AGREEMENT AND PLAN OF MERGER
MARCH 10, 2002
AMONG
BSQUARE CORPORATION,
BSQUARE SAN DIEGO CORPORATION,
INFOGATION CORPORATION
AND
KENT PU
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER....................................................................................... 1
1.1 Effective Time of the Merger......................................................................... 1
1.2 Closing.............................................................................................. 2
1.3 Effects of the Merger................................................................................ 2
1.4 Directors and Officers............................................................................... 2
ARTICLE II CONVERSION OF SECURITIES......................................................................... 2
2.1 Conversion of Capital Stock.......................................................................... 2
2.2 Escrow Agreement..................................................................................... 6
2.3 Appraisal Rights..................................................................................... 7
2.4 Exchange of Certificates; No Further Ownership Rights in InfoGation Capital Stock.................... 8
2.5 Distributions with Respect to Unexchanged Shares..................................................... 9
2.6 No Fractional Shares................................................................................. 9
2.7 Tax Consequences..................................................................................... 9
2.8 Restricted Securities................................................................................ 10
2.9 Deductions; Withholdings............................................................................. 10
2.10 Further Action....................................................................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INFOGATION..................................................... 10
3.1 Organization of InfoGation........................................................................... 10
3.2 InfoGation Capital Structure......................................................................... 11
3.3 Authority; No Conflict; Required Filings and Consents................................................ 12
3.4 Financial Statements; Absence of Undisclosed Liabilities............................................. 13
3.5 Tax Matters.......................................................................................... 14
3.6 Absence of Certain Changes or Events................................................................. 16
3.7 Title and Related Matters............................................................................ 18
3.8 Proprietary Rights................................................................................... 18
3.9 Employee Benefit Plans............................................................................... 22
3.10 Bank Accounts........................................................................................ 24
3.11 Contracts............................................................................................ 24
3.12 Orders, Commitments and Returns...................................................................... 26
3.13 Compliance With Law.................................................................................. 26
3.14 Labor Difficulties; No Discrimination................................................................ 26
3.15 Trade Regulation..................................................................................... 27
3.16 Insider Transactions................................................................................. 27
3.17 Employees, Independent Contractors and Consultants................................................... 28
3.18 Insurance............................................................................................ 28
3.19 Accounts Receivable.................................................................................. 28
3.20 Litigation........................................................................................... 28
3.21 Governmental Authorizations and Regulations.......................................................... 29
3.22 Subsidiaries......................................................................................... 29
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3.23 Compliance with Environmental Requirements........................................................... 29
3.24 Corporate Documents.................................................................................. 29
3.25 No Brokers........................................................................................... 30
3.26 Customers and Suppliers.............................................................................. 30
3.27 InfoGation Action.................................................................................... 30
3.28 Privacy Laws and Policies Compliance................................................................. 30
3.29 Disclosure........................................................................................... 30
3.30 Disclosure to Shareholders........................................................................... 30
3.31 Vote Required........................................................................................ 31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BSQUARE AND SUB................................................ 31
4.1 Organization of BSQUARE and Sub...................................................................... 31
4.2 Valid Issuance of BSQUARE Common Stock............................................................... 31
4.3 Authority; No Conflict; Required Filings and Consents................................................ 31
4.4 Commission Filings; Financial Statements............................................................. 32
4.5 Compliance with Laws................................................................................. 33
4.6 Interim Operations of Sub............................................................................ 33
4.7 Disclosure........................................................................................... 33
4.8 No Litigation........................................................................................ 34
ARTICLE V PRECLOSING COVENANTS OF INFOGATION............................................................... 34
5.1 Approval of InfoGation Shareholders.................................................................. 34
5.2 Advice of Changes.................................................................................... 34
5.3 Operation of Business................................................................................ 34
5.4 Access to Information................................................................................ 37
5.5 Satisfaction of Conditions Precedent................................................................. 38
5.6 Other Negotiations................................................................................... 38
5.7 Budget and Updated Financial Information............................................................. 38
5.8 Certain Employee Benefits Matters.................................................................... 38
ARTICLE VI PRECLOSING AND OTHER COVENANTS OF BSQUARE AND SUB................................................ 38
6.1 Advice of Changes.................................................................................... 38
6.2 Approval of InfoGation Shareholders.................................................................. 39
6.3 Reservation of BSQUARE Common Stock.................................................................. 39
6.4 Satisfaction of Conditions Precedent................................................................. 39
6.5 Nasdaq National Market Listing....................................................................... 39
6.6 Registration Rights.................................................................................. 39
6.7 Employee Benefit Matters............................................................................. 39
6.8 Attorneys' Fees...................................................................................... 40
ARTICLE VII OTHER AGREEMENTS................................................................................. 40
7.1 Confidentiality...................................................................................... 40
7.2 No Public Announcement............................................................................... 40
7.3 Regulatory Filings; Consents; Reasonable Efforts..................................................... 40
7.4 Further Assurances................................................................................... 40
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7.5 Escrow Agreement..................................................................................... 41
7.6 Blue Sky Laws........................................................................................ 41
7.7 Other Filings........................................................................................ 41
7.8 Availability of BSQUARE's Public Information......................................................... 41
7.9 Qualification as Reorganization...................................................................... 41
ARTICLE VIII CONDITIONS TO MERGER............................................................................. 41
8.1 Conditions to Each Party's Obligation to Effect the Merger........................................... 41
8.2 Additional Conditions to Obligations of BSQUARE and Sub.............................................. 42
8.3 Additional Conditions to Obligations of InfoGation................................................... 44
ARTICLE IX TERMINATION AND AMENDMENT........................................................................ 44
9.1 Termination.......................................................................................... 44
9.2 Effect of Termination................................................................................ 45
9.3 Fees and Expenses.................................................................................... 45
ARTICLE X ESCROW AND INDEMNIFICATION....................................................................... 45
10.1 Indemnification...................................................................................... 45
10.2 Escrow Fund.......................................................................................... 46
10.3 Escrow Period........................................................................................ 46
10.4 Claims Upon Escrow Fund.............................................................................. 46
10.5 Valuation............................................................................................ 47
10.6 Objections to Claims................................................................................. 47
10.7 Resolution of Conflicts.............................................................................. 47
10.8 Shareholders' Agent.................................................................................. 48
10.9 Actions of the Shareholders' Agent................................................................... 48
10.10 Claims............................................................................................... 49
10.11 Limitation of Remedies............................................................................... 49
ARTICLE XI MISCELLANEOUS.................................................................................... 49
11.1 Survival of Representations and Covenants............................................................ 49
11.2 Notices.............................................................................................. 50
11.3 Interpretation....................................................................................... 51
11.4 Counterparts......................................................................................... 51
11.5 Entire Agreement; No Third-Party Beneficiaries....................................................... 51
11.6 Governing Law........................................................................................ 51
11.7 Assignment........................................................................................... 51
11.8 Amendment............................................................................................ 51
11.9 Extension; Waiver.................................................................................... 52
11.10 Specific Performance................................................................................. 52
EXHIBITS
EXHIBIT A - ESCROW AGREEMENT
EXHIBIT B - INVESTOR REPRESENTATION STATEMENT
EXHIBIT C - REGISTRATION RIGHTS AGREEMENT
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 10, 2002 (this
"Agreement"), is entered into by and among BSQUARE Corporation, a Washington
corporation ("BSQUARE"), BSQUARE San Diego Corporation, a Washington corporation
and a wholly owned subsidiary of BSQUARE ("Sub"), InfoGation Corporation, a
Delaware corporation ("InfoGation") and Kent Pu.
RECITALS
A. Each of the boards of directors of BSQUARE, Sub and InfoGation
have deemed it advisable and in the best interests of each corporation and its
respective shareholders that BSQUARE and InfoGation combine in order to advance
the long-term business interests of BSQUARE and InfoGation;
B. The combination of BSQUARE and InfoGation shall be effected
according to the terms, but subject to the conditions, set forth in this
Agreement through a transaction pursuant to which, among other things, (1)
InfoGation will merge with and into Sub (the "Merger"), (2) Sub will survive the
Merger and (3) the stockholders of InfoGation will become shareholders of
BSQUARE;
C. For Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
D. This Agreement has been adopted and approved by the respective
boards of directors of BSQUARE, Sub and InfoGation.
NOW, THEREFORE, in consideration of the foregoing recitals and the
respective representations, warranties, covenants and agreements set forth
below, and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger.
(a) Subject to the provisions of this Agreement, (i) articles
of merger (the "Washington Articles of Merger"), in such mutually acceptable
form as is required by the relevant provisions of the Washington Business
Corporation Act ("Washington Law"), shall be duly executed and delivered by the
Surviving Corporation (as defined in Section 1.3(a)) and thereafter delivered to
the Secretary of State of the State of Washington for filing on the Closing Date
and (ii) a certificate of merger (the "Delaware Certificate of Merger") in such
mutually acceptable form as is required by the relevant provisions of the
Delaware General Corporation
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Law ("Delaware Law") shall be duly executed and delivered by the Surviving
Corporation and thereafter delivered to the Secretary of State of the State of
Delaware for filing on the Closing Date.
(b) The Merger shall become effective upon the due and valid
filing of the Washington Articles of Merger with the Secretary of State of the
State of Washington or at such time thereafter as is provided in the Washington
Articles of Merger (the "Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") will take place
at 10:00 a.m., Pacific Daylight time, on a date (the "Closing Date") to be
specified by BSQUARE and InfoGation, which shall be no later than the second
business day after satisfaction or waiver of the latest to occur of the
conditions set forth in Article VIII, at the offices of Summit Law Group, PLLC,
0000 Xxxxxxxx Xxxxxx X., Xxxxx 000, Xxxxxxx, Xxxxxxxxxx 00000 unless another
date, time or place is agreed to in writing by BSQUARE and InfoGation.
1.3 Effects of the Merger.
(a) At the Effective Time (i) InfoGation shall be merged with
and into Sub, and the separate existence of InfoGation shall cease (Sub and
InfoGation are sometimes referred to herein as the "Constituent Corporations,"
and Sub following consummation of the Merger is sometimes referred to herein as
the "Surviving Corporation"), (ii) the articles of incorporation of Sub as in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Surviving Corporation and (iii) the bylaws of Sub as in
effect immediately prior to the Effective Time shall become the bylaws of the
Surviving Corporation.
(b) At the Effective Time, the effect of the Merger shall be
as provided in this Agreement and the applicable provisions of Washington Law
and Delaware Law. Without limiting the generality of the foregoing, at and after
the Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises, and be subject to all the restrictions and
duties of each of the Constituent Corporations.
1.4 Directors and Officers. The directors of Sub immediately prior to
the Effective Time shall become the directors of the Surviving Corporation, each
to hold office in accordance with the articles of incorporation and bylaws of
the Surviving Corporation, and the officers of Sub immediately prior to the
Effective Time shall become the officers of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and
qualified.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of the
capital stock of Sub or the holder of any shares of the capital stock of
InfoGation, including, without limitation, shares of Common Stock, $0.01 par
value, of InfoGation ("InfoGation Common Stock"), shares of Series B-1 Preferred
Stock, $0.01 par value, of InfoGation ("InfoGation Series B-1 Preferred Stock"),
shares of Series B-2 Preferred Stock, $0.01 par value, of InfoGation
("InfoGation Series B-2 Preferred Stock"), shares of Series C Preferred Stock,
$0.01 par value of InfoGation
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("InfoGation Series C Preferred Stock, and, together with the InfoGation Series
B-1 Preferred Stock and the InfoGation Series B-2 Preferred Stock, the
"InfoGation Preferred Stock"), the capital stock of the Constituent Corporations
shall be treated as follows:
(a) Cancellation of BSQUARE-Owned and InfoGation-Owned Stock.
Any shares of InfoGation Capital Stock that are owned by BSQUARE, Sub,
InfoGation or any other direct or indirect wholly owned Subsidiary (as defined
below) of BSQUARE or InfoGation shall be canceled and retired and shall cease to
exist and no stock of BSQUARE or other consideration shall be delivered in
exchange. As used in this Agreement, "InfoGation Capital Stock" means any share
of InfoGation Common Stock, InfoGation Series B-1 Preferred Stock, InfoGation
Series B-2 Preferred Stock or InfoGation Series C Preferred Stock which is
issued and outstanding immediately prior to the Effective Time. As used in this
Agreement, the word "Subsidiary" means, with respect to any other party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization or a majority of the profit interests in
such other organization is directly or indirectly owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and one or
more of its Subsidiaries.
(b) Exchange Ratio.
(i) Subject to Sections 2.2, 2.3, 2.6 and 9.3 of
this Agreement, pursuant to this Agreement and InfoGation's certificate of
incorporation, each issued and outstanding share of InfoGation Capital Stock
(other than shares to be canceled in accordance with Section 2.1(a) and any
Dissenting Shares as defined in and to the extent provided in Section 2.3)
immediately prior to the Effective Time shall be converted into the right to
receive the following:
(A) Each share of InfoGation Common
Stock issued and outstanding immediately prior to the Effective Time shall cease
to be outstanding and shall be converted into and exchanged for the right to
receive 0.1541 shares of BSQUARE Common Stock (the "Common Stock Exchange
Ratio").
(B) Each share of InfoGation Series B-1
Preferred Stock shall be converted into and exchanged for the right to receive
(1) a cash payment equal to the fraction (a) having a numerator equal to
$1,000,000 and (b) having a denominator equal to the Fully Diluted Number of
Shares of InfoGation Series B-1 Preferred Stock (as defined below) (the "Series
B-1 Cash Consideration") plus (2) that number of shares of BSQUARE Common Stock
equal to the Series B-1 Exchange Ratio (as defined below) plus (3) that number
of shares of BSQUARE Common Stock and/or cash equal to the Series B-1 Preferred
Stock Earnout (as defined below). All such shares of InfoGation Series B-1
Preferred Stock when so converted shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of InfoGation Series B-1 Preferred
Stock shall cease to have any rights with respect thereto, except the right to
receive the
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Series B-1 Cash Consideration and the shares of BSQUARE Common Stock in
consideration therefor upon the surrender of such certificate in accordance with
Section 2.4, without interest. The "Series B-1 Exchange Ratio" shall be the
fraction (x) having a numerator equal to 278,324 and (y) having a denominator
equal to the Fully Diluted Number of Shares of InfoGation Series B-1 Preferred
Stock. The "Fully Diluted Number of Shares of InfoGation Series B-1 Stock" means
the aggregate number of shares of InfoGation Series B-1 Preferred Stock
outstanding immediately prior to the Effective Time. The "Series B-1 Preferred
Stock Earnout" shall be the fraction (x) having a numerator equal to 15% of any
quarterly license royalty revenue payments (for contracts with total license
royalty revenue of at least $20 per unit) received by BSQUARE from Clarion Co.,
Ltd. ("Clarion Co."), Clarion Corporation of America ("CCA") and/or any
Affiliates (as defined in Section 3.16) of Clarion Co. or CCA (collectively,
"Clarion"), in connection with licensing or similar arrangements with automobile
manufacturers or automobile parts manufacturers where such arrangements involve
the licensing by Clarion of InfoGation technology (the "Royalty Revenue
Payments"), which shall be made in the form of unregistered BSQUARE Common
Stock; provided, however, that in no event shall BSQUARE be required to issue
any additional shares of BSQUARE Common Stock pursuant to the Series B-1
Preferred Stock Earnout in the event that the sum of the aggregate number of
shares of BSQUARE Common Stock issued pursuant to the Series B-1 Preferred Stock
Earnout, when added to the number of shares of BSQUARE Common Stock previously
issued (or reserved for issuance) as consideration hereunder is equal to 19.9%
of the outstanding shares of BSQUARE Common Stock as of the Effective Time. Upon
the occurrence of such event, any remaining Royalty Revenue Payments shall be
paid in cash. The BSQUARE Common Stock to be delivered as payment for the
Royalty Revenue Payments shall be valued by determining the average closing
price of such stock over a 20-business-day period beginning 10 business days
before the end of each calendar quarter and ending 10 business days after the
end of the quarter to which the applicable Royalty Revenue Payments pertain, and
shall be made following BSQUARE's receipt from Clarion of 100% of the royalty
revenue payments owing to BSQUARE for such quarter and (y) having a denominator
equal to the Fully Diluted Number of Shares of InfoGation Series B-1 Preferred
Stock. Any such shares of BSQUARE Common Stock shall be delivered by or on
behalf of BSQUARE to the former holders of InfoGation Series B-1 Preferred Stock
within 30 calendar days after the receipt by BSQUARE from Clarion of 100% of the
royalty revenue payments owing to BSQUARE for such quarter. Notwithstanding the
foregoing, the Series B-1 Preferred Stock Earnout shall forever cease and
terminate on the earlier of (a) the date on which the holders of InfoGation B-1
Preferred Stock have received cash and/or shares of BSQUARE Common Stock with an
aggregate value of $3,000,000 (valued at the time of issuance) from the Series
B-1 Preferred Stock Earnout (and expressly excluding the BSQUARE Common Stock
paid pursuant to this Section 2.1(b)(i)(B)(2) above), or (b) five years from the
Effective Time.
(C) Each share of InfoGation Series B-2
Preferred Stock shall be converted into and exchanged for the right to receive
that number of shares of BSQUARE Common Stock equal to the Series B-2 Exchange
Ratio (as defined below). The "Series B-2 Exchange Ratio" shall be the fraction
(x) having a numerator equal to 205,632 and (y) having a denominator equal to
the Fully Diluted Number of Shares of InfoGation Series B-2 Preferred Stock. All
such shares of InfoGation Series B-2 Preferred Stock when so converted shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares of
InfoGation Series B-2 Preferred Stock shall cease to have any rights with
respect thereto, except the right to receive the shares of
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BSQUARE Common Stock in consideration therefor upon the surrender of such
certificate in accordance with Section 2.4, without interest. The "Fully Diluted
Number of Shares of InfoGation Series B-2 Stock" means the aggregate number of
shares of InfoGation Series B-2 Preferred Stock outstanding immediately prior to
the Effective Time.
(D) Each share of InfoGation Series C
Preferred Stock shall be converted into and exchanged for the right to receive
(1) a cash payment equal to the fraction (a) having a numerator equal to
$2,000,000 and (b) having a denominator equal to the Fully Diluted Number of
Shares of InfoGation Series C Preferred Stock (as defined below) (the "Series C
Cash Consideration" and, together with the Series B-1 Cash Consideration, the
"Cash Consideration") plus (2) that number of shares of BSQUARE Common Stock
equal to the Series C Exchange Ratio (as defined below). All such shares of
InfoGation Series C Preferred Stock when so converted shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of
InfoGation Series C Preferred Stock shall cease to have any rights with respect
thereto, except the right to receive the Series C Cash Consideration and the
shares of BSQUARE Common Stock in consideration therefor upon the surrender of
such certificate in accordance with Section 2.4, without interest. The "Series C
Exchange Ratio" shall be the fraction (x) having a numerator equal to 163,720
and (y) having a denominator equal to the Fully Diluted Number of Shares of
InfoGation Series C Stock. The "Fully Diluted Number of Shares of InfoGation
Series C Stock" means the aggregate number of shares of InfoGation Series C
Preferred Stock outstanding immediately prior to the Effective Time.
(ii) If, on or after the date of this Agreement
and prior to the Effective Time, the outstanding shares of BSQUARE Common Stock,
InfoGation Series B-1 Preferred Stock, InfoGation Series B-2 Preferred Stock or
InfoGation Series C Preferred Stock shall have been changed into a different
number of shares or a different class by reason of any reclassification, stock
split, stock dividend or stock combination, then the Common Stock Exchange
Ratio, the Series B-1 Exchange Ratio, the Series B-2 Exchange Ratio or the
Series C Exchange Ratio, as the case may be, shall be correspondingly adjusted.
(c) InfoGation Stock Options and Warrants.
(i) All options to purchase InfoGation Common
Stock (the "InfoGation Options") issued and outstanding under either the
InfoGation 1996 Stock Option Plan, as amended (the "InfoGation 1996 Option Plan"
and a "InfoGation Option Plan"), or the InfoGation 2001 Stock Option/Stock
Issuance Plan, as amended (the "InfoGation 2001 Option Plan" and a "InfoGation
Option Plan"), whether or not exercisable, whether or not vested, and whether or
not performance-based, shall remain outstanding following the Effective Time
subject to the provisions of this Section 2.1(c). Schedule 2.1(c) hereto sets
forth a true and complete list as of the date of this Agreement of all holders
of outstanding options under both the InfoGation 1996 Option Plan and the
InfoGation 2001 Option Plan, including the number of shares of InfoGation Common
Stock subject to each such option, the exercise or vesting schedule, the
exercise price per share and the term of each such option. On the Closing Date,
InfoGation shall deliver to BSQUARE an updated Schedule 2.1(c) hereto current as
of such date.
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(ii) At the Effective Time, the InfoGation
Options shall, by virtue of the Merger and without any further action on the
part of InfoGation or any holder of the InfoGation Options, be assumed by
BSQUARE in accordance with this Section 2.1(c). Each such InfoGation Option so
assumed by BSQUARE under this Agreement shall continue to have, and be subject
to, the same terms and conditions set forth in the InfoGation Option Plan
pursuant to which it was issued immediately prior to the Effective Time, except
that (i) such InfoGation Option will be exercisable for that number of whole
shares of BSQUARE Common Stock equal to the product of the number of shares of
InfoGation Common Stock that were issuable upon exercise of such InfoGation
Option immediately prior to the Effective Time multiplied by the Common Stock
Exchange Ratio and rounded down to the nearest whole number of shares of BSQUARE
Common Stock, and (ii) the per share exercise price for the shares of BSQUARE
Common Stock issuable upon exercise of such assumed option will be equal to the
quotient determined by dividing the exercise price per share of InfoGation
Common Stock at which such InfoGation Option was exercisable immediately prior
to the Effective Time by the Common Stock Exchange Ratio, rounded up to the
nearest whole cent.
(iii) InfoGation has not taken, and shall not
take, any action that would result in the accelerated vesting, exercisability or
payment of the InfoGation Options as a consequence of the execution of, or
consummation of the transactions contemplated by, this Agreement. Consistent
with the terms of the InfoGation 1996 Option Plan and the InfoGation 2001 Option
Plan and the documents governing the outstanding options under such InfoGation
Option Plans, the Merger will not terminate any of the outstanding InfoGation
Options or accelerate the vesting, exercisability or payment of such InfoGation
Options or the shares of BSQUARE Common Stock which will be subject to those
options upon Gumpdrop's assumption of the InfoGation Options in the Merger.
(iv) It is the intention of the parties that the
InfoGation Options assumed by BSQUARE following the Effective Time qualify as
incentive stock options as defined in Section 422 of the Code to the extent such
InfoGation Options qualified as incentive stock options prior to the Effective
Time. As soon as practicable after the Effective Time, BSQUARE will issue to
each person who, immediately prior to the Effective Time, was a holder of a
InfoGation Option under either of the InfoGation Option Plans, a written
document evidencing the foregoing assumption of such InfoGation Option by
BSQUARE.
(v) Without limiting the foregoing, effective
immediately prior to the Effective Time and contingent upon consummation of the
Merger, all outstanding InfoGation Warrants (as defined below), to the extent
not exercised prior to the Effective Time and excluding the InfoGation Options
not specifically assumed pursuant to this Section 2.1(c), shall terminate in
their entirety by virtue of the Merger and without any action on the part of
InfoGation, BSQUARE, Sub or the holder thereof. "InfoGation Warrants" shall mean
all warrants or other rights to acquire any shares InfoGation Capital Stock
outstanding immediately prior to the Effective Time, including, without
limitation, the Series B-2 Option (as defined below) and the InfoGation Series C
Preferred Stock Warrants (as defined below).
2.2 Escrow Agreement. At the Effective Time, BSQUARE will, on behalf of
the holders of InfoGation Series B-1 and Series C Preferred Stock entitled to
receive the Cash Consideration pursuant to Section 2.1 of this Agreement
(collectively the "Cash Consideration Stockholders")
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and on behalf of the holders of InfoGation Common Stock and InfoGation Series
B-1, Series B-2 and Series C Preferred Stock entitled to receive shares of
BSQUARE Common Stock pursuant to Section 2.1 of this Agreement (collectively the
"Stock Consideration Stockholders"), deposit in escrow $300,000 in cash (the
"Escrow Cash") and certificates (the "Escrow Shares") representing ten percent
(10%) of the total number of shares of BSQUARE Common Stock issuable pursuant to
Section 2.1 of this Agreement (the "Total Consideration Shares"). The Escrow
Cash shall be held in escrow for the benefit of the Cash Consideration
Stockholders in accordance with each such stockholder's Pro Rata Cash Portion
(as defined below). The "Pro Rata Cash Portion" shall mean, as to any
stockholder, that number equal to the fraction (a) having a numerator equal to
the aggregate Series B-1 Cash Consideration or Series C Cash Consideration, as
applicable, owing to such stockholder pursuant to Sections 2.1(b)(i)(B) or (D),
as applicable, and (b) having a denominator equal to 3,000,000 less any
Additional Fees (as defined in Section 9.3 of this Agreement). The Escrow Shares
shall be held in escrow and registered in the names of the Stock Consideration
Stockholders in accordance with each such stockholder's Pro Rata Stock Portion
(as defined below). The "Pro Rata Stock Portion" shall mean, as to any
stockholder, that number of shares equal to the fraction (a) having a numerator
equal to the aggregate number of shares of BSQUARE Capital Stock issuable to
such stockholder pursuant to Sections 2.1(b)(i)(A), (B), (C) or (D), as
applicable and (b) having a denominator equal to the Total Consideration Shares.
The Escrow Cash and Escrow Shares (collectively, the "Escrow Funds") deposited
into escrow pursuant to this Section 2.2 shall be held and applied pursuant to
the provisions of an escrow agreement in the form attached hereto as Exhibit A
(the "Escrow Agreement") to be executed pursuant to Section 7.5 of this
Agreement. The Escrow Funds shall be maintained in escrow for the purpose of
satisfying claims brought pursuant to Article X of this Agreement and for the
period of time set forth in Article X and the Escrow Agreement. No contribution
to the escrow shall be made in respect of any InfoGation Options. All
calculations to determine the number of Escrow Shares to be delivered by each
Stock Consideration Stockholder into escrow shall be rounded down to the nearest
whole share. Any shares of BSQUARE Common Stock issued by reason of any
reclassification, stock split, stock dividend or stock combination of the Escrow
Shares shall be deposited into escrow and held as Escrow Funds hereunder.
2.3 Appraisal Rights.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of InfoGation Capital Stock held by a holder who has
demanded an appraisal of such shares' value in accordance with Section 262 of
the Delaware Law or Chapter 13 of the California Corporations Code (the "CCC"),
and who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights, or may become owned by "dissenters" ("Dissenting Shares")
within the meaning of Delaware Law and/or Chapter 13 of CCC, shall not be
converted into or represent a right to receive BSQUARE Common Stock pursuant to
Section 2.1, and the holder or holders of such Dissenting Shares shall be
entitled only to such rights as may be granted to such holder or holders in
Section 262 of the Delaware Law or Chapter 13 of the California Corporations
Code; provided, however, that if the status of any Dissenting Shares shall not
be perfected in accordance with Section 262 of the Delaware Law and/or Chapter
13 of CCC, or if they lose their status as Dissenting Shares, then, as of the
later of the Effective Time or the time of the failure to perfect such status or
upon the loss of such status, such shares shall automatically be converted into
and shall represent only the right to receive (upon the surrender
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of the certificate or certificates representing such shares) BSQUARE Common
Stock and Cash Consideration, if any, issuable in accordance with this Article
II.
(b) InfoGation shall give BSQUARE (i) prompt notice of any
written demand received by InfoGation to require InfoGation to purchase
Dissenting Shares pursuant to Section 262 of the Delaware Law and/or Chapter 13
of CCC and (ii) the opportunity to participate in all negotiations and
proceedings with respect to any such demand. InfoGation shall not, except with
the prior written consent of BSQUARE, voluntarily make any payment with respect
to any such demands or offer to settle or compromise any such demands.
2.4 Exchange of Certificates; No Further Ownership Rights in InfoGation
Capital Stock.
