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AGREEMENT AND PLAN OF MERGER
DATED AS OF ____________
BY AND AMONG
GENITOR ACQUISITION CORP,
STARBASE CORPORATION
AND
GENITOR CORPORATION
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made and entered into as of June
12, 2000 ("Agreement"), by and among STARBASE CORPORATION, a Delaware
corporation ("Parent"), GENITOR ACQUISITION CORP, a Delaware corporation
("Merger Sub") and GENITOR CORPORATION, a Michigan corporation (the "Company.
Capitalized terms not otherwise defined in this Agreement are
defined in Appendix A hereto.
RECITALS:
WHEREAS, the Boards of Directors of each of the Company, Parent
and Merger Sub believe it is in the best interests of each company and their
respective stockholders that Parent acquire the Company through the statutory
merger of the Company with and into the Merger Sub (the "Merger"), and in
furtherance thereof, have approved the Merger;
WHEREAS, pursuant to the Merger, among other things, and subject
to the terms and conditions of this Agreement, all of the issued and outstanding
shares of capital stock of the Company ("Company Capital Stock") and all
outstanding options, warrants or other rights to acquire or receive shares of
Company Capital Stock shall be converted into the right to receive Three Hundred
Thirty-Three Thousand Three Hundred Thirty-Three (333,333) unregistered shares
(except as adjusted according to Section 1.6 (i) or (ii) hereof) of Common Stock
of Parent ("Parent Shares");
WHEREAS, a portion of the Parent Common Stock otherwise issuable
in connection with the Merger shall be placed in escrow by Parent, the release
of which amount shall be contingent upon certain events and conditions, as set
forth in Section 1.9 hereof; WHEREAS, the Company, Parent and Merger Sub desire
to make certain representations and warranties and other agreements in
connection with the Merger; and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE I
GENERAL
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1.1 The Merger. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Delaware General Corporation Law ("Delaware Law")
and the Michigan Business Corporation Act ("Michigan Law"), the Company shall be
merged with and into the Merger Sub, the separate corporate existence of the
Company shall cease, and the Merger Sub shall continue as the surviving
corporation and as a wholly-owned subsidiary of Parent. The Merger Sub as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
1.2 Effective Time. Unless this Agreement is earlier terminated
pursuant to Article VI hereof, and subject to the satisfaction or waiver of each
of the conditions set forth in Article V, the closing of the Merger (the
"Closing") shall take place on June 12, 2000, at the offices of StarBase
Corporation, 0 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx, unless
another place or time is agreed to by Parent and the Company. The date upon
which the Closing actually occurs is herein referred to as the "Closing Date."
On the Closing Date, the parties hereto shall cause the Merger to be consummated
by filing an Agreement or Certificate of Merger (or like instrument) with the
Secretary of State of the State of Delaware (the "Merger Agreement") and a
Certificate of Merger with the State of Michigan, in accordance with the
relevant provisions of applicable law (the later of the times of confirmation of
such filings by the appropriate state authorities being referred to herein as
the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time, the Certificate of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation.
(b) Unless otherwise determined by Parent, the Bylaws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the Bylaws
of the Surviving Corporation until thereafter amended.
1.5 Directors and Officers. The director(s) of Merger Sub
immediately prior to the Effective Time shall be the initial director(s) of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving
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Corporation. The officers of Merger Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Bylaws of the Surviving Corporation.
1.6 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub or Company:
(a) Each issued and outstanding share of the Company
Capital Stock, other than Dissenting Stock (as defined below) or shares of
Company Capital Stock held in treasury of Company as of the Effective Time,
shall be automatically converted into the right to receive consideration per
share (the "Merger Consideration") consisting of that number of shares of Parent
Common Stock, determined by dividing 333,333 (as adjusted pursuant to (i) or
(ii) below), by the number of issued and outstanding shares of Company Capital
Stock (including Dissenting Stock, if any, but excluding that number of shares
of Company Capital Stock, if any, issued pursuant to Section 1.6(b) hereof)
other than shares of Company Capital Stock held in treasury, subject to
adjustment as appropriate to account for any split, combination or
reclassification with respect to the Parent Common Stock. Anything to the
contrary contained herein notwithstanding, the Merger Consideration shall be
adjusted as follows:
(i) If the value of the Parent Shares to be
exchanged in the Merger under this Section 1.6(a) is less than $2.0 million,
based on the average closing price of Parent's Common Stock as quoted on the
Nasdaq Smallcap Market (or such other exchange or quotation system on which
Parent Common Stock is then traded or quoted) on the five (5) business days
prior to the Closing Date (the "Average Per-Share Price"), then the number of
Parent Shares will be adjusted so that the number of Parent Shares shall be
equal to the quotient of (A) $2.0 million and (B) the Average Per-Share Price,
but in no event shall the number of Parent Shares exceed 500,000.
(ii) If the value of the Parent Shares to be
exchanged in the Merger under this Section 1.6(a) is greater than $2.5 million,
based on the Average Per-Share Price, then the number of Parent Shares will be
adjusted so that the number of Parent Shares shall be equal to the quotient of
(A) $2.5 million and (B) the Average Per-Share Price.
(iii) the value of the aggregate Merger
Consideration as determined in this Section 1.6(a) after any adjustment pursuant
to (i) and (ii) above, shall be further reduced by (a) any outstanding
indebtedness (excluding the Preferred Debt Amount as defined below, letters of
credit, bankers' acceptances and document acceptances) owed by Company to any
bank or financial institution or any debt owed to any current or former
shareholder (or any Affiliate thereof) of the Company as of the Closing Date,
and (b) any outstanding amounts owed by Company under Capital Leases as of the
Closing Date.
(b) In addition to the Parent Shares delivered under
Section 1.6 (a), Parent shall deliver to each holder of the Company's
Convertible Promissory Notes the number of unregistered shares of Parent Common
Stock equal to the quotient of (A) the amount of the debt
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outstanding under each such holder's Convertible Promissory Note(s) as listed on
Schedule 1.6(b) hereof, which the aggregate of all such Convertible Promissory
Notes is currently estimated by the parties to be $457,007, but in no event to
exceed an aggregate total of $460,000 ("Preferred Debt Amount") and (B) the
closing price of the Parent Common Stock as quoted on the Nasdaq Smallcap Market
(or such other exchange or quotation system on which Parent Common Stock is then
traded or quoted) on the last market trading day prior to the Closing Date
("Parent Closing Market Price"). The Preferred Debt Amount shall not be subject
to the adjustments set forth in Section 1.6(a) or to the escrow requirements set
forth in Section 1.9.
(c) All shares of the Company Capital Stock surrendered in
exchange for shares of Parent Common Stock, shall be canceled and extinguished
by Company.
(d) Any option, warrant or other right exercisable or
exchangeable into shares of Company Capital Stock and outstanding as of the
Effective Time (the "Company Options"), if any, a complete and accurate list of
which is set forth in Schedule 2.2, shall be canceled and extinguished without
any conversion thereof and no payment shall be made with respect thereto.
(e) Any shares of the capital stock of Company held in the
treasury of Company shall be canceled and extinguished without any conversion
thereof and no payment shall be made with respect thereto.
(f) No fractional shares of Parent Common Stock shall be
issued in connection with the Merger but, in lieu thereof, each holder of
Company Capital Stock who would otherwise be entitled to a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) will be entitled to receive from Parent an
amount of cash (rounded to the nearest whole US $0.01) equal to the product of
(i) such fraction of a share multiplied by (ii) the Parent Closing Market Price.
(g) From and after the Effective Time, the holders of
certificates evidencing ownership of Company Capital Stock shall cease to have
any rights with respect to such stock, except as otherwise provided herein or by
law.
(h) Subject to Section 6.1(c), shares of the Company
Capital Stock with respect to which appraisal rights have been demanded and
perfected (the "Dissenting Stock") in accordance with Sections 761 through 774
of Michigan Law shall not be converted into the right to receive any portion of
the Merger Consideration at or after the Effective Time, and the holder thereof
shall be entitled only to such rights as are granted by Michigan Law.
Notwithstanding the preceding sentence, if any holder of shares of the Company
Capital Stock who demands appraisal of such shares under the Michigan Law shall
effectively withdraw his demand for such appraisal (in accordance with the
Michigan Law) or becomes ineligible for such appraisal (through failure to
perfect or otherwise) then, as of the Effective Time or the occurrence of such
event, whichever is the last to occur, such holder's Dissenting Stock shall
cease to be Dissenting
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Stock and shall be converted into and represent the right to receive such
holder's pro rata portion of the Merger Consideration, without interest thereon,
as provided in this Section 1.6. Company shall give Parent and Merger Sub (i)
prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other instrument served pursuant to Sections 761 through 774
of the Michigan Law received by Company and (ii) the opportunity to participate
in all negotiations and proceedings with respect to demands for appraisal under
such Section.
(i) Each share of the capital stock of Merger Sub issued
and outstanding at the Effective Time shall remain outstanding as fully paid and
nonassessable shares of the common stock of the Surviving Corporation.
