Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and among
F5 NETWORKS, INC.,
UROAM, INC.
and
UROAM ACQUISITION CORPORATION
July 23, 2003
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") is dated July 23, 2003 (the
"AGREEMENT DATE"), by and among F5 Networks, Inc., a Washington corporation
("BUYER"), uRoam, Inc., a California corporation ("UROAM"), and its wholly owned
subsidiary uRoam Acquisition Corporation, a California corporation ("UAC," and
together with uRoam, "SELLER").
RECITALS
Seller desires to sell, and Buyer desires to purchase, the Assets of
Seller for the consideration and on the terms set forth in this Agreement.
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS AND USAGE
1.1 Definitions
For purposes of this Agreement, the following terms and variations
thereof have the meanings specified or referred to in this Section 1.1:
"ACCOUNTS RECEIVABLE" -- (a) all trade accounts receivable and other
rights to payment from customers of Seller and the full benefit of all security
for such accounts or rights to payment, including all trade accounts receivable
representing amounts receivable in respect of goods shipped or products sold or
services rendered to customers of Seller, (b) all other accounts or notes
receivable of Seller and the full benefit of all security for such accounts or
notes and (c) any claim, remedy or other right related to any of the foregoing.
"ASSETS" -- as defined in Section 2.1.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" -- as defined in Section
2.7(a)(ii).
"ASSUMED LIABILITIES" -- as defined in Section 2.4(a).
"BALANCE SHEET" -- as defined in Section 3.4.
"XXXX OF SALE" -- as defined in Section 2.7(a)(i).
"BREACH" -- any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any other Contract, or any event which
with the passing of time or the giving of notice, or both, would constitute such
a breach, inaccuracy or failure.
"BULK SALES LAWS" -- as defined in Section 5.10.
"BUSINESS DAY" -- any day other than (a) Saturday or Sunday or (b) any
other day on which banks in Seattle, Washington are permitted or required to be
closed.
"BUYER" -- as defined in the first paragraph of this Agreement.
"BUYER INDEMNIFIED PERSONS" -- as defined in Section 11.2.
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"CLOSING" -- as defined in Section 2.6.
"CLOSING DATE" -- the date on which the Closing actually takes place.
"CLOSING WORKING CAPITAL" -- as defined in Section 2.9(b).
"CODE" -- the Internal Revenue Code of 1986.
"COMMERCIALLY REASONABLE EFFORTS" -- the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to achieve
that result as expeditiously as possible, provided, however, that a Person
required to use Commercially Reasonable Efforts under this Agreement will not be
thereby required to undertake extraordinary or unreasonable measures, including
the payment of amounts in excess of normal and usual filing fees and processing
fees, if any, or other payments with respect to any Contract that are
significant in the context of such Contract (or significant on an aggregate
basis as to all Contracts).
"CONFIDENTIAL INFORMATION" -- as defined in Section 12.1.
"CONSENT" -- any approval, consent, ratification, waiver or other
authorization.
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement.
"CONTRACT" -- any agreement, contract, Lease, consensual obligation,
promise or undertaking (whether written or oral and whether express or implied).
"COPYRIGHTS" -- as defined in Section 3.25(a)(iii).
"DAMAGES" -- as defined in Section 11.2.
"DISCLOSURE LETTER" -- the disclosure letter delivered by Seller to
Buyer concurrently with the execution and delivery of this Agreement.
"EFFECTIVE TIME" -- The time at which the Closing is consummated.
"EMPLOYEE PLANS" -- "employee benefit plans" as defined by Section 3(3)
of ERISA, all specified fringe benefit plans as defined in Section 6039D of the
Code, and all other bonus, incentive-compensation, deferred-compensation,
profit-sharing, stock-option, stock-appreciation-right, stock-bonus,
stock-purchase, employee-stock-ownership, savings, severance, change-in-control,
supplemental-unemployment, layoff, salary-continuation, retirement, pension,
health, life-insurance, disability, accident, group-insurance, vacation,
holiday, sick-leave, fringe-benefit or welfare plan, and any other employee
compensation or benefit plan, agreement, policy, practice, commitment, contract
or understanding (whether qualified or nonqualified, currently effective or
terminated, written or unwritten) and any trust, escrow or other agreement
related thereto that (i) is maintained or contributed to by Seller or any other
corporation or trade or business controlled by, controlling or under common
control with Seller (within the meaning of Section 414 of the Code or Section
4001(a)(14) or 4001(b) of ERISA) ("ERISA AFFILIATE") or has been maintained or
contributed to in the last six (6) years by Seller or any ERISA Affiliate, or
with respect to which Seller or any ERISA Affiliate has or may have any
liability, and (ii) provides benefits, or describes policies or procedures
applicable to any current or former director, officer, employee or service
provider of Seller or any ERISA Affiliate, or the dependents of any thereof,
regardless of how (or whether) liabilities for the provision of benefits are
accrued or assets are acquired or dedicated with respect to the funding thereof.
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"EMPLOYMENT AGREEMENT" -- as defined in Section 2.7(a)(vi).
"ENCUMBRANCE" -- any charge, claim, community or other marital property
interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment, servitude, right of
first option, right of first refusal or similar restriction.
"ERISA" -- the Employee Retirement Income Security Act of 1974.
"ESCROW AGREEMENT" -- as defined in Section 2.7(a)(viii).
"ESCROW FUND" -- as defined in Section 2.3.
"EXCHANGE ACT" -- the Securities Exchange Act of 1934.
"EXCLUDED ASSETS" -- as defined in Section 2.2.
"GAAP" -- generally accepted accounting principles for financial
reporting in the United States, applied on a basis consistent with the basis on
which the Balance Sheet and the other financial statements referred to in
Section 3.4 were prepared.
"GOVERNING DOCUMENTS" -- (a) the articles of incorporation and the
bylaws of a corporation; (b) all shareholder agreements, voting agreements,
voting trust agreements, joint venture agreements, registration rights
agreements or other agreements or documents relating to the organization,
management or operation of any corporation or relating to the rights, duties and
obligations of the shareholders of any corporation; and (c) any amendment or
supplement to any of the foregoing.
"GOVERNMENTAL AUTHORIZATION" -- any Consent, license, registration or
permit issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"GOVERNMENTAL BODY" -- any:
(a) federal, state, local, municipal, foreign or other
government;
(b) governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission, court,
tribunal or other entity exercising governmental or quasi-governmental
powers);
(c) multinational organization or governing body;
(d) body exercising, or entitled or purporting to exercise,
any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power; or
(e) official of any of the foregoing.
"INDEMNIFIED PERSON" -- as defined in Section 11.9.
"INDEMNIFYING PERSON" -- as defined in Section 11.9.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.25(a).
"INTERIM BALANCE SHEET" -- as defined in Section 3.4.
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"INVENTORIES" -- all inventories of Seller, wherever located, including
all finished goods, work in process, raw materials, spare parts and all other
materials and supplies to be used or consumed by Seller in the production of
finished goods.