(a) From and after the Effective Time, each holder of an
outstanding certificate or certificates ("Certificates") which represented
shares of InfoGation Capital Stock shall have the right to surrender each
Certificate to BSQUARE (or at BSQUARE's option, to an exchange agent to be
appointed by BSQUARE), and receive promptly in exchange for all Certificates
held by such holder (1) a certificate representing the number of whole shares of
BSQUARE Common Stock (other than the Escrow Shares) into which the InfoGation
Capital Stock evidenced by the Certificates so surrendered has been converted
pursuant to the provisions of Article II of this Agreement and (2) with respect
to the Cash Consideration Stockholders only, the Cash Consideration (other than
the Escrow Cash). The surrender of Certificates shall be accompanied by duly
completed and executed Letters of Transmittal in such form as may be reasonably
specified by BSQUARE (which shall specify, among other things, that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon receipt of the Certificates by BSQUARE (or, if applicable, the
exchange agent)). Until surrendered, each outstanding Certificate which prior to
the Effective Time represented shares of InfoGation Capital Stock shall be
deemed for all corporate purposes to evidence the right to receive the number of
whole shares of BSQUARE Common Stock into which the shares of InfoGation Capital
Stock have been converted and, with respect to the Cash Consideration
Stockholders only, the Cash Consideration, but shall, subject to applicable
appraisal rights under the Delaware Law, Chapter 13 of the CCC and Section 2.3
hereof, have no other rights. Subject to applicable appraisal rights under
Delaware Law, Chapter 13 of the CCC and Section 2.3 hereof, from and after the
Effective Time, the holders of shares of InfoGation Capital Stock shall cease to
have any rights in respect of such shares and their rights shall be solely in
respect of the BSQUARE Common Stock into which such shares of InfoGation Capital
Stock have been converted and, with respect to the Cash Consideration
Stockholders only, the Cash Consideration. From and after the Effective Time,
there shall be no further registration of transfers on the records of InfoGation
of shares of InfoGation Capital Stock.
(b) If any shares of BSQUARE Common Stock are to be issued in
the name of a person other than the person in whose name the Certificate(s)
surrendered in exchange therefor is registered, it shall be a condition to the
issuance of such shares that (i) the Certificate(s) so surrendered shall be
transferable, and shall be properly assigned, endorsed or accompanied by
appropriate stock powers and (ii) the person requesting such transfer shall pay
BSQUARE, or its exchange agent, any transfer or other taxes payable by reason of
the foregoing or establish to the satisfaction of BSQUARE that such taxes have
been paid or are not required to be paid. Notwithstanding the foregoing, none of
BSQUARE, InfoGation, the Surviving Corporation or
8
any party hereto shall be liable to any person for any amount properly paid to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(c) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed, BSQUARE shall issue
in exchange for such lost, stolen or destroyed Certificate the shares of BSQUARE
Common Stock issuable in exchange therefor pursuant to the provisions of Article
II of this Agreement. BSQUARE's exchange agent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificate to provide to BSQUARE an indemnity agreement
and/or bond against any claim that may be made against BSQUARE with respect to
the Certificate alleged to have been lost, stolen or destroyed.
(d) BSQUARE agrees to make available to its exchange agent the
Total Consideration Shares less the aggregate number of Escrow Shares (which
Escrow Shares will be deposited with the Escrow Agent (as defined in Section
10.2) pursuant to Section 2.2) and the Cash Consideration less the Escrow Cash
(which Escrow Cash will be deposited with the Escrow Agent (as defined in
Section 10.2) pursuant to Section 2.2).
(e) The provisions of this Section 2.4 shall also apply to
Dissenting Shares that lose their status as such, except that the obligations of
BSQUARE under this Section 2.4 shall commence on the date of loss of such
status.
2.5 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
BSQUARE Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of
BSQUARE Common Stock represented thereby until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
BSQUARE Common Stock issued in exchange therefor, without interest (a) at the
time of such surrender, the amount of any dividends or other distributions with
a record date after the Effective Time previously paid with respect to such
whole shares of BSQUARE Common Stock, and (b) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of BSQUARE Common Stock.
2.6 No Fractional Shares. No fraction of a share of BSQUARE Common
Stock will be issued, but in lieu thereof each holder of shares of InfoGation
Capital Stock who would otherwise be entitled to a fraction of a share of
BSQUARE Common Stock (after aggregating all fractional shares of BSQUARE Common
Stock to be received by such holder) shall receive from BSQUARE an amount of
cash (rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) $3.05.
2.7 Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a "reorganization" within the meaning of Section 368 of
the Code. The parties hereto
9
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.
2.8 Restricted Securities. The shares of BSQUARE Common Stock to be
issued in the Merger shall be characterized as "restricted securities" for
purposes of Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), and each certificate representing any such shares shall,
until such time that the shares are not so restricted under the Securities Act,
bear a legend identical or similar in effect to the following legend (together
with any other legend or legends required by applicable state securities laws or
otherwise, if any):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE."
2.9 Deductions; Withholdings. BSQUARE and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable to any holder of InfoGation Capital Stock pursuant to this
Agreement such amounts as BSQUARE or the Surviving Corporation may be required
to deduct or withhold therefrom under the Code or under any provision of state,
local or foreign tax law. To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the person or entity to whom such amounts would otherwise
have been paid.
2.10 Further Action. If, at any time after the Effective Time, any
further action is determined by BSQUARE to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation or
BSQUARE with full right, title and possession for and to all rights and property
of Sub and InfoGation, the officers and directors of the Surviving Corporation
and BSQUARE shall be fully authorized to take such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INFOGATION
InfoGation and Kent Pu, jointly and severally, each represent and
warrant to BSQUARE and Sub that the statements contained in this Article III are
true and correct, except as expressly set forth in the disclosure schedule
delivered by InfoGation to BSQUARE on or before the date of this Agreement (the
"InfoGation Disclosure Schedule"). The InfoGation Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article III.
3.1 Organization of InfoGation. InfoGation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted,
10
and is duly qualified or licensed to do business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of its business or
ownership or leasing of properties makes such qualification or licensing
necessary, which jurisdictions are set forth in the InfoGation Disclosure
Schedule. The InfoGation Disclosure Schedule contains a true and complete
listing of the locations of all sales offices, development facilities, and any
other offices or facilities of InfoGation and a true and complete list of all
states in which InfoGation maintains any employees. The InfoGation Disclosure
Schedule contains a true and complete list of all states in which InfoGation is
duly qualified or licensed to transact business as a foreign corporation.
3.2 InfoGation Capital Structure.
(a) The authorized capital stock of InfoGation consists of
34,650,000 shares of capital stock, of which 21,000,000 are designated as
InfoGation Common Stock and 13,650,000 shares of have been designated as
InfoGation Preferred Stock, of which 7,000,000 shares are designated as
InfoGation Series B-1 Preferred Stock, 1,250,000 shares are designated
InfoGation Series B-2 Preferred Stock and 5,400,000 shares are designated
InfoGation Series C Preferred Stock. As of the date of this Agreement, there are
(i) 4,217,676 shares of InfoGation Common Stock, 7,000,000 shares of InfoGation
Series B-1 Preferred Stock, 800,000 shares of InfoGation Series B-2 Preferred
Stock and 2,103,662 shares of InfoGation Series C Preferred Stock issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
none of which are subject to preemptive or repurchase rights or rights of first
refusal created by applicable law, contract or otherwise; (ii) an outstanding
option to purchase up to 450,000 shares of InfoGation Series B-2 Preferred Stock
issued to Kent Pu (the "Series B-2 Option"); (iii) outstanding warrants to
purchase up to 3,048,777 shares of InfoGation Series C Preferred Stock (the
"InfoGation Series C Preferred Stock Warrants"); (iv) 9,903,662 shares of
InfoGation Common Stock reserved for future issuance upon conversion of the
InfoGation Series B-1 Preferred Stock, Series B-2 Preferred Stock and Series C
Preferred Stock; (v) 1,186,325 shares of InfoGation Common Stock reserved for
future issuance pursuant to InfoGation Options granted and outstanding under the
InfoGation Option Plans; (vi) 1,575,864 shares of InfoGation Common Stock
reserved for issuance upon exercise of options available to be granted in the
future under the InfoGation Option Plans; (vii) 450,000 shares of InfoGation
Series B-2 Preferred Stock reserved for issuance upon the exercise of the Series
B-2 Option; (viii) 3,048,777 shares of InfoGation Series C Preferred Stock
reserved for issuance upon the exercise of the InfoGation Series C Preferred
Stock Warrants; (ix) 450,000 shares of InfoGation Common Stock reserved for
issuance upon the conversion of the InfoGation Series B-2 Preferred Stock
issuable upon the exercise of the Series B-2 Option; and (x) 3,048,777 shares of
InfoGation Common Stock reserved for issuance upon the conversion of the
InfoGation Series C Preferred Stock issuable upon exercise of the InfoGation
Series C Preferred Stock Warrants. The issued and outstanding shares of
InfoGation Common Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock
and Series C Preferred Stock are held of record by the stockholders of
InfoGation as set forth and identified on Schedule 3.2(a) of the InfoGation
Disclosure Schedule, and that schedule lists each stockholder's state of
residence opposite such stockholder's name. The issued and outstanding
InfoGation Options are held of record by the optionholders identified in the
amounts and subject to the vesting schedules set forth on Schedule 3.2(a) of the
InfoGation Disclosure Schedule, which lists each state of residence opposite
such optionholder's name. The Series B-2 Option is held of record by Kent Pu.
The issued and outstanding InfoGation Series C Preferred Stock
11
Warrants are held of record by the warrantholders as set forth and identified on
Schedule 3.2(a) of the InfoGation Disclosure Schedule, which lists each
warrantholder's state of residence opposite such warrantholder's name. All
shares of InfoGation Common Stock subject to issuance as specified above, upon
issuance on the terms and conditions (including payment) specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable and shall not be subject to
preemptive or repurchase rights or rights of first refusal created by applicable
law, contract or otherwise. All shares of InfoGation Common Stock subject to
issuance upon the conversion of InfoGation Series B-1, Series B-2 and Series C
Preferred Stock and upon the exercise of InfoGation Options and all shares of
InfoGation Series B-2 Preferred Stock subject to issuance upon exercise of the
Series B-2 Option and InfoGation Series C Preferred Stock subject to issuance
upon exercise of the InfoGation Series C Preferred Stock Warrants, upon issuance
on the terms and conditions (including payment) specified in the instrument
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable and shall not be subject to preemptive or
repurchase rights or rights of first refusal created by applicable law, contract
or otherwise. Except as set forth in Schedule 3.2(a) of the InfoGation
Disclosure Schedule, all outstanding shares of InfoGation Capital Stock and
outstanding InfoGation Options, InfoGation Warrants, the Series B-2 Option and
InfoGation Series C Preferred Stock Warrants (collectively "InfoGation
Securities") were issued in compliance with applicable federal and state
securities laws. Except as set forth in the InfoGation Disclosure Schedule,
there are no obligations, contingent or otherwise, of InfoGation to repurchase,
redeem or otherwise acquire or issue or sell any shares of InfoGation Capital
Stock or make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity. Except as otherwise provided herein or in the
InfoGation Disclosure Schedule, there are no other shares of InfoGation Capital
Stock authorized, issued and outstanding. An updated Schedule 3.2(a) reflecting
changes permitted by this Agreement in the capitalization of InfoGation between
the date hereof and the Effective Time shall be delivered by InfoGation to
BSQUARE on the Closing Date.
3.3 Authority; No Conflict; Required Filings and Consents.
(a) InfoGation has all requisite corporate power and authority
to enter into this Agreement and all Transaction Documents (as defined below) to
which it is or will become a party and to consummate the transactions
contemplated in this Agreement and such Transaction Documents. The execution and
delivery of this Agreement and such Transaction Documents and the consummation
of the transactions contemplated in this Agreement and such Transaction
Documents have been duly authorized by all necessary corporate action on the
part of InfoGation, subject only to the approval of the Merger by InfoGation's
stockholders under the provisions of Delaware Law and InfoGation's certificate
of incorporation. This Agreement has been and such Transaction Documents have
been or, to the extent not executed by InfoGation as of the date hereof, will be
duly executed and delivered by InfoGation. This Agreement and each of the
Transaction Documents to which InfoGation is a party constitutes, and each of
the Transaction Documents to which InfoGation will become a party, when executed
and delivered by InfoGation, will constitute, the valid and binding obligation
of InfoGation, enforceable against InfoGation in accordance with their
respective terms, except to the extent that enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding at law or in
12
equity. For purposes of this Agreement, "Transaction Documents" means the
Washington Articles of Merger, the Delaware Certificate of Merger and the Escrow
Agreement.
(b) The execution and delivery by InfoGation of this Agreement
and the Transaction Documents to which it is or will become a party does not,
and the consummation of the transactions contemplated in this Agreement and the
Transaction Documents to which it is or will become a party will not, (i)
conflict with, or result in any violation or breach of any provision of the
certificate of incorporation or bylaws of InfoGation, each as amended to date
(ii) result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any benefit) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which InfoGation
is a party or by which it or any of its properties or assets may be bound, or
(iii) conflict or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
InfoGation or any of its properties or assets, except in the case of (ii) and
(iii) for any such conflicts, violations, defaults, terminations, cancellations
or accelerations which would not have a material adverse effect on the business,
assets (including intangible assets), liabilities, condition (financial or
otherwise), property or results of operations (a "Material Adverse Effect") of
InfoGation.
(c) None of the execution and delivery by InfoGation of this
Agreement or of any other Transaction Document to which InfoGation is or will
become a party or the consummation of the transactions contemplated in this
Agreement or any such Transaction Document will require any consent, approval,
order or authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental authority or
instrumentality ("Governmental Entity"), except for (i) the filing of the
Washington Articles of Merger with the Secretary of State of the State of
Washington (ii) the filing of the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware, (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and (iv) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, could be expected to have a Material Adverse Effect on
InfoGation, all of which consents are listed on the InfoGation Disclosure
Schedule.
3.4 Financial Statements; Absence of Undisclosed Liabilities.
(a) InfoGation has delivered to BSQUARE copies of InfoGation's
unaudited balance sheet as of January 31, 2002 (the "Most Recent Balance Sheet")
and unaudited statements of operations, shareholders' equity and cash flows for
the ten-month period then-ended (together with the Most Recent Balance Sheet,
the "InfoGation Interim Financials") and InfoGation's audited balance sheets as
of March 31, 2001, 2000, and 1999 and the related audited statements of
operations, shareholders' equity and cash flows for the years ended March 31,
2001, 2000 and 1999, respectively (together with the InfoGation Interim
Financials, the "InfoGation Financial Statements"). The InfoGation Financial
Statements are attached as Schedule 3.4(a) of the InfoGation Disclosure
Schedule.
13
(b) Other than as set forth on the InfoGation Disclosure
Schedule, the InfoGation Financial Statements were prepared in accordance with
the books and records of InfoGation and present fairly in all material respects
the financial position, results of operations and cash flows of InfoGation as of
their historical dates and for the periods indicated, subject, in the case of
the InfoGation Interim Financials, to normal year-end audit adjustments. The
InfoGation Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods,
except to the extent required by changes in generally accepted accounting
principles or as may be indicated in the notes thereto and except to the extent
that the InfoGation Interim Financials do not include footnotes that would be
required by generally accepted accounting principles. The reserves, if any,
reflected on the InfoGation Financial Statements are adequate in light of the
contingencies with respect to which they were made.
(c) InfoGation has no material debt, liability or obligation
of any nature, whether accrued, absolute, contingent or otherwise, and whether
due or to become due, that is not reflected or reserved against in the Most
Recent Balance Sheet, except for those that would not reasonably be required, in
accordance with generally accepted accounting principles applied on a basis
consistent with prior periods, to be included in a balance sheet or the notes
thereto. All debts, liabilities and obligations incurred after the date of the
Most Recent Balance Sheet were incurred in the ordinary course of business and
are not material either individually or in the aggregate to InfoGation or its
business.
3.5 Tax Matters.
(a) For purposes of this Section 3.5 and other provisions of
this Agreement relating to Taxes, the following definitions shall apply:
(i) The term "Taxes" shall mean all taxes,
however denominated, including any interest, penalties or other additions to tax
that may become payable in respect thereof, (A) imposed by any federal,
territorial, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes (including but not
limited to, federal income taxes and state income taxes), payroll and employee
withholding taxes, unemployment insurance, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, ozone depleting chemicals taxes, transfer
taxes, workers' compensation, Pension Benefit Guaranty Corporation premiums and
other governmental charges, and other obligations of the same or of a similar
nature to any of the foregoing, which are required to be paid, withheld or
collected, (B) any liability for the payment of amounts referred to in (A) as a
result of being a member of any affiliated, consolidated, combined or unitary
group, or (C) any liability for amounts referred to in (A) or (B) as a result of
any obligations to indemnify another person.
(ii) The term "Returns" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
14
(b) All material Returns required to be filed prior to the
date hereof by or on behalf of InfoGation have been duly filed on a timely
basis, and such Returns are true, complete and correct in all material respects.
All Taxes shown to be payable on such Returns or on subsequent assessments with
respect thereto, and all payments of estimated Taxes required to be made prior
to the date hereof by or on behalf of InfoGation under Section 6655 of the Code
or comparable provisions of state, local or foreign law, have been paid in full
on a timely basis or have been accrued on the Most Recent Balance Sheet, and no
other Taxes are payable by InfoGation with respect to items or periods covered
by such Returns (whether or not shown on such Returns). InfoGation currently is
not the beneficiary of any extension of time within which to file any Return.
InfoGation has withheld and paid over all Taxes required to have been withheld
and paid over prior to the date hereof, and complied with all information
reporting and backup withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party. No claim has
ever been made by any authority in a jurisdiction where InfoGation does not file
Returns that it is or may be subject to taxation by that jurisdiction. There are
no liens on any of the assets of InfoGation with respect to Taxes, other than
liens for Taxes not yet due and payable or for Taxes that InfoGation is
contesting in good faith through appropriate proceedings and for which
appropriate reserves have been established on the Most Recent Balance Sheet.
InfoGation has not at any time been (i) a member of an affiliated group of
corporations filing consolidated, combined or unitary income or franchise tax
returns, nor does it have any liability for Taxes of any Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law) as a transferee or successor, by contract or otherwise. InfoGation
has not at any time been a member of any partnership or joint venture for a
period for which the statue of limitations for any Tax potentially applicable as
a result of such membership has not expired.
(c) The amount of InfoGation's liability for unpaid Taxes
(whether or not shown on any Returns) for all periods through the date of the
Most Recent Balance Sheet does not, in the aggregate, exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) reflected on the Most Recent
Balance Sheet (rather than in any notes thereto), and the Most Recent Balance
Sheet reflects proper accrual in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods of all liabilities
for Taxes payable after the date of the Most Recent Balance Sheet attributable
to transactions and events occurring prior to such date. No liability for Taxes
has been incurred (or prior to Closing will be incurred) by InfoGation since
such date other than in the ordinary course of business.
(d) InfoGation has furnished to BSQUARE true and complete
copies of (i) relevant portions of income tax audit reports, statements of
deficiencies, closing or other agreements received by or on behalf of InfoGation
relating to Taxes, and (ii) all federal and state income or franchise tax
Returns, state sales and use tax Returns and business and occupation tax Returns
for or including InfoGation for all periods since the inception of InfoGation.
InfoGation is not required to file Returns in any state other than states for
which Returns have been duly filed and furnished to BSQUARE.
(e) The Returns of or including InfoGation have never been
audited by a government or taxing authority, nor is any such audit in process,
pending or, to InfoGation's
15
knowledge, threatened (either in writing or verbally, formally or informally).
No deficiencies exist or have been asserted (in writing), and InfoGation has not
received notice (in writing) that it has not filed a Return or paid Taxes
required to be filed or paid. InfoGation is neither a party to any action or
proceeding for assessment or collection of Taxes, nor has such event been
asserted or, to the knowledge of InfoGation, overtly threatened (either in
writing or orally, formally or informally) against InfoGation or any of its
assets. No waiver or extension of any statute of limitations is in effect with
respect to Taxes or Returns of InfoGation. InfoGation has disclosed on its
federal and state income and franchise tax Returns all positions taken therein
that could give rise to a substantial understatement penalty within the meaning
of Section 6662 of the Code or comparable provisions of applicable state, local,
foreign or other tax laws.
(f) InfoGation will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any:
(i) change in method of accounting for a taxable period ending on or prior to
the Closing Date; (ii) "closing agreement" as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign
income Tax law) executed on or prior to the Closing Date; (iii) installment sale
or open transaction disposition made on or prior to the Closing Date; or (iv)
prepaid amount received on or prior to the Closing Date.
(g) InfoGation is not, nor has it ever been, a party to any
tax sharing agreement.
(h) InfoGation has not been a "distributing corporation" or a
"controlled corporation" in a transaction described in Section 355(a) of the
Code (x) in the two years prior to the date of this Agreement; or (y) in a
distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(i) InfoGation is not, nor has it been, a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code,
and BSQUARE is not required to withhold tax by reason of Section 1445 of the
Code. InfoGation is not a "consenting corporation" under Section 341(f) of the
Code. InfoGation has not entered into any agreement, contract, arrangement or
plan that has resulted or would result, separately or in the aggregate (x) in a
nondeductible expense to InfoGation pursuant to Section 280G of the Code or an
excise tax to the recipient of such payment pursuant to Section 4999 of the Code
or (y) in an amount that will not be fully deductible as a result of Section
162(m) or Section 404 of the Code. InfoGation is not, nor has it been, a
"reporting corporation" subject to the information reporting and record
maintenance requirements of Section 6038A of the Code and the regulations
thereunder. InfoGation is in compliance with the terms and conditions of any
applicable tax exemptions, agreements or orders of any foreign government to
which it may be subject or which it may have claimed, and the transactions
contemplated by this Agreement will not have any adverse effect on such
compliance.
3.6 Absence of Certain Changes or Events. Since January 31, 2002,
other than as set forth on the InfoGation Disclosure Schedule, InfoGation has
not:
16
(a) suffered any Material Adverse Effect;
(b) suffered any damage, destruction or loss, other than
operating losses included in the ordinary course of business and consistent with
recent periods, whether covered by insurance or not, that has resulted, or could
be reasonably expected to result, in a Material Adverse Effect on InfoGation;
(c) granted or agreed to make any increase in the compensation
payable or to become payable by InfoGation to its officers or employees;
(d) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of the capital stock of InfoGation
or declared any direct or indirect redemption, retirement, purchase or other
acquisition by InfoGation of such shares;
(e) issued any shares of capital stock of InfoGation or any
warrants, rights, options or entered into any commitment relating to the shares
of InfoGation, except for the grant of InfoGation Options pursuant to the
InfoGation Option Plans in the ordinary course of business and consistent with
recent periods and the issuance of shares of InfoGation capital stock pursuant
to the exercise of InfoGation Options set forth on the InfoGation Disclosure
Schedule;
(f) except as required by generally accepted accounting
principles, made any change in the accounting methods or practices it follows,
whether for general financial or tax purposes, or any change in depreciation or
amortization policies or rates adopted therein;
(g) sold, leased, abandoned or otherwise disposed of any real
property or any machinery, equipment or other operating property with an
individual net book value in excess of One Thousand Dollars ($5,000);
(h) sold, assigned, transferred or otherwise disposed of any
patent, trademark, trade name, brand name, copyright (or pending application for
any patent, trademark or copyright) invention, work of authorship, process,
know-how, formula or trade secret or interest thereunder or other intangible
asset;
(i) permitted or allowed any of its property or assets to be
subjected to any mortgage, deed of trust, pledge, lien, security interest or
other encumbrance of any kind (except those permitted under Section 3.7);
(j) made any capital expenditure or commitment for capital
expenditure individually in excess of Five Thousand Dollars ($5,000) or in the
aggregate in excess of Fifteen Thousand Dollars ($15,000);
(k) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets to, or entered into any agreement
or arrangement with, any of its Affiliates (as defined in Section 3.16),
officers, directors or stockholders or any affiliate of any of the foregoing;
17
(l) made any amendment to or terminated any agreement which,
if not so amended or terminated, would be required to be disclosed on the
InfoGation Disclosure Schedule; or
(m) agreed to take any action described in this Section 3.6 or
outside of its ordinary course of business or which would constitute a breach of
any of the representations of InfoGation contained in this Agreement.
3.7 Title and Related Matters. InfoGation has good and valid title to
all its properties, interests in properties and assets, real and personal, free
and clear of all mortgages, liens, pledges, charges or encumbrances of any kind
or character, except the lien of current taxes not yet due and payable. The
equipment of InfoGation used in the operation of its business is, taken as a
whole, (a) adequate for the business conducted by InfoGation and (b) in good
operating condition and repair, ordinary wear and tear excepted. All personal
property leases to which InfoGation is a party are valid, binding, enforceable
against the parties thereto and in effect in accordance with their respective
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium, or other laws affecting the
enforcement of creditors' rights generally and by principles of equity,
regardless of whether such enforceability is considered in a proceeding at law
or in equity. There is not under any of such leases any existing default by
InfoGation or event of default or event which, with notice or lapse of time or
both, would constitute a default by InfoGation or, to the knowledge of
InfoGation, any existing default by any other party to such leases or event of
default or event which, with notice or lapse of time or both, would constitute a
default by any other party to such leases. The InfoGation Disclosure Schedule
contains a description of all items of personal property with an individual net
book value in excess of Fifteen Thousand Dollars ($15,000) and real property
leased or owned by InfoGation, describing its interest in said property. True
and correct copies of InfoGation's real property and personal property leases
have been provided to BSQUARE or its representatives.
3.8 Proprietary Rights.
(a) InfoGation owns all right, title and interest in and to,
or otherwise possesses legally enforceable rights, or is licensed to use all
copyrights, technology, software, software tools, know-how, processes, trade
secrets, trademarks, service marks, trade names, Internet domain names and other
proprietary rights and, to InfoGation's knowledge, patents, used in the conduct
of InfoGation's business as conducted to the date of this Agreement or as
proposed to be conducted, including, without limitation, the technology,
information, databases, data lists, data compilations, and all proprietary
rights developed or discovered or used in connection with or contained in all
versions and implementations of InfoGation's World Wide Web sites (including
www.InfoGation and the other domain names listed in Section 3.8(a) of the
InfoGation Disclosure Schedule) and InfoGation's products and services
(collectively, including such Web sites, the "InfoGation Proprietary Rights"),
free and clear of all liens, claims and encumbrances (excluding licensing and
distribution rights listed in the InfoGation Disclosure Schedule). Such
InfoGation Proprietary Rights are sufficient for the conduct of InfoGation's
business as currently conducted and as proposed to be conducted. The InfoGation
Disclosure Schedule contains an accurate and complete (i) description of all
patents and patent applications, registered trademarks and trademark
applications, registrations or applications for trade names, Internet domain
names
18
and registered copyrights included in the InfoGation Proprietary Rights
(collectively, "Registered Intellectual Property"), including the jurisdictions
in which each such InfoGation Proprietary Right has been issued or registered or
in which any such application of such issuance and registration has been filed,
(ii) list of all licenses and other agreements with third parties (the
"Third-Party Licenses") relating to any patents, copyrights, trade secrets,
software, inventions, technology, know-how, processes or other proprietary
rights that InfoGation is licensed or otherwise authorized by such third parties
to use, market, or distribute (such patents, copyrights, trade secrets,
software, inventions, technology, know-how, processes or other proprietary
rights are collectively referred to as the "Third-Party Technology"), other than
non-exclusive, object code licenses of software generally available to the
public under standard form shrinkwrap or clickwrap license agreements that are
both (A) currently generally publicly available and (B) do not relate to
software that InfoGation is redistributing in whole or in part, and (iii) list
of all licenses and other agreements with third parties relating to any
information, compilations, data lists or databases that InfoGation is licensed
or otherwise authorized by such third parties to use, market, disseminate or
distribute. All of InfoGation's patents and patent applications are subsisting
and all necessary registration, maintenance and renewal fees in connection with
such InfoGation patents and patent applications have been paid and all necessary
documents and certificates in connection with such InfoGation patents and patent
applications have been filed with the relevant patent or other authorities in
the United States or foreign jurisdictions, as the case may be, for the purposes
of maintaining such InfoGation Intellectual Property Rights. To InfoGation's
knowledge, all of InfoGation's Registered Intellectual Property is valid and in
full force and effect, and except as set forth on the InfoGation Disclosure
Schedule, the consummation of the transactions contemplated in this Agreement
will not alter or impair any such rights. Other than as set for the in the
Third-Party Licenses, there are no royalties, license fees or other payments
payable by InfoGation to any third party (other than salaries payable to
employees and independent contractors not contingent on or related to use of
their work product) as a result of the ownership, use, license, distribution,
sale or practice of any InfoGation Proprietary Rights by InfoGation or any of
its licensees and none shall become payable as a result of the consummation of
the transactions contemplated by this Agreement. Except as set forth on the
InfoGation Disclosure Schedule, no claims have been asserted or, to InfoGation's
knowledge, threatened against InfoGation (and InfoGation is not aware of any
claims which are likely to be asserted or threatened against InfoGation or which
have been asserted or threatened against others relating to InfoGation
Proprietary Rights) by any person challenging InfoGation's use, possession,
manufacture, sale or distribution of InfoGation Proprietary Rights (including,
without limitation, the Third-Party Technology and any technology embodying the
InfoGation Proprietary Rights) or challenging or questioning the validity or
effectiveness of any license or agreement to which InfoGation is a party
relating thereto (including, without limitation, the Third-Party Licenses) or
alleging a violation by InfoGation or any employee, consultant or agent of
InfoGation of any person's or entity's privacy, personal or confidentiality
rights. InfoGation knows of no valid basis for any claim of the type specified
in the immediately preceding sentence which could in any way relate to or
interfere with the continued enhancement and exploitation by InfoGation of any
of the InfoGation Proprietary Rights. Neither the use or exploitation of any
InfoGation Proprietary Rights (other than patents) or, to InfoGation's
knowledge, the use or exploitation of any InfoGation patents, in InfoGation's
business as currently conducted or as proposed to be conducted infringes on the
rights of or constitutes misappropriation of any proprietary information or
intangible property right of any third person
19
or entity, including without limitation any patent, trade secret, copyright,
trademark or trade name, and InfoGation has not been served with a summons in
any suit, action or proceeding which involves a claim of such infringement,
misappropriation or unfair competition.