1.7 Closing of Transfer Books. At the Effective Time, the stock
transfer books of Company shall be closed and there shall be no further
registration of transfers of any shares of the capital stock of Company
thereafter on its records.
1.8 Surrender of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent and
Company shall designate the law firm of Xxxxxx Xxxxxx LLP to act as exchange
agent (the "Exchange Agent").
(b) Parent to Provide Common Stock. Promptly as practicable after
the Effective Time, Parent shall make available to the Exchange Agent for
exchange in accordance with this Article I, the aggregate number of shares of
Parent Common Stock issuable pursuant to Section 1.6(a) in exchange for
outstanding shares of Company Capital Stock; provided that, on behalf of the
holders of Company Capital Stock, Parent shall deposit into an escrow account a
number of shares of Parent Common Stock equal to the Escrow Amount (as defined
in Section 1.9 hereof) out of the aggregate number of shares of Parent Common
Stock otherwise issuable pursuant to Section 1.6(a). The portion of the Escrow
Amount contributed on behalf of each holder of Company Capital Stock shall be in
proportion to the aggregate number of shares of Parent Common Stock which such
holder would otherwise be entitled to receive under Section 1.6(a) by virtue of
ownership of outstanding shares of Company Capital Stock.
(c) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Company Capital Stock and which
shares were converted into the right to receive shares of Parent Common Stock
pursuant to Section 1.6, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other
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agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Parent Common Stock, less the number of shares of Parent Common Stock,
if any, to be deposited in escrow on such holder's behalf pursuant to Section
1.9 hereof, plus cash in lieu of fractional shares in accordance with Section
1.6, to which such holder is entitled pursuant to Section 1.6, and the
Certificate so surrendered shall forthwith be canceled. As soon as practicable
after the Effective Time, and subject to and in accordance with the provisions
of Section 1.9 hereof, Parent shall cause to be distributed to the Escrow Agent
(as defined in Section 1.9) a certificate or certificates representing the
number of shares of Parent Common Stock equal to the Escrow Amount, which
certificate shall be registered in the name of the Escrow Agent. Such shares
shall be beneficially owned by the holders on whose behalf such shares were
deposited in the Escrow Fund and shall be available to compensate Parent as
provided in Section 1.9. Until so surrendered, each outstanding Certificate
that, prior to the Effective Time, represented shares of Company Capital Stock
will be deemed from and after the Effective Time, for all corporate purposes,
other than the payment of dividends, to evidence the ownership of the number of
full shares of Parent Common Stock into which such shares of Company Capital
Stock shall have been so converted and the right to receive an amount in cash in
lieu of the issuance of any fractional shares in accordance with Section 1.6.
(d) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock declared or
made after the Effective Time and with a record date after the Effective Time
will be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, at the time of such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of Parent
Common Stock.
(e) Transfers of Ownership. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) No Liability. Notwithstanding anything to the contrary in
this Section 1.8,
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none of the Exchange Agent, the Surviving Corporation or any party hereto shall
be liable to a holder of shares of Parent Common Stock or Company Capital Stock
for any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 Escrow Amount. As additional security for the indemnification
provisions as set forth under Article VII hereof, ten percent (10%) of the
shares of Parent Shares to be distributed under Section 1.6(a) ("Indemnity
Escrow Shares") shall be held in escrow with Greater Bay Trust Company (the
"Escrow Agent") as collateral for the indemnification obligations of the Company
pursuant to this Agreement and the provisions of an escrow agreement ("Escrow
Agreement") in the form attached hereto as Exhibit 1.9. The Indemnity Escrow
Shares shall be returned to the holders, less any amounts to cover claims, upon
the first anniversary of the Closing Date ("Indemnity Escrow Period"), provided,
however, that ten percent (10%) of the shares of Parent Shares to be owned by
Xxxx Xxxxx and Xxxxx Xxxxx (the "Seidls") as their portion of the Merger
Consideration (the "Xxxxx Escrow Shares") shall be held in escrow for a period
of two (2) years from the Closing Date as collateral for (i) the indemnification
obligations as set forth in Sections 7.1 and 7.3 hereunder and (ii) the
obligation of Xxxx Xxxxx under his Employment Agreement (the execution of which
is a condition to Closing under Section 5.2(f) below) not to terminate his
employment with Parent voluntarily and without cause, and not to have been
terminated with cause, during the two-year employment term set forth in the
Employment Agreement, pursuant to the provisions of the Escrow Agreement. The
Xxxxx Escrow Shares shall be withheld from the shares of Parent Shares to be
delivered at the Closing and at the expiration of the Indemnity Escrow Period,
as provided in the Escrow Agreement, and shall be returned to the Seidls upon
the second anniversary of the Closing, less any amounts to cover claims,
provided that Xxxx Xxxxx has remained continuously employed with Parent through
such date. In the event that Xxxx Xxxxx'x employment terminates prior to such
second anniversary, and such termination is not due to (i) termination by Parent
without cause, or (ii) the death or long-term disability of Xxxx Xxxxx, the
Seidls will forfeit all the Xxxxx Escrow Shares and such Xxxxx Escrow Shares
shall revert to Parent. Notwithstanding anything to the contrary contained
herein, in the event that all holders have not executed either (i) the Escrow
Agreement or (ii) a power of attorney naming one or more of the Primary
Shareholders (as that term is defined in Section 5.2(h) below) as their attorney
in fact to act on their behalf under the Escrow Agreement, within thirty (30)
days after the Closing Date, as additional security, the Seidls will return to
Parent to have placed in the escrow the number of Parent Shares associated with
such holder(s) (the "Additional Xxxxx Indemnity Shares"). Such Additional Xxxxx
Indemnity Shares will be released (subject to any claims) at the expiration of
the Indemnity Escrow Period.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE SEIDLS
Company and the Seidls represent and warrant to Parent and Merger Sub
that the statements contained in this Section 2 are correct and complete as of
the date of this Agreement, except as set forth in the Disclosure Schedule
accompanying this Agreement and initialed by the parties (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Article II. The term
"Knowledge" of the Company or statements about facts or circumstances recognized
by the Company shall refer to the actual knowledge of the Seidls, after due
investigation, examination of the Company's records and inquiries of Company
personnel.
2.1 Organization, Standing and Power. Company is a corporation duly
organized and validly existing under the laws of the state of its incorporation,
with full corporate power and authority to own, lease and operate its properties
and to carry on business as presently conducted by it. Company is duly qualified
and is in good standing as a foreign corporation in all states or jurisdictions
in which the character and location of any of the properties owned or leased by
Company, or the conduct of its business, makes it necessary for it to qualify to
do business as a foreign corporation and where it has not so qualified, except
for those jurisdictions in which the failure to so qualify would not have a
Material Adverse Effect (as defined in Section 2.5 hereof) on the business or
operations of Company. Copies of the Articles of Incorporation of Company and
all amendments thereof and the By-laws of Company, as amended to date, have been
made available to Parent and are complete and correct. Company's minute books
heretofore made available to Parent contain complete and accurate records of all
meetings and other corporate actions of its stockholders and board of directors
(including committees of its Board of Directors).
2.2 Capitalization. As of April 30, 2000, the authorized Company Capital
Stock consists of 200,000 shares of common stock, no par value per share (the
"Company Stock") and 25,000 shares of preferred stock, no par value (the
"Preferred Stock"), of which 84,166 shares of Company Stock and 15,657 shares of
Preferred Stock are issued and outstanding. Notwithstanding the foregoing, as of
the Closing Date, all shares of Preferred Stock shall have been converted to
Company Stock. Except as disclosed in Schedule 2.2 of the Disclosure Schedule,
there are no outstanding options, warrants, rights, calls, commitments,
conversion rights, puts, plans or other agreements of any character to which
Company is a party or otherwise bound which provide for the acquisition or
disposition of any of the Company Stock or any of the securities of Company.
Schedule 2.2 sets forth a true and complete list of the holders of all
outstanding Company Options, and breakdown as between vested and unvested
options, the exercise price per share and the terms of such options, as of the
date hereof. Except as listed on Schedule 2.2, there are (a) no options,
warrants or other rights, agreements, arrangements or commitments of any
character obligating Company to issue or sell any shares of capital stock of or
other equity interests in Company, (b) no outstanding contractual obligations
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or other commitments or arrangements of Company to: (i) repurchase, redeem or
otherwise acquire any shares of the capital stock of Company (or any interest
therein) or (ii) provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity, or (iii) issue or
distribute to any person any capital stock of Company, or (iv) issue or
distribute to holders of any of the capital stock of Company any evidences of
indebtedness or assets of Company, and (c) no preemptive rights with regard to
the capital stock of Company, and no right-of-first refusal or similar catch-up
rights with regard to such capital stock. All of the outstanding securities of
Company have been issued and sold by Company in full compliance with applicable
federal and state securities laws. All of the outstanding Company Stock has been
duly and validly issued and is fully paid and nonassessable.