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"KEY EMPLOYEE" - those employees of Seller named on Schedule
2.7(a)(vi).
"KNOWLEDGE" -- an individual will be deemed to have Knowledge of a
particular fact or other matter if: (a) that individual is actually aware of
that fact or matter; or (b) a reasonably prudent individual would discover that
fact or matter in the course of conducting a reasonable investigation in the
ordinary course of business regarding the accuracy of any representation or
warranty contained in this Agreement. A Person (other than an individual) will
be deemed to have Knowledge of a particular fact or other matter if any
individual who is serving, or who has at any time served, as a director,
officer, partner, executor or trustee of that Person (or in any similar
capacity) has, or at any time had, Knowledge of that fact or other matter (as
set forth in (a) and (b) above).
"LEASE" -- any lease or rental agreement, license, right to use or
installment and conditional sale agreement to which Seller is a party and any
other Seller Contract pertaining to the leasing or use of any Tangible Personal
Property.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.
"LIABILITY" -- with respect to any Person, any liability or obligation
of such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
"MARKS" -- as defined in Section 3.25(a)(i).
"MATERIAL CONSENTS" -- as defined in Section 7.3.
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, including the Occupational Safety and Health Act, and
any program, whether governmental or private (such as those promulgated or
sponsored by industry associations and insurance companies), designed to provide
safe and healthful working conditions.
"ORDER" -- any order, injunction, judgment, decree, ruling, assessment
or arbitration award of any Governmental Body or arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the Ordinary Course of Business only if that
action:
(a) is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the
normal, day-to-day operations of such Person; and
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(b) does not require authorization by the board of directors
or shareholders of such Person (or by any Person or group of Persons
exercising similar authority) and does not require any other separate
or special authorization of any nature.
"PART" -- a part or section of the Disclosure Letter.
"PATENT APPLICATIONS" -- as defined in Section 3.25(a)(ii).
"PERMITTED ENCUMBRANCES" -- as defined in Section 3.9.
"PERSON" -- an individual, partnership, corporation, business trust,
limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture or other entity or a
Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"PURCHASE PRICE" -- as defined in Section 2.3.
"RECORD" -- information that is inscribed on a tangible medium or that
is stored in an electronic or other medium and is retrievable in perceivable
form.
"RELATED PERSON" -- With respect to a particular individual: (a) each
other member of such individual's Family; (b)any Person that is directly or
indirectly controlled by any one or more members of such individual's Family;
(c) any Person in which members of such individual's Family hold (individually
or in the aggregate) a Material Interest; and (d) any Person with respect to
which one or more members of such individual's Family serves as a director,
officer, partner, executor or trustee (or in a similar capacity). With respect
to a specified Person other than an individual: (a) any Person that directly or
indirectly controls, is directly or indirectly controlled by or is directly or
indirectly under common control with such specified Person; (b) any Person that
holds a Material Interest in such specified Person; (c)each Person that serves
as a director, officer, partner, executor or trustee of such specified Person
(or in a similar capacity); (d) any Person in which such specified Person holds
a Material Interest; and (e) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar capacity). For
purposes of this definition, (a) "control" (including "controlling," "controlled
by," and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise, and shall be construed as such term is used in the rules promulgated
under the Securities Act; (b) the "Family" of an individual includes (i) the
individual, (ii) the individual's spouse, and (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree; and (c) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of voting securities
or other voting interests representing greater than twenty-five percent (25%) of
the outstanding voting power of a Person or equity securities or other equity
interests representing greater than twenty-five percent (25%) of the outstanding
equity securities or equity interests in a Person.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.
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"RETAINED LIABILITIES" -- as defined in Section 2.4(b).
"SEC" -- the United States Securities and Exchange Commission.
"SECURITIES ACT" -- as defined in Section 3.3.
"SELLER" -- as defined in the first paragraph of this Agreement;
provided, that as the context requires "Seller" shall mean either (i) uRoam
alone, or (ii) UAC alone or (iii) uRoam and UAC together.
"SELLER CONTRACT" -- any Contract (a) under which Seller has or may
acquire any rights or benefits; (b) under which Seller has or may become subject
to any obligation or liability; or (c) by which Seller or any of the assets
owned or used by Seller is or may become bound.
"SOFTWARE" -- all computer software and subsequent versions thereof,
including source code, object, executable or binary code, objects, comments,
screens, user interfaces, report formats, templates, menus, buttons and icons
and all files, data, materials, manuals, design notes and other items and
documentation related thereto or associated therewith.
"SUBSIDIARY" -- with respect to any Person (the "OWNER"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred), are held by the Owner or one or more of its
Subsidiaries.
"TANGIBLE PERSONAL PROPERTY" -- all machinery, equipment, tools,
furniture, office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than Inventories) of every
kind owned by Seller (wherever located and whether or not carried on Seller's
books), together with any express or implied warranty by the manufacturers or
sellers or lessors of any item or component part thereof and all maintenance
records and other documents relating thereto.
"TAX" -- any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or registration,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever
and any interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any Governmental Body or
payable under any tax-sharing agreement or any other Contract.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"THIRD PARTY" -- a Person that is not a party to this Agreement.
"THIRD-PARTY CLAIM" -- any claim against any Indemnified Person by a
Third Party, whether or not involving a Proceeding.
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1.2 Usage
(a) Interpretation. In this Agreement, unless a clear
contrary intention appears:
(i) the singular number includes the plural
number and vice versa;
(ii) reference to any Person includes such
Person's successors and assigns but, if applicable, only if
such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other
gender;
(iv) reference to any agreement, document or
instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in
accordance with the terms thereof;
(v) reference to any Legal Requirement means
such Legal Requirement as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from
time to time, including rules and regulations promulgated
thereunder, and reference to any section or other provision of
any Legal Requirement means that provision of such Legal
Requirement from time to time in effect and constituting the
substantive amendment, modification, codification, replacement
or reenactment of such section or other provision;
(vi) "hereunder," "hereof," "hereto," and words
of similar import shall be deemed references to this Agreement
as a whole and not to any particular Article, Section or other
provision hereof;
(vii) "including" (and with correlative meaning
"include") means including without limiting the generality of
any description preceding such term;
(viii) "or" is used in the inclusive sense of
"and/or";
(ix) with respect to the determination of any
period of time, "from" means "from and including" and "to"
means "to but excluding"; and
(x) references to documents, instruments or
agreements shall be deemed to refer as well to all addenda,
exhibits, schedules or amendments thereto.
(b) Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted
and all accounting determinations hereunder shall be made in accordance
with GAAP.
(c) Legal Representation of the Parties. This Agreement
was negotiated by the parties with the benefit of legal representation,
and any rule of construction or interpretation otherwise requiring this
Agreement to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof.