(b) Except as set forth in Section 3.8(b) of the InfoGation
Disclosure Schedule, InfoGation has not granted any third party any right to
use, reproduce, distribute, market or exploit any of the InfoGation Proprietary
Rights or any adaptations, translations, or derivative works based on the
InfoGation Proprietary Rights or any portion thereof. Except with respect to the
rights of third parties to the Third-Party Technology and except as set forth in
the InfoGation Disclosure Schedule, no third party has any express right to use,
reproduce, distribute, market or exploit any works or materials of which any of
the InfoGation Proprietary Rights are a "derivative work" as that term is
defined in the United States Copyright Act, Title 17, U.S.C. Section 101. Except
as set forth in Schedule 3.8(b) of the InfoGation Disclosure Schedule,
InfoGation has not assigned or granted joint ownership rights to any software,
technology or intellectual property developed by InfoGation.
(c) All material designs, drawings, specifications, source
code, object code, scripts, documentation, flow charts, diagrams, data lists,
databases, compilations and information incorporating, embodying or reflecting
any of the InfoGation Proprietary Rights at any stage of their development (the
"InfoGation Components") were written, developed and created solely and
exclusively by full-time employees of InfoGation without the assistance of any
third party or entity or were created by third parties who assigned ownership of
their rights to InfoGation by means of valid and enforceable confidentiality and
intellectual property rights assignment agreements, copies of which have been
delivered to BSQUARE.
(d) To InfoGation's knowledge, no employee, contractor or
consultant of InfoGation is in violation in any material respect of any term of
any written employment contract, patent disclosure agreement or any other
written contract or agreement relating to the relationship of any such employee,
consultant or contractor with InfoGation or, to InfoGation's knowledge, any
other party because of the nature of the business conducted by InfoGation or
proposed to be conducted by InfoGation. The InfoGation Disclosure Schedule lists
all employees, contractors and consultants who have participated in any way in
the development of any material portion of the InfoGation Proprietary Rights. To
InfoGation's knowledge, the employment of any employee of InfoGation or the use
by InfoGation of the services of any consultant or independent contractor does
not subject InfoGation to any liability to any third party for improperly
soliciting such employee, consultant or independent contractor to work for
InfoGation, whether such liability is based on contractual or other legal
obligations to such third party
(e) Each person presently or previously employed by InfoGation
(including independent contractors, if any) with access authorized by InfoGation
to confidential information of InfoGation has executed a confidentiality and
non-disclosure agreement pursuant to the form of agreement previously provided
to BSQUARE or its representatives.
(f) No product liability or warranty claims have been
communicated in writing to or threatened against InfoGation.
20
(g) To InfoGation's knowledge, there is no unauthorized use,
disclosure, infringement or misappropriation of any InfoGation Proprietary
Rights, or any Third-Party Technology to the extent licensed by or through
InfoGation, by any third party, including any employee or former employee of
InfoGation. InfoGation has not entered into any agreement to indemnify any other
person against any charge of infringement of any InfoGation Proprietary Rights
except in the ordinary course of business pursuant to agreements listed in
Schedule 3.8(b) of the InfoGation Disclosure Schedule.
(h) InfoGation has taken all steps customary and reasonable in
the industry to protect and preserve the confidentiality and proprietary nature
of all InfoGation Proprietary Rights and other confidential information not
otherwise protected by issued patents ("Confidential Information"). All use and
disclosure to a third party by InfoGation of Confidential Information owned by
InfoGation has been pursuant to the terms of a written agreement between
InfoGation and such third party. To InfoGation's knowledge, all use and
disclosure to a third party by another party pursuant to rights granted to it by
InfoGation of Confidential Information owned by InfoGation has been pursuant to
the terms of a written agreement between such other party and such third party,
and all use and disclosure by InfoGation of Confidential Information not owned
by InfoGation has been pursuant to the terms of a written agreement between
InfoGation and the owner of such Confidential Information, or is otherwise
lawful.
(i) Neither InfoGation nor any other party acting on its
behalf has disclosed or delivered to any party, or permitted the disclosure or
delivery to any escrow agent or other party of, any InfoGation Source Code (as
defined below). No event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time, or both) shall, or would
reasonably be expected to, result in the disclosure or delivery by InfoGation or
any other party acting on their behalf to any party of any InfoGation Source
Code. Schedule 3.8(h) identifies each contract, agreement, arrangement,
commitment or undertaking (whether written or oral) pursuant to which InfoGation
has deposited, or is or may be required to deposit, with an escrow holder or any
other party, any InfoGation Source Code and further describes whether the
execution of this Agreement or the consummation of the Merger or any of the
other transactions contemplated by this Agreement, in and of itself, would
reasonably be expected to result in the release from escrow of any InfoGation
Source Code. As used in this Section 3.8(i), "InfoGation Source Code" means,
collectively, any software source code, or any portion or aspect of the software
source code that embodies any InfoGation Proprietary Rights or any other product
marketed or currently under development by InfoGation.
(j) No government funding; facilities of a university,
college, other educational institution or research center; or funding from third
parties (other than funds received in consideration for InfoGation capital
stock) was used in the development of the computer software programs or
applications owned by InfoGation. Except as set forth on Schedule 3.8(j), no
current or former employee, consultant or independent contractor of InfoGation,
who was involved in, or who contributed to, the creation or development of any
InfoGation Proprietary Rights, has performed services for the government,
university, college, or other educational institution or research center during
a period of time during which such employee, consultant or independent
contractor was also performing services for InfoGation.
21
(k) No Public Software (as defined below) forms part of the
InfoGation Proprietary Rights or was or is used in connection with the
development of any InfoGation Proprietary Right, incorporated in whole or in
part, or has been distributed, in whole or in part, in conjunction with any
InfoGation Proprietary Right. As used in this Section 3.8(k), "Public Software"
means any software that contains, or is derived in any manner (in whole or in
part) from, any software that is distributed as free software, open source
software (e.g., Linux) or similar licensing or distribution models, including
software licensed or distributed under any of the following licenses or
distribution models, or licenses or distribution models similar to any of the
following: (i) GNU's General Public License (GPL) or Lesser/Library GPL (LGPL),
(ii) the Artistic License (e.g., PERL), (iii) the Mozilla Public License, (iv)
the Netscape Public License, (v) the Sun Community Source License (SCSL), (vi)
the Sun Industry Standards License (SISL), (vii) the BSD License and (viii) the
Apache License
3.9 Employee Benefit Plans.
(a) The InfoGation Disclosure Schedule lists, with respect to
InfoGation and any trade or business (whether or not incorporated) which is
treated as a single employer with InfoGation (an "ERISA Affiliate") within the
meaning of Section 414(b), (c), (m) or (o) of the Code, (i) all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") to which InfoGation and/or an ERISA Affiliate
contribute or which they sponsor or maintain or by which they are otherwise
bound, (ii) each loan to a non-officer employee, loans to officers and directors
and any stock option, stock purchase, phantom stock, stock appreciation right,
supplemental retirement, severance, sabbatical, medical, dental, vision care,
disability, employee relocation, cafeteria benefit (Code Section 125) or
dependent care (Code Section 129), life insurance or accident insurance plans,
programs or arrangements, (iii) all bonus, pension, profit sharing, savings,
deferred compensation or incentive plans, programs or arrangements, (iv) other
fringe or employee benefit plans, programs or arrangements that apply to senior
management of InfoGation and/or an ERISA Affiliate and that do not generally
apply to all employees, and (v) any current or former employment or executive
compensation or severance agreements, written or otherwise, for the benefit of,
or relating to, any present or former employee, independent contractor,
consultant or director of InfoGation and/or an ERISA Affiliate, as to which
(with respect to any of items (i) through (v) above) any potential liability is
borne by InfoGation and/or an ERISA Affiliate (together, the "InfoGation
Employee Plans"). Each InfoGation Employee Plan has been duly adopted by
InfoGation.
(b) InfoGation has delivered to BSQUARE or its representatives
a copy of each of the InfoGation Employee Plans and related trust documents,
insurance policies or contracts, employee booklets and summary plan
descriptions, and, to the extent still in its possession, any material employee
communications related thereto, and has, with respect to each InfoGation
Employee Plan which is subject to ERISA reporting requirements, provided copies
of any Form 5500 reports filed for the last three plan years, including all
schedules thereto and financial statements with attached opinions of independent
auditors. Any InfoGation Employee Plan intended to be qualified under Section
401(a) of the Code has either obtained from the Internal Revenue Service a
favorable determination letter as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of 1986 and
subsequent legislation, or has remaining a period of time under the Code or
applicable Treasury Regulations
22
or Internal Revenue Service pronouncements in which to apply for such
determination letter and to make any amendments necessary to obtain a favorable
determination and each trust under such InfoGation Employee Plan is exempt from
tax under Section 501(a) of the Code. InfoGation has also furnished BSQUARE with
the most recent Internal Revenue Service determination letter issued with
respect to each such InfoGation Employee Plan, and, to the knowledge of
InfoGation, nothing has occurred since the issuance of each such letter which
could reasonably be expected to cause the loss of the tax-qualified status of
any InfoGation Employee Plan subject to Code Section 401(a) or the loss of the
tax-qualified status of any trust thereunder.
(c) (i) None of the InfoGation Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person, except
to the extent mandated by applicable law, including, without limitation,
Sections 601 through 609 of ERISA and Section 4980B(f) of the Code; (ii) there
has been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975(c)(1) of the Code, for which an exemption is not
available, with respect to any InfoGation Employee Plan that is a "plan" within
the meaning of Section 4975(c)(1) of the Code or an "employee benefit plan"
within the meaning of Section 3(3) of ERISA; (iii) each InfoGation Employee Plan
has been administered in all material respects in accordance with its terms and
in compliance with the requirements prescribed by any and all statutes, rules
and regulations (including ERISA and the Code), and InfoGation and each ERISA
Affiliate have performed all material obligations required to be performed by
them under, are not in any material respect in default under or in material
violation of, and have no knowledge of any material default or violation by any
other party to, any of the InfoGation Employee Plans; (iv) neither InfoGation
nor any ERISA Affiliate is subject to any liability or penalty under Sections
4976 through 4980 of the Code with respect to any of the InfoGation Employee
Plans; (v) all contributions required to be made by InfoGation or any ERISA
Affiliate to any InfoGation Employee Plan have been made on or before their due
dates and a reasonable amount has been accrued for contributions to each
InfoGation Employee Plan for the current plan years; and (vi) no InfoGation
Employee Plan is covered by, and neither InfoGation nor any ERISA Affiliate has
incurred or expects to incur any material liability under, Title IV of ERISA or
Section 412 of the Code. With respect to each InfoGation Employee Plan subject
to ERISA as either an employee pension benefit plan within the meaning of
Section 3(2) of ERISA or an employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, InfoGation has prepared in good faith and timely filed
all requisite governmental reports (which, to the knowledge of InfoGation, were
true and correct as of the date filed) and has properly and timely filed and
distributed or posted all notices and reports to employees required to be filed,
distributed or posted with respect to each such InfoGation Employee Plan. No
suit, administrative proceeding, action or other litigation has been brought, or
to the knowledge of InfoGation is threatened, against or with respect to any
such InfoGation Employee Plan, including any audit or inquiry by the IRS or
United States Department of Labor. Neither InfoGation nor any ERISA Affiliate is
a party to, or has made any contribution to or otherwise incurred any obligation
under, any "multiemployer plan" as defined in Section 3(37) of ERISA.
(d) With respect to each InfoGation Employee Plan that is a
"group health plan" within the meaning of the Code and ERISA, InfoGation has
complied in all material respects with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), and the regulations
23
thereunder, (ii) the applicable requirements of the Family and Medical Leave Act
of 1993, as amended, and the regulations thereunder, (iii) the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996,
as amended ("HIPAA"), and the temporary regulations thereunder, (iv) the Women's
Health and Cancer Rights Act, and any regulations thereunder, (v) the Mental
Health Parity Act, and any regulations thereunder, (vi) the Newborns and Mothers
Health Protection Act, and any regulations thereunder, and (vii) any other
federal and state laws or regulations applicable to such plans..
(e) The consummation of the transactions contemplated in this
Agreement will not (i) entitle any current or former employee or other service
provider of InfoGation or an ERISA Affiliate to severance benefits or any other
payment (including, without limitation, unemployment compensation, golden
parachute or bonus), except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting of any such benefits, or (iii)
increase or accelerate any benefits or the amount of compensation due any such
employee or service provider.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by InfoGation or other ERISA Affiliate
relating to, or change in participation or coverage under, any InfoGation
Employee Plan which would materially increase the expense of maintaining such
Plan above the level of expense incurred with respect to that Plan for the most
recent fiscal year included in the InfoGation Financial Statements.
3.10 Bank Accounts. The InfoGation Disclosure Schedule sets forth
the names and locations of all banks, trust companies, savings and loan
associations, and other financial institutions at which InfoGation maintains
accounts of any nature and the names of all persons authorized to draw thereon
or make withdrawals therefrom.
3.11 Contracts.
(a) A list of (i) all contracts to which InfoGation is a party
which involves payment by InfoGation of Ten Thousand Dollars ($10,000) or more
in any calendar year (excluding any employment agreements), (ii) each material
agreement, credit agreement or other instrument relating to the borrowing of
money by InfoGation or the guarantee by InfoGation of any such obligation (other
than trade payables and instruments relating to transactions entered into in the
ordinary course of business) or (iii) any other contract or agreement or
amendment thereto that (A) is material to the business, financial condition or
results of operations of InfoGation, or (B) places any material restrictions on
the ability of InfoGation to engage in any business activity (collectively, the
"Material Contracts") is set forth in the InfoGation Disclosure Schedule. Except
as identified therein and as set forth in the InfoGation Disclosure Schedule:
(i) InfoGation has no agreements, contracts or
commitments that provide for the sale, assignment or distribution by InfoGation
of any InfoGation Proprietary Rights. Without limiting the foregoing, except as
set forth on the InfoGation Disclosure Schedule, InfoGation has not granted to
any third party (including, without limitation, original equipment manufacturers
("OEMs") and site-license customers) any rights to use, reproduce, manufacture
or distribute any of the InfoGation Proprietary Rights, nor has InfoGation
granted to any third party any exclusive rights of any kind (including, without
limitation, territorial
24
exclusivity or exclusivity with respect to particular versions, implementations
or translations of any of the InfoGation Proprietary Rights), nor has InfoGation
granted any third party any right to market any of the InfoGation Proprietary
Rights under any private label or "OEM" arrangements, nor has InfoGation granted
any license of any InfoGation trademarks or service marks.
(ii) InfoGation has no agreements, contracts or
commitments that call for fixed and/or contingent payments or expenditures by or
to InfoGation (including, without limitation, any advertising or revenue sharing
arrangement).
(iii) InfoGation has no outstanding sales or
advertising contract, commitment or proposal.
(iv) InfoGation has no outstanding agreements,
contracts or commitments with officers, employees, agents, consultants,
advisors, salesmen, sales representatives, distributors or dealers that are not
cancelable by InfoGation "at will" and without liability, penalty or premium.
(v) InfoGation has no employment, independent
contractor or similar agreement, contract or commitment that is not terminable
on 30 days' notice or less without penalty, liability or premium of any type,
including, without limitation, severance or termination pay.
(vi) InfoGation has no currently effective
collective bargaining or union agreements, contracts or commitments.
(vii) InfoGation is not restricted by agreement
from competing with any person or from carrying on its business anywhere in the
world.
(viii) InfoGation has not guaranteed any
obligations of other persons or made any agreements to acquire or guarantee any
obligations of other persons.
(ix) InfoGation has no outstanding loan or
advance to any person; nor is it party to any line of credit, standby financing,
revolving credit or other similar financing arrangement of any sort which would
permit the borrowing by InfoGation of any sum.
(x) InfoGation has no agreements providing for
the development of any software, content (including textual content and visual,
photographic or graphics content), technology or intellectual property.
True, correct and fully executed copies of each document or instrument
listed on the InfoGation Disclosure Schedule pursuant to this Section 3.11(a)
have been provided to BSQUARE or its representatives.
(b) All of the Material Contracts listed on the InfoGation
Disclosure Schedule are valid, binding, in full force and effect, and, to the
knowledge of InfoGation, enforceable by InfoGation in accordance with their
respective terms, except to the extent that enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
25
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding at law or in equity. Except as disclosed in the InfoGation
Disclosure Schedule, no Material Contract contains any liquidated damages or
similar provision. To the knowledge of InfoGation, except as disclosed in the
InfoGation Disclosure Schedule, no party to any such Material Contract intends
to cancel, withdraw, modify or amend such contract, agreement or arrangement.
(c) InfoGation is not in default under or in breach or
violation of, nor, to InfoGation's knowledge, is there any valid basis for any
claim of default by InfoGation under, or breach or violation by InfoGation of,
any provision of any Material Contract. To InfoGation's knowledge, no other
party is in default under or in breach or violation of, nor is there any valid
basis for any claim of default by any other party under or any breach or
violation by any other party of, any Material Contract.
(d) Except as specifically indicated on the InfoGation
Disclosure Schedule, none of the Material Contracts provides for indemnification
by InfoGation of any third party. No claims have been made or threatened that
would require indemnification by InfoGation, and InfoGation has not paid any
amounts to indemnify any third party as a result of indemnification requirements
of any kind.
3.12 Orders, Commitments and Returns. All accepted advertising
arrangements entered into by InfoGation, and all material agreements, contracts,
or commitments for the purchase of supplies by InfoGation, were made in the
ordinary course of business. There are no oral contracts or arrangements for the
sale of advertising or any other product or service by InfoGation.
3.13 Compliance With Law. InfoGation and the operation of its
business are in compliance with all laws and regulations applicable to the
operation of its business except for any non-compliances that would not have a
Material Adverse Effect on InfoGation. Neither InfoGation nor, to InfoGation's
knowledge, any of its employees has directly or indirectly paid or delivered any
fee, commission or other sum of money or item of property, however
characterized, to any finder, agent, government official or other party in the
United States or any other country, that was or is in violation of any federal,
state, or local statute or law or of any statute or law of any other country
having jurisdiction. InfoGation has not participated directly or indirectly in
any boycotts or other similar practices affecting any of its customers.
InfoGation has complied at all times with any and all applicable federal, state
and foreign laws, rules, regulations, proclamations and orders relating to the
importation or exportation of its products except for non-compliances that would
not have a Material Adverse Effect on InfoGation.
3.14 Labor Difficulties; No Discrimination.
(a) InfoGation is not engaged in any unfair labor practice and
is not in violation of any applicable laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours. There is no
unfair labor practice complaint against InfoGation actually pending or, to the
knowledge of InfoGation, threatened before the National Labor Relations Board or
any comparable state agency. There is no strike, labor dispute, slowdown, or
stoppage actually pending or, to the knowledge of InfoGation, threatened against
26
InfoGation. To the knowledge of InfoGation, no union organizing activities are
taking place with respect to the business of InfoGation. No grievance, nor any
arbitration proceeding arising out of or under any collective bargaining
agreement is pending and, to the knowledge of InfoGation, no claims therefor
exist. No collective bargaining agreement that is binding on InfoGation
restricts it from relocating or closing any of its operations. InfoGation has
not experienced any work stoppage.
(b) There is and has not been any claim against InfoGation or
its officers or employees, or to InfoGation's knowledge, threatened against
InfoGation or its officers or employees, based on actual or alleged race, age,
sex, disability or other harassment or discrimination, or similar tortuous
conduct, or based on actual or alleged breach of contract with respect to any
person's employment by InfoGation, nor, to the knowledge of InfoGation, is there
any basis for any such claim.
(c) There are no pending claims against InfoGation under any
workers' compensation plan or policy or for long-term disability. Neither
InfoGation nor any of its ERISA Affiliates has any material obligations under
COBRA with respect to any former employees or qualified beneficiaries
thereunder. InfoGation agrees to provide BSQUARE at the Effective Time with an
updated list of "M&A qualified beneficiaries" (as defined in Treasury Regulation
Section 54.4980B-9 (Q&A-4). InfoGation is in material compliance with all
currently applicable laws and regulations respecting employment, discrimination
in employment, terms and conditions of employment, wages, hours and occupational
health and safety in employment practices. InfoGation has withheld all amounts
required by law or by agreement to be withheld from the wages, salaries, and
other payments to employees, and is not liable for any arrears of wages or any
taxes or penalties for failure to comply with the foregoing. InfoGation is not
liable for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees. There are no
controversies pending or, to the knowledge of InfoGation, threatened between
InfoGation and any of its employees which controversies have or could reasonably
be expected to result in an action, suit, proceeding, claim, arbitration or
investigation before any agency, court or tribunal.
3.15 Trade Regulation. To InfoGation's knowledge, all of the prices
charged by InfoGation in connection with the marketing or sale of any products
or services have been in compliance with all applicable laws and regulations. No
claims have been communicated or threatened in writing against InfoGation with
respect to wrongful termination of any dealer, distributor or any other
marketing entity, discriminatory pricing, price fixing, unfair competition,
false advertising, or any other violation of any laws or regulations relating to
anti-competitive practices or unfair trade practices of any kind, and to
InfoGation's knowledge, no specific situation, set of facts, or occurrence
provides any basis for any such claim against InfoGation.
3.16 Insider Transactions. InfoGation is not indebted to any
director, officer, employee or agent of InfoGation (except for amounts due in
reimbursement of ordinary expenses), and no such person is indebted to
InfoGation. Except as set forth in Section 3.16 of the Disclosure Schedule, no
affiliate ("Affiliate") as defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), of InfoGation owns any asset that
is used in the Company's business or has any relationship with InfoGation that
would require
27
disclosure under Item 404 of Regulation S-K under the Securities Act if
InfoGation were subject to such regulation.
3.17 Employees, Independent Contractors and Consultants. The
InfoGation Disclosure Schedule lists all past and all currently effective
written or oral consulting, independent contractor and/or employment agreements
involving the development of InfoGation Proprietary Rights and all currently
effective written or oral consulting, independent contractor and/or employment
agreements (except for standard employee offer letters prepared by InfoGation
and executed and delivered by InfoGation and its employees) and other material
agreements concluded with individual employees, independent contractors or
consultants to which InfoGation is or was a party. True and correct copies of
all such written agreements and standard offer letters have been provided to
BSQUARE or its representatives. To InfoGation's knowledge, no employees,
independent contractors or consultants of InfoGation are in violation of any
term of any employment agreement, consulting agreement, confidentiality
agreement, inventions assignment agreement, or noncompetition agreement between
InfoGation and such individual, or to InfoGation's knowledge, in violation of
any restrictive covenant to a former employer relating to the right of any such
individual to be employed or engaged by InfoGation because of the nature of the
business conducted by InfoGation or to the use of trade secrets or proprietary
information of others. To InfoGation's knowledge, all independent contractors
have been properly classified as independent contractors for the purposes of
federal and applicable state Tax laws, laws applicable to employee benefits and
other applicable law. All salaries and wages paid by InfoGation are in
compliance with applicable federal, state and local laws. Also shown on the
InfoGation Disclosure Schedule are the names, positions and salaries or rates of
pay, including bonuses, of all persons presently employed by InfoGation.
3.18 Insurance. The InfoGation Disclosure Schedule contains a list
of the policies of fire, liability and other forms of insurance currently held
by InfoGation, and all claims made by InfoGation under such policies. To its
knowledge, InfoGation has not done anything, either by way of action or
inaction, that might invalidate such policies in whole or in part. There is no
claim pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have been paid
and InfoGation is otherwise in compliance with the terms of such policies and
bonds.
3.19 Accounts Receivable. The accounts receivable of InfoGation, as
shown on the Most Recent Balance Sheet and as set forth on the InfoGation
Disclosure Schedule, were incurred in the ordinary course of business.
3.20 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of InfoGation, threatened
against InfoGation or any of its properties or any of its officers, directors,
employees or agents (in their capacities as such). There is no judgment, decree
or order against InfoGation, or, to the knowledge of InfoGation, any of its
directors, officers, employees or agents (in their capacities as such). To
InfoGation's knowledge, no circumstances exist that could reasonably be expected
to result in a claim against InfoGation as a result of the conduct of
InfoGation's business (including, without limitation, any claim of infringement
of any intellectual property right). The matters described in this Section 3.20
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include, but are not limited to, those arising under any applicable federal,
state and local laws, regulations and agency interpretations of the same
relating to the collection and use of user information gathered in the course of
InfoGation's operations.
3.21 Governmental Authorizations and Regulations. InfoGation has
obtained each federal, state, county, local or foreign governmental consent,
license, permit, grant, or other authorization of a Governmental Entity (a)
pursuant to which InfoGation currently operates or holds any interest in any of
its properties or (b) that is required for the operation of InfoGation's
business or the holding of any such interest, and all of such authorizations are
in full force and effect.
3.22 Subsidiaries. InfoGation has no Subsidiaries. InfoGation does
not own or control (directly or indirectly) any capital stock, bonds or other
securities of, and does not have any proprietary interest in, any other
corporation, general or limited partnership, limited liability company, firm,
association or business organization, entity or enterprise, and InfoGation does
not control (directly or indirectly) the management or policies of any other
corporation, partnership, limited liability company, firm, association or
business organization, entity or enterprise.
3.23 Compliance with Environmental Requirements. InfoGation has
obtained all permits, licenses and other authorizations which are required under
federal, state and local laws applicable to InfoGation and relating to pollution
or protection of the environment, including laws or provisions relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials, substances, or wastes into air,
surface water, groundwater, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials,
substances, or wastes or which are intended to assure the safety of employees,
workers or other persons. InfoGation is in compliance with all terms and
conditions of all such permits, licenses and authorizations. There are no
conditions, circumstances, activities, practices, incidents, or actions relating
to InfoGation which could reasonably be expected to form the basis of any claim,
action, suit, proceeding, hearing, or investigation of, by, against or relating
to InfoGation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, or hazardous or toxic substance, material or waste, or relating to
the safety of employees, workers or other persons.
3.24 Corporate Documents. InfoGation has furnished to BSQUARE or
its representatives: (a) copies of its certificate of incorporation and bylaws,
each as amended to date; (b) consents, actions, and meetings of the
stockholders, the board of directors and any committees thereof; (c) all
permits, orders, and consents issued by any regulatory agency with respect to
InfoGation, or any securities of InfoGation, and all applications for such
permits, orders, and consents; and (d) the stock transfer books of InfoGation
setting forth all transfers of any capital stock. The stock certificate books,
stock registers and other corporate records of InfoGation are complete and
accurate, and the signatures appearing on all documents contained therein are
the true or facsimile signatures of the persons purporting to have signed the
same.
29
3.25 No Brokers. Except as set forth in the Disclosure Schedule,
neither InfoGation nor, to InfoGation's knowledge, any InfoGation stockholder is
obligated for the payment of fees or expenses of any broker or finder in
connection with the origination, negotiation or execution of this Agreement or
the other Transaction Documents or in connection with any transaction
contemplated herein or therein or with respect to any previous issuance of
InfoGation Securities.
3.26 Customers and Suppliers. As of the date hereof, no customer
which individually accounted for more than five percent (5%) of InfoGation's
gross revenues during the 12-month period preceding the date hereof, and no
material supplier of InfoGation, has canceled or otherwise terminated prior to
the expiration of the contract term, or, to InfoGation's knowledge, made any
written threat to InfoGation to cancel or otherwise terminate its relationship
with InfoGation, or has at any time on or after January 31, 2002 decreased
materially its services or supplies to InfoGation in the case of any such
supplier, or its usage of the services or products of InfoGation in the case of
such customer, and to InfoGation's knowledge, no such supplier or customer
intends to cancel or otherwise terminate its contractual relationship with
InfoGation or to decrease materially its services or supplies to InfoGation or
its usage of the services or products of InfoGation, as the case may be.
InfoGation has not (a) breached, so as to provide a benefit to InfoGation that
was not intended by the parties, any agreement with, or (b) engaged in any
fraudulent conduct with respect to, any customer or supplier or InfoGation.
InfoGation's customers and suppliers are listed on the InfoGation Disclosure
Schedule.
3.27 InfoGation Action. The board of directors of InfoGation, at a
meeting duly called and held, has (a) determined that the Merger is fair and in
the best interests of InfoGation and its stockholders, (b) approved, and
declared the advisability of the Merger, this Agreement and the transactions
contemplated hereby in accordance with the provisions of Delaware Law, and (c)
directed that this Agreement and the Merger be submitted to InfoGation
stockholders for their approval and resolved to recommend that InfoGation
stockholders vote in favor of the approval of the Merger, this Agreement and the
transactions contemplated hereby.