2.3 Interests in Other Entities. Company does not: (a) own,
directly or indirectly, of record or beneficially, any shares of voting stock or
other equity securities of any other entity; (b) have any ownership interest,
direct or indirect, of record or beneficially, in any unincorporated entity; or
(c) have any obligation, direct or indirect, present or contingent, (i) to
purchase or subscribe for any interest in, advance or loan moneys to, or in any
way make investments in, any person or entity, or (ii) to share any profits or
capital investments or both from any entity.
2.4 Authority.
(a) The execution and delivery by Company of this
Agreement and of all of the agreements to be executed and delivered by it
pursuant hereto (the "Company Documents"), the performance by Company of its
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by
Company's Board of Directors and no other corporate or other proceedings on the
part of Company, other than the approval of its stockholders, are necessary to
authorize the execution and delivery of this Agreement by Company or the
consummation of the transactions contemplated hereby.
(b) This Agreement and the Company documents are the valid
and binding obligation of Company and are enforceable in accordance with their
respective terms, subject to the effect of applicable bankruptcy,
reorganization, insolvency, moratorium and other similar laws of general
application relating to, limiting or affecting the enforcement of creditors'
rights generally and general principles of equity that may limit the
enforceability of the remedies, covenants or other provisions of this Agreement
or the Company Documents and the availability of injunctive relief or other
equitable remedies.
2.5 Noncontravention. Neither the execution and delivery by
Company of this Agreement or the Company Documents pursuant hereto, nor the
consummation of any of the transactions contemplated hereby or thereby, nor the
performance by Company of its obligations hereunder or thereunder, will (nor
with the giving of notice or the lapse of time or both would): (a) conflict with
or result in a breach of any provision of the Articles of Incorporation or
By-laws
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of Company; or (b) in any manner that would materially affect the ability of
Company to consummate or perform the transactions contemplated hereby or have a
material adverse effect on the business, assets, liabilities, properties,
results of operations or financial condition of Company (hereinafter, a
"Material Adverse Effect"), (i) give rise to a default, or any right of
termination, cancellation or acceleration, or otherwise be in conflict with or
result in a loss of contractual benefits to Company under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which Company is a party or by
which Company may be bound or to which Company may be subject, or require any
consent, approval or notice under the terms of any such document or instrument
that has not been obtained, or (ii) violate any order, writ, injunction, decree,
law, statute, rule or regulation of any court or governmental authority which is
applicable to Company or (iii) result in the creation or imposition of any lien,
adverse claim, security interest, pledge, mortgage, charge or encumbrance, of
any nature whatsoever (a "Lien"), upon any of the properties or assets of
Company; or (c) interfere with or otherwise adversely affect the ability of the
Surviving Corporation to carry on the business of the Company after the
Effective Time on substantially the same basis as is now conducted; or (d)
require the consent, waiver, approval, authorization that has not been obtained,
license, certificate or franchise, of or any filing by Company other than the
filing of a certificate of merger with the Secretary of State of the State of
Delaware and with the Corporation, Securities and Land Development Bureau of the
State of Michigan.
2.6 Litigation. There are no suits or actions, or administrative,
arbitration or other proceedings or governmental investigations, pending or to
the Company's Knowledge threatened, against or relating to Company. There are no
judgments, orders, stipulations, injunctions, decrees or awards in effect which
relate to Company or the operation of Company, which if decided against Company
would have a Material Adverse Effect. There has been no products liability
claims made or threatened against Company.
2.7 Compliance with Law. To the best of Company's Knowledge,
Company is not engaging in any activity or omitting to take any action as a
result of which it is in violation of any law, rule, regulation, zoning or other
ordinance, statute, order, injunction or decree, or any other requirement of any
court or governmental or administrative body or agency, applicable to Company,
its business or its assets ("Laws"), which Laws include, but are not limited to,
those relating to: the use, storage, handling, transport or disposal of
pollutants, contaminants, pesticides, petroleum or petroleum product, asbestos,
hazardous or toxic materials or wastes, or any substance, whether solid, liquid
or gaseous, that is listed, defined or regulated as a "hazardous substance",
"hazardous waste" or "solid waste" or otherwise classified as hazardous or
toxic, in or pursuant to any Environmental Law (as defined herein), causing or
posing a threat to cause contamination or adverse effect to the environment
("Hazardous Substances"); occupational safety and health; business practices and
operations; labor practices; employee benefits; and zoning and other land use.
For purposes hereof, "Environmental Laws" means all federal, state and local
laws, rules, regulations, permits, orders, judgments, injunctions and decrees
relating to Hazardous Substances applicable to the business and the facilities
of Company (whether or not owned by them).
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2.8 Financial Statements; SEC Filings; Books and Records.
(a) Company has delivered or made available to Parent an
unaudited balance sheet at December 31, 1999 and December 31, 1998, and the
related unaudited statements of cash flow and income for the twelve (12) months
then ended, and an audited balance sheet ("Balance Sheet") at April 30, 2000
(collectively, the "Company Reports").
(b) The April 30, 2000 Balance Sheet, together with the
notes thereto, has been prepared in accordance with generally accepted
accounting principles ("GAAP"), except as disclosed therein, and presents fairly
the financial condition and position of Company as at the dates thereof.
(c) The books and records of Company are materially
complete and correct, have been maintained in accordance with good business
practices, and accurately reflect the basis for the financial condition, results
of operations and cash flow of Company as set forth in the financial statements
contained in the Company Reports.
2.9 Accounts Receivables; Inventories. The accounts receivable,
net of the allowance for doubtful accounts applicable thereto (which allowance
is established on a basis consistent with GAAP) included in the April 30, 2000
Balance Sheet, represent bona fide transactions made in the ordinary course of
business of Company and, in the aggregate, to Company's Knowledge, are
collectible in the ordinary course of business consistent with past practices of
Company, subject to applicable reserves. Company has performed all obligations
with respect thereto which it was obligated to perform to the date hereof.
2.10 Properties. Except as disclosed on Schedule 2.10, Company
has good and valid title to all of the properties and assets that are necessary
for the conduct of its business free and clear of any and all Liens (including
liens for current Taxes (as defined in Section 2.14(b) hereof)), of any nature
whatsoever. All plants, structures and equipment which are utilized in the
business, or are material to the condition (financial or otherwise) of Company
are owned or leased by Company. Schedule 2.10 sets forth all (1) real property
which is owned, leased (whether as lessor or lessee) or subject to contract or
commitment of purchase or sale or lease (whether as lessor or lessee) by
Company, or which is subject to a title retention or conditional sales agreement
or other security device, and (2) tangible personal property which is owned,
leased (whether as lessor or lessee) or subject to contract or commitment of
purchase or sale or lease (whether as lessor or lessee) by Company.
2.11 Intellectual Property.
(a) Schedule 2.11 identifies (by a summary description)
the Intellectual Property (as defined below) of Company which Schedule
encompasses: (i) all United States and foreign patents, trademark and trade name
registrations, trademarks and tradenames, brandmarks and brand name
registrations, servicemarks and servicemark registrations, assumed names and
copyrights and copyright registrations, owned in whole or in
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part or used by Company, and all applications therefore, (ii) all material
inventions, discoveries, improvements, processes, formulae, technology,
know-how, processes and other intellectual property, proprietary rights and
trade secrets owned in whole or in part or used by the Company's and (iii) all
licenses and other agreements (the "Licenses") to which Company is a party or
otherwise bound which relate to any of the Intellectual Property or the use
thereof by Company (collectively, the "Intellectual Property"). No violations of
the material terms of any of the aforesaid licenses and/or agreements have
occurred. It is understood that the term "Intellectual Property" shall not
include Systems (as defined in section 2.12) and that no representations or
warranties are made in this Section 2.11 with respect to Systems.
(b) Except as disclosed on Schedule 2.11, (i) Company owns
or is authorized to use all of the Intellectual Property; (ii) no proceedings
have been instituted, are pending, or are threatened which challenge the rights
of Company with respect to the Intellectual Property or its use thereof in
connection with the assets and properties of Company or the validity thereof
and, there is no valid basis for any such proceedings; (iii) Company's ownership
of the Intellectual Property nor its use thereof in connection with the assets
and properties of Company does not violate any Laws, or has at any time
infringed upon or violated any rights of others or to the best of Company's
Knowledge, is being infringed by others; (iv) none of the Intellectual Property,
or use thereof by Company in connection with the assets and properties of
Company is subject to any outstanding order, decree, judgment, stipulation or
any Lien except as set forth on Schedule 2.11; (v) no "freeware" that is subject
to a GNU Public License or other similar arrangement has been incorporated into
any Company software code; and (vi) Company has not granted any license to third
parties with regard to the Intellectual Property.