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2. SALE AND TRANSFER OF ASSETS; CLOSING
2.1 Assets to be Sold
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, but effective as of the Effective Time, Seller shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase
and acquire from Seller, free and clear of any Encumbrances other than Permitted
Encumbrances, all of Seller's right, title and interest in and to all of
Seller's property and assets, real, personal or mixed, tangible and intangible,
of every kind and description, wherever located, other than the Excluded Assets.
All of the property and assets to be transferred to Buyer hereunder are herein
referred to collectively as the "ASSETS." Notwithstanding the foregoing, the
transfer of the Assets pursuant to this Agreement shall not include the
assumption of any Liability related to the Assets unless Buyer expressly assumes
that Liability pursuant to Section 2.4(a).
2.2 Excluded Assets
Notwithstanding anything to the contrary contained in Section 2.1 or
elsewhere in this Agreement, the assets of Seller set forth on Schedule 2.2
(collectively, the "EXCLUDED ASSETS") are not part of the sale and purchase
contemplated hereunder, are excluded from the Assets and shall remain the
property of Seller after the Closing.
2.3 Consideration
The consideration for the Assets (the "Purchase Price") will be (a)
twenty-five million dollars ($25,000,000.00) and (b) the assumption of the
Assumed Liabilities. In accordance with Section 2.7(b), at the Closing, the
Purchase Price shall be delivered by Buyer to Seller as follows: (a) twenty-two
million five hundred thousand dollars ($22,500,000) by wire transfer; (b) two
million five hundred thousand dollars ($2,500,000) paid to the escrow agent
pursuant to the Escrow Agreement (the "ESCROW FUND"); and (c) by the execution
and delivery of the Assignment and Assumption Agreement.
2.4 Liabilities
(a) Assumed Liabilities. On the Closing Date, but
effective as of the Effective Time, Buyer shall assume and agree to
discharge only the following Liabilities of Seller (the "ASSUMED
LIABILITIES"):
(i) any trade account payable reflected on the
Interim Balance Sheet (other than a trade account payable to
any Related Person of Seller) that remains unpaid at and is
not delinquent as of the Effective Time;
(ii) any trade account payable (other than a
trade account payable to a Related Person of Seller) incurred
by Seller in the Ordinary Course of Business between the date
of the Interim Balance Sheet and the Effective Time that
remains unpaid at and is not delinquent as of the Effective
Time;
(iii) any Liability to Seller's customers incurred
by Seller in the Ordinary Course of Business for nondelinquent
orders outstanding as of the Effective Time reflected on
Seller's books (other than any Liability arising out of or
relating to a Breach that occurred prior to the Effective
Time);
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(iv) any Liability to Seller's customers under
written warranty agreements given by Seller to its customers
in the Ordinary Course of Business prior to the Effective Time
(other than any Liability arising out of or relating to a
Breach that occurred prior to the Effective Time);
(v) any Liability arising after the Effective
Time under any Seller Contract included in the Assets (other
than any Liability arising out of or relating to a Breach that
occurred prior to the Effective Time); and
(vi) any Liability of Seller arising after the
Effective Time under any Seller Contract included in the
Assets that is entered into by Seller after the date hereof in
accordance with the provisions of this Agreement (other than
any Liability arising out of or relating to a Breach that
occurred prior to the Effective Time)..
(b) Retained Liabilities. The Retained Liabilities shall
remain the sole responsibility of and shall be retained, paid,
performed and discharged solely by Seller. "RETAINED LIABILITIES" shall
mean every Liability of Seller other than the Assumed Liabilities.
2.5 Allocation.
The Purchase Price shall be allocated in accordance with Schedule 2.5.
After the Closing, the parties shall make consistent use of the allocation, fair
market value and useful lives specified in Exhibit 2.5 for all Tax purposes and
in all filings, declarations and reports with the IRS in respect thereof,
including the reports required to be filed under Section 1060 of the Code. Buyer
and Seller shall prepare and file IRS Forms 8594 in a manner reflecting the
allocation set forth in Exhibit 2.5. In any Proceeding related to the
determination of any Tax, neither Buyer nor Seller shall contend or represent
that such allocation is not a correct allocation.
2.6 Closing
The purchase and sale provided for in this Agreement (the "CLOSING")
will take place at Buyer's offices in Seattle, WA, commencing at 8:00 a.m.
(local time) on July 23, 2003 unless Buyer and Seller otherwise agree. Subject
to the provisions of Article 9, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 2.6 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
In such a situation, the Closing will occur as soon as practicable, subject to
Article 9.
2.7 Closing Obligations
In addition to any other documents to be delivered under other
provisions of this Agreement, at the Closing:
(a) Seller shall deliver to Buyer, together with funds
sufficient to pay any applicable documentary transfer taxes:
(i) a xxxx of sale for all of the Assets that
are Contracts and Tangible Personal Property in a form reasonably
satisfactory to Buyer and Seller (the "XXXX OF SALE") executed by
Seller;
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(ii) an assignment of all of the Assets that are
intangible personal property in a form reasonably satisfactory to Buyer
and Seller, which assignment shall also contain Buyer's undertaking and
assumption of the Assumed Liabilities (the "ASSIGNMENT AND ASSUMPTION
AGREEMENT") executed by Seller;
(iii) assignments of all Intellectual Property
Assets and separate assignments of all registered Marks, Patent
Applications and Copyrights in a form reasonably satisfactory to Buyer
and Seller executed by Seller;
(iv) such other deeds, bills of sale,
assignments, certificates of title, documents and other instruments of
transfer and conveyance as may reasonably be requested by Buyer, each
in form and substance satisfactory to Buyer and Seller and their legal
counsel and executed by Seller;
(v) Buyer's standard form employment agreement,
or employment offer letter executed, or accepted, as applicable, by
each of the Key Employees (each an "EMPLOYMENT AGREEMENT");
(vi) an escrow agreement in a form reasonably
satisfactory to Buyer and Seller, executed by Seller and the escrow
agent (the "ESCROW AGREEMENT"); and
(vii) a certificate executed by each of the
Sellers as to the accuracy of their representations and warranties as
of the date of this Agreement and as of the Closing in accordance with
Section 7.1 and as to their compliance with and performance of their
covenants and obligations to be performed or complied with at or before
the Closing in accordance with Section 7.2.
(b) Buyer shall deliver to Seller:
(i) twenty-two million five hundred thousand
dollars ($22,500,000) by wire transfer to an account specified
by Seller in a writing delivered to Buyer at least three (3)
business days prior to the Closing Date;
(ii) the Escrow Agreement, executed by Buyer and
the escrow agent, together with the delivery of two million
five hundred thousand dollars ($2,500,000) to the escrow agent
thereunder, by wire transfer to an account specified by the
escrow agent;
(iii) the Assignment and Assumption Agreement
executed by Buyer;
(iv) the Employment Agreements executed by Buyer;
and
(v) a certificate executed by Buyer as to the
accuracy of its representations and warranties as of the date
of this Agreement and as of the Closing in accordance with
Section 8.1 and as to its compliance with and performance of
its covenants and obligations to be performed or complied with
at or before the Closing in accordance with Section 8.2.