3.28 Privacy Laws and Policies Compliance. InfoGation has complied
in all material respects with all applicable federal, state and local laws, and
regulations relating to the collection and use of user information gathered in
the course of InfoGation's operations, and InfoGation has at all times complied
with all rules, policies and procedures established by InfoGation from time to
time with respect to the foregoing.
3.29 Disclosure. No statements by InfoGation contained in this
Agreement, its exhibits and schedules (when read together) nor in any of the
certificates or documents, including any of the Transaction Documents, delivered
or required to be delivered by InfoGation to BSQUARE or Sub under this Agreement
contain any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. InfoGation
has disclosed to BSQUARE all material information of which it is aware relating
specifically to the operations and business of InfoGation as of the date of this
Agreement or the transactions contemplated in this Agreement.
3.30 Disclosure to Stockholders. InfoGation has read and reviewed
the information statement to be sent to the stockholders of InfoGation in
connection with the written consent of
30
stockholders of InfoGation (such information statement as amended or
supplemented is referred to herein as the "Information Statement") and that,
with respect to the information InfoGation has supplied, the Information
Statement does not contain any statement which is false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not false or misleading.
3.31 Vote Required. The affirmative vote of the holders of (i) a
majority of the InfoGation Common Stock and InfoGation Preferred Stock, voting
together as a group, (ii) a majority of the InfoGation Common Stock, voting as a
separate series, (iii) a majority of the InfoGation Series B-1 Preferred Stock,
voting as a separate series, (iv) a majority of the InfoGation Series B-2
Preferred Stock, voting as a separate series and (v) eighty-five percent (85%)
of the InfoGation Series C Preferred Stock voting as a separate series, are the
only votes of the holders of InfoGation's Capital Stock necessary to approve the
Merger, this Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BSQUARE AND SUB
BSQUARE and Sub jointly and severally represent and warrant to
InfoGation that the statements contained in this Article IV are true and correct
except as set forth in the disclosure schedule delivered by BSQUARE to
InfoGation on or before the date of this Agreement (the "BSQUARE Disclosure
Schedule"). The BSQUARE Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
IV.
4.1 Organization of BSQUARE and Sub. Each of BSQUARE and Sub, is a
corporation duly organized and validly existing under the laws of the State of
Washington and has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted and is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed would have a
Material Adverse Effect on BSQUARE or Sub.
4.2 Valid Issuance of BSQUARE Common Stock. The shares of BSQUARE
Common Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid and nonassessable, and will not be subject to
preemptive or repurchase rights or rights of first refusal created by applicable
law, BSQUARE's articles of incorporation or bylaws, or any agreement by which
BSQUARE is a party or is bound (except for the Escrow Shares which are subject
to this Agreement and the Escrow Agreement), and issued in compliance with all
applicable federal or state securities laws.
4.3 Authority; No Conflict; Required Filings and Consents.
(a) Each of BSQUARE and Sub has all requisite corporate power
and authority to enter into this Agreement and the other Transaction Documents
to which it is or will become a party and to consummate the transactions
contemplated in this Agreement and such Transaction Documents. The execution and
delivery of this Agreement and such Transaction Documents and
31
the consummation of the transactions contemplated in this Agreement and such
Transaction Documents have been duly authorized by all necessary corporate
action on the part of BSQUARE and Sub. This Agreement has been and such
Transaction Documents have been or, to the extent not executed as of the date
hereof, will be duly executed and delivered by BSQUARE and Sub. This Agreement
and each of the Transaction Documents to which BSQUARE or Sub is a party
constitutes, and each of the Transaction Documents to which BSQUARE or Sub will
become a party when executed and delivered by BSQUARE or Sub will constitute, a
valid and binding obligation of BSQUARE or Sub, enforceable by InfoGation
against BSQUARE or Sub, as the case may be, in accordance with its terms, except
to the extent that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the enforcement
of creditors' rights generally and by general principles of equity, regardless
of whether such enforceability is considered in a proceeding at law or in
equity.
(b) The execution and delivery by BSQUARE or Sub of this
Agreement and the Transaction Documents to which it is or will become a party
does not, and consummation of the transactions contemplated in this Agreement or
the Transaction Documents to which it is or will become a party will not, (i)
conflict with, or result in any violation or breach of any provision of the
articles of incorporation or bylaws of BSQUARE or Sub, respectively, (ii) result
in any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any material benefit) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which BSQUARE or
Sub is a party or by which either of them or any of their properties or assets
may be bound, or (iii) conflict or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to BSQUARE or Sub or any of their properties or assets, except in the
case of (ii) and (iii) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which would not have a Material
Adverse Effect on BSQUARE and its Subsidiaries, taken as a whole.
(c) Neither the execution and delivery of this Agreement by
BSQUARE or Sub or the Transaction Documents to which BSQUARE or Sub is or will
become a party nor the consummation of the transactions contemplated herein or
therein will require any consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, except for
(i) the filing of the Washington Articles of Merger with the Secretary of State
of the State of Washington (ii) the filing of the Delaware Certificate of Merger
with the Secretary of State of the State of Delaware, (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws and the laws
of any foreign country, and (iv) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, could be expected to
have a Material Adverse Effect on BSQUARE and its Subsidiaries, taken as a
whole.
4.4 Commission Filings; Financial Statements.
(a) BSQUARE has filed with the Commission all forms, reports
and documents required to be filed by BSQUARE with the Securities and Exchange
Commission (the "Commission") since October 19, 1999 (collectively, the "BSQUARE
Commission Reports").
32
The BSQUARE Commission Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such BSQUARE Commission
Reports or necessary in order to make the statements in such BSQUARE Commission
Reports, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the financial statements (including, in each case,
any related notes) contained in the BSQUARE Commission Reports, including any
BSQUARE Commission Reports filed after the date of this Agreement until the
Closing, complied or will comply as to form in all material respects with the
applicable published rules and regulations of the Commission with respect
thereto, was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the Commission) and fairly
presented the consolidated financial position of BSQUARE and its Subsidiaries as
of the respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
4.5 Compliance with Laws. BSQUARE has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which would not have a Material Adverse Effect
on BSQUARE and its Subsidiaries, taken as a whole.
4.6 Interim Operations of Sub. Sub was formed by BSQUARE solely for the
purpose of engaging in the transactions contemplated in this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated in this Agreement. Sub has no liabilities and, except for a
subscription agreement pursuant to which all of its authorized capital stock was
issued to BSQUARE, is not a party to any agreement other than this Agreement.
4.7 Disclosure. No statements by BSQUARE contained in this Agreement,
its exhibits and schedules, or any of the certificates or documents, including
any of the Transaction Documents, required to be delivered by BSQUARE or Sub to
InfoGation under this Agreement contain any untrue statement of material fact or
omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
4.8 Disclosure to InfoGation Stockholders. BSQUARE has read and
reviewed the Information Statement and that, with respect to the information
BSQUARE has supplied, the Information Statement does not contain any statement
which is false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not false or misleading.
33
4.9 No Litigation. Except as set forth in Section 4.9 of the BSQUARE
Disclosure Schedule, there is no action, investigation or proceeding pending
against, and to the knowledge of BSQUARE, threatened against or effecting
BSQUARE or Sub before any court, agency, government entity or tribunal the
result of which would have a Material Adverse Effect on BSQUARE.
ARTICLE V
PRECLOSING COVENANTS OF INFOGATION
5.1 Approval of InfoGation Stockholders. Prior to the Closing Date,
InfoGation will solicit written consents from its stockholders seeking approval
of this Agreement, the Merger and related matters. In soliciting such written
consent, the board of directors of InfoGation will (subject to satisfying its
fiduciary obligations to the stockholders of InfoGation) recommend to the
stockholders of InfoGation that they approve and adopt this Agreement and the
Merger and shall use its best efforts to obtain the approval of the stockholders
of InfoGation entitled to consent to this Agreement and the Merger. With the
assistance and cooperation of BSQUARE, InfoGation will prepare as soon as
reasonably practicable the Information Statement to be sent with the
solicitation of written consents from the stockholders of InfoGation to approve
this Agreement, the Merger and related matters. InfoGation shall cooperate with
and assist BSQUARE so that the Information Statement shall be in such form and
contain such information so as to permit compliance by BSQUARE with the
requirements of applicable federal and state securities laws in connection with
the issuance of shares of BSQUARE Common Stock in the Merger and will comply in
all material respects with all applicable requirements of law and the rules and
regulations promulgated thereunder. Within two business days after the execution
of this Agreement and the completion of the Information Statement, InfoGation
will distribute the Information Statement to the stockholders of InfoGation.
Whenever any event occurs which should be set forth in an amendment or
supplement to the Information Statement, InfoGation or BSQUARE, as the case may
be, will promptly inform the other of such occurrence and cooperate in making
any appropriate amendment or supplement, and in mailing to such amendment or
supplement to the stockholders of InfoGation.
5.2 Advice of Changes. InfoGation will promptly advise BSQUARE in
writing of any event known to InfoGation occurring subsequent to the date of
this Agreement which would render any representation or warranty of InfoGation
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue or inaccurate in any material respect; provided however,
that nothing provided by InfoGation after the date of this Agreement pursuant to
this Section 5.2 or any other provision of this Agreement shall affect the
representations, warranties, covenants or agreements of the parties in this
Agreement or the conditions to the obligations of the parties under this
Agreement, except as specifically set forth herein.
5.3 Operation of Business. During the period from the date of this
Agreement and continuing until the earlier of the termination of the Agreement
or the Effective Time, InfoGation agrees (except to the extent that BSQUARE
shall otherwise consent in writing) to carry on its business in the usual,
regular and ordinary course in substantially the same manner as previously
conducted, to pay its debts and Taxes when due, subject to good faith disputes
over such debts or Taxes, to pay or perform other obligations when due, to
comply with all applicable
34
laws, rules, regulations and orders, and, to the extent consistent with such
business, use all reasonable efforts consistent with past practices and policies
to preserve intact its present business organization, keep available the
services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and
ongoing businesses would be unimpaired at the Effective Time. InfoGation shall
promptly notify BSQUARE of any event or occurrence not in the ordinary course of
business of InfoGation. Except as expressly contemplated by this Agreement,
InfoGation shall not, without the prior written consent of BSQUARE:
(a) accelerate, amend or change the period of exercisability
or the vesting schedule of any options or restricted stock granted under any
InfoGation Option Plan or agreements or authorize cash payments in exchange for
any options or stock granted under any of such plans except as specifically
required by the terms of such plans or any related agreements or any such
agreements in effect as of the date of this Agreement and disclosed in the
InfoGation Disclosure Schedule;
(b) declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of capital stock of such party, or purchase or
otherwise acquire, directly or indirectly, any shares of its capital stock
except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service by such party and as set forth in the InfoGation
Disclosure Schedule;
(c) issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, or purchase or propose the purchase of, any
shares of its capital stock or securities convertible into shares of its capital
stock, or subscriptions, rights, warrants or options to acquire, or other
agreements or commitments of any character obligating it to issue any such
shares or other convertible securities, other than (i) the issuance of shares of
InfoGation Common Stock issuable upon exercise of InfoGation Options, which are
outstanding on the date of this Agreement or (ii) the repurchase of shares of
Common Stock from terminated employees pursuant to the terms of outstanding
stock restriction or similar agreements;
(d) acquire or agree to acquire by merging or consolidating
with, or by purchasing an equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership or other
business organization or division, or otherwise acquire or agree to acquire any
assets;
(e) sell, lease, license or otherwise dispose of any of its
properties or assets (other than InfoGation Proprietary Rights) except in the
ordinary course of business;
(f) (i) except as set forth on the InfoGation Disclosure
Schedule, increase or agree to increase the compensation payable or to become
payable to its officers or employees, (ii) except as set forth on the InfoGation
Disclosure Schedule, grant any additional severance or termination pay to, or
enter into any employment or severance agreements with, officers, (iii)
35
grant any severance or termination pay to, or enter into any employment or
severance agreement, with any non-officer employee, (iv) enter into any
collective bargaining agreement, or (v) establish, adopt, enter into or amend
(except as may be required by pursuant to any applicable law, rule or
regulation) in any material respect any InfoGation Employee Plan, any bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees;
(g) revalue any of its assets, including writing down the
value of inventory or writing off notes or accounts receivable;
(h) incur any indebtedness or guarantee any such indebtedness
or issue or sell any debt securities or warrants or rights to acquire any debt
securities or guarantee any debt securities of others;
(i) amend or propose to amend its certificate of incorporation
or bylaws;
(j) incur or commit to incur any capital expenditures in
excess of Five Thousand Dollars ($5,000) in the aggregate or in excess of Two
Thousand Five Hundred Dollars ($2,500) as to any individual matter;
(k) lease, license, sell, transfer or encumber or permit to be
encumbered any asset, InfoGation Proprietary Right or other property associated
with the business of InfoGation (including sales or transfers to Affiliates of
InfoGation) (other than non-exclusive object code licenses of software forming
part of the InfoGation Proprietary Rights granted in the ordinary course of
business);
(l) enter into any lease or contract for the purchase or sale
of any property, real or personal, except in the ordinary course of business
involving annual expenditures of less than $10,000;
(m) materially reduce the amount of any insurance coverage
provided by existing insurance policies;
(n) fail to maintain its equipment and other assets in the
state they were in as of the date of this Agreement, subject only to ordinary
wear and tear;
(o) change accounting methods;
(p) amend or terminate any contract, agreement or license to
which it is a party except in the ordinary course of business with the prior
written consent of BSQUARE;
(q) loan any amount to any person or entity, or guaranty or
act as a surety for any obligation;
(r) waive or release any right or claim, except in the
ordinary course of business with the prior written consent of BSQUARE;
36
(s) make or change any material Tax or accounting election,
change any annual accounting period, adopt or change any accounting method, file
any amended Return, enter into any closing agreement, settle any Tax claim or
assessment relating to InfoGation, surrender any right to claim refund of Taxes,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment relating to InfoGation, or take any other action or omit
to take any action that would have the effect of increasing the Tax liability of
InfoGation or BSQUARE;
(t) pay, discharge or satisfy in an amount in excess of $2,000
in any one case, or $10,000 in the aggregate, any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) arising
other than in the ordinary course of business, other than the payment, discharge
or satisfaction of liabilities reflected or reserved in the InfoGation Financial
Statements;
(u) take any action or fail to take any action that would
cause there to be a Material Adverse Change with respect to InfoGation;
(v) enter into any agreement outside of the ordinary course of
business;
(w) enter into any agreement (including without limitation any
licenses to information or databases, any OEM agreements, any exclusive
agreements of any kind, or any agreements providing for obligations that would
extend beyond one hundred eighty (180) days of the date of this Agreement) other
than in the ordinary course of business consistent with past practice;
(x) continue or begin any discussions or negotiations
regarding any international expansion, licensing, joint ventures, partnership or
other arrangements, plans or other similar commitments or understandings;
(y) commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith determines that
failure to commence suit would result in the material impairment of a valuable
aspect of its business, provided that it consults with BSQUARE prior to the
filing of such suit or (iii) for the breach of this Agreement; or
(z) take, or agree in writing or otherwise to take, any of the
actions described in clauses (a) through (y) above, or any action which is
reasonably likely to make any of InfoGation's representations or warranties
contained in this Agreement untrue or incorrect on the date made or as of the
Effective Time.
5.4 Access to Information. Until the Closing, InfoGation shall allow
BSQUARE and its agents reasonable free access, upon reasonable notice, to its
officers, directors, employees, files, books, records, and offices, including,
without limitation, any and all information relating to Taxes, commitments,
contracts, leases, licenses, personal and real property and financial condition.
Until the Closing, InfoGation shall cause its accountants to cooperate with
BSQUARE and its agents in making available all financial information requested,
including, without limitation, the right to examine all working papers
pertaining to all financial statements prepared or audited by such accountants.
No information or knowledge obtained in any investigation pursuant to this
Section shall affect or be deemed to modify any representation or
37
warranty contained in this Agreement or its exhibits and schedules. All such
access shall be subject to the terms of the Confidentiality Agreement (as
defined in Section 7.1).
5.5 Satisfaction of Conditions Precedent. InfoGation will use its best
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Sections 8.1 and 8.2, and InfoGation will use its best efforts
to cause the transactions contemplated in this Agreement to be consummated, and,
without limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties which may be necessary, advisable or reasonably
required on its part in order to effect the transactions contemplated in this
Agreement, including, without limitation, all consents necessary to consummate
the Merger with respect to those Material Contracts listed on the InfoGation
Disclosure Schedule (the "Material Consents").
5.6 Other Negotiations. Following the date hereof and until termination
of this Agreement pursuant to Section 9.1, InfoGation will not take (and it will
not permit any of its officers, directors, shareholders, optionholders,
warrantholders, employees, agents, Affiliates or representatives to take) any
action to solicit, initiate, seek, encourage or support any inquiry, proposal or
offer from, furnish any information to, or participate in any negotiations with,
any corporation, partnership, person or other entity or group (other than
BSQUARE) regarding any acquisition of InfoGation, any merger or consolidation
with or involving InfoGation, or any acquisition of any material portion of the
stock or assets of InfoGation or any material license of InfoGation Proprietary
Rights (any of the foregoing being referred to in this Agreement as an
"Acquisition Transaction") or enter into an agreement concerning any Acquisition
Transaction with any party other than BSQUARE. If between the date of this
Agreement and the termination of this Agreement pursuant to Section 9.1,
InfoGation receives from a third party any offer or indication of interest
regarding any Acquisition Transaction, or any request for information regarding
any Acquisition Transaction, InfoGation shall (a) notify BSQUARE immediately
(verbally and in writing) of such offer, indication of interest or request,
including the identity of such party and the full terms of any proposal therein,
and (b) notify such third party immediately of InfoGation's obligations under
this Agreement. Any notification of such third party shall comply with
InfoGation's obligations under the Confidentiality Agreement.
5.7 Budget and Updated Financial Information. InfoGation shall provide
to BSQUARE internally generated financial statements, including a statement of
cash flows, within 2 business days after the end of each week between the date
of this Agreement and the Closing Date.
5.8 Certain Employee Benefits Matters. Unless otherwise required by
applicable law, InfoGation shall take such actions as are requested by BSQUARE
that may be necessary to terminate or continue the InfoGation Employee Plans, as
determined by BSQUARE in its sole discretion.
ARTICLE VI
PRECLOSING AND OTHER COVENANTS OF BSQUARE AND SUB
6.1 Advice of Changes. BSQUARE and Sub will promptly advise InfoGation
in writing of any event occurring subsequent to the date of this Agreement which
would render any
38
representation or warranty of BSQUARE or Sub contained in this Agreement, if
made on or as of the date of such event or the Closing Date, untrue or
inaccurate in any material respect; provided however, that nothing provided by
BSQUARE after the date of this Agreement pursuant to this Section 6.1 or any
other provision of this Agreement shall affect the representations, warranties,
covenants or agreements of the parties in this Agreement or the conditions to
the obligations of the parties under this Agreement, except as specifically set
forth herein.
6.2 Information Statement. As soon as reasonably practicable, BSQUARE
will provide InfoGation with such information as is reasonably necessary for
inclusion with the Information Statement so as to permit compliance by BSQUARE
with the requirements of applicable federal and state securities laws in
connection with the issuance of shares of BSQUARE Common Stock in the Merger.
The Information Statement shall include as an attachment an Investor
Representation Statement, in substantially the form attached hereto as Exhibit B
(an "Investor Representation Statement"), to be completed by each holder of
InfoGation Capital Stock and delivered to BSQUARE.
6.3 Reservation of BSQUARE Common Stock. BSQUARE shall prior to the
Effective Time reserve for issuance, out of its authorized but unissued capital
stock, the maximum number of shares of BSQUARE Common Stock as may be issuable
upon consummation of the Merger.
6.4 Satisfaction of Conditions Precedent. BSQUARE and Sub will use
their best efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Sections 8.1 and 8.3, and BSQUARE and Sub will
use their best efforts to cause the transactions contemplated in this Agreement
to be consummated, and, without limiting the generality of the foregoing, to
obtain all consents and authorizations of third parties and to make all filings
with, and give all notices to, third parties which may be necessary or
reasonably required on its part in order to effect the transactions contemplated
herein.
6.5 Nasdaq National Market Listing. BSQUARE shall prior to the
Effective Time cause the shares of BSQUARE Common Stock issuable to the
stockholders of InfoGation in the Merger to be authorized for listing on the
Nasdaq National Market in accordance with applicable regulations.
6.6 Registration Rights. BSQUARE and InfoGation will execute and
deliver at closing a Registration Rights Agreement in the form attached hereto
as Exhibit C granting the holders of InfoGation Series C Preferred Stock
immediately prior to the Closing certain piggyback registration rights with
respect to BSQUARE Common Stock into which their InfoGation Series C Preferred
Stock is converted (the "Registration Rights Agreement").
6.7 Employee Benefit Matters. Following the Effective Time, BSQUARE, in
its sole and absolute discretion, shall arrange for each participant (including
without limitation all dependents) in the InfoGation Employee Plans ("InfoGation
Participants") to participate in BSQUARE's and/or Sub's employee benefit plans
("BSQUARE Plans") to the same extent as similarly situated employees of BSQUARE
and their dependents. Each InfoGation Participant who continues to be employed
by BSQUARE (or any of its subsidiaries) or Sub immediately following the
Effective Time shall, to the extent permitted by law and applicable tax
39
qualification requirements, and subject to any generally applicable break in
service or similar rule, receive credit for all purposes for eligibility to
participate and vesting under BSQUARE's 401(k) Plan for years of service with
InfoGation (and its subsidiaries and predecessors) prior to the Effective Time.
6.8 Attorneys' Fees . At the Closing, BSQUARE shall pay Infogation's
attorneys' fees in the amount of $100,000, as well as the reasonable expenses of
Infogation's attorneys, incurred in connection with the Merger.
ARTICLE VII
OTHER AGREEMENTS
7.1 Confidentiality. Each party acknowledges that BSQUARE and
InfoGation have previously executed a Non-Disclosure Agreement (the
"Confidentiality Agreement"), which agreement shall continue in full force and
effect in accordance with its terms.
7.2 No Public Announcement. The parties shall make no public
announcement concerning this Agreement, their discussions or any other
memoranda, letters or agreements between the parties relating to the Merger;
provided, however, that (i) either party may make disclosure if required under
applicable law, including disclosure by BSQUARE of the Merger and the
transactions contemplated thereby to the SEC and the Nasdaq National Market as
may be necessary under applicable securities laws and listing requirements; (ii)
either party may disclose, in general terms only, the Merger and the
transactions contemplated thereby, to its employees and the media, so long as,
with respect to the media communications, the other party gives its prior
consent to the content of such communications, which consent shall not be
unreasonably withheld, conditioned or delayed.
7.3 Regulatory Filings; Consents; Reasonable Efforts. Subject to the
terms and conditions of this Agreement, InfoGation and BSQUARE shall (a) make
all necessary filings with respect to the Merger and this Agreement under the
Securities Act and the Exchange Act and applicable blue sky or similar
securities laws and obtain required approvals and clearances with respect
thereto and supply all additional information requested in connection therewith;
(b) make merger notification or other appropriate filings with federal, state or
local governmental bodies or applicable foreign governmental agencies and obtain
required approvals and clearances with respect thereto and supply all additional
information requested in connection therewith; (c) use their respective
reasonable good faith efforts to obtain all consents, waivers, approvals,
authorizations and orders required in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Merger; and
(d) use their respective reasonable good faith efforts to take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable.
7.4 Further Assurances. Prior to and following the Closing, each party
agrees to cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by any
40
other party to better evidence and reflect the transactions described herein and
contemplated herein and to carry into effect the intents and purposes of this
Agreement.
7.5 Escrow Agreement. On or before the Effective Time, BSQUARE shall,
and the parties hereto shall exercise their reasonable good faith efforts to
cause the Escrow Agent (as defined in Section 10.2) and the Stockholders' Agent
(as defined in Section 10.9), to enter into a Escrow Agreement in substantially
the form attached hereto as Exhibit A.
7.6 Blue Sky Laws. BSQUARE shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the BSQUARE Common Stock in connection with the
Merger. InfoGation shall use its reasonable good faith efforts to assist BSQUARE
as may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of BSQUARE
Common Stock in connection with the Merger.
7.7 Other Filings. As promptly as practicable after the date of this
Agreement, InfoGation and BSQUARE will prepare and file any other filings
required under the Exchange Act, the Securities Act or any other federal,
foreign or state securities or blue sky laws relating to the Merger and the
transactions contemplated in this Agreement (the "Other Filings"). Whenever any
event occurs which is required to be set forth in an amendment or supplement to
the Other Filings, InfoGation or BSQUARE, as the case may be, will promptly
inform the other of such occurrence and cooperate in making any appropriate
amendment or supplement, and/or mailing to stockholders of InfoGation, such
amendment or supplement.
7.8 Availability of BSQUARE's Public Information. BSQUARE shall timely
file all reports required to be filed pursuant to the Exchange Act and to keep
available adequate current public information about itself, as such information
is described in Section (c) of Rule 144 of the Securities Act.
7.9 Qualification as Reorganization Each of BSQUARE and InfoGation
shall use reasonable best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code. Without
limiting the generality of the foregoing, except where otherwise required by
law, each of BSQUARE, Sub and InfoGation shall not take a position on any tax
returns inconsistent with the treatment of the Merger for tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code by reason
of Section 368(a)(2)(D) of the Code.
ARTICLE VIII
CONDITIONS TO MERGER
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The stockholders of InfoGation
entitled to vote on or consent to this Agreement and the Merger, including,
without limitation, Clarion Co. and CCA, shall have duly approved this Agreement
and the Merger.
41
(b) Approvals. Other than the filings provided for by Section
1.1, all authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental
Entity shall have been filed, occurred or been obtained.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger or limiting or restricting
the conduct or operation of the business of InfoGation by BSQUARE after the
Merger shall have been issued, nor shall any proceeding brought by a domestic
administrative agency or commission or other domestic Governmental Entity or
other third party, seeking any of the foregoing be pending; nor shall there be
any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger which makes the consummation of the
Merger illegal.
(d) Nasdaq. The shares of BSQUARE Common Stock to be issued in
the Merger shall have been approved for quotation on the Nasdaq National Market.
8.2 Additional Conditions to Obligations of BSQUARE and Sub. The
obligations of BSQUARE and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by BSQUARE and Sub:
(a) Representations and Warranties. The representations and
warranties of InfoGation and Kent Pu set forth in this Agreement shall be true
and correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except for changes
contemplated in this Agreement; and BSQUARE shall have received a certificate
signed on behalf of InfoGation by the chief executive officer or chief financial
officer of InfoGation to such effect.
(b) Performance of Obligations of InfoGation. InfoGation shall
have performed all obligations required to be performed by it under this
Agreement at or prior to the Closing Date; and BSQUARE shall have received a
certificate signed on behalf of InfoGation by the chief executive officer of
InfoGation to such effect.
(c) Secretary's Certificate. InfoGation shall have delivered
to BSQUARE (i) resolutions of the board of directors of InfoGation, certified by
its Secretary, authorizing its execution and delivery of this Agreement and the
performance of its obligations hereunder, and (ii) resolutions adopted by
written consent of the holders of InfoGation Capital Stock certified by its
Secretary, authorizing the execution and delivery of this Agreement and the
performance of InfoGation's obligations hereunder.
(d) Certificate and Bylaws. InfoGation shall have delivered to
BSQUARE a copy of the certificate of incorporation of InfoGation, certified as
of a recent date by the Secretary of State of Delaware, and the bylaws of
InfoGation, certified as of a recent date by its Secretary.
42
(e) Blue Sky Laws. BSQUARE shall have received all state
securities or "blue sky" permits and other authorizations necessary to issue
shares of BSQUARE Common Stock pursuant to the Merger.
(f) Escrow Agreement. The Escrow Agent and Stockholders' Agent
shall have executed and delivered to BSQUARE the Escrow Agreement and such
agreement shall remain in full force and effect.
(g) Employees; Employee Agreement. Kent Pu shall have executed
and delivered employment, non-competition and non-solicitation agreements in a
form satisfactory to BSQUARE. In addition, Kent Pu, and all other InfoGation
employees who shall become employees of BSQUARE at the Effective Time, shall
have executed and delivered BSQUARE's standard form of proprietary information
and invention assignment agreement.
(h) Opinion of InfoGation's Counsel. BSQUARE shall have
received an opinion letter dated the Closing Date of Wilson, Sonsini, Xxxxxxxx &
Xxxxxx, a Professional Corporation, counsel to InfoGation, in form and substance
reasonably satisfactory to BSQUARE.
(i) Approvals. All authorizations, consents (including the
Material Consents), or approvals of, or notifications to, any third party,
required by InfoGation's contracts, agreements or other obligations in
connection with the consummation of the Merger shall have occurred or been
obtained.
(j) Affirmative Vote or Dissenting Stockholders. Holders of
ninety-six percent (96%) or more of InfoGation's Capital Stock entitled to vote
on the Merger shall have voted in favor of the approval of the Merger.