2.12 Systems and Software. Company owns or has the right to use
pursuant to lease, license, sublicense, agreement, or permission all computer
hardware, software and information systems necessary for the operation of the
Business as presently conducted (collectively, "Systems"), all of which is
listed on Schedule 2.12. Each System owned by Company immediately prior to the
Effective Time will be owned by Company on identical terms and conditions
immediately subsequent to the Effective Time. With respect to each System owned
by a third party and used by Company pursuant to lease, license, sublicense,
agreement or permission: (a) the lease, license, sublicense agreement or
permission covering the System is legal, valid, binding, enforceable, and in
full force and effect with regard to Company, and to Company's Knowledge with
regard to the other party thereto; (b) the lease, license, sublicense, agreement
or permission will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the Effective Time with
regard to Company, and to the Company's Knowledge with regard to the other party
thereto; (c) neither Company nor to Company's Knowledge any party to any such
lease, license, sublicense, agreement or permission is in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default, and permit termination, modification or acceleration
thereunder; (d) neither Company nor to Company's Knowledge any party or any such
lease, license, sublicense, agreement or permission has repudiated any provision
thereof; (e) Company has not granted any sublicense, sublease or similar right
with respect to any such lease, license,
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sublicense, agreement or permission; and (f) Company's use and continued use by
Company of such System does not and will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any intellectual property
rights of third parties as a result of the continued operation of the business.
2.13 Insurance. Schedule 2.13 is a complete and correct list and
summary description of all material policies of insurance in which Company is an
insured party, beneficiary or loss payable payee, including without limitation
any products liability insurance. Such policies are in full force and effect,
all premiums due and payable with respect thereto have been paid, and no notice
of cancellation or termination has been received by Company with respect to any
such policy.
2.14 Tax Matters.
(a) Except as set forth in Schedule 2.14:
(i) Company has (A) duly and timely filed or caused
to be filed with the appropriate branch, office, department, agency or other
instrumentality engaged in the monitoring, collection and enforcement of Taxes
(as defined in (b) below) (the "Tax Authority") each return, declaration or
statement, and any amendment thereto (the "Tax Return") that is required to be
filed by or on behalf of the Company or that includes or relates to Company's
income, sales, assets or business, which Tax Return is true, correct and
complete in all material respects, (B) duly and timely paid in full, caused to
be paid in full, all Taxes due and payable in respect of all Tax periods up to
and including the date of this Agreement, and (C) has properly accrued on the
April 30, 2000 Balance Sheet in accordance with GAAP a provision for the payment
of all Taxes due or which will be due or for which Company otherwise is or may
be liable;
(ii) Company has complied in all respects with all
applicable material laws relating to the payment, collection or withholding of
any Tax, and the remittance thereof to any and all Tax Authorities;
(iii) There is no Lien for Taxes upon any of the
assets or properties of Company;
(iv) Company has received no notice fromany Tax
Authority that any Tax Return filed by or on behalf of Company has ever been
examined or audited by any Tax Authority;
(v) No audit, examination, investigation,
reassessment or other administrative or court proceeding is pending, or to the
Knowledge of Company, proposed or threatened with regard to any Tax or Tax
Return or the payment, collection or withholding of any Tax;
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(vi) Company has not received a ruling from any Tax
Authority or signed an agreement with any Tax Authority or has requested a
ruling from or an agreement with any Tax Authority, and there is no outstanding
subpoena or request for information or documents from any Tax Authority, with
respect to any Tax for which Company is or may be liable or with respect to
Company's income, sales, assets or business; and
(vii) Schedule 2.14 sets forth a list of all
jurisdictions (both foreign and domestic) in which any Tax Returns have been
filed by or on behalf of Company, respectively, or with respect to Company's
income, sales, assets or business and Company has provided to Purchaser (A) a
copy of all Tax Returns for the past five (5) years, and (B) all audit reports,
closing agreements, letter rulings, or technical advice memoranda issued to
Company relating to any Tax for which Company is or may be liable with respect
to Company's income, sales, assets or business.
(b) For purposes hereof, "Code" or "IRC" shall mean the
Internal Revenue Code of 1986, as amended, and "Tax" or "Taxes" shall mean any
tax, charge, fee, levy, deficiency or other assessment of whatever kind or
nature including, without limitation, any net income, gross income, profits,
gross receipts, excise, real or personal property, sales, ad valorem,
withholding, social security, retirement, excise, employment, unemployment,
minimum, estimated, severance, stamp, property, occupation, environmental,
windfall profits, use, service, net worth, payroll, franchise, license, gains,
customs, transfer, recording and other tax, customs duty, fee assessment or
charge of any kind whatsoever, imposed by any Tax Authority, including any
liability therefore as a transferee (including, without limitation, under
section 6901 of the Code or any similar provision of applicable law), as a
result of Treasury Regulation Section 1.1502-6 or any similar provision of
applicable law, or as a result of any tax sharing or similar agreement, together
with any interest, penalties or additions to tax relating thereto.
2.15 Employee Arrangements.
(a) Except as disclosed on Schedule 2.15(a), Company has
no outstanding employment agreement with any officer or employee of Company or
any bonus, incentive compensation, deferred compensation, profit sharing, stock
option, stock bonus, stock purchase, savings, severance, salary continuation
(other than benefits that are required to be provided pursuant to Consolidated
Omnibus Budget Reconciliation act of 1985 ("COBRA")), consulting, retirement
(including health and life insurance benefits provided after retirement) or
pension plan (including Employee Benefit Plans as defined in Section 2.15(b)
hereof) or arrangement with or for the benefit of any officer, employee or other
person, or for the benefit of any group of officers, employees or other persons.
Company has not made, or entered into any agreement to make, any payment that
becomes payable as a result of the consummation of this transaction which would
be treated as an "excess parachute payment" as defined in Section 280G of the
Code. There are no such agreements, plans or other arrangements entered into
with or provided for any independent contractors with whom Company has a
business relationship.
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(b) Set forth on Schedule 2.15(b) are all of the employee
benefit plans as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), but without regard to whether any
such plan is in fact subject to ERISA, that is sponsored, or is being maintained
or contributed to, by Company (the "Employee Benefit Plan"). None of the
Employee Benefit Plans are "multiemployer plans" as defined in Section 3(37) of
ERISA. Company has furnished to Parent and Merger Sub (i) a true and complete
copy of the plan document and summary plan description for each Employee Benefit
Plan, (ii) a true and complete copy of the most recently filed Form 5500
(including the related schedules) with respect to Employee Benefit Plan for
which such form is required to be filed, (iii) a true and complete copy of any
trust agreement, insurance contract or other agreement or arrangement serving as
source of funding any benefits payable under any Employee Benefit Plan, and (iv)
the most recently issued financial statement and actuarial report, if any, for
each Employee Benefit Plan. No "prohibited transactions" (as such term is
defined in Section 4975 of the IRC, or in Part 4 of Subtitle B of Title I of
ERISA) have occurred with respect to any Employee Benefit Plan that could result
in the imposition of taxes or penalties. With respect to each of the Employee
Benefit Plans that is intended to qualify for favorable income tax treatment
under Section 401(a) of the IRC, (x) the Internal Revenue Service ("IRS") has
issued a favorable determination letter with respect to such plan; (y) except as
set forth on Schedule 2.15, Company has furnished Purchaser with a copy of the
determination letter most recently issued by the IRS with respect to such plan
and the application filed with the IRS for such determination letter; and (z) to
the Knowledge of Company, no event has occurred from the date of each such
favorable determination letter that would adversely affect the tax-qualified
status of the plan in question. Each Employee Benefit Plan has been administered
in compliance with the applicable requirements of ERISA and the IRC, and in
compliance with all other applicable provisions of law. With respect to each
Employee Benefit Plan, Company has not incurred liabilities as a result of the
violation of or the failure to comply with any applicable provision of ERISA,
the IRC, the continuation coverage rules of COBRA, any other applicable
provision of law, or any provision of such plan. None of the Employee Benefit
Plans which is an "employee pension benefit plan", as that term is defined in
Section 3(2) of ERISA (a "Company Employee Pension Benefit Plan"), has not
incurred an "accumulated funding deficiency," within the meaning of Section 302
of ERISA or Section 412 of the IRC. Company has not failed to make any
contribution to, or to make any payment under, any Employee Benefit Plan that it
was required to make pursuant to the terms of the plan or pursuant to applicable
law in any amount. No "reportable events," with respect to which a notice must
be filed with the Pension Benefit Guaranty Corporation ("PBGC"), has occurred
with respect to any Employee Pension Benefit Plan subject to Title IV of the
ERISA. No proceedings by the PBGC to terminate any Employee Pension Benefit Plan
pursuant to Subtitle C of Title IV of ERISA have been instituted or threatened.
Company (1) has not incurred any liability to the PBGC in connection with any
Employee Pension Benefit Plan, including any liability under Section 4069 of
ERISA and any penalty imposed under Section 4071 of ERISA, (2) has not
terminated any Employee Pension Benefit Plan, or ceased operations at any
facility or withdrawn from any Employee Pension Benefit Plan, in a manner that
could subject it to liability or any liens under Section 4062, 4063,
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4064 or 4068 of ERISA or (3) has no Knowledge as to the existence of any state
of facts, or as to the occurrence of any transactions, that might reasonably be
anticipated to result in any liability of Company to the PBGC under any other
provision of Title IV of ERISA. There is no pending or, to the Knowledge of
Company, threatened legal action, proceeding or investigation against or
involving any Employee Benefit Plan which could result in liabilities to the
Plan or Company. Except as disclosed on Schedule 2.15, the present value of
accrued benefits of each Employee Benefit that is a defined benefit plan as
defined in Section 3(35) of ERISA does not exceed the value of the assets of
such plan available to pay such benefits.