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2.8 Consents
(a) If there are any Material Consents that have not yet
been obtained (or otherwise are not in full force and effect) as of the
Closing, in the case of each Seller Contract as to which such Material
Consents were not obtained (or otherwise are not in full force and
effect) (the "RESTRICTED MATERIAL CONTRACTS"), Buyer may waive the
closing conditions as to any such Material Consent and either:
(i) elect to have Seller continue its efforts to
obtain the Material Consents; or
(ii) elect to have Seller retain that Restricted
Material Contract and all Liabilities arising therefrom or
relating thereto.
If Buyer elects to have Seller continue its efforts to obtain any
Material Consents and the Closing occurs, notwithstanding Sections 2.1
and 2.4, neither this Agreement nor the Xxxx of Sale nor any other
document related to the consummation of the Contemplated Transactions
shall constitute a sale, assignment, assumption, transfer, conveyance
or delivery or an attempted sale, assignment, assumption, transfer,
conveyance or delivery of the Restricted Material Contracts, and
following the Closing, the parties shall use Commercially Reasonable
Efforts, and cooperate with each other, to obtain the Material Consent
relating to each Restricted Material Contract as quickly as
practicable. Pending the obtaining of such Material Consents relating
to any Restricted Material Contract, the parties shall cooperate with
each other in any reasonable and lawful arrangements designed to
provide to Buyer the benefits of use of the Restricted Material
Contract for its term (or any right or benefit arising thereunder,
including the enforcement for the benefit of Buyer of any and all
rights of Seller against a third party thereunder). Once a Material
Consent for the sale, assignment, assumption, transfer, conveyance and
delivery of a Restricted Material Contract is obtained, Seller shall
promptly assign, transfer, convey and deliver such Restricted Material
Contract to Buyer, and Buyer shall assume the obligations under such
Restricted Material Contract assigned to Buyer from and after the date
of assignment to Buyer pursuant to a special-purpose xxxx of sale or
assignment and assumption agreement substantially similar in terms to
those of the Xxxx of Sale and Assignment and Assumption Agreement
(which special-purpose agreements the parties shall prepare, execute
and deliver in good faith at the time of such transfer, all at no
additional cost to Buyer). Notwithstanding the foregoing, Seller's
obligations under this Section 2.8(a) shall terminate no later than
December 1, 2003.
(b) If there are any Consents not listed on Schedule 7.3
necessary for the assignment and transfer of any Seller Contracts to
Buyer (the "NONMATERIAL CONSENTS") which have not yet been obtained (or
otherwise are not in full force and effect) as of the Closing, Buyer
shall elect at the Closing, in the case of each of the Seller Contracts
as to which such Nonmaterial Consents were not obtained (or otherwise
are not in full force and effect) (the "RESTRICTED NONMATERIAL
CONTRACTS"), whether to:
(i) accept the assignment of such Restricted
Nonmaterial Contract, in which case, as between Buyer and
Seller, such Restricted Nonmaterial Contract shall, to the
maximum extent practicable and notwithstanding the failure to
obtain the applicable Nonmaterial Consent, be transferred at
the Closing pursuant to the Xxxx of Sale as elsewhere provided
under this Agreement; or
(ii) reject the assignment of such Restricted
Nonmaterial Contract, in which case, notwithstanding Sections
2.1 and 2.4, (A) neither this Agreement nor the Xxxx of Sale
11
nor any other document related to the consummation of the
Contemplated Transactions shall constitute a sale, assignment,
assumption, conveyance or delivery or an attempted sale,
assignment, assumption, transfer, conveyance or delivery of
such Restricted Nonmaterial Contract, and (B) Seller shall
retain such Restricted Nonmaterial Contract and all
Liabilities arising therefrom or relating thereto.
(c) Notwithstanding any other provision in this
Agreement, the parties acknowledge and agree that no Consents (the
"INTERJAK CONSENTS") under Seller Contracts relating to the Interjak
business of Seller (the "INTERJAK CONTRACTS") shall be obtained prior
to or at Closing and that the Interjak Consents shall not be considered
Material Consents or Nonmaterial Consents hereunder. Interjak Contracts
shall be assigned to Buyer as set forth in Section 2.1. Following
Closing and until no later than December 1, 2003, the parties shall use
Commercially Reasonable Efforts, and cooperate with each other, to
obtain any Interjak Consents as reasonably requested by Buyer as
quickly as practicable.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
uRoam and UAC represent and warrant, jointly and severally, and except
as set forth in the Disclosure Letter, to Buyer as follows:
3.1 Organization and Good Standing
(a) Part 3.1(a) contains a complete and accurate list of
Seller's jurisdiction of incorporation and any other jurisdictions in
which it is qualified to do business as a foreign corporation. Each of
uRoam and UAC is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, with full
corporate power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under the
Seller Contracts. Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification.
(b) Complete and accurate copies of the Governing
Documents of Seller, as currently in effect have been delivered to
Buyer.
(c) uRoam has no Subsidiary other than UAC, and does not
own any shares of capital stock or other securities of any other
Person. UAC has no Subsidiary and does not own any shares of capital
stock or other securities of any other Person.
3.2 Enforceability; Authority; No Conflict
(a) This Agreement constitutes the legal, valid and
binding obligation of Seller, enforceable against each of them in
accordance with its terms. Upon the execution and delivery by Seller of
the Escrow Agreement, and each other agreement to be executed or
delivered by Seller at the Closing (collectively, the "SELLER'S CLOSING
DOCUMENTS"), each of Seller's Closing Documents will constitute the
legal, valid and binding obligation of Seller, enforceable against each
of them in accordance with its terms. Seller has the absolute and
unrestricted right, power and authority to execute and deliver this
Agreement and the Seller's Closing Documents to which it is a party and
to perform its obligations under this Agreement and the Seller's
Closing Documents, and such action has been duly authorized by all
necessary action by Seller's shareholders and board of directors.
12
(b) Except as set forth in Part 3.2(b), neither the
execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) Breach (A) any provision of any of the
Governing Documents of Seller or (B) any resolution adopted by
the board of directors or the shareholders of Seller;
(ii) Breach or give any Governmental Body or
other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief
under any Legal Requirement or any Order to which Seller, or
any of the Assets, may be subject;
(iii) contravene, conflict with or result in a
violation or breach of any of the terms or requirements of, or
give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Seller or that otherwise relates
to the Assets or to the business of Seller;
(iv) cause Buyer to become subject to, or to
become liable for the payment of, any Tax (other than Taxes
arising from ownership of the Assets after the Closing);
(v) Breach any provision of, or give any Person
the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or payment
under, or to cancel, terminate or modify, any Seller Contract;
or
(vi) result in the imposition or creation of any
Encumbrance upon or with respect to any of the Assets.