(k) Financial Statements. InfoGation shall have provided all
of the information required by Section 5.7.
(l) Board Resignations. InfoGation shall have delivered to
BSQUARE written letters of resignation from the InfoGation board of directors
from each of the current members of such board of directors, in each case
effective at the Effective Time.
(m) Securities Exemption. Each holder of InfoGation Capital
Stock shall have executed and delivered to BSQUARE an Investor Representation
Statement and, based upon the information supplied in such Investor
Representation Statement, BSQUARE shall have reasonably concluded that the
issuance of shares of BSQUARE Common Stock shall be exempt from registration
under applicable federal and state securities laws.
(n) No Material Change. Since January 31, 2002, there shall
not have been any material adverse change in the financial condition, results of
operations, assets, liabilities, business or prospects of InfoGation or in any
Material Contract of InfoGation.
(o) Distribution Compliance with Law. InfoGation shall have
taken all necessary action to ensure that the distribution of the consideration
set forth in Section 2.1 of this Agreement is in compliance with Delaware law.
43
(p) Exclusivity Agreement. BSQUARE, InfoGation and Clarion Co.
shall have executed an Exclusivity Agreement in form and substance satisfactory
to BSQUARE whereby InfoGation (and, following the Effective Time, Sub) will be
the exclusive supplier of navigation software to Clarion.
8.3 Additional Conditions to Obligations of InfoGation. The obligation
of InfoGation to effect the Merger is subject to the satisfaction of each of the
following conditions, any of which may be waived, in writing, exclusively by
InfoGation:
(a) Representations and Warranties. The representations and
warranties of BSQUARE and Sub set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, and InfoGation shall have received a
certificate signed on behalf of BSQUARE by the chief executive officer or chief
financial officer of BSQUARE to such effect.
(b) Performance of Obligations of BSQUARE and Sub. BSQUARE and
Sub shall have performed all obligations required to be performed by them under
this Agreement at or prior to the Closing Date; and InfoGation shall have
received a certificate signed on behalf of BSQUARE by the chief executive
officer or chief financial officer of BSQUARE to such effect.
(c) No Material Change. Since January 31, 2002, there shall
not have been any material adverse change in the financial condition, results of
operations, assets, liabilities, business or prospects of BSQUARE.
(d) Escrow Agreement. The Escrow Agent and BSQUARE shall have
executed and delivered to InfoGation the Escrow Agreement and such agreement
shall remain in full force and effect.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of BSQUARE and InfoGation;
(b) by either BSQUARE or InfoGation, by giving written notice
to the other party, if a court of competent jurisdiction or other Governmental
Entity shall have issued a nonappealable final order, decree or ruling or taken
any other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger, except, if such party relying on
such order, decree or ruling or other action shall not have complied with its
respective obligations under Sections 5.5 or 6.3 of this Agreement, as the case
may be;
(c) by BSQUARE or InfoGation, by giving written notice to the
other party, if the other party is in material breach of any representation,
warranty, or covenant of such other party contained in this Agreement, which
breach shall not have been cured, if subject to cure, within
44
10 business days following receipt by the breaching party of written notice of
such breach by the other party;
(d) by BSQUARE, by giving written notice to InfoGation, if the
Closing shall not have occurred on or before April 15, 2002 by reason of the
failure of any condition precedent under Section 8.1 or 8.2 (unless the failure
results primarily from a material breach by BSQUARE of any representation,
warranty, or covenant of BSQUARE contained in this Agreement or BSQUARE's
failure to fulfill a material condition precedent to closing or other default);
(e) by InfoGation, by giving written notice to BSQUARE, if the
Closing shall not have occurred on or before April 15, 2002 by reason of the
failure of any condition precedent under Section 8.1 or 8.3 (unless the failure
results primarily from a material breach by InfoGation of any representation,
warranty, or covenant of InfoGation contained in this Agreement or InfoGation's
failure to fulfill a condition precedent to closing or other default).
9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of BSQUARE,
InfoGation, Sub or their respective officers, directors, stockholders or
Affiliates, except as set forth in Section 9.3 and further except to the extent
that such termination results from the willful breach by any such party of any
of its representations, warranties or covenants set forth in this Agreement.
9.3 Fees and Expenses. All fees and expenses (including investment
banking fees) incurred in connection with this Agreement and the transactions
contemplated herein shall be paid by the party incurring such expenses in the
event the Merger is not consummated. In the event the Merger is consummated,
then BSQUARE will assume the fees and expenses incurred by InfoGation in
connection with this Agreement and the transactions contemplated herein up to a
maximum of $650,000. Fees and expenses incurred by InfoGation in excess of
$650,000 (the "Additional Fees") shall be deducted by BSQUARE on a proportionate
basis from the aggregate Merger consideration paid to the holders of InfoGation
Capital Stock at the Closing. Notwithstanding the foregoing, if InfoGation has
violated the provisions of Section 5.6 of this Agreement, because the parties
agree that the damages to BSQUARE resulting from such violation would be
difficult to obtain, then InfoGation shall pay BSQUARE $500,000 in cash as
liquidated damages. InfoGation has submitted a budget to BSQUARE for completion
of the Merger. InfoGation shall use its best efforts to consummate the Merger
within such budget and shall not enter into any agreement inconsistent with such
budget.
ARTICLE X
ESCROW AND INDEMNIFICATION
10.1 Indemnification. From and after the Effective Time and subject
to the limitations contained in Section 10, InfoGation and the holders of
InfoGation Capital Stock, including, without limitation, Kent Pu, jointly and,
with respect to Kent Pu, severally, will indemnify and hold BSQUARE harmless
against any loss, expense, liability or other damage, including attorneys' fees,
to the extent of the amount of such loss, expense, liability or other damage
45
(collectively "Damages") that BSQUARE has incurred by reason of the breach or
alleged breach by InfoGation and Kent Pu of any representation, warranty,
covenant or agreement of InfoGation and Kent Pu contained in this Agreement that
occurs or becomes known to BSQUARE.
10.2 Escrow Fund. As partial security for the indemnities in
Section 10.1 and as soon as practicable after the Effective Time, the Escrow
Cash and the Escrow Shares shall be deposited by BSQUARE with Mellon Investor
Services (or such other institution selected by BSQUARE with the reasonable
consent of InfoGation) as Escrow Agent (the "Escrow Agent"), such deposit to
constitute the Escrow Fund (the "Escrow Fund") and to be governed by the terms
set forth in this Article X and in the Escrow Agreement. With respect to all
holders of InfoGation Capital Stock other than Kent Pu, the Escrow Fund shall be
the exclusive remedy of BSQUARE and Sub for breaches of the representations and
warranties made in this Agreement by InfoGation and Kent Pu, or for violations
of the covenants made by InfoGation in this Agreement. Furthermore, BSQUARE may
not receive any of the Escrow Cash and/or the Escrow Shares from the Escrow Fund
unless and until BSQUARE Officer's Certificates (as defined below) identifying
BSQUARE's Damages, the aggregate amount of which exceed $50,000, have been
delivered to the Escrow Agent as provided in Section 10.4; thereafter, BSQUARE
shall be entitled to be indemnified for all BSQUARE Damages in excess of such
$50,000 threshold. Any claims for BSQUARE Damages shall be offset or reduced by
the amount of any insurance proceeds actually received by BSQUARE and/or Sub.
10.3 Escrow Period. The Escrow Fund shall terminate upon the first
anniversary date of the Closing Date (the period from the Closing Date to such
date referred to as the "Escrow Period"), and on such date, each holder of
InfoGation Capital Stock who was entitled to shares of the Total Consideration
Shares shall be entitled to the release of such holder's Pro Rata Stock Portion
of what remains of the Escrow Shares as of such date and each holder of
InfoGation Capital Stock who was entitled to receive part of the Cash
Consideration shall be entitled to the release of such holder's Pro Rata Cash
Portion of what remains of the Escrow Cash as of such date, which releases shall
be made in accordance with the terms of Section 6 of the Escrow Agreement.
Notwithstanding the foregoing sentence, BSQUARE shall have the right, in its
reasonable discretion, to withhold that amount of Escrow Cash and/or Escrow
Shares which, subject to the objection of the Stockholders' Agent (as defined
below) and the subsequent resolution of the matter in the manner provided in
Section 10.8, is necessary to satisfy any unsatisfied claims specified in any
Officer's Certificate (as defined below) theretofore delivered to the Escrow
Agent and the Stockholders' Agent prior to termination of the Escrow Period with
respect to Damages incurred or litigation pending prior to expiration of the
Escrow Period, shall remain in the Escrow Fund until such claims have been
finally resolved.
10.4 Claims Upon Escrow Fund. Upon receipt by the Escrow Agent on
or before the last day of the Escrow Period of a certificate signed by any
appropriately authorized officer of BSQUARE (an "Officer's Certificate"):
(i) Stating the aggregate amount of BSQUARE's
Damages or an estimate thereof, in each case to the extent known or determinable
at such time; and
(ii) Specifying in reasonable detail the
individual items of such Damages included in the amount so stated, the date each
such item was paid or properly accrued
46
or arose, and the nature of the misrepresentation, breach or claim to which such
item is related, the Escrow Agent shall, subject to the provisions of Section
10.6 and 10.7 hereof and of the Escrow Agreement, deliver to BSQUARE out of the
Escrow Fund, as promptly as practicable, Escrow Cash and Escrow Shares having,
in aggregate, a value equal to such Damages all in accordance with the Escrow
Agreement. The Escrow Cash and Escrow Shares delivered pursuant to the preceding
sentence shall be delivered such that the relative proportion of Escrow Cash and
Escrow Shares shall remain the same before and after such distribution.
10.5 Valuation. For the purpose of compensating BSQUARE for its
Damages pursuant to this Agreement, the value of the Escrow Shares which shall
be released to BSQUARE in respect of a claim for Damages shall be $3.05 per
share.
10.6 Objections to Claims. At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such Officer's Certificate
shall be delivered to the Stockholders' Agent and for a period of 30 days after
such delivery, the Escrow Agent shall make no delivery of Escrow Cash and Escrow
Shares, as the case may be, pursuant to Section 10.4 unless the Escrow Agent
shall have received written authorization from the Stockholders' Agent to make
such delivery. After the expiration of such 30-day period, the Escrow Agent
shall make delivery of the Escrow Cash or Escrow Shares, as the case may be, in
the Escrow Fund in accordance with Section 10.4; provided, however, that no such
delivery may be made if the Stockholders' Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall have been delivered to the Escrow Agent and to BSQUARE prior to the
expiration of such 30-day period.
10.7 Resolution of Conflicts.
(a) In case the Stockholders' Agent shall so object in writing
to any claim or claims by BSQUARE made in any Officer's Certificate, BSQUARE
shall have 30 days to respond in a written statement to the objection of the
Stockholders' Agent. If after such 30-day period there remains a dispute as to
any claims, the Stockholders' Agent and BSQUARE shall attempt in good faith for
30 days to agree upon the rights of the respective parties with respect to each
of such claims. If the Stockholders' Agent and BSQUARE should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be
entitled to rely on any such memorandum and shall distribute the Escrow Cash or
the Escrow Shares, as the case may be, from the Escrow Fund in accordance with
the terms of the memorandum.
(b) If no such agreement can be reached after good faith
negotiation, either BSQUARE or the Stockholders' Agent may, by written notice to
the other, demand arbitration of the matter unless the amount of the damage or
loss is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained or both
parties agree to arbitration; and in either such event the matter shall be
settled by arbitration conducted by three arbitrators. Within 15 days after such
written notice is sent, BSQUARE (on the one hand) and the Stockholders' Agent
(on the other hand) shall each select one arbitrator, and the two arbitrators so
selected shall select a third arbitrator. The decision of the arbitrators as to
the validity and amount of any claim in such Officer's Certificate shall be
binding and conclusive upon the parties to this Agreement and the Escrow Agent
shall be entitled to act in
47
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance with such decision.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
King County, Washington under the commercial rules then in effect of the
American Arbitration Association. The non-prevailing party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the administrative fee
of the American Arbitration Association, and the expenses, including, without
limitation, the reasonable attorneys' fees and costs, incurred by the prevailing
party to the arbitration.
10.8 Stockholders' Agent.
(a) If this Agreement and the Merger are approved by the
requisite vote of InfoGation's stockholders, effective upon such vote and
without any further act by any former InfoGation stockholder, Kent Pu shall be
constituted and appointed as agent (the "Stockholders' Agent") for and on behalf
of the holders of InfoGation Capital Stock to give and receive notices and
communications, to authorize delivery to BSQUARE of the Escrow Cash and the
Escrow Shares or other property from the Escrow Fund in satisfaction of claims
by BSQUARE, to object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and to take all
actions necessary or appropriate in the judgment of the Stockholders' Agent for
the accomplishment of the foregoing. Such agency may be changed from time to
time by (i) the holders of a majority in interest of the Escrow Shares or (ii)
the holders of a majority in interest of the Escrow Shares deposited on behalf
of the holders of InfoGation Series C Preferred Stock immediately prior to the
Effective Time, in each case upon not less than 10 days' prior written notice to
BSQUARE. No bond shall be required of the Stockholders' Agent, and the
Stockholders' Agent shall receive no compensation for services. Notices or
communications to or from the Stockholders' Agent shall constitute notice to or
from each of the holders of InfoGation Capital Stock.
(b) The Stockholders' Agent shall not be liable for any act
done or omitted hereunder as Stockholders' Agent while acting in good faith, and
any act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith. The holders of InfoGation Capital Stock shall
severally and jointly indemnify the Stockholders' Agent and hold him harmless
against any loss, liability or expense incurred without gross negligence or bad
faith on the part of the Stockholders' Agent and arising out of or in connection
with the acceptance or administration of his duties hereunder under this
Agreement or the Escrow Agreement.
(c) The Stockholders' Agent shall have reasonable access to
information about InfoGation and BSQUARE and the reasonable assistance of
InfoGation's and BSQUARE's officers and employees for purposes of performing
their duties and exercising their rights under this Article X, provided that the
Stockholders' Agent shall treat confidentially and not disclose any nonpublic
information from or about InfoGation or BSQUARE to anyone (except on a need to
know basis to individuals who agree to treat such information confidentially).
10.9 Actions of the Stockholders' Agent. A decision, act, consent
or instruction of the Stockholders' Agent shall constitute a decision of all of
the Designated InfoGation Stockholders
48
for whom shares of BSQUARE Common Stock otherwise issuable to them are deposited
in the Escrow Fund and shall be final, binding and conclusive upon each such
Designated InfoGation Stockholder, and the Escrow Agent and BSQUARE may rely
upon any decision, act, consent or instruction of the Stockholders' Agent as
being the decision, act, consent or instruction of each and every such holder of
InfoGation Capital Stock. The Escrow Agent and BSQUARE are hereby relieved from
any liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Stockholders' Agent.
10.10 Claims. In the event BSQUARE becomes aware of a third-party
claim which BSQUARE reasonably believes may result in a demand against the
Escrow Fund, BSQUARE shall promptly notify the Stockholders' Agent of such
claim, and the Stockholders' Agent and the holders of InfoGation Capital Stock
shall be entitled, at their expense, to participate in any defense of such
claim. BSQUARE shall have the right in its sole discretion to settle any such
claim; provided, however, that BSQUARE may not effect the settlement of any such
claim without the consent of the Stockholders' Agent, which consent shall not be
unreasonably withheld. In the event that the Stockholders' Agent has consented
to any such settlement, the Stockholders' Agent shall have no power or authority
to object to the amount of such settlement.
10.11 Limitation of Remedies. BSQUARE and Sub acknowledge and agree
that, in the event the Merger is completed, recourse to the Escrow Fund shall be
the exclusive remedy of BSQUARE and Sub for BSQUARE Damages from all holders of
InfoGation Capital Stock other than Kent Pu. With respect to Kent Pu, in
addition to recourse to the Escrow Fund, and only after BSQUARE and Sub shall
have first sought and obtained reimbursement from the Escrow Fund and exhausted
the entire Escrow Fund for BSQUARE Damages, then and only then, may BSQUARE
exercise any other right, power or remedy granted to it or otherwise permitted
to it by law, either by suit in equity or by action at law, or both against Kent
Pu, provided, however, that in no event shall the aggregate amount recovered
from Kent Pu by BSQUARE exceed the aggregate value of the consideration received
by Kent Pu under this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Survival of Representations and Covenants. All
representations, warranties, covenants and agreements of InfoGation and Kent Pu
contained in this Agreement shall survive the Closing and any investigation at
any time made by or on behalf of BSQUARE until (a) sixty days following the
expiration of any applicable statute of limitations (including any extensions
thereof) in the case of any claim for misrepresentation or breach of warranty
made in Section 3.2, (b) in the case of any fraud, intentional misrepresentation
or active concealment, the representations and warranties of InfoGation or Kent
Pu shall survive until sixty days following the expiration of any applicable
statute of limitations (including any extensions thereof), and (c) until the
first anniversary date of the Closing Date for all other representations,
warranties, covenants and agreements of InfoGation. All representations,
warranties, covenants and agreements of BSQUARE and Sub contained in this
Agreement shall survive the Closing and any investigation at any time made by or
behalf of InfoGation until the first anniversary date of the Closing Date.
49
11.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or two business days after being mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to BSQUARE or Sub:
BSQUARE Corporation
0000 - 000xx Xxx. X.X., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Telephone:(000) 000-0000
Fax: (000) 000-0000
Attention: Xxx Xxxxxxxxxxx
with a copy to:
Summit Law Group, PLLC
0000 Xxxxxxxx Xxxxxx X., Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
(b) if to InfoGation, to:
InfoGation Corporation
00000 Xxxxx Xxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Kent Pu
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
Attention: Xxxx X. Xxxxxx
50
(c) If to Stockholders' Agent:
Kent Pu
0000 Xxxxxxxx Xxx
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
11.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." Whenever the words "to the knowledge
of InfoGation" or "known to InfoGation" or similar phrases are used in this
Agreement, they mean to the actual knowledge, after due and diligent inquiry, of
all of the executive officers of InfoGation. Whenever the words "to the
knowledge of BSQUARE" or "known to BSQUARE" or similar phrases are used in this
Agreement, they mean to the actual knowledge, after due and diligent inquiry, of
the chief executive and chief financial officers of BSQUARE.
11.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
11.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein), the
Confidentiality Agreement, and the Transaction Documents (a) constitute the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
and (b) are not intended to confer upon any person other than the parties hereto
(including without limitation any InfoGation employees) any rights or remedies
hereunder.
11.6 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Washington without regard to any
applicable conflicts of law.
11.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
11.8 Amendment. This Agreement may be amended by the parties
hereto, at any time before or after approval of matters presented in connection
with the Merger by the stockholders of InfoGation, but after any such
stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
51
11.9 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or the other acts of the other parties
hereto, (b) waive any inaccuracies in the representations or warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
11.10 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to injunctive relief to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
(signature page follows)
52
IN WITNESS WHEREOF, BSQUARE, Sub and InfoGation have caused this
Agreement and Plan of Merger to be signed by their respective officers thereunto
duly authorized as of the date first written above.
BSQUARE CORPORATION
By:______________________________________________
Title:___________________________________________
BSQUARE SAN DIEGO CORPORATION
By:______________________________________________
Title:___________________________________________
INFOGATION CORPORATION
By:______________________________________________
Title:___________________________________________
KENT PU
_________________________________________________
EXHIBIT A
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Escrow Agreement") is entered into as of
March 13, 2002 by and among InfoGation Corporation, a Delaware corporation (the
"Company"), Kent Pu, as agent and representative of the stockholders of the
Company (the "Stockholders' Agent"), BSQUARE Corporation, a Washington
corporation ("BSQUARE"), and Mellon Investor Services LLC, as escrow agent (the
"Escrow Agent").
RECITALS
A. BSQUARE, BSQUARE San Diego Corporation, a Washington
corporation and wholly owned subsidiary of BSQUARE ("Sub"), the Company, and the
stockholders of the Company have entered into an Agreement and Plan of Merger of
even date herewith (the "Merger Agreement"), pursuant to which BSQUARE will
acquire the Company through the merger of the Company with and into Sub (the
"Merger").
B. Pursuant to the Merger Agreement, the stockholders of the
Company (the "Stockholders") will receive (i) cash and (ii) shares of common
stock of BSQUARE ("BSQUARE Common Stock"), a portion of which is to be deposited
into the escrow fund provided for hereby. The Merger Agreement provides that the
escrow fund provided for hereby will secure the indemnification obligations of
the Stockholders to BSQUARE on the terms and conditions set forth herein.
C. The parties desire to establish the terms and conditions
pursuant to which the Escrow Fund (as defined in Section 3(a) of this Escrow
Agreement) will be established and maintained and the procedure by which claims
for indemnification may be made against the Escrow Fund.
D. Capitalized terms used in this Escrow Agreement and not
otherwise defined shall have the meanings given those terms in the Merger
Agreement.
AGREEMENT
The parties to this Escrow Agreement hereby agree as follows:
1. CONSENT OF STOCKHOLDERS. By execution of the Investor
Representation Statement, each Stockholder has (a) agreed to be bound by the
indemnification obligations of the Stockholders set forth in Article X of the
Merger Agreement, (b) consented to the establishment of the Escrow Fund (as
defined below) to secure the indemnification obligations of the Stockholders
under Article X of the Merger Agreement, (c) irrevocably authorized and
appointed the Stockholders' Agent, with full power of substitution and
resubstitution, as his or her representative and true and lawful
attorney-in-fact and agent, to act in his, her or its name, place and stead as
contemplated by Article X of the Merger Agreement and this Escrow Agreement,
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and to execute in his, her or its name, and on behalf of such Stockholder, this
Escrow Agreement and any other agreement, certificate, instrument and document
to be delivered by the Stockholders in connection with Article X of the Merger
Agreement and the Escrow Agreement.
2. APPOINTMENT OF ESCROW AGENT. The Escrow Agent is hereby
appointed to act, and the Escrow Agent agrees to act, as escrow
agent under this Escrow Agreement.
3. ESCROW AND INDEMNIFICATION.
ESCROW FUND. The escrow fund (the "Escrow Fund") shall consist of the
following:
Cash in the aggregate amount of $300,000 (the "Escrow Cash"), which
amount shall be deposited into the Escrow Fund at the
Effective Time;
129,772 shares of BSQUARE common stock, no par value per share (the
"Common Stock"), which shares shall be deposited into the
Escrow Fund at the Effective Time (the "Escrow Shares");
any additional shares of BSQUARE Common Stock or other equity
securities issued or distributed by BSQUARE (including shares
issued upon a stock split) with respect to the Escrow Shares
(the "New Shares"), which shares shall be deposited into the
Escrow Fund as of the date of such issuance or distribution
and become part of the Escrow Shares.
Exhibit A hereto sets forth the name of each Stockholder and the amount
of Escrow Cash and/or the number of Escrow Shares contributed to the Escrow Fund
on behalf of each such Stockholder pursuant to Article X of the Merger
Agreement. The amount of the Escrow Cash contributed by each Stockholder divided
by the aggregate amount of the Escrow Cash contributed by all Stockholders to
the Escrow Fund shall be each such Stockholder's "proportionate interest" in the
Escrow Cash. The number of Escrow Shares contributed by each Stockholder divided
by the aggregate number of Escrow Shares contributed by all Stockholders to the
Escrow Fund shall be each such Stockholder's "proportionate interest" in the
Escrow Shares. The initial "proportionate interest" of each Stockholder shall
also be set forth on Exhibit A hereto.
The Escrow Agent shall have no duty to confirm or verify the
sufficiency, appropriateness, or accuracy of any amount of Escrow Cash or Escrow
Shares deposited with it under this Escrow Agreement.
Pledge. At the Effective Time (in the case of the Escrow Shares issued
at the Effective Time) or at the time of issuance (in the case
of any New Shares), the Escrow Shares shall be issued to and
beneficially owned by the Stockholders, on a pro rata basis
according to each such Stockholder's proportionate interest
(as set forth on Exhibit A hereto) in the total number of
shares of BSQUARE Common Stock issued at the Effective Time
(in the case of the Escrow Shares issued at the Effective
Time) or at the time of issuance (in the case of any New
Shares). At the Effective Time (in the case of the Escrow Cash
and Escrow Shares issued at the Effective Time) or at the time
of issuance (in the case of any New Shares), the
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Stockholders shall be deemed to have pledged such Escrow Cash
and Escrow Shares to BSQUARE and shall deliver such Escrow
Cash and Escrow Shares to the Escrow Agent, and such Escrow
Cash and Escrow Shares shall be held by the Escrow Agent on
BSQUARE 's behalf in accordance with the terms and conditions
of this Escrow Agreement. The Company shall deliver to BSQUARE
appropriate stock powers from the Stockholders endorsed in
blank and such documentation as BSQUARE may reasonably request
to carry out the purposes of this Escrow Agreement. So long as
any Escrow Cash or Escrow Shares are held by the Escrow Agent
under this Escrow Agreement, BSQUARE shall have, and the
Stockholders shall be deemed to have granted to BSQUARE,
effective as of the Effective Time (in the case of the Escrow
Cash or Escrow Shares issued at the Effective Time) or at the
time of issuance (in the case of any New Shares), a perfected,
first-priority security interest in such Escrow Cash and
Escrow Shares (subject only to the security interest of the
Stockholders' Agent and the Escrow Agent, as described in
Sections 7 and 9(f), respectively, of this Escrow Agreement),
to secure payment of amounts payable by the Stockholders in
respect of indemnification claims made under Article X of the
Merger Agreement and this Escrow Agreement. The Escrow Agent
makes no representation or warranty as to the sufficiency,
legality or effectiveness of the above-mentioned
first-priority security interest and the perfection thereof,
and except as expressly provided herein, the Escrow Agent
shall have no duty or obligation to monitor or take any action
whatsoever (except upon the express written reasonable request
of BSQUARE) in connection therewith. The Escrow Fund shall not
be subject to any lien, attachment, trustee process or any
other judicial process of any creditor of any party to this
Escrow Agreement (except for the security interests of the
Stockholders' Agent and Escrow Agent, as provided in this
Escrow Agreement). The Escrow Agent agrees to accept delivery
of and hold the Escrow Cash and Escrow Shares subject to the
terms and conditions of this Escrow Agreement.
INDEMNIFICATION. Subject to the terms and conditions of Article X of
the Merger Agreement, the Stockholders shall indemnify and
hold each of the Indemnified Parties harmless from and
against, and shall reimburse the Indemnified Parties for, any
and all Losses (as defined in Section 6.2 of the Merger
Agreement) incurred by such Indemnified Party that are
indemnifiable under Article VI of the Merger Agreement.
(d) ESCROW CASH. It is expressly agreed and understood
that the Escrow Cash shall, until distributed pursuant to the terms of this
Escrow Agreement, constitute assets of BSQUARE. Accordingly, for tax purposes,
the Escrow Cash and all earnings on the Escrow Cash shall be considered owned by
BSQUARE until distributed pursuant to the terms of this Escrow Agreement, and
reported as such for all tax reporting purposes.
(e) INVESTMENTS. So long as the Escrow Agent is holding
the Escrow Cash or any other funds or cash in the Escrow Fund in accordance with
this Escrow Agreement, it shall invest such Escrow Cash, funds or cash in Class
B Shares of the Dreyfus General Money Market Fund. All income and earnings from
the investment of the Escrow Cash shall be credited to, and become a part of,
the Escrow Fund, and any losses on any such investments shall be debited to
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the Escrow Fund. The Escrow Agent shall have no duty, responsibility or
obligation to invest any funds or cash held in the Escrow Fund other than in
accordance with this Section 3(e). The Escrow Agent shall have no liability or
responsibility for any investment losses, including without limitation any
market loss on any investment liquidated (whether at or prior to maturity) in
order to make a payment required under this Escrow Agreement. The Escrow Agent
may, in making or disposing of any investment permitted by this Escrow
Agreement, deal with itself, in its individual capacity, or any of its
affiliates, whether or not it or such affiliate is acting as a subagent of the
Escrow Agent or for any third person or dealing as principal for its own
account.
4. ADMINISTRATION OF ESCROW FUND. The Escrow Agent shall
administer the Escrow Fund as follows:
DUTIES OF ESCROW AGENT. The Escrow Agent shall (i) hold and safeguard
the Escrow Fund during the period beginning on the date of
this Escrow Agreement and ending 12 months after the date
hereof (the "Escrow Period"), (ii) treat the Escrow Fund in
accordance with the terms of this Escrow Agreement and (iii)
hold and dispose of the Escrow Fund only in accordance with
the terms of this Escrow Agreement.