(c) There are no pending or threatened labor negotiations,
work stoppages or work slowdowns involving or affecting the Company's business,
and no union representation questions exist, and there are no organizing
activities, in respect of any of the employees of Company.
2.16 Certain Business Matters and Practices.
(a) Except as set forth on Schedule 2.16(a), Company (i)
is not a party to or bound by any material distributorship, dealership, sales
agency, franchise or similar agreement and (ii) has not provided any warranties
on its respective products and has no greater obligations than to replace the
product sold or as is otherwise customary in the industry.
(b) Set forth on Schedule 2.16(b) is a description of (i)
the rebate and volume discount practices and obligations of Company, (ii) the
allowance and customer return practices and obligations of Company, (iii) the
co-op advertising and other promotional practices of Company, (iv) price
protection agreements, and (v) return policies and historical return rates, as
each of the foregoing relate to the customers and suppliers of Company.
2.17 Certain Contracts.
(a) Set forth on Schedule 2.17 is a complete and correct
list of all material contracts, commitments, obligations and understandings to
which Company is a party or otherwise bound, except for each of those which (a)
was made in the ordinary course of business, and (b) either (i) is terminable by
Company without liability, expense or other obligation in excess of $5,000 on
thirty (30) days' notice or less, or (ii) may be anticipated to involve
aggregate payments to or by Company of $5,000 (or the equivalent) or less
calculated over the full term thereof, and (c) is not otherwise material to the
Company's business. Except as set forth in the immediately preceding sentence,
there are no agreements or arrangements in effect entered into by Company with
any independent salesperson, distributor, sublicensor or other remarketer or
sales organization.
(b) Complete and correct copies of all contracts,
commitments, obligations and undertakings set forth on any of the Schedules
delivered pursuant to this Agreement have been furnished or made available by
Company to Purchaser, and (i) each of them is in full force and effect, no
person or entity which is a party thereto or otherwise bound
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thereby is in default thereunder, and no event, occurrence, condition or act
exists which does (or which with the giving of notice or the lapse of time or
both would) give rise to a default or right of cancellation, acceleration or
loss of contractual benefits thereunder; (ii) to the Company's Knowledge, there
has been no threatened cancellations thereof, and (iii) there are no outstanding
disputes thereunder.
2.18 Customers and Suppliers.
(a) Schedule 2.18(a) sets forth a complete and correct
list, as of April 30, 2000, of (i) the 10 largest customers of the Company and
the amount for which each such customer is invoiced during the prior twelve (12)
month period, and (ii) the 10 largest suppliers of the Company and the amount of
goods and services purchased from each such supplier during the prior twelve
(12) month period.
(b) Except as set forth on Schedule 2.18(b), Company has
not received any notice that any of the suppliers or customers listed on
Schedule 2.18(a) have any disputes with Company or intend to cease selling or
rendering services to, or dealing with, Company on substantially the same basis
as of the date hereof, nor has any information been brought to its attention
which might reasonably lead it to believe any such suppliers or customers intend
to alter in any material respect the amount of sales or services or the extent
of dealings with Company, or would alter in any material respect the sales or
services or dealings in the event of the consummation of the sale under this
Agreement. Company has no information which might reasonably indicate, nor has
any information been brought to any of their attention which might reasonably
lead any of them to believe, that any supplier of Company will not be able to
fulfill outstanding or currently anticipated purchase orders placed by, or
service obligations to, Company.
2.19 Approvals/Consents. Except as set forth on Schedule 2.19,
(i) no governmental, administrative or third-party consents, permits,
appointments, approvals, licenses, certificates or franchises are necessary for
the operation of the Company's business (the "Permits") and (ii) all such
Permits are in full force and effect and will, remain in full force and effect
without the payment of any penalty, the incurrence of any additional debt or
liability or the change of any term. No material violations of the terms thereof
have heretofore occurred or are known by Company to exist as of the date hereof.
There are no proceedings pending or, to the Knowledge of Company, threatened, or
any basis therefore, seeking to cancel, terminate or limit such Permits.
2.20 Transactions with Affiliated Parties. Schedule 2.20 sets
forth a true and complete list and description of all transactions engaged in
between Company and any director, officer, employee, stockholder, partner or
agent of Company, or any of its respective spouses or children, any trust of
which any such person is the grantor, trustee or beneficiary, any corporation of
which any such person or party is a stockholder, employee, officer or director,
or any partnership or other person in which any such person or party owns an
interest (each such person,
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trust, corporation and partnership, an "Affiliated Party"). No Affiliated Party
is a party to any agreement, contract or commitment with Company except as set
forth in Schedule 2.20.
2.21 Restricted Securities. Company has advised each stockholder
of Company that the securities such stockholder is purchasing are characterized
as "restricted securities" under the federal securities laws inasmuch as they
are being acquired from Parent in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be sold
without registration under the Act only in certain limited circumstances and in
accordance with the terms and conditions set forth in the legend described in
Section 2.22 below.
2.22 Legends. It is understood that the certificates evidencing
Parent's Common Stock will bear the following legend:
"These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold,
offered for sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the
securities under such Act or an opinion of counsel
satisfactory to the company that such registration is not
required or unless sold pursuant to Rule 144 of such Act."
2.23 Information as to Company. None of the representations or
warranties made by Company in this Agreement or in any agreement executed and
delivered by or on behalf of it pursuant hereto contain any untrue statement of
a material fact, or omit to state any material fact necessary in order to make
the statements therein contained, in light of the circumstances under which they
were made, not misleading.
2.24 Conduct of the Business Since Balance Sheet Date. Except as
set forth on Schedule 2.24, since the April 30, 2000 Balance Sheet date:
(a) The Company has been conducted its business only in
the ordinary course and consistent with past practice;
(b) Company has not (i) amended its Articles of
Incorporation or By-Laws, (ii) changed the number of authorized, issued or
outstanding shares of Company Capital Stock, other than through the conversion
of the Preferred Stock into Company Stock, (iii) declared, set aside or paid any
dividend or other distribution or payment in cash, stock or property in respect
of shares of its capital stock, (iv) made any direct or indirect redemption,
retirement, purchase or other acquisition of any of its capital stock, or (v)
split, combined or reclassified its outstanding shares of capital stock;
(c) Company has not, directly or indirectly, (i) issued,
granted, sold or pledged or agreed or proposed to issue, grant, sell or pledge
any shares of, or rights of any kind to acquire any shares of the capital stock
of Company, (ii) other than in the ordinary course
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of business and consistent with past practice, incurred any indebtedness for
borrowed money, (iii) waived, released, granted or transferred any rights of
material value, except in the ordinary course of business consistent with past
practices or (iv) transferred, leased, licensed, sold, mortgaged, pledged,
disposed of or encumbered any material assets of Company other than in the
ordinary course of business and consistent with past practice;
(d) There has been no change in any of Company's material
personnel or business relationships, including, without limitation, suppliers
and customers;
(e) Company has not, directly or indirectly, (i) increased
the compensation payable or to become payable by it to any of its respective
employees, officers or directors, (ii) adopted additional terms or requirements,
or made any bonus or unique payment or provision, under any stock option, bonus,
profit sharing, pension, retirement, deferred compensation, employment or other
payment or employee compensation plan, agreement or arrangement for the benefit
of employees of Company or otherwise, (iii) entered into or amended any
employment or severance agreement or arrangement or (iv) made any loan or
advance to, or enter into any written contract, lease or commitment with, any
officer, director or employee of Company;
(f) Company has not, directly or indirectly, assumed,
guaranteed, endorsed or otherwise become responsible for the obligations of any
other individual, firm or corporation or made any loans or advances to any
individual, firm or corporation;
(g) Company has not made any investment of a capital
nature either by purchase of stock or securities, contributions to capital,
property transfers, acquisition or financing of equipment or otherwise, other
than in the ordinary course of business, or the purchase of any property or
assets of any other individual, firm or corporation;
(h) Company has not entered into, modified or amended in
any material respect or taken any action to terminate any of its material
contracts;
(i) Company has not taken any action, other than
reasonable and usual actions in the ordinary course of business and consistent
with past practice, with respect to accounting policies or procedures;
(j) Company has not entered into any agreement or
arrangement to do any of the foregoing actions.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to Company as
follows:
3.1 Organization. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. Each of Parent and Merger Sub has the
corporate power and authority to enter into and perform this Agreement, has full
corporate power and authority to own, lease and operate its properties and to
carry on business as presently conducted by it, and is duly qualified to do
business as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have a material adverse effect on Parent and Merger Sub as
a whole.