(c) Except as set forth in Part 3.2(c), Seller is not
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
3.3 Capitalization
(a) The authorized equity securities of uRoam consist of
41,958,300 shares of common stock, without par value, and 37,038,663
shares of preferred stock, without par value, of which 988,678 shares
of common stock, 33,700,363 shares of Series A-1 preferred stock and
3,338,286 shares of Series B-1 preferred stock are issued and
outstanding. There are no Contracts relating to the issuance, sale or
transfer of any equity securities or other securities of uRoam. None of
the outstanding equity securities of uRoam was issued in violation of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), or any
other Legal Requirement.
(b) The authorized equity securities of UAC consist of
10,000,000 shares of common stock, par value $0.0001 per share, of
which 1,000 shares are issued and outstanding, and held of record by
uRoam. There are no Contracts relating to the issuance, sale or
transfer of any equity securities or other securities of UAC. None of
the outstanding equity securities of UAC was issued in violation of the
Securities Act or any other Legal Requirement.
3.4 Financial Statements
Seller has delivered to Buyer: (a) an audited balance sheet of Seller
as of December 31, 2002 (including the notes thereto, the "BALANCE SHEET"), and
the related audited statements of income, changes
13
in shareholders' equity and cash flows for the fiscal year then ended, including
in each case the notes thereto, together with the report thereon of BDO Xxxxxxx,
independent certified public accountants; (b) an audited balance sheet of Seller
as of December 31, 2001 (including the notes thereto), and the related audited
statements of income, changes in shareholders' equity and cash flows for the
fiscal year then ended, including in each case the notes thereto, together with
the report thereon of BDO Xxxxxxx; and (c) an unaudited balance sheet of Seller
as of March 31, 2003, (the "INTERIM BALANCE SHEET") and the related unaudited
statements of income, changes in shareholders' equity, and cash flows for the
three (3) months then ended, including in each case the notes thereto certified
by Seller's chief financial officer. Such financial statements fairly present
the financial condition and the results of operations, changes in shareholders'
equity and cash flows of Seller as of the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP.
The financial statements referred to in this Section 3.4 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. The financial
statements have been prepared from and are in accordance with the accounting
Records of Seller. Seller has also delivered to Buyer copies of all letters from
Seller's auditors to Seller's board of directors or the audit committee thereof
during the thirty-six (36) months preceding the execution of this Agreement,
together with copies of all responses thereto.
3.5 Books and Records
The books of account and other financial Records of Seller, all of
which have been made available to Buyer, are complete and correct and represent
actual, bona fide transactions and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of internal
controls. The minute books of Seller, all of which have been made available to
Buyer, contain accurate and complete Records of all meetings held of, and
corporate action taken by, the shareholders, the board of directors and
committees of the board of directors of Seller, and no meeting of any such
shareholders, board of directors or committee has been held for which minutes
have not been prepared or are not contained in such minute books.
3.6 Sufficiency of Assets
Except as set forth in Part 3.6, the Assets (a) constitute all of the
assets, tangible and intangible, of any nature whatsoever, necessary to operate
Seller's business in the manner presently operated by Seller and (b) include all
of the operating assets of Seller.
3.7 [Reserved]
3.8 [Reserved]
3.9 Title to Assets; Encumbrances
Seller owns good and transferable title to all of the Assets free and
clear of any Encumbrances other than those described in Part 3.9 ("PERMITTED
ENCUMBRANCES").
3.10 [Reserved]
3.11 Accounts Receivable
All Accounts Receivable that are reflected on the Balance Sheet or the
Interim Balance Sheet or on the accounting Records of Seller as of the Closing
Date represent or will represent valid obligations arising from sales actually
made or services actually performed by Seller in the Ordinary Course of
14
Business. Except to the extent paid prior to the Closing Date, such Accounts
Receivable are or will be as of the Closing Date current and collectible net of
the respective reserves shown on the Balance Sheet or the Interim Balance Sheet
(which reserves are adequate and calculated consistent with past practice).
Subject to such reserves, each of such Accounts Receivable either has been or
will be collected in full, without any setoff, within ninety (90) days after the
day on which it first becomes due and payable. There is no contest, claim,
defense or right of setoff, other than returns in the Ordinary Course of
Business of Seller, under any Contract with any account debtor of an Account
Receivable relating to the amount or validity of such Account Receivable. Part
3.11 contains a complete and accurate list of all Accounts Receivable as of the
date of the Interim Balance Sheet, which list sets forth the aging of each such
Account Receivable.
3.12 Inventories
All items included in the Inventories consist of a quality and quantity
usable and, with respect to finished goods, saleable, in the Ordinary Course of
Business of Seller except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Balance Sheet or the Interim Balance Sheet or on the accounting
Records of Seller as of the Closing Date, as the case may be. Seller is not in
possession of any inventory not owned by Seller, including goods already sold.
All of the Inventories have been valued at the lower of cost or net realizable
value on a first in, first out basis. Inventories now on hand that were
purchased after the date of the Balance Sheet or the Interim Balance Sheet were
purchased in the Ordinary Course of Business of Seller at a cost not exceeding
market prices prevailing at the time of purchase. The quantities of each item of
Inventories (whether raw materials, work-in-process or finished goods) are not
excessive but are reasonable in the present circumstances of Seller.
Work-in-process Inventories are now valued, and will be valued on the Closing
Date, according to GAAP.
3.13 No Undisclosed Liabilities
Except as set forth in Part 3.13, Seller has no Liability except for
Liabilities reflected or reserved against in the Balance Sheet or the Interim
Balance Sheet and current liabilities incurred in the Ordinary Course of
Business of Seller since the date of the Interim Balance Sheet.
3.14 Taxes
Seller has filed or caused to be filed on a timely basis all Tax
Returns and all reports with respect to Taxes that are or were required to be
filed by Seller pursuant to applicable Legal Requirements. All Tax Returns and
reports filed by Seller are true, correct and complete in all material respects.
Seller has paid, or made provision for the payment of, all Taxes of Seller that
have or may have become due for all periods covered by the Tax Returns or
otherwise, or pursuant to any assessment received by Seller.
3.15 No Material Adverse Change
Since the date of the Interim Balance Sheet, there has not been any
material adverse change in the business, operations, prospects, assets, results
of operations or condition (financial or other) of Seller, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.16 Employee Benefits
Full payment has been made of all amounts that are required under the
terms of each Employee Plan to be paid as contributions with respect to all
periods prior to and including the last day of the most recent fiscal year of
such Employee Plan ended on or before the date of this Agreement and all periods
15
thereafter prior to the Closing Date, and no accumulated funding deficiency or
liquidity shortfall (as those terms are defined in Section 302 of ERISA and
Section 412 of the Code) has been incurred with respect to any such Employee
Plan, whether or not waived. The value of the assets of each Employee Plan
exceeds the amount of all benefit liabilities (determined on a plan termination
basis using the actuarial assumptions established by the Pension Benefit
Guaranty Corporation ("PBGC") as of the Closing Date) of such Employee Plan.