CLAIMS FOR INDEMNIFICATION. Upon receipt by the Stockholder
Representative and the Escrow Agent at any time on or before
the last day of the Escrow Period (except as provided in
Section 6 of this Escrow Agreement) of a certificate signed by
any officer of BSQUARE (an "Officer's Certificate"):
stating that BSQUARE has incurred Damages that, on a aggregate basis
with all prior Damages, exceed $50,000,
specifying in reasonable detail the individual items of all such
Damages included in the amount so stated, the date each such
item was paid or properly accrued or arose, and a reasonably
detailed statement of the misrepresentation, breach or claim
to which such item is related, and
specifying the exact amount of Escrow Cash and the specific number of
Escrow Shares to be delivered to BSQUARE (including each
Stockholder's proportionate interest of such Escrow Cash and
such Escrow Shares),
the Escrow Agent shall, subject to the provisions of this Escrow Agreement,
deliver to BSQUARE out of the Escrow Fund, as promptly as practicable, Escrow
Cash and Escrow Shares in an amount as set forth in said Officer's Certificate,
which value shall be determined by BSQUARE in accordance with subsection (iii)
of this Section 4(b). When making any necessary calculations, BSQUARE shall
ensure that the Escrow Cash and Escrow Shares delivered pursuant to the
preceding sentence shall be delivered such that the relative proportion of
Escrow Cash and Escrow Shares shall remain the same before and after such
distribution.
For the purposes of determining the number of Escrow Shares to be
transferred to BSQUARE out of the Escrow Fund pursuant to
subsection (ii) of this Section 4(b), the value of the Escrow
Shares shall be $3.05 per share. The
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Escrow Agent shall have no duty or obligation to make,
calculate or verify any determination regarding the value of
Escrow Shares or regarding the number of Escrow Shares that
are necessary to be delivered to BSQUARE, nor shall it have
any duty or obligation to verify, examine, or make any
determination in connection with any of the information set
forth in the applicable Officer's Certificate; its sole duty
in connection therewith being to deliver the precise number of
Escrow Shares and Escrow Cash as are set forth in an Officer's
Certificate delivered to it.
If any Escrow Cash or Escrow Shares are retained by the Escrow Agent or
transferred to BSQUARE pursuant to any provisions of this
Section 4, such Escrow Cash and Escrow Shares shall be taken
from the Escrow Fund in accordance with each Stockholder's
proportionate interest therein, all as determined pursuant to
Section 3(a) of this Escrow Agreement and all as shall be set
forth in the Officer's Certificate delivered to the Escrow
Agent.
Notwithstanding the foregoing, in the event that BSQUARE reasonably
anticipates in good faith that it will have to pay or incur
Damages with respect to facts and circumstances existing on or
before the expiration of the Escrow Period, BSQUARE shall, on
or before the last day of the Escrow Period, deliver to both
the Stockholders' Agent and the Escrow Agent an Officer's
Certificate with respect to such anticipated liability, in
accordance with the provisions of this subsection (b). That
amount of Escrow Cash and/or number of Escrow Shares that, in
the reasonable judgment of BSQUARE and as is expressly set
forth in the applicable Officer's Certificate, subject to the
objection of the Stockholders' Agent and the subsequent
resolution of the claim in accordance with this Escrow
Agreement, would be necessary to satisfy a claim for
indemnification with respect to such anticipated liability, if
BSQUARE were to prevail in establishing its right to
indemnification, shall remain in the Escrow Fund until such
claim for indemnification shall have been resolved.
OBJECTIONS TO CLAIMS. For a period of 30 days after delivery of the
Officer's Certificate to the Stockholders' Agent and the
Escrow Agent, BSQUARE shall receive no Escrow Cash or Escrow
Shares from the Escrow Fund pursuant to Section 4(b) of this
Escrow Agreement unless the Escrow Agent shall have received
written authorization from the Stockholders' Agent to make
such delivery. If the Stockholders' Agent shall not have
objected in a written statement to the claim made in the
Officer's Certificate (such written objection, a "Dispute
Notice") and delivered such statement to BSQUARE and the
Escrow Agent before the expiration of such 30-day period,
BSQUARE shall be entitled to receive Escrow Cash and/or Escrow
Shares from the Escrow Fund in accordance with Section 4(b) of
this Escrow Agreement.
RESOLUTION OF CONFLICTS; ARBITRATION.
If the Stockholders'Agent shall deliver a Dispute Notice to the Escrow
Agent within such 30-day period, BSQUARE shall have 30 days to
respond in a written statement to
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the objection of the Stockholders' Agent. If after such 30-day
period there remains a dispute as to any claims, the
Stockholders' Agent and BSQUARE shall attempt in good faith
for 30 days to agree upon the rights of the respective parties
with respect to each of such claims. If the Stockholders'
Agent and BSQUARE should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties
and shall be furnished to the Escrow Agent. Such memorandum
shall set forth the items that are required to be set forth in
an Officer's Certificate in accordance with Section 4(b)(iii)
above. The Escrow Agent shall be entitled to rely on any such
memorandum and, provided such memorandum contains the required
information, shall distribute the Escrow Cash or the Escrow
Shares, as the case may be, from the Escrow Fund in accordance
with the terms of the memorandum.
If no such agreement can be reached after good faith negotiation,
either BSQUARE or the Stockholders' Agent may, by written
notice to the other, demand arbitration of the matter unless
the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration
shall not be commenced until such amount is ascertained or
both parties agree to arbitration; and in either such event
the matter shall be settled by arbitration conducted by three
arbitrators. Within 15 days after such written notice is sent,
BSQUARE (on the one hand) and the Stockholders' Agent (on the
other hand) shall each select one arbitrator, and the two
arbitrators so selected shall select a third arbitrator. The
decision of the arbitrators as to the validity and amount of
any claim in such Officer's Certificate shall be binding and
conclusive upon the parties to this Escrow Agreement and the
Escrow Agent shall be entitled to act in accordance with such
decision and make or withhold payments out of the Escrow Fund
in accordance with such decision. Such decision shall set
forth the items that are required to be set forth in an
Officer's Certificate in accordance with Section 4(b)(iii)
above.
(iii) Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in King County, Washington under the commercial rules
then in effect of the American Arbitration Association. The non-prevailing party
to an arbitration shall pay its own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration Association, and the expenses,
including, without limitation, the reasonable attorneys' fees and costs,
incurred by the prevailing party to the arbitration.
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5. THIRD-PARTY CLAIMS. In the event BSQUARE becomes aware of a
third-party claim which BSQUARE reasonably and in good faith believes will
result in a demand against the Escrow Fund, BSQUARE shall promptly notify the
Stockholders' Agent of such claim, and the Stockholders' Agent and the
Stockholders shall be entitled, at their expense, to participate in any defense
of such claim. BSQUARE shall have the right in its sole discretion to settle any
such claim; provided, however, that BSQUARE may not effect the settlement of any
such claim without the consent of the Stockholders' Agent, which consent shall
not be unreasonably withheld. In the event that the Stockholders' Agent has
consented to any such settlement, the Stockholders' Agent shall have no power or
authority to object to the amount of such settlement.
6. RELEASE OF ESCROW FUND. Subject to the provisions of this
Section 6, the Escrow Fund shall remain in existence during the Escrow Period.
Upon the expiration of the Escrow Period, the Escrow Fund shall terminate with
respect to all Escrow Cash and/or Escrow Shares then remaining in the Escrow
Fund and the Escrow Agent shall deliver all such Escrow Cash and/or Escrow
Shares to the Stockholders in such proportionate amounts as shall be set forth
in a writing from the Stockholders' Agent to the Escrow Agent; provided,
however, that the amount of Escrow Cash and/or number of Escrow Shares that, in
the reasonable judgement of BSQUARE, subject to the objection of the
Stockholders' Agent and the subsequent negotiation and arbitration of the matter
in accordance with Section 4(d) hereof, is necessary to satisfy any unsatisfied
claims specified in any Officer's Certificate delivered to Escrow Agent prior to
the expiration of such Escrow Period with respect to facts and circumstances
existing on or prior to the expiration of the Escrow Period shall remain in the
Escrow Fund (and the Escrow Fund shall remain in existence) until such claims
have been resolved; provided further, that BSQUARE agrees to notify Escrow Agent
in writing of the expiration of the Escrow Period. As soon as all such claims
have been resolved or the maximum amount associated with such claims has been
agreed to by the Stockholders' Agent and BSQUARE, the Escrow Agent shall deliver
to the Stockholders, in the amounts as set forth in a writing from BSQUARE to
the Escrow Agent, all Escrow Cash and/or Escrow Shares and other property then
remaining in the Escrow Fund and not required to satisfy such claims. Deliveries
of Escrow Cash and Escrow Shares and other property to the Stockholders pursuant
to this Section 6 shall be made in accordance with each Stockholder's
proportionate interest therein.
7. STOCKHOLDERS' AGENT.
No bond shall be required of the Stockholders' Agent, and the
Stockholders' Agent shall receive no compensation for
services. Notices or communications to or from the
Stockholders' Agent shall constitute notice to or from each of
the Stockholders.
The Stockholders' Agent shall not be liable for any act done or omitted
hereunder as Stockholders' Agent while acting in good faith,
and any act done or omitted pursuant to the advice of counsel
shall be conclusive evidence of such good faith. The
Stockholders shall severally and jointly indemnify the
Stockholders' Agent and hold him harmless against any loss,
liability or expense incurred without gross negligence or bad
faith on the part of the Stockholders' Agent and arising out
of or in connection with the acceptance or administration of
his duties hereunder under this Escrow Agreement or the Merger
Agreement.
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A decision, act, consent or instruction of the Stockholders' Agent
shall constitute a decision of all of the Stockholders and
shall be final, binding and conclusive upon each such
Stockholder, and the Escrow Agent and BSQUARE may rely upon
any decision, act, consent or instruction of the Stockholders'
Agent as being the decision, act, consent or instruction of
each and every such Stockholder. The Escrow Agent and BSQUARE
are hereby relieved from any liability to any person or entity
for any acts done by them in accordance with such decision,
act, consent or instruction of the Stockholders' Agent.
The Stockholders' Agent may be replaced by (i) the holders of a
majority in interest of the Escrow Shares or (ii) the holders
of a majority in interest of the Escrow Shares deposited on
behalf of the holders of InfoGation Series C Preferred Stock
immediately prior to the Effective Time, in each case upon not
less than 10 days' prior written notice to BSQUARE. Upon any
replacement of the Stockholders' Agent, BSQUARE will promptly
deliver to the Escrow Agent notice of such replacement, as
well as a specimen signature of such new Stockholders' Agent.
Before receiving such notice and specimen signature, the
Escrow Agent shall not be required to recognize any change in
the Stockholders' Agent.
The Stockholders' Agent shall have reasonable access to information
about the Company and BSQUARE and the reasonable assistance of
the Company's and BSQUARE's officers and employees for
purposes of performing their duties and exercising their
rights under this Escrow Agreement, provided that the
Stockholders' Agent shall treat confidentially and not
disclose any nonpublic information from or about the Company
or BSQUARE to anyone (except on a need to know basis to
individuals who agree to treat such information
confidentially).
8. DISTRIBUTIONS; VOTING.
Any New Shares and any accrued interest on Escrow Cash shall be added
to the Escrow Fund and become a part of the Escrow Shares and
Escrow Cash, respectively. When and if cash dividends on
Escrow Shares in the Escrow Fund shall be declared and paid,
they shall be distributed to the beneficial owners of such
shares on the applicable distribution date. Such dividends
will not become part of the Escrow Fund and will not be
available to satisfy Damages. The beneficial owners of such
shares shall pay any taxes on such dividends.
Each Stockholder shall possess voting rights with respect to that
number of Escrow Shares issued to and deposited in the Escrow
Fund on behalf of such Stockholder (and on any voting
securities added to the Escrow Fund with respect to such
shares), so long as such shares or other voting securities are
held in the Escrow Fund. BSQUARE shall promptly deliver to the
Escrow Agent, and the Escrow Agent shall promptly deliver to
Stockholder, copies of all proxy solicitation materials.
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9. DUTIES OF ESCROW AGENT.
BSQUARE and the Stockholders' Agent acknowledge and agree that the
Escrow Agent (i) shall be obligated only for the performance
of such duties as are specifically set forth in this Escrow
Agreement with respect to the Escrow Agent (and no implied
obligations) and as set forth in any additional written escrow
instructions as the Escrow Agent may receive after the date of
this Escrow Agreement that are signed by an officer of BSQUARE
and the Stockholders' Agent and in form and substance
acceptable to the Escrow Agent; (ii) shall not be obligated to
take any legal or other action under this Escrow Agreement
that would, in its reasonable judgment, result in a material
expense or liability unless the Escrow Agent shall have been
furnished with indemnity acceptable to it; and (iii) may rely
on and shall be protected in acting or refraining from acting
upon any written notice, instruction, instrument, statement,
request or document furnished to it under this Escrow
Agreement and reasonably believed by it to be genuine and to
have been signed or presented by the proper person, and shall
have no responsibility for determining the accuracy thereof.
The Escrow Agent is hereby expressly authorized to comply with and obey
any order, judgment or decree of any court of competent
jurisdiction or a written decision of arbitrators. If the
Escrow Agent shall obey or comply with any such order,
judgment or decree or written decision of arbitrators, the
Escrow Agent shall not be liable to any of the parties to this
Escrow Agreement or to any other person by reason of such
compliance, notwithstanding any such order, judgment, decree
or written decision being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered
without jurisdiction.
The Escrow Agent shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Escrow
Agreement or any documents or papers deposited or called for
under this Escrow Agreement.
The Escrow Agent shall not be liable for the expiration of any rights
under any statute of limitations with respect to this Escrow
Agreement or any documents or other items deposited with the
Escrow Agent.
Neither the Escrow Agent nor any of its affiliates, directors, officers
or employees shall be liable to anyone for any error of
judgment or for any action taken, suffered or omitted to be
taken by it or any of its affiliates, directors, officers or
employees under or in connection with this Escrow Agreement
except in the case of gross negligence, bad faith or willful
misconduct (each as finally determined by a court of competent
jurisdiction or as agreed to by the parties). Anything to the
contrary notwithstanding, in no event shall the Escrow Agent
be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including,
but not limited to, lost profits), even if the Escrow Agent
has been advised of the likelihood of such loss or damage. Any
liability of the Escrow Agent under this Escrow Agreement
shall be limited to the amount of fees
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paid to the Escrow Agent under this Agreement. Subject to
Section 9(g) below, BSQUARE and the Stockholders
(collectively, the "Escrow Indemnifying Parties") covenant and
agree to jointly and severally indemnify the Escrow Agent and
hold it harmless from and against any fee, loss, claim, cost,
penalty, fine, settlement, damages, judgment, liability or
expense (including reasonable attorney's fees and expenses)
(an "Escrow Loss") incurred by the Escrow Agent arising out of
or in connection with this Escrow Agreement, including but not
limited to, the execution and delivery of this Escrow
Agreement, the Escrow Agent's performance of its obligations
in accordance with the provisions of this Escrow Agreement or
with the administration of its duties under this Escrow
Agreement, unless such Escrow Loss shall arise out of or be
caused by the Escrow Agent's gross negligence, bad faith or
willful misconduct (each as finally determined by a court of
competent jurisdiction or as agreed to by the parties);
provided, however, that indemnification for the Escrow Agent's
standard fees and expenses set forth on the fee schedule
attached to this Escrow Agreement as Exhibit B shall be paid
exclusively by BSQUARE, and provided further that the
indemnity agreement contained in this Section 9(e) shall not
apply to amounts paid in settlement of any Escrow Loss if such
settlement is effected without the consent of the
Stockholders' Agent, such consent not to be unreasonably
withheld, conditioned or delayed.
Subject to Section 9(g) below, the Escrow Indemnifying Parties agree to
jointly and severally indemnify and hold the Escrow Agent
harmless from and against any taxes, additions for late
payment, interest, penalties and other expenses, that may be
assessed against the Escrow Agent on any payment or other
activities under this Escrow Agreement unless any such tax,
addition for late payment, interest, penalty or other expense
shall arise out of or be caused by the gross negligence, bad
faith or willful misconduct of the Escrow Agent (each as
finally determined by a court of competent jurisdiction or as
agreed to by the parties). To the extent that the Escrow Agent
becomes liable for any of the foregoing or to the extent the
Stockholders and BSQUARE owe the Escrow Agent money under any
of the other provisions of this Escrow Agreement, the Escrow
Agent may, but shall not be obligated to, satisfy such
liability or obligation from the Escrow Cash and/or Escrow
Shares remaining in the Escrow Fund, and the Stockholders and
BSQUARE shall be deemed to have granted to the Escrow Agent at
the Closing, effective as of the Effective Time or at the time
of issuance, as the case may be, a perfected, first-priority
security interest in the Escrow Cash and Escrow Shares to
secure payment of such taxes. No cash distributions will be
made to the Stockholders unless the Escrow Agent is supplied
with an original, signed Form W-9 or its equivalent before
distribution.
Notwithstanding the joint and several nature of the obligations of the
Escrow Indemnifying Parties under Section 9(e) and 9(f), the
Stockholders' total collective share of the liability for
indemnification of the Escrow Agent under Sections 9(e) and
9(f) of this Escrow Agreement (the "Escrow Indemnification
Liability") shall in no event exceed the aggregate value of
the Escrow Cash and Escrow Shares then held as part of the
Escrow Fund. Any and all amounts to be
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paid by the Stockholders for their share of the Escrow
Indemnification Liability shall be paid in cash to the Escrow
Agent by BSQUARE, and the Stockholders shall reimburse BSQUARE
for such amounts pro rata in accordance with each
Stockholder's proportionate interest in the Escrow Fund. The
Escrow Agent shall deliver such amount of Escrow Cash and/or
number of Escrow Shares as reimbursement to BSQUARE as BSQUARE
requests in writing, which writing shall set forth the
proportionate interest of each Stockholder in such
reimbursement. Subject to the foregoing, each of the Escrow
Indemnifying Parties shall contribute to the Escrow
Indemnification Liability in such proportion as is appropriate
to reflect the relative fault of each individual Escrow
Indemnifying Party, including up to all such Escrow
Indemnification Liability in the case of any tax liability
arising from failure to provide correct information with
respect to any taxes pursuant to Section 9(f). In all cases
where there is no such basis for allocating contribution for
such Escrow Indemnification Liability or except as otherwise
provided in Section 9(e), one half of the total Escrow
Indemnification Liability shall be paid out of the Escrow Cash
and/or Escrow Shares and allocated pro rata among each of the
Stockholders according to their proportionate interest
therein, and one half of the total Escrow Indemnification
Liability shall be paid by BSQUARE. Notwithstanding anything
to the contrary, nothing in this Escrow Agreement shall be
construed as absolving BSQUARE from fully indemnifying the
Escrow Agent for any Escrow Loss or otherwise to the extent
the Stockholders fail to comply with their indemnification
obligations under this Escrow Agreement. The costs and
expenses incurred by the Escrow Agent in enforcing any right
of indemnification set forth in this Escrow Agreement shall be
paid by BSQUARE.
The Escrow Agent may resign at any time with at least 30 days' prior
written notice to BSQUARE and the Stockholders' Agent;
provided, however, that no such resignation shall become
effective until the appointment of a successor escrow agent,
which shall be accomplished as follows. BSQUARE and the
Stockholders' Agent shall use their commercially reasonable
best efforts to mutually agree upon a successor agent within
30 days after receiving such notice. If the parties fail to
agree upon a successor escrow agent within such time, BSQUARE,
with the consent of the Stockholders' Agent (which shall not
be unreasonably withheld), shall have the right to appoint a
successor escrow agent. The successor escrow agent selected in
the preceding manner shall execute and deliver an instrument
accepting such appointment and it shall thereupon be deemed
Escrow Agent under this Escrow Agreement and it shall without
further acts be vested with all the estates, properties,
rights, powers and duties of the predecessor Escrow Agent as
if originally named as Escrow Agent. If no successor escrow
agent is named, the Escrow Agent may apply to a court of
competent jurisdiction for the appointment of a successor
escrow agent or the Escrow Agent may deposit the Escrow Fund
with such court. Upon such deposit or upon the appointment of
a successor Escrow Agent, the predecessor Escrow Agent shall
be discharged from any further duties and liabilities under
this Escrow Agreement. The provisions of this Section 9 and
Section 10, to the extent applicable, shall survive the
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resignation or removal of the Escrow Agent or the termination
of this Escrow Agreement.
1. The Escrow Agent shall be under no duty to institute or defend
any proceeding unless the subject of such proceeding is part
of its duties under this Escrow Agreement. In the event of any
dispute between the parties to this Escrow Agreement, or
between any of them and any other person, resulting in adverse
claims or demands being made upon any of the Escrow Funds, or
in the event that the Escrow Agent, in good faith, is in doubt
as to what action it should take under this Escrow Agreement,
the Escrow Agent may, at its option, file a suit as
interpleader in a court of appropriate jurisdiction, or refuse
to comply with any claims or demands on it, or refuse to take
any other action under this Escrow Agreement, so long as such
dispute shall continue or such doubt shall exist. The Escrow
Agent shall be entitled to continue so to refrain from acting
until (i) the rights of all parties have been fully and
finally adjudicated by a court of appropriate jurisdiction or
(ii) all differences and doubt shall have been resolved by
agreement among all of the interested persons, and the Escrow
Agent shall have been notified thereof in writing signed by
all such persons. The rights of the Escrow Agent under this
Section are cumulative of all other rights which it may have
by law or otherwise.
(j) The Escrow Agent may consult with and obtain advice
from counsel (who may be counsel to a party hereto or an employee of the Escrow
Agent).
(k) The Escrow Agent shall not be subject to, nor be
required to comply with, or determine if any person or entity has complied with,
the Merger Agreement or any other agreement between or among the parties hereto,
even though reference thereto may be made in this Escrow Agreement, or to comply
with any notice, instruction, direction, request or other communication, paper
or document other than as expressly set forth in this Escrow Agreement.
(l) The Escrow Agent may execute or perform any duty,
responsibility or obligation hereunder either directly or through agents,
attorneys, accountants or other experts; provided, however, that nothing in this
Section 9(l) shall relieve the Escrow Agent of any of its obligations hereunder.
(m) The Escrow Agent may engage or be interested in any
financial or other transaction with BSQUARE or any party hereto or affiliate
thereof, and may act on, or as depositary, trustee or agent for, any committee
or body of holders of obligations of such party or affiliate, as freely as if it
were not the Escrow Agent hereunder.
(n) The Escrow Agent shall not be obligated to expend or
risk its own funds or to take any action which it believes would expose it to
expense or liability or to a risk of incurring expense or liability, unless it
has been furnished with assurances of repayment or indemnity satisfactory to it.
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(o) The Escrow Agent shall not be called upon to advise
any person or entity as to any investments with respect to any security,
property or funds held in escrow hereunder or the dividends, distributions,
income, interest or earnings thereon.
(p) In the event the Escrow Agent believes any ambiguity
or uncertainty exists hereunder or in any notice, instruction, direction,
request or other communication, paper or document received by the Escrow Agent
hereunder, Escrow Agent, may, in its sole discretion, upon written notice to
BSQUARE and the Stockholders' Agent, refrain from taking any action, and shall
be fully protected and shall not be liable in any way to BSQUARE, the
Stockholders' Agent or any Stockholder or other person or entity for refraining
from taking such action, unless the Escrow Agent receives written instructions
signed by BSQUARE and the Stockholders' Agent which eliminates such ambiguity or
uncertainty to the reasonable satisfaction of Escrow Agent.
10. FEES, EXPENSES AND TAXES.
BSQUARE agrees to pay or reimburse the Escrow Agent for its normal
services under this Escrow Agreement in accordance with the fee schedule
attached to this Escrow Agreement as Exhibit B. The Escrow Agent shall be
entitled to reimbursement upon 30 days' written notice for all reasonable
expenses and disbursements incurred in connection with the preparation,
negotiation, amendment, modification, waiver, execution, delivery, performance
or enforcement of this Escrow Agreement, and payment of any reasonable legal
fees and expenses incurred by the Escrow Agent in connection with the resolution
of any claim by any party under this Escrow Agreement. Taxes incurred with
respect to the earnings of the Escrow Fund and payments made under this Escrow
Agreement shall be paid by the party to whom such earnings are distributed (or
to be distributed) or to whom such payment is made.
11. MISCELLANEOUS.
AMENDMENTS AND WAIVERS. Any term of this Escrow Agreement may be
amended or waived with the written consent of BSQUARE, the
Escrow Agent and the Stockholders' Agent, or their respective
permitted successors and assigns. Any amendment or waiver
effected in accordance with this Section 11(a) shall be
binding upon the parties and their respective successors and
assigns.
SUCCESSORS AND ASSIGNS. The terms and conditions of this Escrow
Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties to this
Escrow Agreement. Nothing in this Escrow Agreement, express or
implied, is intended to confer upon any party other than the
parties to this Escrow Agreement or their respective
successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Escrow Agreement,
except as expressly provided in this Escrow Agreement.
GOVERNING LAW; JURISDICTION; VENUE. This Escrow Agreement and all acts
and transactions pursuant to this Escrow Agreement and the
rights and obligations of the parties shall be governed,
construed and interpreted in accordance with the laws of the
State of Washington, without giving effect to principles of
conflicts of
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law; provided, however, that all provisions regarding the
rights, duties and obligations of the Escrow Agent shall be
governed by and construed in accordance with the laws of the
state of New York applicable to contracts made and to be
performed entirely within that state.
COUNTERPARTS. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and
all of which together shall constitute one instrument.
HEADINGS. The headings used in this Escrow Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Escrow Agreement.
NOTICES. Any notice required or permitted by this Escrow Agreement
shall be in writing and shall be deemed sufficient upon
receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, or three days after
being deposited in the regular mail as certified or registered
mail (airmail if sent internationally) with postage prepaid,
if such notice is addressed to the party to be notified at
such party's address or facsimile number as set forth below,
or as subsequently modified by written notice.
If to BSQUARE Corporation or Sub:
BSQUARE Corporation
3150 - 000 xx Xxx. X.X., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxx Xxxxxxxxxxx
with a copy to:
Summit Law Group, PLLC
0000 Xxxxxxxx Xxxxxx X., Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
If to the Company:
InfoGation Corporation
00000 Xxxxx Xxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Kent Pu
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with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Telephone No: (000) 000-0000
Fax No: (000) 000-0000
Attention: Xxxx X. Xxxxxx
If to the Stockholders' Agent:
Kent Pu
0000 Xxxxxxxx Xxx
Xxx Xxxxx, XX 00000
(000) 000-0000
If to the Escrow Agent:
Mellon Investor Services, LLC
00 Xxxxxxxxxx XX, 0xx Xxxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: Client Administration
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Mellon Investor Services, LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
SEVERABILITY. If one or more provisions of this Escrow Agreement are
held to be unenforceable under applicable law, the parties
agree to renegotiate such provision in good faith, in order to
maintain the economic position enjoyed by each party as
closely as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such
provision, then (i) such provision shall be excluded from this
Escrow Agreement, (ii) the balance of the Escrow Agreement
shall be interpreted as if such provision were so excluded and
(iii) the balance of the Escrow Agreement shall be enforceable
in accordance with its terms.
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ENTIRE AGREEMENT. This Escrow Agreement, the Merger Agreement (with
respect to all parties but the Escrow Agent) and the exhibits
and schedules hereto and thereto constitute the entire
agreement between the parties pertaining to the subject matter
of this Escrow Agreement, and supercedes all prior agreements
and understandings (written or oral) of the parties with
respect to the subject matter of this Escrow Agreement.
Notwithstanding the foregoing, in the event of any conflict
between the terms and provisions of this Escrow Agreement and
those of the Merger Agreement, the terms and conditions of
this Escrow Agreement shall control.
ADVICE OF LEGAL COUNSEL. Each party acknowledges and represents that,
in executing this Escrow Agreement, it has had the opportunity
to seek advice as to its legal rights from legal counsel and
that the person signing on its behalf has read and understood
all of the terms and provisions of this Escrow Agreement. This
Escrow Agreement shall not be construed against any party by
reason of the drafting or preparation of this Escrow
Agreement.
[Signature Page Follows]
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In witness whereof, the parties have executed this Escrow Agreement as
of the date first above written.
BSQUARE Corporation
By:___________________
Name:_________________
Its:__________________
InfoGation Corporation
By:___________________
Name:_________________
Its:__________________
STOCKHOLDERS' AGENT
______________________
Kent Pu
MELLON INVESTOR SERVICES LLC, as
Escrow Agent
By:___________________
Name:_________________
Its:__________________
EXHIBIT B
INFOGATION CORPORATION
INVESTOR REPRESENTATION STATEMENT
The undersigned is aware that pursuant to an Agreement and Plan of Merger dated
as of March 10, 2002 (the "MERGER AGREEMENT") entered into by and among BSQUARE
Corporation, a Washington corporation ("BSQUARE"), Galaxy Surfer, Inc., a
Washington corporation and a wholly owned subsidiary of BSQUARE ("SUB"),and
InfoGation Corporation, a Delaware corporation ("INFOGATION"), InfoGation will
merge (the "MERGER") with and into Sub, and all shares of capital stock of
InfoGation will be exchanged for certain consideration as set forth in the
Merger Agreement (the "MERGER CONSIDERATION"). Unless otherwise indicated,
capitalized terms not defined herein have the meanings set forth in the Merger
Agreement.