3.2 Authorization. The execution and delivery of this Agreement
by Parent and Merger Sub and the performance of their obligations hereunder have
been duly authorized by the directors of Parent and Merger Sub and no other
corporate action or approval by Parent and Merger Sub is necessary for the
execution, delivery or performance of this Agreement by Parent and Merger Sub.
This Agreement has been duly executed and delivered by Parent and Merger Sub and
is a valid and binding obligation of each of Parent and Merger Sub, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, relating to or limiting creditors'
rights generally, and (b) general principles of equity (whether considered in an
action in equity or at law).
3.3 No Conflict. Neither the execution and delivery of this
Agreement by Parent and Merger Sub nor the consummation of the transactions
contemplated hereunder nor the fulfillment by Parent and Merger Sub of any of
its terms will:
(a) conflict with or result in a breach by Parent or Merger Sub
of, or constitute a default by it under, or create an event that, with the
giving of notice or the lapse of time, or both, would be a default under or
breach of, any of the terms, conditions or provisions of (i) any indenture,
mortgage, lease, deed of trust, pledge, loan or credit agreement or any other
material contract, arrangement or agreement to which Parent or Merger Sub is a
party or to which a material portion of its assets is subject, (ii) the
Certificate of Incorporation or Bylaws of Parent or Merger Sub, or (iii) any
judgment, order, writ, injunction, decree or demand of any Governmental Entity
which materially affects Parent or Merger Sub or which materially affects the
Parent or Merger Sub's ability to conduct its business or to own or convey its
assets;
(b) result in the creation or imposition of any Lien upon any
material portion of the assets of Parent or Merger Sub or which materially
affects the Parent's or Merger Sub's ability to conduct its business as
conducted prior to the date of this Agreement; or
(c) cause a loss or adverse modification of any permit, license,
or other authorization granted by any Governmental Entity to or otherwise held
by Parent or Merger Sub which is necessary or materially useful to Parent or
Merger Sub's business.
3.4 Consents and Approvals. Except for those filings listed on
Schedule 3.4 hereto, no consent, approval or authorization of, or declaration,
filing or registration with, any
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Governmental Entity or any third party is required to be made or obtained by
Parent or Merger Sub in connection with the execution, delivery and performance
by Parent or Merger Sub of this Agreement and the consummation of the
transactions contemplated hereby.
3.5 No Finders or Brokers. Neither Parent nor Merger Sub has
entered into any agreement, arrangement or understanding with any Person which
could result in the obligation to pay any finder's fee, brokerage commission,
advisory fee or similar payment in connection with this Agreement or the
transactions contemplated hereby.
3.6 Capitalization. The authorized capital stock of Parent
consists of 80,000,000 shares of Parent Common Stock, $.01 par value and
10,000,000 shares of blanket preferred stock, par value of $.01 per share. As of
March 31, 2000: (1) 44,315,610 shares of Parent Common Stock are issued and
outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable; (2) 11,836,123 shares of Parent Common Stock are reserved for
future issuance upon exercise of options granted by Parent; and (3) 239,669
shares of Parent Common Stock are reserved for future issuance upon exercise of
warrants granted by Parent.
3.7 Merger Consideration. The Parent Common Stock, when issued
and delivered in accordance with the terms and provisions of this Agreement,
will be duly authorized and validly issued, fully paid and non-assessable, and
issued in compliance with all applicable federal and state securities laws.
3.8 Securities and Exchange Commission Filings; Financials.
(a) Since January 1, 1998, Parent has timely filed on
XXXXX all forms, reports, statements and documents required to be filed with the
SEC (collectively, the "Parent SEC Reports"), each of which has complied in form
in all material respects with the applicable requirements of the Securities Act
or the Exchange Act, as applicable, each as in effect on the date so filed.
(b) Each of the financial statements contained in the
Parent SEC Reports has been prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may otherwise be
indicated in the notes thereto) and each presents fairly, in all material
respects, the financial position of Parent as at the respective dates thereof
and the results of its operations and cash flow position for the periods
indicated.
3.9 Full Disclosure. The representations and warranties made by
the Parent and contained in the Parent SEC Reports, when taken together, do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements so made, in light of the circumstances
under which they were made, not misleading.
ARTICLE IV
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COVENANTS
4.1 Exclusivity. During the period from the date of this
Agreement to the Closing Date, Company shall not take any action to, directly or
indirectly, encourage, initiate or engage in discussions or negotiations with,
or provide any information to, any Person, other than Parent, concerning any
purchase of the Company Common Stock or any merger, sale of substantial assets
or similar transaction involving Company.
4.2 Cooperation/Further Assurances.
(a) Each of the parties hereto hereby agrees to fully
cooperate with the other parties hereto in preparing and filing any notices,
applications, reports and other instruments and documents which are required by,
or which are desirable in the reasonable opinion of any of the parties hereto,
or their respective legal counsel, in respect of, any statute, rule, regulation
or order of any governmental or administrative body in connection with the
transactions contemplated by this Agreement.
(b) Each of the parties hereto hereby further agrees to
execute, acknowledge, deliver, file and/or record, or cause such other parties
to the extent permitted by law to execute, acknowledge, deliver, file and/or
record such other documents as may be required by this Agreement and as Parent,
Merger Sub or Company may reasonably require in order to document and carry out
the transactions contemplated by this Agreement.
4.3 Registration Statement; Rule 144 Reporting.
(a) Parent will use its reasonable best efforts to
register all shares to be issued hereunder with the SEC as soon as practicable
on the next Form S-3 filed by Parent. All registration obligations of Parent
under this Agreement are limited to registrations permitted on Form S-3, if
available. It is anticipated that a registration statement will be filed within
thirty (30) days after the Closing Date. All registration expenses, including,
without limitation, all registration and filing fees, printing expenses,
reasonable fees and disbursements of a single special counsel for the Company
stockholders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration, shall be paid by Parent. Each
Company stockholder shall pay all underwriting discounts and selling commissions
applicable to the sale of his shares pursuant to any such registration.
(b) With a view to making available to the Company
stockholders the benefits of certain rules and regulations of the SEC which may
permit the sale of the shares of Parent Common Stock acquired under this
Agreement to the public without registration, Parent agrees to use its
reasonable best efforts to:
(i) Make and keep public information available, as
those terms are understood and defined in SEC Rule 144 or any similar or
analogous rule promulgated under the Securities Act; and
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(ii) File with the SEC, in a timely manner, all
reports and other documents required of Parent under the Exchange Act.
ARTICLE V
CONDITIONS OF CLOSING
5.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of the parties hereto to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Litigation. No order of any court or administrative
agency shall be in effect which restrains or prohibits the transactions
contemplated hereby, and no claim, suit, action, inquiry, investigation or
proceeding in which it will be, or it is, sought to restrain, prohibit or change
the terms of or obtain damages or other relief in connection with this Agreement
or any of the transactions contemplated hereby, shall have been instituted or
threatened by any person or entity, and which, upon the advice of counsel to any
of the parties hereto (based on the reasonable likelihood of success and
material consequences of such claim, suit, action, inquiry or proceeding), makes
it inadvisable to proceed with the consummation of such transactions.
(b) Vote. The Merger contemplated hereby shall have been
approved and adopted by the requisite vote of the holders of the outstanding
shares of Company Capital Stock entitled to vote thereon at the stockholders
meeting.
(c) Merger Certificate. Confirmation, in the form
satisfactory to the parties hereto, from the State of Delaware and the State of
Michigan or a filing service (jointly chosen by the parties hereto) that the
Certificate of Merger of Company with and into Merger Sub has been filed with
the Secretary of State of Delaware and with the State of Michigan, together with
a copy of the executed form of the merger agreement or plan of merger, as
applicable.
(d) Consents. All consents, waivers, approvals, licenses
and authorizations by third parties and governmental and administrative
authorities (and all amendments or modifications to existing agreements with
third parties) required as a precondition to the performance by either Parent,
Merger Sub or Company of their respective obligations hereunder and under any
agreement delivered pursuant hereto shall have been duly obtained and shall be
in full force and effect.
(e) Date of Consummation. The Merger shall have been
consummated on or prior to June 30, 2000, or such later date as the parties
shall agree by a written instrument signed by all of them.
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5.2 Conditions to the Obligation of Company to Effect the Merger.
The obligation of Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Each of Parent and Merger Sub shall have performed in
all material respects its respective obligations under this Agreement required
to be performed by either or both of them on or prior to the Effective Time
pursuant to the terms hereof.
(b) All representations or warranties of Parent and Merger
Sub in this Agreement which are qualified with respect to a material adverse
effect or materiality shall be true and correct, and all such representations or
warranties that are not so qualified shall be true and correct in all material
respects, in each case as if such representation or warranty was made as of the
Effective Time, except to the extent that any such representation or warranty is
made as of a specified date, in which case such representation or warranty shall
have been true and correct as of such specified date.
(c) Since the date of this Agreement, there shall not have
been any material adverse change in the financial condition, results of
operations, assets, properties, liabilities, business or prospects of Parent.
(d) Each of Parent and Merger Sub shall have delivered to
Company a certificate dated the Effective Time and executed by their respective
Chairman of the Board, President or Vice President to the effect set forth in
paragraphs (a), (b) and (c) of this Section 5.2.