3.17 Compliance with Legal Requirements; Governmental
Authorizations
(a) Except as set forth in Part 3.17(a):
(i) Seller is, and at all times since its
inception, has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct
or operation of its business or the ownership or use of any of
its assets;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may
constitute or result in a violation by Seller of, or a failure
on the part of Seller to comply with, any Legal Requirement or
(B) may give rise to any obligation on the part of Seller to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature; and
(iii) Seller has not received, at any time since
its inception, any notice or other communication (whether oral
or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement
or (B) any actual, alleged, possible or potential obligation
on the part of Seller to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
(b) Part 3.17(b) contains a complete and accurate list of
each Governmental Authorization that is held by Seller or that
otherwise relates to Seller's business or the Assets. Each Governmental
Authorization listed or required to be listed in Part 3.17(b) is valid
and in full force and effect. Except as set forth in Part 3.17(b):
(i) Seller is, and at all times since its
inception, has been, in full compliance with all of the terms
and requirements of each Governmental Authorization identified
or required to be identified in Part 3.17(b);
(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of
or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Part 3.17(b) or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Part 3.17(b);
(iii) Seller has not received, at any time since
its inception, any notice or other communication (whether oral
or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible or potential
violation of or failure to comply with any term or requirement
of any Governmental Authorization or (B) any actual, proposed,
possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any
Governmental Authorization; and
16
(iv) all applications required to have been filed
for the renewal of the Governmental Authorizations listed or
required to be listed in Part 3.17(b) have been duly filed on
a timely basis with the appropriate Governmental Bodies, and
all other filings required to have been made with respect to
such Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.17(b) collectively
constitute all of the Governmental Authorizations necessary to permit
Seller to lawfully conduct and operate its business in the manner in
which it currently conducts and operates such business and to permit
Seller to own and use its assets in the manner in which it currently
owns and uses such assets.
3.18 Legal Proceedings; Orders
(a) Except as set forth in Part 3.18(a), there is no
pending or, to Seller's Knowledge, threatened Proceeding: (1) by or
against Seller or that otherwise relates to or may affect the business
of, or any of the assets owned or used by, Seller; or (2) that
challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Contemplated
Transactions. To the Knowledge of Seller, no event has occurred or
circumstance exists that is reasonably likely to give rise to or serve
as a basis for the commencement of any such Proceeding. Seller has
delivered to Buyer copies of all pleadings, correspondence and other
documents relating to each Proceeding listed in Part 3.18(a). There are
no Proceedings listed or required to be listed in Part 3.18(a) that
could have a material adverse effect on the business, operations,
assets, condition or prospects of Seller or upon the Assets.
(b) Except as set forth in Part 3.18(b): (1) there is no
Order to which Seller, its business or any of the Assets is subject;
and (2) to the Knowledge of Seller, no officer, director, agent or
employee of Seller is subject to any Order that prohibits such officer,
director, agent or employee from engaging in or continuing any conduct,
activity or practice relating to the business of Seller.
(c) Except as set forth in Part 3.18(c): (1) Seller is,
and, at all times since its inception, has been in compliance with all
of the terms and requirements of each Order to which it or any of the
Assets is or has been subject; (2) no event has occurred or
circumstance exists that is reasonably likely to constitute or result
in (with or without notice or lapse of time) a violation of or failure
to comply with any term or requirement of any Order to which Seller or
any of the Assets is subject; and (3) Seller has not received, at any
time since its inception, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person
regarding any actual, alleged, possible or potential violation of, or
failure to comply with, any term or requirement of any Order to which
Seller or any of the Assets is or has been subject.
3.19 Absence of Certain Changes and Events
Except as set forth in Part 3.19, since the date of the Interim Balance
Sheet, Seller has conducted its business only in the Ordinary Course of Business
and there has not been any:
(a) payment (except in the Ordinary Course of Business)
or increase by Seller of any bonuses, salaries or other compensation to
any shareholder, director, officer or employee or entry into any
employment, severance or similar Contract with any director, officer or
employee;
(b) damage to or destruction or loss of any Asset,
whether or not covered by insurance;
17
(c) entry into, termination of or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit or similar Contract to which
Seller is a party, or (ii) any Contract or transaction involving a
total remaining commitment by Seller of at least $10,000;
(d) sale (other than sales of Inventories in the Ordinary
Course of Business), lease or other disposition of any Asset or
property of Seller (including the Intellectual Property Assets) or the
creation of any Encumbrance on any Asset;
(e) cancellation or waiver of any claims or rights with a
value to Seller in excess of $10,000;
(f) indication by any customer or supplier of an
intention to discontinue or change the terms of its relationship with
Seller; or
(g) Contract by Seller to do any of the foregoing.
3.20 Contracts; No Defaults
(a) Part 3.20(a) contains an accurate and complete list,
and Seller has delivered to Buyer accurate and complete copies, of:
(i) each Seller Contract that involves future
performance of services or delivery of goods or materials by
Seller of an amount or value in excess of $10,000;
(ii) each Seller Contract that involves future
performance of services or delivery of goods or materials to
Seller of an amount or value in excess of $10,000;
(iii) each Seller Contract that was not entered
into in the Ordinary Course of Business and that involves
future expenditures or receipts of Seller in excess of
$10,000;
(iv) each Seller Contract affecting the ownership
of, leasing of, title to, use of or any leasehold or other
interest in any real or personal property (except personal
property leases and installment and conditional sales
agreements having a value per item or aggregate payments of
less than $10,000 and with a term of less than one year);
(v) each Seller Contract with any labor union or
other employee representative of a group of employees relating
to wages, hours and other conditions of employment;
(vi) each Seller Contract (however named)
involving a sharing of profits, losses, costs or liabilities
by Seller with any other Person;
(vii) each Seller Contract containing covenants
that in any way purport to restrict Seller's business activity
or limit the freedom of Seller to engage in any line of
business or to compete with any Person;
(viii) each Seller Contract providing for payments
to or by any Person based on sales, purchases or profits,
other than direct payments for goods;
18
(ix) each power of attorney of Seller that is
currently effective and outstanding;
(x) each Seller Contract entered into other than
in the Ordinary Course of Business that contains or provides
for an express undertaking by Seller to be responsible for
consequential damages;
(xi) each Seller Contract for capital
expenditures in excess of $25,000;
(xii) each written warranty, guaranty and/or other
similar undertaking with respect to contractual performance
extended by Seller other than in the Ordinary Course of
Business; and
(xiii) each amendment, supplement and modification
(whether oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.20(b):
(i) each Contract identified or required to be
identified in Part 3.20(a) and which is to be assigned to or
assumed by Buyer under this Agreement is in full force and
effect and is valid and enforceable in accordance with its
terms;
(ii) each Contract identified or required to be
identified in Part 3.20(a) and which is being assigned to or
assumed by Buyer is assignable by Seller to Buyer without the
consent of any other Person; and
(c) Except as set forth in Part 3.20(c):
(i) Seller is, and at all times since its
inception, has been, in compliance with all applicable terms
and requirements of each Seller Contract which is being
assumed by Buyer;
(ii) To Seller's knowledge, each other Person
that has or had any obligation or liability under any Seller
Contract which is being assigned to Buyer is, and at all times
during the term of such Seller Contract, has been, in full
compliance with all applicable terms and requirements of such
Contract;
(iii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene,
conflict with or result in a Breach of, or give Seller or
other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of,
or payment under, or to cancel, terminate or modify, any
Seller Contract that is being assigned to or assumed by Buyer;
(iv) no event has occurred or circumstance exists
under or by virtue of any Contract that (with or without
notice or lapse of time) would cause the creation of any
Encumbrance affecting any of the Assets; and
(v) Seller has not given to or received from any
other Person, at any time since its inception, any notice or
other communication (whether oral or written) regarding any
actual, alleged, possible or potential violation or Breach of,
or default under, any Contract which is being assigned to or
assumed by Buyer.