The undersigned understands that the execution of this Statement is a
condition precedent to BSQUARE and Sub's obligation to consummate the Merger and
to the receipt by the undersigned of the shares of BSQUARE Common Stock in
connection with the Merger (pursuant to the terms and conditions of the Merger
Agreement).
The undersigned hereby represents and warrants as follows:
ARTICLE XII INVESTMENT REPRESENTATIONS.
12.1 The BSQUARE Common Stock issued to the undersigned will be
acquired for investment for the undersigned's own account, not as a nominee or
agent, and not with a view to or for the sale or distribution of any part
thereof in violation of the Securities Act of 1933, as amended (the "1933 ACT"),
and the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same. The undersigned represents
that the entire legal and beneficial interest of the BSQUARE Common Stock will
be held for the undersigned's account only, and neither in whole nor in part for
any other person.
12.2 The undersigned understands and acknowledges that the issuance
of the BSQUARE Common Stock pursuant to the Merger Agreement is being effected
on the basis that the issuance of such securities is exempt from registration
pursuant to Section 4(2) of the 1933 Act and exemptions from applicable state
securities laws and that BSQUARE's reliance upon such exemptions is predicated
upon the undersigned's representations herein.
12.3 The undersigned further represents that (without limiting or
affecting the representations and warranties of BSQUARE or Sub under the Merger
Agreement) the undersigned: (i) has such knowledge and experience in financial
and business matters as to be capable of protecting his, her or its own
interests and evaluating the merits and risks of the undersigned's prospective
investment in the shares of BSQUARE Common Stock; (ii) has received and reviewed
BSQUARE's (A) Annual Report on Form 10-K for the year ended December 31, 2000;
(B) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001, June
30, 2001 and September 30, 2001; (C) Current Reports on Form 8-K dated July 16,
2001, July 12, 2001 and July 6, 2001; (D) 2001 Annual Report to Shareholders and
(E) Proxy Statement for 2001 Annual Meeting of Shareholders; and (iii) has
received and reviewed all of the information he, she or it has requested from
BSQUARE and InfoGation that the undersigned considers necessary or appropriate
for
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deciding whether to accept the BSQUARE Common Stock and has had the opportunity
to ask questions and request information; and (iv) has the ability to bear the
economic risks of the undersigned's prospective investment; and (v) is able,
without materially impairing his, her or its financial condition, to hold the
BSQUARE Common Stock for an indefinite period of time and to suffer a complete
loss on such investment.
12.4 Each certificate representing BSQUARE Common Stock issued
pursuant to the Merger Agreement to the undersigned, and any shares issued or
issuable in respect of any such BSQUARE Common Stock upon any stock split, stock
dividend, recapitalization or similar event, shall be stamped or otherwise
imprinted with legends in substantially the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SHARES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
12.5 The certificates evidencing the BSQUARE Common Stock shall
also bear any legend required pursuant to any state, local or foreign law
governing such securities.
12.6 The undersigned understands and acknowledges that the BSQUARE
Common Stock has not been registered under the 1933 Act, that the BSQUARE Common
Stock must be held indefinitely unless subsequently registered under the 1933
Act or an exemption from such registration is available, and that, except as
expressly contemplated by the Registration Rights Agreement attached as an
exhibit to the Merger Agreement, neither BSQUARE nor InfoGation is under any
obligation to register the BSQUARE Common Stock.
12.7 The undersigned acknowledges that the BSQUARE Common Stock
shall not be transferable except upon the conditions specified in this
Statement, except if:
(a) There is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (A) The transferee has agreed in writing to be bound by
the terms of this Statement, including without limitation this Section 1(g), (B)
the undersigned shall have notified BSQUARE of the proposed disposition and
shall have furnished BSQUARE with a detailed statement of the circumstances
surrounding the proposed disposition, and (C) if reasonably requested by
BSQUARE, the undersigned shall have furnished BSQUARE with an opinion of
counsel, reasonably satisfactory to BSQUARE, that such disposition will not
require registration of such shares under the 1933 Act.
12.8 The undersigned is familiar with the provisions of Rule 144,
promulgated under the 1933 Act, which, in substance, permits limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof (or from an affiliate of such issuer) in a non-public offering
subject to the satisfaction of certain conditions, including, among other
things: (i) a public trading market then exists for the BSQUARE Common Stock;
(ii) the availability of certain public
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information about BSQUARE; (iii) the resale occurring not less than one (1) year
after the party has purchased, and made full payment for, within the meaning of
Rule 144, the securities to be sold; and (iv) the sale being made through a
broker in an unsolicited "broker transaction" or in transactions directly with a
market maker (as said term is defined under the Securities Exchange Act of 1934,
as amended) and the amount of securities being sold during any three (3) month
period not exceeding the specified limitations stated therein, if applicable.
The undersigned further understands that at the time the undersigned wishes to
sell the shares of BSQUARE Common Stock received from BSQUARE there may be no
public market upon which to make such a sale, and that, even if such a public
market then exists, BSQUARE may not be satisfying the current public information
requirements of Rule 144, and that, in such event, the undersigned would be
precluded from selling the shares of BSQUARE Common Stock received from BSQUARE
under Rule 144 even if the one (1) year minimum holding period had been
satisfied. The undersigned further understands that, in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
1933 Act, compliance with Regulation A or some other registration exemption
would be required to sell the shares of BSQUARE Common Stock received from
BSQUARE.
12.9 The undersigned is the sole record and beneficial owner of
capital stock of InfoGation ("INFOGATION CAPITAL STOCK") of the amount and type
set forth next to his, her or its name on the signature page hereto. Such
InfoGation Capital Stock is not subject to any claim, lien, pledge, charge,
security interest or other encumbrance or to any rights of first refusal of any
kind, and the undersigned has not granted any rights to purchase such shares to
any other person or entity. The undersigned has the sole right to transfer such
shares. Such shares constitute all of the InfoGation Capital Stock owned,
beneficially or of record, by the undersigned, and the undersigned has no other
rights to acquire any capital stock of InfoGation except as set forth on the
signature page hereto.
12.10 The undersigned has had an opportunity to review with his, her
or its own tax advisors the tax consequences to the undersigned of the Merger
and the transactions contemplated by the Merger Agreement. The undersigned
understands that it must rely solely on his, her or its advisors and not on any
statements or representations by BSQUARE, InfoGation or any of their agents with
respect to tax matters. The undersigned understands that he, she or it (and not
BSQUARE or InfoGation) shall be responsible for his, her or its own tax
liability that may arise as a result of the Merger or the transactions
contemplated by the Merger Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this Statement this _____ day
of March, 2002.
___________________________________
Print Name of Stockholder
____________________________________
Signature of Stockholder
Address:____________________________
____________________________________
NUMBER OF SHARES AND TYPE OF
INFOGATION COMMON STOCK:
(indicate class of stock, i.e.,
common, preferred, etc. and
include options and warrants)
____________________________________
____________________________________
____________________________________
[SIGNATURE PAGE TO INVESTOR REPRESENTATION STATEMENT]
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EXHIBIT C
BSQUARE CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made as of March 13,
2002 by and among BSQUARE Corporation, a Washington corporation (the "PARENT"),
and the shareholders listed on EXHIBIT A hereto (the "SHAREHOLDERS"), pursuant
to that certain Agreement and Plan of Merger dated as of March 10, 2002 (the
"MERGER AGREEMENT") among the Parent, BSQUARE San Diego Corporation, a
Washington corporation and wholly owned subsidiary of the Parent (the "SUB"),
InfoGation Corporation, a Delaware corporation (the "COMPANY"), and certain
shareholders of InfoGation.
ARTICLE XIII DEFINITIONS. AS USED IN THIS AGREEMENT:
13.1 "SHAREHOLDERS" means any person who holds outstanding
Registrable Securities which have not been sold to the public, but only if such
person (i) was a holder of record of shares of the Company's Series C
Convertible Preferred Stock immediately prior to the Effective Time of the
Merger (as defined in the Merger Agreement) or (ii) is an assignee or transferee
thereof in accordance with Section 7 hereof.
13.2 "REGISTRABLE SECURITIES" means the shares of the Parent Common
Stock issued in the Merger to the Shareholders pursuant to the Merger Agreement,
in the amounts set forth for each Shareholder on EXHIBIT A attached hereto.
13.3 "SEC" means the Securities and Exchange Commission.
13.4 "SECURITIES ACT" means the Securities Act of 1933, as amended.
Terms not otherwise defined herein have the meanings given to them in the Merger
Agreement.
ARTICLE XIV PARENT REGISTRATION.
(a) Notice of Registration. If on or after the Effective
Time, the Parent shall determine to register any of its Common Stock by filing
with the SEC a registration statement for its own account, other than (i) a
registration statement on Form S-4 and/or relating solely to a merger,
acquisition or exchange, (ii) a registration statement relating solely to
employee benefit plans or (iii) a registration statement relating to a
convertible debt transaction, the Parent will:
(i) promptly give to each Shareholder written notice
thereof; and
(ii) use its best efforts to include in such registration
(and any related qualification under blue sky laws or other statute or
regulation), and in any underwriting involved therein, all of the Registrable
Securities specified in a written request or requests made within ten (10) days
after receipt of such written notice from the Parent by any Shareholder, subject
to the underwriter's right to limit the number of securities included in the
registration as set forth in Section 2(b) below.
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(b) Underwriting. If the registration of which the Parent
gives notice is for a registered public offering involving an underwriting, the
Parent shall so advise the Shareholders as a part of the written notice given
pursuant to Section 2(a)(i). In such event, the right of any Shareholder to
registration pursuant to this Section 2 shall be conditioned upon such
Shareholder's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent provided herein. All
Shareholders proposing to distribute their securities through such underwriting
shall (together with the Parent and any other selling shareholders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Parent. Notwithstanding any other provision of this Section 2, if the
managing underwriter determines in its sole discretion that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may limit the number of Registrable Securities to be included in the
registration and underwriting pursuant to this Section 2. In such event, the
securities so included will be apportioned first to the Parent, then pro rata
among the selling shareholders (including the Shareholders) according to the
total amount of securities otherwise entitled to be included therein owned by
each selling shareholder or in such other proportions as shall mutually be
agreed to by such selling shareholders (including the Shareholders). No such
reduction shall reduce (a) the securities being offered by the Parent for its
own account to be included in the registration and underwriting or (b) the
number of Registrable Securities to less than 20% of the securities being sold
in the offering. To facilitate the allocation of shares in accordance with the
above provisions, the Parent or the underwriters may round the number of shares
allocated to any Shareholder or other shareholder to the nearest 100 shares. If
any Shareholder or other shareholder disapproves of the terms of any such
underwriting, he or she may elect to withdraw therefrom by written notice to the
Parent and the managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration and shall not be
transferred in a public distribution prior to 90 days after the date of the
final prospectus included in the registration statement relating thereto.
(c) Right to Terminate, Withdraw or Suspend Registration.
The Parent shall have the right to terminate, withdraw or suspend any
registration initiated by it under this Section 2 either prior to or after the
effectiveness of such registration, whether or not any Shareholder has elected
to include securities in such registration; provided, however, that, subject to
Section 10 hereof, the Shareholders' rights under this Section 2 shall survive
any such termination, withdrawal or suspension of any registration.
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ARTICLE XV EXPENSES. THE PARENT SHALL PAY THE EXPENSES INCURRED BY THE PARENT
IN CONNECTION WITH ANY REGISTRATION OF REGISTRABLE SECURITIES PURSUANT TO THIS
AGREEMENT INCLUDING ALL SEC, NASD AND BLUE SKY REGISTRATION AND FILING FEES,
PRINTING EXPENSES, TRANSFER AGENTS' AND REGISTRARS' FEES, AND THE REASONABLE
FEES AND DISBURSEMENTS OF THE PARENT'S OUTSIDE COUNSEL AND INDEPENDENT
ACCOUNTANTS; PROVIDED, HOWEVER, THAT THE SHAREHOLDERS SHALL BE RESPONSIBLE FOR
ALL UNDERWRITING DISCOUNTS AND COMMISSIONS APPLICABLE TO THE SECURITIES SOLD BY
SUCH SHAREHOLDERS AND FOR ALL OTHER EXPENSES INCURRED BY THE SHAREHOLDERS,
INCLUDING, WITHOUT LIMITATION, THE FEES AND EXPENSES OF THEIR OWN COUNSEL AND
ACCOUNTANTS, IF ANY, PROVIDED, FURTHER, HOWEVER, THAT IN THE EVENT THAT THE
PARENT TERMINATES ANY REGISTRATION OF REGISTRABLE SECURITIES COMMENCED PURSUANT
TO THIS AGREEMENT, THEN IN SUCH EVENT PARENT AGREES TO REIMBURSE THE
SHAREHOLDERS FOR ANY REASONABLE EXPENSES INCURRED BY THE SHAREHOLDERS IN
CONNECTION WITH SUCH REGISTRATION PRIOR TO THE DATE OF TERMINATION, UP TO A
MAXIMUM AGGREGATE AMOUNT FOR ALL SELLING SHAREHOLDERS COLLECTIVELY OF $10,000.
ARTICLE XVI ADDITIONAL OBLIGATIONS OF THE PARENT. IN THE CASE OF EACH
REGISTRATION EFFECTED BY THE PARENT PURSUANT TO THIS AGREEMENT, THE PARENT WILL
KEEP EACH SHAREHOLDER ADVISED IN WRITING AS TO THE INITIATION OF EACH
REGISTRATION AND AS TO THE COMPLETION THEREOF. AT ITS EXPENSE, THE PARENT WILL
USE ITS BEST EFFORTS TO:
16.1 Keep such registration effective for a period of 60 days or
until the Shareholder or Shareholders have completed the distribution described
in the registration statement relating thereto, whichever first occurs;
16.2 Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement, subject to Section 4(a) above;
16.3 Furnish such number of prospectuses and other documents
incident thereto as a Shareholder from time to time may reasonably request;
16.4 Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, prepare and furnish to such seller a reasonable
number of copies of a supplement or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such shares,
such prospectus shall not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or incomplete in the light to the
circumstances then existing;
16.5 Register or qualify the securities covered by said
registration statement under the securities or "blue sky" laws of such
jurisdictions as any selling Shareholder may reasonably
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request, provided that the Parent shall not be required to register or qualify
the securities in any jurisdictions which require it to qualify to do business
therein;
16.6 Cause all such Registrable Securities to be listed on each
securities exchange or quotation system on which similar securities issued by
the Parent are then listed or quoted;
16.7 Otherwise comply with the securities laws of the United States
and other applicable jurisdictions and all applicable rules and regulations of
the SEC and comparable governmental agencies in other applicable jurisdictions;
and
16.8 Otherwise cooperate with the underwriter or underwriters, the
SEC and other regulatory agencies and take all actions and execute and deliver
or cause to be executed and delivered all documents necessary to effect the
registration of any Registrable Securities under this Agreement.
ARTICLE XVII INDEMNIFICATION. IN THE EVENT OF ANY OFFERING REGISTERED
PURSUANT TO THIS AGREEMENT:
17.1 By the Parent. The Parent will indemnify each Shareholder with
respect to any registration effected pursuant to this Agreement against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, or any amendment or supplement thereto, or prospectus
related thereto, incident to any such registration, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, not misleading, or any violation by
the Parent of any rule or regulation promulgated under the Securities Act, or
state securities laws, applicable to the Parent in connection with any such
registration, and will reimburse such Shareholder for any legal and any other
expenses reasonably incurred as such expenses are incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Parent will not be liable in any such case (i) to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based in any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Parent by such Shareholder provided for the purpose of
inclusion in the registration statement or (ii) if a copy of the final
prospectus relating to any registration statement (as then amended or
supplemented if the Parent shall have furnished any amendments or supplements
thereto) (the "FINAL PROSPECTUS") was not sent or given by or on behalf of such
Shareholder to a purchaser of the Shareholder's Registrable Securities, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Registrable Securities to such purchaser, and if
the Final Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability; provided that Parent
notifies Shareholder prior to such sale that the prospectus in its then current
form contains a material misstatement or omission.
17.2 By the Shareholders. Each Shareholder will severally indemnify
the Parent, each of its directors, officers, employees, agents and each person
who controls the Parent within the
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meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) or a material fact contained in
any registration statement, or any amendment or supplement thereto, or
prospectus related thereto, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement or prospectus in reliance upon and in
conformity with written information furnished to the Parent by such Shareholder
provided for the purpose of inclusion in the registration statement and will
reimburse the Parent, the remaining Shareholders, such directors, officers,
employees, agents and/or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action.
17.3 Procedures. Each party entitled to indemnification under this
Section 5 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, but only to the
extent that the Indemnifying Party's ability to defend against such claim or
litigation is impaired as a result of such failure to give notice. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. Whether or
not the defense of any claim or action is assumed by the Indemnifying Party,
such Indemnifying Party will not be subject to any liability for any settlement
without its consent.
17.4 Contribution. If the indemnification provided for in Sections
5(a) and (b) above for any reason is held by a court of competent jurisdiction
to be unavailable to an indemnified party in respect of any losses, claims,
damages, expenses or liabilities referred to therein, then each indemnifying
party under this Section 5, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, expenses or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Parent, the other selling shareholders and the underwriters from the
offering of the Registrable Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Parent, the other selling shareholders
and the underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages, expenses or liabilities, as well as
any other relevant equitable considerations. The relative benefits received by
the Parent, the selling shareholders and the underwriters shall be deemed to be
in the same respective proportions that the net proceeds from the offering
(before deducting expenses) received by the Parent and the selling shareholders
and the underwriting discount received
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by the underwriters, in each case as set forth in the table on the cover page of
the applicable prospectus, bear to the aggregate public offering price of the
Registrable Securities. The relative fault of the Parent, the selling
shareholders and the underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Parent, the selling shareholders or the underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Parent and the selling Shareholders agree that it would
not be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not found guilty of
such fraudulent misrepresentation.
17.5 Survival. The obligations of the Parent and the Shareholders
under this Section 5 shall survive the completion of any offering of stock in a
registration statement effected under this Agreement.
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ARTICLE XVIII SUSPENSION. IN THE CASE OF A REGISTRATION FOR THE SALE OF
REGISTRABLE SECURITIES, UPON RECEIPT OF ANY NOTICE (A "SUSPENSION NOTICE") FROM
THE PARENT OF THE HAPPENING OF ANY EVENT WHICH MAKES ANY STATEMENT MADE IN THE
REGISTRATION STATEMENT OR RELATED PROSPECTUS UNTRUE OR WHICH REQUIRES THE MAKING
OF ANY CHANGES IN SUCH REGISTRATION STATEMENT OR PROSPECTUS SO THAT THEY WILL
NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY
MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING, EACH SHAREHOLDER WHO IS A HOLDER OF REGISTRABLE
SECURITIES REGISTERED UNDER SUCH REGISTRATION STATEMENT SHALL FORTHWITH
DISCONTINUE DISPOSITION OF SUCH REGISTRABLE SECURITIES PURSUANT TO SUCH
REGISTRATION STATEMENT (A "SUSPENSION") UNTIL SUCH SHAREHOLDER'S RECEIPT OF THE
COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS OR UNTIL IT IS ADVISED IN
WRITING (THE "ADVICE") BY THE PARENT THAT THE USE OF THE PROSPECTUS MAY BE
RESUMED, AND HAS RECEIVED COPIES OF ANY ADDITIONAL OR SUPPLEMENTAL FILINGS WHICH
ARE INCORPORATED BY REFERENCE IN THE PROSPECTUS. IN THE EVENT OF A SUSPENSION,
THEN LENGTH OF TIME IN WHICH PARENT IS REQUIRED TO KEEP THE REGISTRATION
EFFECTIVE UNDER SECTION 4(a) OF THIS AGREEMENT SHALL BE EXTENDED BY THE NUMBER
OF DAYS OF THE SUSPENSION, AND IN NO EVENT SHALL ANY SUSPENSION LAST MORE THAN
TWENTY (20) DAYS. IN THE EVENT THAT THE PARENT SHALL GIVE ANY SUSPENSION NOTICE,
THE PARENT SHALL USE ITS BEST EFFORTS AND TAKE SUCH ACTIONS AS ARE NECESSARY TO
RENDER THE ADVICE AND END THE SUSPENSION PERIOD AS PROMPTLY AS PRACTICABLE.
ARTICLE XIX NON-ASSIGNMENT OF REGISTRATION RIGHTS. THE RIGHTS TO CAUSE THE
PARENT TO REGISTER REGISTRABLE SECURITIES PURSUANT TO THIS AGREEMENT MAY NOT BE
ASSIGNED BY THE SHAREHOLDERS TO ANY PERSON OR ENTITY EXCEPT (a) A TRANSFER BY
WILL OR INTESTACY UPON THE DEATH OF ANY SHAREHOLDER, (b) ESTATE PLANNING
TRANSFERS CONSISTING OF GIFTS TO THE SPOUSE OR ISSUE OF THE TRANSFEREE AND
TRANSFERS TO TRUSTS FOR THE BENEFIT OF THE SPOUSE OR ISSUE OF THE TRANSFEREE,
(c) A TRANSFER TO ANY TRANSFEREE OR ASSIGNEE WHO IS A PARTNER OR MEMBER (OR
RETIRED PARTNER OR MEMBER) OF A SHAREHOLDER OR THE ESTATE OF SUCH PARTNER OR
MEMBER (OR RETIRED PARTNER OR MEMBER) OR (d) A SHAREHOLDER THAT IS A
CORPORATION, LIMITED LIABILITY COMPANY OR PARTNERSHIP MAY ASSIGN THE RIGHTS TO
CAUSE THE PARENT TO REGISTER REGISTRABLE SECURITIES PURSUANT TO THIS
AGREEMENT TO ANY WHOLLY OWNED SUBSIDIARY OF SUCH SHAREHOLDER.
ARTICLE XX INFORMATION BY HOLDER. EACH SHAREHOLDER WHO IS A HOLDER OF
REGISTRABLE SECURITIES SHALL FURNISH TO THE PARENT SUCH INFORMATION REGARDING
SUCH SHAREHOLDER AND THE DISTRIBUTION PROPOSED BY SUCH SHAREHOLDER AS THE PARENT
MAY REASONABLY REQUEST IN WRITING AND AS SHALL BE REASONABLY REQUIRED IN
CONNECTION WITH ANY REGISTRATION, QUALIFICATION OR COMPLIANCE REFERRED TO IN
THIS AGREEMENT.
ARTICLE XXI AMENDMENT OF REGISTRATION RIGHTS. THIS AGREEMENT MAY BE AMENDED BY
THE HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES AND THE PARENT AT ANY
TIME BY EXECUTION OF AN INSTRUMENT IN WRITING SIGNED ON BEHALF OF EACH OF SUCH
PARTIES.
ARTICLE XXII TERMINATION. THE REGISTRATION RIGHTS SET FORTH IN THIS AGREEMENT
SHALL TERMINATE AS TO ANY SHAREHOLDER AT SUCH TIME AS ALL OF THE REGISTRABLE
SECURITIES THEN HELD BY SUCH SHAREHOLDER CAN BE SOLD BY SUCH SHAREHOLDER IN A
SINGLE 3-MONTH PERIOD IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT.
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ARTICLE XXIII GRANT OF ADDITIONAL REGISTRATION RIGHTS. THE SHAREHOLDERS
ACKNOWLEDGE THAT THE PARENT MAY ACQUIRE OTHER COMPANIES OR ISSUE ADDITIONAL
SECURITIES AND IN THE COURSE OF SUCH ACQUISITIONS OR ISSUANCES MAY GRANT THE
EQUITY OWNERS THEREOF REGISTRATION RIGHTS WITH RESPECT TO THEIR SHARES OF THE
PARENT ON TERMS WHICH WOULD BE NEGOTIATED AT SUCH TIME AND MAY BE MATERIALLY
DIFFERENT THAN THE TERMS OF THIS AGREEMENT, AND MAY BE SUPERIOR TO THE RIGHTS
GRANTED TO THE SHAREHOLDERS HEREUNDER.
ARTICLE XXIV NOTICES. ALL NOTICES AND OTHER COMMUNICATIONS REQUIRED OR PERMITTED
HEREUNDER SHALL BE IN WRITING AND SHALL BE DEEMED EFFECTIVELY GIVEN UPON
DELIVERY TO THE PARTY TO BE NOTIFIED IN PERSON OR BY COURIER SERVICE OR FIVE
DAYS AFTER DEPOSIT WITH THE UNITED STATES MAIL, POSTAGE PREPAID, ADDRESSED (a)
IF TO THE SHAREHOLDERS, AT THE SHAREHOLDERS' RESPECTIVE ADDRESSES AS SET FORTH
IN EXHIBIT A HERETO OR (b) IF TO THE PARENT, AT 0000 - 000XX XXXXXX X.X., XXXXX
000, XXXXXXXX, XX 00000, ATTENTION: CORPORATE SECRETARY.
ARTICLE XXV GOVERNING LAW; INTERPRETATION. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE AND GOVERNED FOR ALL PURPOSES BY THE LAWS OF THE STATE OF WASHINGTON
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF WASHINGTON OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
WASHINGTON. THE SHAREHOLDERS HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION AND
VENUE OF THE STATE AND FEDERAL COURTS SITTING IN KING COUNTY, WASHINGTON FOR ALL
MATTERS AND ACTIONS ARISING UNDER THIS AGREEMENT.
ARTICLE XXVI SEVERABILITY; SURVIVAL. IF ANY PORTION OF THIS AGREEMENT IS HELD BY
A COURT OF COMPETENT JURISDICTION TO CONFLICT WITH ANY FEDERAL, STATE OR LOCAL
LAW, OR TO BE OTHERWISE INVALID OR UNENFORCEABLE, SUCH PORTION OF THIS AGREEMENT
SHALL BE OF NO FORCE OR EFFECT, AND THIS AGREEMENT SHALL OTHERWISE REMAIN IN
FULL FORCE AND EFFECT AND BE CONSTRUED AS IF SUCH PORTION HAD NOT BEEN INCLUDED
IN THIS AGREEMENT.
ARTICLE XXVII ENTIRE AGREEMENT. THIS AGREEMENT CONTAINS THE ENTIRE AGREEMENT AND
UNDERSTANDING OF THE PARTIES AND SUPERSEDES ALL PRIOR DISCUSSIONS, AGREEMENT AND
UNDERSTANDINGS RELATING TO THE SUBJECT MATTER HEREOF.
ARTICLE XXVIII COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN ONE OR MORE
COUNTERPARTS, ALL OF WHICH SHALL BE CONSIDERED ONE AND THE SAME AGREEMENT AND
SHALL BECOME EFFECTIVE WHEN ONE OR MORE COUNTERPARTS HAVE BEEN SIGNED BY EACH OF
THE PARTIES AND DELIVERED TO THE OTHER PARTY, IT BEING UNDERSTOOD THAT ALL
PARTIES NEED NOT SIGN THE SAME COUNTERPART.
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IN WITNESS WHEREOF, the Parent and the Shareholders have caused this Agreement
to be executed as of the date first above written.
BSQUARE CORPORATION
By:_________________________________________
Signature of Authorized Signatory
____________________________________________
Print Name and Title
SHAREHOLDERS
BRIDGEWEST, LLC
By:_________________________________________
Signature of Authorized Signatory
____________________________________________
Print Name and Title
NEXTREME VENTURES LLC
By:________________________________________
Signature of Authorized Signatory
____________________________________________
Print Name and Title
BARAKA TRUST
By:_________________________________________
Signature of Authorized Signatory
____________________________________________
Print Name and Title
AMIRRA INVESTMENTS, LTD.
By:_________________________________________
Signature of Authorized Signatory
____________________________________________
Print Name and Title
____________________________________________
XXXX XXXXXXXXXX
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
SECOND AMENDMENT
THIS SECOND AMENDMENT (the "Amendment") is made and entered into as of the
_____ day of __________________, 2000, by and between EOP-SUNSET NORTH BELLEVUE,
L.L.C., A WASHINGTON LIMITED LIABILITY COMPANY ("Landlord") and BSQUARE
CORPORATION, A WASHINGTON CORPORATION ("Tenant").
WITNESSETH
A. WHEREAS, Landlord (as successor in interest to WRC Sunset North LLC, a
Washington limited liability company) and Tenant are parties to that
certain lease dated as of January 15, 1999, as amended by instruments
dated October 19, 1999 and July 27, 1999 (the "First Amendment)
(collectively the "Lease"), for space currently designated in the Lease
as containing 125,490 rentable square feet (approximately 113,054
usable square feet) on the 2nd, 3rd, 4th and 5th floors of building 4
(the "Initial Premises") located at the Northeast corner of 000xx
Xxxxxx Xxxxxxxxx and Southeast 32nd Street, Bellevue, Washington and
commonly known as Sunset North Corporate Campus (the "Building"); and
B. WHEREAS, Landlord and Tenant have remeasured the Initial Premises as
required by Article 5.A of the Lease, and Landlord has remeasured the
Buildings, and Landlord and Tenant now wish to amend the Lease to
properly reflect the Rentable Area and usable area of the Initial
Premises and the Rentable Area of the Buildings; and
C. WHEREAS, Tenant has requested that additional space containing
approximately 25,803 rentable square feet described as Floor 1 of
Building 4, as shown on Exhibit A hereto (the "Expansion Space") be
added to the Initial Premises and that the Lease be appropriately
amended and Landlord is willing to do the same on the following terms
and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:
I. REMEASUREMENT OF INITIAL PREMISES. Pursuant to Article 5.A of the
Lease, the Initial Premises have been remeasured and Landlord and
Tenant agree that the Rentable Area of the Initial Premises is 123,684
square feet and that the usable area of the Initial Premises is 109,028
square feet.