(e) Each of Parent and Merger Sub shall have delivered to
Company a certificate of the secretary of such party, setting forth a copy of
their respective Certificates of Incorporation, resolutions adopted by the Board
of Directors approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, together with a signature
and incumbency certificate.
(f) Employment Agreements between Parent and each of Xxxx
Xxxxx and Xxxxx Xxxxx.
(g) Noncompetition Agreements between Parent and each of
Xxxx Xxxxx and Xxxxx Xxxxx.
(h) Escrow Agreement among Parent, Merger Sub, the Seidls,
the other primary shareholders, namely, Arbor Venture Partners and Longinus
Private Equities I (collectively with the Seidls, the "Primary Shareholders")
and Greater Bay Trust Company as of the Closing Date, with the remaining
shareholders becoming signatories to the Escrow Agreement or providing powers of
attorney naming one or more of the Primary Shareholders as their attorney in
fact in connection with the Escrow Agreement within thirty (30) days of the
Closing Date.
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(i) Company and the Seidls shall have received from
Xxxxxx Xxxxxx LLP, counsel to the Parent, an opinion dated the Effective Time in
the form reasonably agreed to by the parties hereto.
(i) Without limitation by specific enumeration of
the foregoing, all other documents reasonably required to consummate the
transactions contemplated herein.
5.3 Conditions to Obligations of Parent and Merger Sub to Effect
the Merger. The obligations of Parent and Merger Sub to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Company shall have performed in all material respects
each of its obligations under this Agreement required to be performed by it on
or prior to the Effective Time pursuant to the terms hereof.
(b) All representations or warranties of Company in this
Agreement which are qualified with respect to a Material Adverse Effect or
materiality shall be true and correct, and all representations or warranties
that are not so qualified shall be true and correct in all material respects, in
each case as if such representation or warranty were made as of the Effective
Time except to the extent that any such representation or warranty is made as of
a specified date, in which case such representation or warranty shall have been
true and correct as of such specified date.
(c) Since the date of this Agreement, there shall not have
been any material adverse change in the financial condition, results of
operations, assets, properties, liabilities, business or prospects of Company.
(d) Company shall have delivered to Parent and Merger Sub
a certificate of its Chairman of the Board, President or Vice President to the
effect set forth in paragraphs (a), (b) and (c) to this Section 5.3.
(e) Company shall have delivered to Parent and Merger Sub
a certificate of the secretary of Company, setting forth a copy of its
Certificate of Incorporation, By-laws and the resolutions having been adopted by
the Board of Directors approving the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, together with a
signature and incumbency certificate.
(f) Parent shall have received from Xxxxxx, Xxxxxxx and
Xxxxxxx, LLP, counsel to Company, an opinion dated the Effective Time in the
form reasonably agreed to by the parties hereto.
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(g) Company shall have delivered to Parent a Certificate of Good
Standing for the Company issued by the Corporation, Securities and Land
Development Bureau of the State of Michigan, and by the Secretary of State of
each state in which the company is qualified to transact business, such
certificates to be issued at a date not earlier than ten (10) days prior to the
Closing Date.
(h) No later than 30 days after the Closing Date, a Tax Clearance
Certificate for the Company issued by the Michigan Department of Treasury, and
by the taxing authority of each state in which the Company is qualified to do
business, evidencing the filing of all tax reports and the payment in full by
the Company of income, sales and use taxes imposed by such states as of the date
of the applicable tax good standing certificate.
(i) The stock books, stock ledgers, minute books and for the
Company; and
(j) All necessary consents, approvals and estoppel letters or
acceptable alternate arrangements with respect thereto.
(k) Employment Agreements between Parent and each of Xxxx Xxxxx
and Xxxxx Xxxxx.
(l) Noncompetition Agreements between Parent and each of Xxxx
Xxxxx and Xxxxx Xxxxx.
(m) Escrow Agreement among the Company, the Primary Shareholders
(as defined in Section 5.2(h)) and Greater Bay Trust Company as of the Closing
Date, with the remaining shareholders becoming signatories to the Escrow
Agreement or providing powers of attorney naming one or more of the Primary
Shareholders as their attorney in fact in connection with the Escrow Agreement
within thirty (30) days of the Closing Date.
(n) Without limitation by specific enumeration of the foregoing,
all other documents reasonably required to consummate the transactions
contemplated herein.
ARTICLE VI
TERMINATION OF AGREEMENT
6.1 Termination of Agreement. This Agreement may be terminated
and abandoned at any time prior to the Closing:
(a) By mutual consent of Parent and the Seidls;
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(b) By Parent or the Seidls if, without fault of such terminating
party, the Closing shall not have been consummated on or before June 30, 2000.
(c) By Parent if any of the Company's stockholders has exercised
and perfected dissenters rights with respect to the Merger; or
(d) By Company if the Average Per-Share Price (as defined in
Section 1.6(a)(i) above) is less than $4.00.
6.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 6.1, written notice thereof shall be promptly
given by the terminating party to the other parties and thereafter this
Agreement shall forthwith become void, and there shall be no liability or
obligation on the part of Parent, Merger Sub or Company or any of their
respective Affiliates, except that nothing herein will relieve any party from
liability for any breach of any agreement or covenant herein, and if either
Parent or Company terminates this Agreement pursuant to a breach of the
representations by the other party, the breaching party shall pay all third
party costs and expenses incurred by the non-breaching party and its Affiliates
in connection with this Agreement and the transactions contemplated hereunder.
ARTICLE VII
INDEMNIFICATION
7.1 Survival; Right to Indemnification Not Affected By Knowledge.
All representations, warranties, covenants, and obligations of Company in this
Agreement, the Disclosure Schedule, and any certificate or document delivered
pursuant to this Agreement will survive the Closing for a period of twelve (12)
months for all stockholders and an additional twelve (12) months for the Seidls.
The right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, by Parent with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver by Parent of any condition based
on the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
7.2 Indemnification and Payment of Damages. The Company and the
Seidls ("Indemnifying Parties") will indemnify and hold harmless Parent, Merger
Sub and their representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons" ) for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with any breach of any representation,
warranty, covenant, or obligation made by Indemnifying
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Parties in this Agreement, the Disclosure Schedule, or any other certificate or
document delivered by Company pursuant to this Agreement.
7.3 Limitations on Amount. Indemnifying Parties will have no
liability under this Section 7 until the total of all Damages with respect to
such matters exceeds $25,000, after which Parent may recover the amount of
damages from the first dollar of damages incurred by Parent. The total amount of
indemnification permitted under this Section 7 shall be limited to: (i) for all
Company stockholders excluding the Seidls, the Indemnity Escrow Shares
applicable to such stockholders, and (ii) for the Seidls, (A) for the first
twelve (12) months following the Closing Date, one hundred percent (100%) of the
Merger Consideration received by the Seidls ("Xxxxx Consideration") for Damages
relating to claims arising in connection with Sections 2.2, 2.14 and 2.15(a)
("Primary Indemnification Claims") and ten percent (10%) of the Xxxxx
Consideration for any other claims, and (B) for the second twelve (12) months
following the Closing Date, fifty percent (50%) of the Xxxxx Consideration for
Damages relating to the Primary Indemnification Claims only.
7.4 Procedure for Indemnification - Third-Party Claims.
(a) Promptly after receipt by an Indemnified Party of
notice of any Threatened Proceeding against it or the commencement of any
Proceeding against it, such Indemnified Party will, if a claim is to be made
against the Indemnifying Parties under this Article VII, give notice to the
Indemnifying Parties of the commencement of such claim, but the failure to
notify the Indemnifying Parties will not relieve the Indemnifying Parties of any
liability that it may have to any Indemnified Party, except to the extent that
the Indemnifying Parties demonstrate that the defense of such action is
prejudiced by the Indemnified Parties' failure to give such notice. A claim,
Proceeding, dispute, action, or other matter will be deemed to have been
"Threatened" if any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a prudent person to
conclude that such a claim, Proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued in the future. For
purposes of this Agreement, "Proceeding" shall mean any action, arbitration,
audit, hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any governmental body or arbitrator.