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(d) There are no renegotiations of, attempts to
renegotiate or outstanding rights to renegotiate any material amounts
paid or payable to Seller under current or completed Contracts with any
Person having the contractual or statutory right to demand or require
such renegotiation and no such Person has made written demand for such
renegotiation.
(e) Each Contract relating to the sale, design,
manufacture or provision of products or services by Seller has been
entered into in the Ordinary Course of Business of Seller and has been
entered into without the commission of any act alone or in concert with
any other Person, or any consideration having been paid or promised,
that is or would be in violation of any Legal Requirement.
3.21 [Reserved]
3.22 [Reserved]
3.23 Employees
To the Knowledge of Seller, no officer, director, agent, employee,
consultant, or contractor of Seller is bound by any Contract that purports to
limit the ability of such officer, director, agent, employee, consultant, or
contractor (i) to engage in or continue or perform any conduct, activity, duties
or practice relating to the business of Seller or (ii) to assign to Seller or to
any other Person any rights to any invention, improvement, or discovery. To the
Knowledge of Seller, no former or current employee of Seller is a party to, or
is otherwise bound by, any Contract that in any way adversely affected, affects,
or will affect the ability of Seller or Buyer to conduct the business as
heretofore carried on by Seller.
3.24 Labor Disputes; Compliance
To the Knowledge of Seller, Seller has complied in all material
respects with all Legal Requirements relating to employment practices, terms and
conditions of employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining and other
requirements under California law, the payment of social security and similar
Taxes and occupational safety and health. To the Knowledge of Seller, Seller is
not liable for the payment of any Taxes, fines, penalties, or other amounts,
however designated, for failure to comply with any of the foregoing Legal
Requirements.
3.25 Intellectual Property Assets
(a) The term "INTELLECTUAL PROPERTY ASSETS" means all
intellectual property other than those embodied in or covering the
Excluded Assets owned or licensed (as licensor or licensee) by Seller
in which Seller has a proprietary interest, including:
(i) Seller's name, all assumed fictional
business names, trade names, registered and unregistered
trademarks, service marks and applications (collectively,
"MARKS");
(ii) all patent applications ("PATENT
APPLICATIONS");
(iii) all registered and unregistered copyrights
in both published works and unpublished works (collectively,
"COPYRIGHTS");
(iv) all rights in mask works; and
20
(v) all know-how, trade secrets, confidential
and proprietary information, customer lists, Software, and all
confidential technical information, data, process technology,
plans, drawings and blue prints (collectively, "TRADE
SECRETS").
(b) Part 3.25(b) contains a complete and accurate list,
and Seller has delivered to Buyer accurate and complete copies, of all
Seller Contracts relating to the Intellectual Property Assets, except
for any license implied by the sale of a product and perpetual, paid-up
licenses for commonly available Software programs with a per seat
license fee of less than $500 under which Seller is the licensee.
Seller has not received any written threat, demand or notice of claim,
and, to Seller's Knowledge, there are no threatened disputes or
disagreements, with respect to any such Contract.
(c)
(i) Except as set forth in Part 3.25(c), the
Intellectual Property Assets are all those necessary for the
operation of Seller's business as it is currently conducted.
Seller is the owner or licensee of all right, title and
interest in and to each of the Intellectual Property Assets
(excluding those licensed to Seller), free and clear of all
Encumbrances, and has the right to use without payment to a
Third Party all of the Intellectual Property Assets, other
than in respect of licenses listed in Part 3.25(c).
(ii) Except as set forth in Part 3.25(c), all
former and current employees and technical independent
contractors of Seller have executed written Contracts with
Seller that assign to Seller all rights to any inventions,
improvements, discoveries or information made during the
course of employment or provision of contracting services
relating to the business of Seller, subject to those
limitations required by law.
(d) Part 3.25(d) contains a complete and accurate list of
all Patent Applications.
(e)
(i) Part 3.25(e) contains a complete and
accurate list of all Marks.
(ii) All Marks that have been registered by the
United States Patent and Trademark Office are currently in
compliance with all formal Legal Requirements (including the
timely post-registration filing of affidavits of use and
incontestability and renewal applications), are to Seller's
Knowledge valid and enforceable and are not subject to any
maintenance fees or taxes or actions falling due within ninety
(90) days after the Closing Date.
(iii) No Xxxx has been or is now the subject of
any opposition, invalidation or cancellation Proceeding and,
to Seller's Knowledge, no such action is threatened with
respect to any of the Marks.
(iv) To Seller's knowledge, no Third Party is
infringing any Xxxx.
(v) Seller has not received any demand or claim
that any Xxxx infringes a Third Party's trademark rights nor,
to Seller's Knowledge, has any such demand or claim been
challenged or threatened in any way. To Seller's Knowledge,
none of the Marks used by Seller infringes or is alleged to
infringe any trade name, trademark or service xxxx of any
Third Party.
21
(vi) All products and materials containing a Xxxx
xxxx the proper federal registration notice as required by
law.
(f)
(i) Part 3.25(f) contains a complete and
accurate list and summary description of all Copyrights.
(ii) All of the registered Copyrights are
currently in compliance with formal Legal Requirements, are
valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety (90) days
after the date of Closing.
(iii) Seller has not received any demand or claim
that any Copyright infringes a Third Party's copyrights nor,
to Seller's Knowledge, has any such demand or claim been
challenged or threatened in any way. To Seller's Knowledge,
none of the subject matter of any of the Copyrights infringes
or is alleged to infringe any copyright of any Third Party or
is a derivative work based upon the work of any Third Party.
(iv) All works embodying the Copyrights have been
marked with the proper copyright notice as required by law.
(g)
(i) With respect to each Trade Secret, the
documentation relating to such Trade Secret is current,
accurate and sufficient in detail and content to identify and
explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual.
(ii) Seller has taken reasonable precautions
customary in its industry to protect the secrecy,
confidentiality and value of all Trade Secrets (including the
enforcement by Seller of a policy requiring each employee or
contractor to execute proprietary information and
confidentiality agreements substantially in Seller's standard
form, and all current and former employees and contractors of
Seller have executed such an agreement).