II. REMEASUREMENT OF THE BUILDINGS, The Buildings (as defined in Section
1.A.3 of the Lease) have been remeasured and Landlord and Tenant agree
that the Rentable Area of the Buildings is 465,013 rentable square
feet.
III. MONTHLY BASE RENTAL. Monthly Base Rental for the Initial Premises shall
be based on the revised rentable area of the Premises and Article 1.A.2
of the Lease is hereby modified to provide that the monthly Base Rental
for the Initial Premises shall be payable as follows:
1
RENTABLE ANNUAL RATE ANNUAL MONTHLY
PERIOD SQUARE FEET PER SQUARE FOOT BASE RENTAL BASE RENTAL
------ ----------- --------------- ----------- -----------
10/01/99- 94,182 $20.00 N/A $156,970.06 (actual
10/14/99 payment is $69,822.12)*
10/15/99- 123,684 $20.00 N/A $181,713.13 (actual
10/31/99 payment is
$ 113,044.52)*
11/01/99- 123,684 $20.00 N/A $ 206,140.00
09/30/00
10/01/00- 123,684 $21.00 $2,597,364.00 $ 216,447.00
09/30/02
10/01/02- 123,684 $22.00 $2,721,048.00 $ 226,754.00
09/30/04
10/01/04- 123,684 $23.00 $2,844,732.00 $ 237,061.00
09/30/06
10/01/06- 123,684 $24.00 $2,968,416.00 $ 247,368.00
09/30/08
10/01/08- 123,684 $25.00 $3,092,100.00 $ 257,675.00
09/30/09
*Prorated based upon number of days at referenced rentable area.
There are two commencement dates for the Initial Premises. The portion
of the Initial Premises on floors 5, 4 & 3, consisting of 94,182
rentable square feet commenced on October 1, 1999 and the portion of
the Initial Premises on the second floor, consisting of 31,921 rentable
square feet commenced on October 15, 1999.
All such Base Rental shall be payable by Tenant in accordance with the
terms of Article 7 of the Lease.
IV. TENANT'S PRO RATA SHARE. Tenant's Pro Rata Share for the Initial
Premises shall be:
A. 20.2536% with respect to the period commencing as of October
1, 1999 and expiring October 14, 1999; and
B. 26.5980% with respect to the period commencing as of October
15, 1999 and continuing thereafter during the Lease Term.
V. BASIC COSTS AND TAXES. Tenant shall pay for Tenant's Pro Rata Share of
Basic Costs and Taxes applicable to the Premises in accordance with the
terms of the Lease.
VI. ALLOWANCE. The Allowance payable to Tenant pursuant to Section B of
Article G of the Lease and Article II of Exhibit D to the Lease is
decreased to a total of $3,287,194.20 ($30.15 per usable square foot
multiplied by 109,028 usable square feet in the Premises).
VII. RECONCILIATION. Within thirty (30) days following the full execution of
this Amendment or as soon thereafter as reasonably possible, Landlord
shall deliver to Tenant a reconciliation of the net amount owed by one
to the other as a result of the increased Rent payable by Tenant to
Landlord and the increased Allowance payable by Landlord to Tenant.
Such net amount shall be paid within fifteen (15) days after delivery
of such reconciliation to Tenant.
VIII. EXPANSION AND EFFECTIVE DATE. Effective as of the Expansion Effective
Date (defined below), the Initial Premises, as defined above, is
increased from 123,684 rentable square feet on the 2nd, 3rd, 4th and
5th floors to 149,487 rentable square feet on the 1st, 2nd, 3rd, 4th
and 5th floors by the addition of the Expansion Space, and from and
after the Expansion Effective Date, the Initial Premises and the
Expansion Space, collectively, shall be deemed the Premises, as defined
in the Lease. The Lease Term for the
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Expansion Space shall commence on the Expansion Effective Date and end
on the Termination Date. The Expansion Space is subject to all the
terms and conditions of the Lease except as expressly modified herein
and except that Tenant shall not be entitled to receive any allowances,
abatements or other financial concessions granted with respect to the
Initial Premises unless such concessions are expressly provided for
herein with respect to the Expansion Space.
A. The Expansion Effective Date shall be January 1, 2001.
B. The Expansion Effective Date shall be delayed to the extent
that Landlord fails to deliver possession of the Expansion
Space for any other reason (other than delays caused by
Tenant), including but not limited to, holding over by prior
occupants. Any such delay in the Expansion Effective Date
shall not subject Landlord to any liability for any loss or
damage resulting therefrom. If the Expansion Effective Date is
delayed, the Termination Date under the Lease shall not be
similarly extended.
IX. BASE RENTAL. In addition to Tenant's obligation to pay Base Rental for
the Initial Premises, Tenant shall pay Landlord Base Rental for the
Expansion Space as follows:
ANNUAL RATE ANNUAL MONTHLY
PERIOD PER SQUARE FOOT BASE RENTAL BASE RENTAL
------ --------------- ----------- -----------
January 1, 2001- $31.00 $799,893.00 $66,657.75
December 31, 2001
January 1, 2002- $32.00 $825,696.00 $68,808.00
December 31, 2003
January 1, 2004- $33.00 $851,499.00 $70,958.25
December 31, 2005
January 1, 2006- $34.00 $877,302.00 $73,108.50
December 31, 2007
January 1, 2008- $35.00 $903,105.00 $75,258.75
September 30, 2009
All such Base Rental shall be payable by Tenant in accordance with the
terms of the Lease.
X. ADDITIONAL SECURITY DEPOSIT. Upon Tenant's execution hereof, Tenant
shall pay Landlord the sum of $270,000.00 (the "Additional Security
Amount") which is added to and becomes part of the Security Deposit
held by Landlord as provided under Section 9.A of the Lease as security
for payment of Rent and the performance of the other terms and
conditions of the Lease by Tenant. At least 50% of the Additional
Security Amount shall be in the form of cash. A maximum of 50% of the
Additional Security Amount may be in the form of an irrevocable letter
of credit, which letter of credit shall be in form and substance
satisfactory to Landlord and shall otherwise conform to the letter of
credit requirements provided in Section 9.C of the Lease.
XI. TENANT'S PRO RATA SHARE. For the period commencing with the Expansion
Effective Date and ending on the Termination Date, Tenant's Pro Rata
Share for the Expansion Space is 5.5489%.
XII. BASIC COSTS AND TAXES. For the period commencing with the Expansion
Effective Date and ending on the Termination Date, Tenant shall pay for
Tenant's Pro Rata Share of Basic Costs and Taxes applicable to the
Expansion Space in accordance with the terms of the Lease.
XIII. IMPROVEMENTS TO EXPANSION SPACE.
A. CONDITION OF EXPANSION SPACE. Tenant has inspected the
Expansion Space and agrees to accept the same "as is" without
any agreements, representations, understandings or obligations
on the part of Landlord to perform any alterations, repairs or
improvements, except as may be expressly provided otherwise in
this Amendment.
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B. RESPONSIBILITY FOR IMPROVEMENTS TO EXPANSION SPACE. Tenant may
perform improvements to the Expansion Space in accordance with
the Work Letter attached hereto as EXHIBIT B and Tenant shall
be entitled to an improvement allowance in connection with
such work as more fully described in EXHIBIT B.
C. RESPONSIBILITY FOR CAT5E AND CAT3 CABLING WITHIN EXPANSION
SPACE. Tenant has agreed to accept the Cat5E and Cat3 cabling
currently in place in the Expansion Space and Tenant agrees
that such cabling shall be considered Tenant's personal
property, which Landlord shall have the right, at its sole
option, to require Tenant to remove on the Termination Date or
upon earlier termination of the Lease or Tenant's right of
possession thereunder.
XIV. EARLY ACCESS TO EXPANSION SPACE. During any period that Tenant shall be
permitted to enter the Expansion Space prior to the Expansion Effective
Date (e.g., to perform alterations or improvements, if any), Tenant
shall comply with all terms and provisions of the Lease, except those
provisions requiring payment of Base Rental or Additional Base Rental
as to the Expansion Space. If Tenant takes possession of the Expansion
Space prior to the Expansion Effective Date for any reason whatsoever
(other than the performance of work in the Expansion Space with
Landlord's prior approval), such possession shall be subject to all the
terms and conditions of the Lease and this Amendment, and Tenant shall
pay Base Rental and Additional Base Rental as applicable to the
Expansion Space to Landlord on a per diem basis for each day of
occupancy prior to the Expansion Effective Date.
XV. PARKING. In accordance with the provisions of Section 5(f) of the
Lease, Landlord shall provide Tenant with an additional ninety-four
(94) unassigned parking spaces in the parking garage serving the
Building from and after the Expansion Effective Date. The rate for
monthly parking for such spaces shall be as set forth in Section 5(f)
of the Lease.
XVI. MISCELLANEOUS.
A. This Amendment sets forth the entire agreement between the
parties with respect to the matters set forth herein. There
have been no additional oral or written representations or
agreements. Under no circumstances shall Tenant be entitled to
any Rent abatement, improvement allowance, leasehold
improvements, or other work to the Expansion Space, or any
similar economic incentives that may have been provided Tenant
in connection with entering into the Lease, unless
specifically set forth in this Amendment.
B. Except as herein modified or amended, the provisions,
conditions and terms of the Lease shall remain unchanged and
in full force and effect.
C. In the case of any inconsistency between the provisions of the
Lease and this Amendment, the provisions of this Amendment
shall govern and control.
D. Submission of this Amendment by Landlord is not an offer to
enter into this Amendment but rather is a solicitation for
such an offer by Tenant. Landlord shall not be bound by this
Amendment until Landlord has executed and delivered the same
to Tenant.
E. The capitalized terms used in this Amendment shall have the
same definitions as set forth in the Lease to the extent that
such capitalized terms are defined therein and not redefined
in this Amendment.
F. Tenant hereby represents to Landlord that Tenant has dealt
with no broker other than Xxx Xxxxxxxx of Leibsohn & Company
in connection with this Amendment. Tenant agrees to indemnify
and hold Landlord, its members, principals, beneficiaries,
partners, officers, directors, employees, mortgagee(s) and
agents, and the respective principals and members of any such
agents (collectively, the "Landlord Related Parties") harmless
from all claims of any brokers claiming to have represented
Tenant in connection with this Amendment. Landlord hereby
represents to Tenant that Landlord has dealt with no broker
other than Xxxxxxx Xxxxx of Xxxxxx Runstad & Company in
connection with this Amendment. Landlord agrees to indemnify
and hold Tenant, its members, principals, beneficiaries,
partners, officers, directors, employees, and agents, and the
respective principals and members of any such agents
(collectively, the "Tenant Related Parties") harmless from all
claims of any other brokers claiming to have represented
Landlord in connection with this Amendment.
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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this
Amendment as of the day and year first above written
LANDLORD: EOP-SUNSET NORTH BELLEVUE, L.L.C., A
WASHINGTON LIMITED LIABILITY COMPANY
By: EOP-Sunset North, L.L.C., a Delaware
limited liability company, its managing
member
By: EOP Operating Limited Partnership,
a Delaware limited partnership, its
sole member
By: Equity Office Properties
Trust, a Maryland real estate
investment trust, its general
partner
By:________________________________
Name: Xxx Xxxxxxxx
Title: Senior Vice President -
Seattle Region
TENANT: BSQUARE CORPORATION, A WASHINGTON
CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
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THIS PAGE IS REQUIRED IF PROPERTY IS IN DELAWARE,
MICHIGAN, OHIO, UTAH, WASHINGTON, D.C. OR WASHINGTON STATE
LANDLORD ACKNOWLEDGMENT
STATE OF ____________________)
COUNTY OF ___________________)Section
I, the undersigned, a Notary Public, in and for the County and State
aforesaid, do hereby certify that ____________________________, personally known
to me to be the Senior Vice President of Equity Office Properties Trust, a
Maryland real estate investment trust, and personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person and acknowledged that as such officer of said entity being
authorized so to do, (s)he executed the foregoing instrument on behalf of said
entity, by subscribing the name of such entity by himself/herself as such
officer, as a free and voluntary act, and as the free and voluntary act and deed
of said entity, for the uses and purposes therein set forth.
GIVEN under my hand and official seal this ___ day of__________, 2000.
_________________________
Notary Public
My Commission Expires: __________________
TENANT ACKNOWLEDGMENT
CORPORATION
STATE OF _____________________)
COUNTY OF ____________________)Section:
On this the ____ day of ___________________, 2000, before me a Notary
Public duly authorized in and for the said County in the State aforesaid to take
acknowledgments personally appeared _______________________________________
known to me to be ______________ President of ______________________________,
one of the parties described in the foregoing instrument, and acknowledged that
as such officer, being authorized so to do, (s)he executed the foregoing
instrument on behalf of said corporation by subscribing the name of such
corporation by himself/herself as such officer and caused the corporate seal of
said corporation to be affixed thereto, as a free and voluntary act, and as the
free and voluntary act of said corporation, for the uses and purposes therein
set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_________________________
Notary Public
My Commission Expires: __________________
EXHIBIT A
Floor Plan of Expansion Space
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EXHIBIT B
TENANT WORKLETTER
This Exhibit is attached to and made a part of the Amendment dated as
of _________, 2000, by and between EOP-SUNSET NORTH BELLEVUE, L.L.C., A
WASHINGTON LIMITED LIABILITY COMPANY ("Landlord") and BSQUARE CORPORATION, a
Washington corporation ("Tenant") for space in the Building located at the
Northeast corner of 000xx Xxxxxx Xxxxxxxxx and Southeast 32nd Street, Bellevue,
Washington and commonly known as the Sunset North Corporate Campus
As used in this Workletter, the "Premises" shall be deemed to mean the Expansion
Space, as defined in the attached Amendment.
I. ALTERATIONS AND ALLOWANCE.
A. Tenant, following the delivery of the Premises by Landlord and
the full and final execution and delivery of the Amendment to
which this Exhibit is attached and all prepaid rental and
security deposits required under such agreement (if any),
shall have the right to perform alterations and improvements
in the Premises (the "Initial Alterations"). Notwithstanding
the foregoing, Tenant and its contractors shall not have the
right to perform Initial Alterations in the Premises unless
and until Tenant has complied with all of the terms and
conditions of Article 13 of the Lease, including, without
limitation, approval by Landlord of the final plans for the
Initial Alterations and the contractors to be retained by
Tenant to perform such Initial Alterations (which contractors
shall be selected by Tenant from Landlord's list of
preapproved contractors). Tenant shall be responsible for all
elements of the design of Tenant's plans (including, without
limitation, compliance with law, functionality of design, the
structural integrity of the design, the configuration of the
premises and the placement of Tenant's furniture, appliances
and equipment), and Landlord's approval of Tenant's plans
shall in no event relieve Tenant of the responsibility for
such design. Landlord's approval of the contractors to perform
the Initial Alterations shall not be unreasonably withheld.
B. Provided Tenant is not in default under the Lease (as so
amended by the Amendment), Landlord agrees to contribute the
sum of $164,881.17 (the "Expansion Allowance") toward the cost
of performing the Initial Alterations in preparation of
Tenant's occupancy of the Premises.
II. The Expansion Allowance may only be used for the cost of preparing
design and construction documents and mechanical and electrical plans
for the Initial Alterations and for hard costs in connection with the
Initial Alterations. The Expansion Allowance, less a 10% retainage
(which retainage shall be payable as part of the final draw), shall be
paid to Tenant or, at Landlord's option, to the order of the general
contractor that performs the Initial Alterations, in periodic
disbursements within 30 days after receipt of the following
documentation: (i) an application for payment and sworn statement of
contractor substantially in the form of AIA Document G-702 covering all
work for which disbursement is to be made to a date specified therein;
(ii) a certification from an AIA architect substantially in the form of
the Architect's Certificate for Payment which is located on AIA
Document G702, Application and Certificate of Payment; (iii)
Contractor's, subcontractor's and material supplier's waivers of liens
which shall cover all Initial Alterations for which disbursement is
being requested and all other statements and forms required for
compliance with the mechanics' lien laws of the state in which the
Premises is located, together with all such invoices, contracts, or
other supporting data as Landlord or Landlord's Mortgagee may
reasonably require; (iv) a cost breakdown for each trade or
subcontractor performing the Initial Alterations; (v) plans and
specifications for the Initial Alterations, together with a certificate
from an AIA architect that such plans and specifications comply in all
material respects with all laws affecting the Building, Property and
Premises; (vi) copies of all construction contracts for the Initial
Alterations, together with copies of all change orders, if any; and
(vii) a request to disburse from Tenant containing an approval by
Tenant of the work done and a good faith estimate of the cost to
complete the Initial Alterations. Upon completion of the Initial
Alterations, and prior to final disbursement of the Expansion
Allowance, Tenant shall furnish Landlord with: (1) general contractor
and architect's completion affidavits, (2) full and final waivers of
lien, (3) receipted bills covering all labor and materials expended and
used, (4) as-built plans of the Initial Alterations, and (5) the
certification of Tenant and its architect that the Initial Alterations
have been installed in a good and workmanlike manner in accordance with
the approved plans, and in accordance with applicable laws,
1
codes and ordinances. In no event shall Landlord be required to
disburse the Expansion Allowance more than one time per month. If the
Initial Alterations exceed the Expansion Allowance, Tenant shall be
entitled to the Expansion Allowance in accordance with the terms
hereof, but each individual disbursement of the Expansion Allowance
shall be disbursed in the proportion that the Expansion Allowance bears
to the total cost for the Initial Alterations, less the 10% retainage
referenced above. Notwithstanding anything herein to the contrary,
Landlord shall not be obligated to disburse any portion of the
Expansion Allowance during the continuance of an uncured default under
the Lease, and Landlord's obligation to disburse shall only resume when
and if such default is cured.
III. In no event shall the Expansion Allowance be used for the purchase of
equipment, furniture or other items of personal property of Tenant. If
Tenant does not submit a request for payment of the entire Expansion
Allowance to Landlord in accordance with the provisions contained in
this Exhibit by the Termination Date (or if the Lease is terminated
prior to the Termination Date, the date of such earlier termination),
any unused amount shall accrue to the sole benefit of Landlord, it
being understood that Tenant shall not be entitled to any credit,
abatement or other concession in connection therewith. Tenant shall be
responsible for all applicable state sales or use taxes, if any,
payable in connection with the Initial Alterations and/or Expansion
Allowance.
IV. Tenant agrees to accept the Premises in its "as-is" condition and
configuration, it being agreed that Landlord shall not be required to
perform any work or, except as provided above with respect to the
Expansion Allowance, incur any costs in connection with the
construction or demolition of any improvements in the Premises.
V. This Exhibit shall not be deemed applicable to any additional space
added to the Premises at any time or from time to time, whether by any
options under the Lease or otherwise, or to any portion of the original
Premises or any additions to the Premises in the event of a renewal or
extension of the original Term of the Lease, whether by any options
under the Lease or otherwise, unless expressly so provided in the Lease
or any amendment or supplement to the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have entered into this Exhibit
as of the date first written above.
LANDLORD: EOP-SUNSET NORTH BELLEVUE, L.L.C., A
WASHINGTON LIMITED LIABILITY COMPANY
By: EOP-Sunset North, L.L.C., a Delaware
limited liability company, its managing
member
By: EOP Operating Limited Partnership,
a Delaware limited partnership, its
sole member
By: Equity Office Properties
Trust, a Maryland real estate
investment trust, its general
partner
By: ______________________________
Name: Xxx Xxxxxxxx
Title: Senior Vice President -
Seattle Region
TENANT: BSQUARE CORPORATION, A WASHINGTON CORPORATION
By: __________________________________________
Name: ________________________________________
Title: _______________________________________
2
THIRD AMENDMENT
THIS THIRD AMENDMENT (the "Amendment") is made and entered into as of
the _____ day of ________________, 2001, by and between EOP-SUNSET NORTH
BELLEVUE, L.L.C., A WASHINGTON LIMITED LIABILITY COMPANY ("Landlord") and
BSQUARE CORPORATION, A WASHINGTON CORPORATION ("Tenant").
RECITALS
A. Landlord (as successor in interest to WRC Sunset North LLC, a
Washington limited liability company) and Tenant are parties to that
certain lease dated as of January 15, 1999, as amended by instruments
dated October 19, 1999, July 27, 1999 (the "First Amendment), and
January 3, 2001 (the "Second Amendment") (collectively the "Lease"),
for space currently designated in the Lease as containing 149,487
rentable square feet on xxx 0xx, 0xx, 0xx, 0xx and 5th floors of
building 4 (the "Initial Premises") located at the Northeast corner of
000xx Xxxxxx Xxxxxxxxx and Southeast 32nd Street, Bellevue, Washington
and commonly known as Building 4 of Sunset North Corporate Campus (the
"Building"); and
B. Tenant plans to make Initial Alterations to the Expansion Space (as
such terms are defined in the Second Amendment) which will eliminate
the "common areas" on Floor 1 of the Building. Landlord acknowledges
and approves such plans, on the condition that Tenant agrees to return
the Appropriate Portions (as defined in Paragraph I) of Floor 1 to
their original configuration, restored for use as common areas
necessary for a multi-tenant building when possession of the Expansion
Space is surrendered to Landlord.
C. Tenant and Landlord mutually desire that the Lease be amended on and
subject to the following terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:
I. AMENDMENT. Effective as of the date hereof, Landlord and Tenant agree
that the Lease shall be amended in accordance with the following terms
and conditions:
Pursuant to the Work Letter attached as Exhibit B to the Second
Amendment, Tenant has provided Landlord with the plans for Tenant's
Initial Alterations to the Expansion Space (i.e. Floor 1 of the
Building), which plans provide for the reconfiguration of the Expansion
Space such that the existing common area corridors and mail room will
be eliminated. Tenant hereby acknowledges and agrees that Landlord has
approved such plans, and that prior to Tenant's surrender of the
Expansion Space on the Termination Date or any earlier termination of
the Lease, Tenant shall, at Tenant's sole cost and expense, perform the
work necessary (the "Required Work") to substantially return the
Appropriate Portions (as defined below) of the Expansion Space to the
configuration and condition they were in prior to the performance of
the Initial Alterations therein (the "Prior Configuration and
Condition") to the reasonable satisfaction of Landlord. The Appropriate
Portions shall mean: The areas generally depicted on the floor plan
attached hereto as Exhibit A, and generally indicated by cross
hatching, and shall be described as: (1) the entire common area
corridor extending from the loading dock door past the elevator bank
and adjacent stairwell, and (2) the mail room, and (3) the loading dock
door and adjacent wall. With respect to the mail room, Tenant
specifically acknowledges that the Prior Configuration and Condition
includes the presence of installed mail boxes, mail chutes, and
counter/work area. All such Required Work shall be performed after
first obtaining Landlord's prior written approval of the contractor and
plans therefor in accordance with Article 13 of the Lease, and using
materials substantially the same as were in place in the Expansion
Space prior to Tenant's Initial Alterations therein. Tenant further
acknowledges and agrees that the failure of Tenant to perform the
Required Work prior to the Termination Date or earlier termination of
the Lease, shall constitute a material default under the Lease. In such
event, and in addition to any other remedies available to Landlord,
Landlord will have the right to perform the Required Work, and Tenant
shall, upon demand, reimburse Landlord for the cost thereof, plus a 15%
oversight fee and any applicable state sales or use tax thereon (all of
which shall constitute Rent under the Lease), and further that until
such time as the Required Work is completed, Tenant shall be
responsible for the payment of Rent under the holdover provisions of
the Lease.
1
However, in such event, if Landlord elects to perform the Required
Work, Landlord will make commercially reasonable efforts to complete
the Required Work in a timely manner.
II. MISCELLANEOUS.
A. This Amendment sets forth the entire agreement between the
parties with respect to the matters set forth herein. There
have been no additional oral or written representations or
agreements. Under no circumstances shall Tenant be entitled to
any Rent abatement, improvement allowance, leasehold
improvements, or other work to the Premises, or any similar
economic incentives that may have been provided Tenant in
connection with entering into the Lease, unless specifically
set forth in this Amendment.
B. Except as herein modified or amended, the provisions,
conditions and terms of the Lease shall remain unchanged and
in full force and effect.
C. In the case of any inconsistency between the provisions of the
Lease and this Amendment, the provisions of this Amendment
shall govern and control.
D. Submission of this Amendment by Landlord is not an offer to
enter into this Amendment but rather is a solicitation for
such an offer by Tenant. Landlord shall not be bound by this
Amendment until Landlord has executed and delivered the same
to Tenant.
E. The capitalized terms used in this Amendment shall have the
same definitions as set forth in the Lease to the extent that
such capitalized terms are defined therein and not redefined
in this Amendment.
F. Tenant hereby represents to Landlord that Tenant has dealt
with no broker in connection with this Amendment. Tenant
agrees to indemnify and hold Landlord, its members,
principals, beneficiaries, partners, officers, directors,
employees, mortgagee(s) and agents, and the respective
principals and members of any such agents (collectively, the
"Landlord Related Parties") harmless from all claims of any
brokers claiming to have represented Tenant in connection with
this Amendment. Landlord hereby represents to Tenant that
Landlord has dealt with no broker in connection with this
Amendment. Landlord agrees to indemnify and hold Tenant, its
members, principals, beneficiaries, partners, officers,
directors, employees, and agents, and the respective
principals and members of any such agents (collectively, the
"Tenant Related Parties") harmless from all claims of any
brokers claiming to have represented Landlord in connection
with this Amendment.
G. At Landlord's option, this Amendment shall be of no force and
effect unless and until accepted by any guarantors of the
Lease, who by signing below shall agree that their guaranty
shall apply to the Lease as amended herein, unless such
requirement is waived by Landlord in writing.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this
Amendment as of the day and year first above written.
LANDLORD: EOP-SUNSET NORTH BELLEVUE, L.L.C.,
A WASHINGTON LIMITED LIABILITY COMPANY
By: EOP-SUNSET NORTH, L.L.C., A DELAWARE
LIMITED LIABILITY COMPANY, ITS
MANAGING MEMBER
By: EOP OPERATING LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP, ITS
SOLE MEMBER
By: EQUITY OFFICE PROPERTIES
TRUST, A MARYLAND REAL ESTATE
INVESTMENT TRUST, ITS GENERAL
PARTNER
By: ________________________
Name: M. XXXXXXX XXXXXXXX
Title: SENIOR VICE PRESIDENT-
SEATTLE REGION
TENANT: BSQUARE CORPORATION, A WASHINGTON
CORPORATION
By: _________________________________
Name: _________________________________
Title: ________________________________
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LANDLORD ACKNOWLEDGMENT
STATE OF ______________________)
COUNTY OF _____________________)ss:
I, the undersigned, a Notary Public, in and for the County and State
aforesaid, do hereby certify that M. Xxxxxxx Xxxxxxxx, personally known to me to
be the Senior Vice President of Equity Office Properties Trust, a Maryland real
estate investment trust, and personally known to me to be the same person whose
name is subscribed to the foregoing instrument, appeared before me this day in
person and acknowledged that as such officer of said entity being authorized so
to do, (s)he executed the foregoing instrument on behalf of said entity, by
subscribing the name of such entity by himself/herself as such officer, as a
free and voluntary act, and as the free and voluntary act and deed of said
entity, for the uses and purposes therein set forth.
GIVEN under my hand and official seal this ______ day of ________,2001.
__________________________
Notary Public
My Commission Expires: _________________
TENANT ACKNOWLEDGMENT
CORPORATION
STATE OF ______________________)
COUNTY OF _____________________)ss:
On this the _____ day of ____________________, 2001, before me a Notary
Public duly authorized in and for the said County in the State aforesaid to take
acknowledgments personally appeared ___________________________ known to me to
be _______________________ President of bSquare Corporation, one of the parties
described in the foregoing instrument, and acknowledged that as such officer,
being authorized so to do, (s)he executed the foregoing instrument on behalf of
said corporation by subscribing the name of such corporation by himself/herself
as such officer and caused the corporate seal of said corporation to be affixed
thereto, as a free and voluntary act, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_______________________________
Notary Public
My Commission Expires: _________________
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EXHIBIT A
FLOOR PLAN OF FLOOR 1
This Exhibit is attached to and made a part of the Amendment dated as
of the ____ day of _____________________, 2001, by and between EOP-SUNSET NORTH
BELLEVUE, L.L.C., A WASHINGTON LIMITED LIABILITY COMPANY ("Landlord") and
BSQUARE CORPORATION, A WASHINGTON CORPORATION ("Tenant") for space in the
Building located at 000 000xx Xxxxxx XX, Xxxxxxxx, XX, 00000.
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