(b) If any Proceeding referred to in Section 7.4(a) is
brought against an Indemnified Party and it gives notice to the Indemnifying
Parties of the commencement of such Proceeding, the Indemnifying Parties will be
entitled to participate in such Proceeding and, to the extent that they wish
(unless (i) the Indemnifying Parties are also parties to such Proceeding and the
Indemnified Party determines in good faith that joint representation would be
inappropriate, or (ii) the Indemnifying Parties fail to provide reasonable
assurance to the Indemnified Party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such Proceeding), unless
the claim involves Taxes, to assume the defense of such Proceeding with
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counsel satisfactory to the Indemnified Party and, after notice from the
Indemnifying Parties to the Indemnified Party of its election to assume the
defense of such Proceeding, the Indemnifying Parties will not, as long as it
diligently conducts such defense, be liable to the Indemnified Party under this
Section 7 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
Indemnified Party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the Indemnifying Parties assume the
defense of a Proceeding, (i) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within the scope of
and subject to indemnification; (ii) no compromise or settlement of such claims
may be effected by the Indemnifying Parties without the Indemnified Party's
consent unless (A) there is no finding or admission of any violation of any law,
regulation or statute or any violation of the rights of any person or entity and
no effect on any other claims that may be made against the Indemnified Party,
and (B) the sole relief provided is monetary damages that are paid in full by
the Indemnifying Parties; and (iii) the Indemnified Party will have no liability
with respect to any compromise or settlement of such claims effected without its
consent. If notice is given to the Indemnifying Parties of the commencement of
any Proceeding and the Indemnifying Parties do not, within ten business days
after the Indemnified Party's notice is given, give notice to the Indemnified
Party of their election to assume the defense of such Proceeding, the
Indemnifying Parties will be bound by any determination made in such Proceeding
or any compromise or settlement effected by the Indemnified Party.
(c) Notwithstanding the foregoing, if an Indemnified Party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the Indemnified Party may, by notice to the Indemnifying Parties,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the Indemnifying Parties will not be bound by any determination of a Proceeding
so defended or any compromise or settlement effected without their consent
(which may not be unreasonably withheld or delayed).
(d) Indemnifying Parties hereby consent to the
non-exclusive jurisdiction of any court in which a Proceeding is brought against
any Indemnified Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on Indemnifying Parties with
respect to such a claim anywhere in the world.
7.5 Procedure for Indemnification Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the Indemnifying Parties.
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ARTICLE VIII
MISCELLANEOUS
8.1 Further Actions. From time to time, as and when requested by
any party hereto, each other party shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as the requesting party may
reasonably deem necessary or desirable to carry out the intent and purposes of
this Agreement, to transfer, assign and deliver the Company Common Stock to
Merger Sub and its successors and assigns effective as of the Closing (or to
evidence the foregoing) and to consummate and give effect to the other
transactions, covenants and agreements contemplated hereby.
8.2 Expenses. Except as otherwise specifically provided herein,
Company, Parent and Merger Sub shall each bear their own legal fees and other
costs and expenses with respect to the negotiation, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereunder.
Except as otherwise set forth in Section 1.8 above, Parent shall pay all sales,
transfer and documentary taxes and other expenses incident to the exchange of
Company Common Stock or Company Preferred Debt for Parent Common Stock. This
Section shall not limit Parent's right to allocate costs and expenses to the
Surviving Corporation after the Closing.
8.3 Entire Agreement. This Agreement, which includes the
Appendix, the Schedules and the Exhibits hereto and the other documents,
agreements and instruments executed and delivered pursuant to this Agreement,
contains the entire agreement between the parties hereto with respect to the
transactions contemplated by this Agreement and supersedes all prior
arrangements or understandings with respect thereto, including, without
limitation, any and all letters of intent among the parties hereto.
8.4 Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
8.5 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and shall be sufficiently
given if (a) delivered personally or (b) sent by registered or certified mail,
postage prepaid, or (c) sent by overnight courier with a nationally recognized
courier, or (d) sent via facsimile confirmed in writing in any of the foregoing
manners, as follows:
If to Company: Genitor Corporation
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx
Facsimile: (000) 000-0000
If to the Seidls: F. Andy and Xxxxx X. Xxxxx
0000 Xxxxx Xxxxxxxxxx
-00-
00
Xxx Xxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxxxx X. Xxxxx
Xxxxxx, Xxxxxxx & Xxxxxxx LLP
34th Floor, 000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
If to Parent StarBase Corporation
Or Merger Sub: 0 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxx, XX 00000
Attention: Chief Financial Officer and Corporate Counsel
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
If sent by mail, notice shall be considered delivered five (5) business days
after the date of mailing, and if sent by any other means set forth above,
notice shall be considered delivered upon receipt thereof. Any party may by
notice to the other parties change the address to which notice or other
communications to it are to be delivered or mailed.
8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California (other than the
choice of law principles thereof). Any action, suit or other proceeding
initiated by Company or Parent against any other party under or in connection
with this Agreement may be brought in any Federal or state court in the State of
California having jurisdiction over the subject matter thereof as the party
bringing such action, suit or proceeding shall elect. Company, the Seidls and
Parent hereby submit themselves to the jurisdiction of any such court and agree
that service of process on them in any such action, suit or proceeding may be
effected by the means by which notices are to be given to it under this
Agreement.
8.7 Assignability. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be assignable by any party without
the written consent of the other parties and any such purported assignment by
any party without such consent shall be void, except that:
(a) Any or all rights of Parent and Merger Sub to receive the
performance of the obligations of Company hereunder and rights to assert claims
against Company in respect of any inaccuracy in or breach of any
representations, warranties or covenants of Company hereunder, may be assigned
by Parent and Merger Sub to a direct or indirect subsidiary of Parent, and
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(b) Parent and Merger Sub may assign to any bank, insurance
company or other financial institution providing financing or extending credit
to Parent, Merger Sub or Company any or all of its rights to assert claims
against Company in respect of any inaccuracy in or breach of representations,
warranties or covenants under this Agreement.
8.8 Waivers and Amendments. Any amendment or supplementation of
this Agreement shall be effective only if in writing signed by each of the
parties hereto. Any waiver of any term or condition of this Agreement shall be
effective only if in writing signed by the party giving the waiver. A waiver of
any breach or failure to enforce any of the terms or conditions of this
Agreement shall not in any way affect, limit or waive a party's rights hereunder
at any time to enforce strict compliance thereafter with every term or condition
of this Agreement, except to the extent such future rights are specifically
included within the scope of such written waiver.
8.9 Third Party Rights. Notwithstanding any other provision of
this Agreement, and except as expressly provided in Section 7 hereof or as
permitted pursuant to Section 8.7 hereof, this Agreement shall not create
benefits on behalf of any shareholder or employee of Parent, Merger Sub or
Company, or any other Person (including without limitation any broker or
finder), and this Agreement shall be effective only as between the parties
hereto, their successors and permitted assigns.
8.10 Public Announcements. Parent, Merger Sub and Company will
consult with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement, and neither Parent, Merger Sub nor Company shall issue any such press
release or make any such public statement without the prior approval of the
other parties both as to the making of such release or statement and as to the
form and content thereof, except to the extent that such party is advised by
counsel, in good faith, that such release or statement is required as a matter
of law.
8.11 Severability. If any term or provision of this Agreement or
the application thereof to any circumstance shall, in any jurisdiction, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable such term or provision in any other
jurisdiction, the remaining terms and provisions of this Agreement or the
application of such terms and provisions to circumstances other than those as to
which it is held invalid or unenforceable.
8.12 Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement. Facsimile signatures shall be treated as if they were originals.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed and delivered
this Agreement as of the date first above written.
"Merger Sub"
GENITOR ACQUISITION CORP
By:_________________________________________
Name:
Title:
"Parent"
STARBASE CORPORATION
By:_________________________________________
Name:
Title:
"Company"
GENITOR CORPORATION.
By:_________________________________________
Name:
Title:
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APPENDIX A
DEFINITIONS
Capitalized terms in this Agreement shall have the meanings
ascribed to them in this Appendix A unless such terms are defined elsewhere in
this Agreement:
Capital Lease: A contract for the lease of property which
possesses the characteristics of a purchase and is reflected as a capital lease
on the Financial Statements.
Governmental Entity: Any nation or any state, commonwealth,
territory, possession or tribe and any political subdivision, courts,
departments, commissions, boards, bureaus, agencies or other instrumentalities
of any of the foregoing.
Person: An individual, corporation, partnership, joint venture,
trust or unincorporated organization or association or other form of business
enterprise or a Governmental Entity.
Subsidiary: With respect to any Person, any other Person whose
voting securities or other ownership interests directly or indirectly are owned
by such Person.
Other Definitions: The following terms have the meanings ascribed
to them in the Sections noted:
Section
Agreement Recitals
Affiliated Party 2.20
Audited Financial Statements 4.2
Authorizations 2.9(a)
Closing 6.1
Closing Date 6.1
COBRA 2.14(f)
Code 2.14(c)
Company Recitals
Company Common Stock Recitals
Company Documents 2.4
Company Reports 2.8
Contracts 2.8(b)
36
Damages 7.2
Employee Benefit Plan 2.15(b)
Employment Agreement 5.1(j)
Environmental Law 2.16(b)
ERISA 2.14(a)
Hazardous Materials 2.16(c)
Intellectual Property 2.11
IRC 2.14(b)
Lien 2.5
Laws 2.7
Licenses 2.11
Material Adverse Effect 2.5
Merger Consideration 1.6(a)
Parent Shares Recitals
PBGC 2.15(b)
Permits 2.19
Primary Indemnification Claims 7.3
Primary Shareholders 5.2(h)
Xxxxx Consideration 7.3
Xxxxx Escrow Shares 1.9
Seidls 1.9
Systems 2.12
Tax Authority 2.14(a)
Tax Return 2.14(a)