(iii) Seller has good title to and the
unrestricted right to use the Trade Secrets. The Trade Secrets
are not part of the public knowledge or literature and, to
Seller's Knowledge, have not been used, divulged or
appropriated either for the benefit of any Person (other than
Seller) or to the detriment of Seller. Seller has not received
any demand or claim that any Trade Secret is subject to any
adverse claim nor, to Seller's Knowledge, has been challenged
or threatened in any way or infringes any intellectual
property right of any other Person.
3.26 Compliance With The Foreign Corrupt Practices Act
Seller and its Representatives have not violated the Foreign Corrupt
Practices Act of 1977, as amended.
3.27 Relationships with Related Persons
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Except as disclosed in Part 3.27, no Related Person of Seller has, or
since January 1, 2001 has had, any interest in any property (whether real,
personal or mixed and whether tangible or intangible) used in or pertaining to
Seller's business.
3.28 Brokers Or Finders
Except as disclosed in Part 3.28, neither Seller nor any of its
Representatives have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payments in connection with the sale of Seller's business or the Assets
or the Contemplated Transactions for which Buyer could become liable.
3.29 Solvency
(a) Seller is not now Insolvent (as defined below) and
will not be rendered insolvent by any of the Contemplated Transactions.
As used in this section, "Insolvent" means that the sum of the debts
and other probable Liabilities of Seller exceeds the present fair
saleable value of Seller's assets.
(b) Immediately after giving effect to the consummation
of the Contemplated Transactions: (i) Seller will be able to pay its
Liabilities as they become due in the usual course of its business;
(ii) Seller will not have unreasonably small capital with which to
conduct its present or proposed business; (iii) Seller will have assets
(calculated at fair market value) that exceed its Liabilities; and (iv)
taking into account all pending and threatened litigation, final
judgments against Seller in actions for money damages are not
reasonably anticipated to be rendered at a time when, or in amounts
such that, Seller will be unable to satisfy any such judgments promptly
in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered) as well as
all other obligations of Seller. The cash available to Seller, after
taking into account all other anticipated uses of the cash, will be
sufficient to pay all such debts and judgments promptly in accordance
with their terms.
3.30 Disclosure
This Agreement (including the Disclosure Letter) does not (i) contain
any Seller representation, warranty or information that is false or misleading
with respect to any material fact, or (ii) omit to state any material fact
necessary in order to make the Seller's representations, warranties and
information contained and to be contained herein and therein (in the light of
the circumstances under which such representations, warranties and information
were or will be made or provided) not false or misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization.
Buyer is a corporation duly organized and validly existing under the
laws of the State of Washington, with full corporate power and authority to
conduct its business as it is now conducted and to own or use the properties and
assets that it purports to own or use.
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4.2 Enforceability; Authority; No Conflict
(a) This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the Assignment and
Assumption Agreement, the Escrow Agreement, the Employment Agreements, and
each other agreement to be executed or delivered by Buyer at Closing
(collectively, the "BUYER'S CLOSING DOCUMENTS"), each of the Buyer's
Closing Documents will constitute the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its respective
terms. Buyer has the absolute and unrestricted right, power and authority
to execute and deliver this Agreement and the Buyer's Closing Documents
and to perform its obligations under this Agreement and the Buyer's
Closing Documents, and such action has been duly authorized by all
necessary corporate action.
(b) Neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent, delay or
otherwise interfere with any of the Contemplated Transactions pursuant to:
(1) any provision of Buyer's Governing Documents; (2) any resolution
adopted by the board of directors or the shareholders of Buyer; (3) any
Legal Requirement or Order to which Buyer may be subject; or (4) any
Contract to which Buyer is a party or by which Buyer may be bound.
(c) Buyer is not and will not be required to give any notice to or
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of
the Contemplated Transactions.
4.3 Certain Proceedings
There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been threatened.
4.4 SEC Documents
Buyer has made available to Seller accurate and complete copies of each
report, registration statement (on a form other than Form S-8 or 8-A) and
definitive proxy statement filed by Buyer with the SEC prior to the date hereof,
which are all the documents (other than preliminary material) that Parent was
required to file (or otherwise did file) with the SEC in accordance with section
6(a) of the Securities Act or sections 13, 14 and 15(d) of the Exchange Act.
5. COVENANTS OF SELLER PRIOR TO CLOSING
5.1 Access and Investigation
Between the date of this Agreement and the Closing Date, and upon
reasonable advance notice received from Buyer, Seller shall (a) afford Buyer and
its Representatives (collectively, "BUYER GROUP") full and free access, during
regular business hours, to Seller's personnel, Contracts, Governmental
Authorizations, books and Records and other documents and data, each as may be
reasonably required in connection with the consummation of the Contemplated
Transactions, such rights of access to be exercised in a manner that does not
unreasonably interfere with the operations of Seller; (b) furnish Buyer Group
with copies of all such Contracts, Governmental Authorizations, books and
Records and other existing documents and data, each as may be reasonably
required in connection with the consummation of
24
the Contemplated Transactions, as Buyer may reasonably request; (c) furnish
Buyer Group with such additional financial, operating and other relevant data
and information, each as may be reasonably required in connection with the
consummation of the Contemplated Transactions, as Buyer may reasonably request;
and (d) otherwise cooperate and assist, to the extent reasonably requested by
Buyer, with Buyer's investigation of the properties, assets and financial
condition related to Seller.
5.2 Operation of the Business of Seller
Between the date of this Agreement and the Closing, Seller shall:
(a) conduct its business only in the Ordinary Course of Business;
(b) except as otherwise directed by Buyer in writing, and without
making any commitment on Buyer's behalf, use its Commercially Reasonable
Efforts to preserve intact its current business organization, keep
available the services of its officers, employees and agents and maintain
its relations and good will with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with
it;
(c) confer with Buyer prior to implementing operational decisions of
a material nature;
(d) otherwise report periodically to Buyer concerning the status of
its business, operations and finances;
(e) make no material changes in management personnel without prior
consultation with Buyer;
(f) maintain the Assets in a state of repair and condition that
complies with Legal Requirements and is consistent with the requirements
and normal conduct of Seller's business;
(g) keep in full force and effect, without amendment, all material
rights relating to Seller's business;
(h) comply with all Legal Requirements and contractual obligations
applicable to the operations of Seller's business;
(i) continue in full force and effect commercially reasonable
insurance coverage;
(j) except as required to comply with ERISA or to maintain
qualification under Section 401(a) of the Code, not amend, modify or
terminate any Employee Plan without the express written consent of Buyer,
and except as required under the provisions of any Employee Plan, not make
any contributions to or with respect to any Employee Plan without the
express written consent of Buyer, provided that Seller shall contribute
that amount of cash to each Employee Plan necessary to fully fund all of
the benefit liabilities of such Employee Plan on a plan-termination basis
as of the Closing Date;
(k) cooperate with Buyer and assist Buyer in identifying the
Governmental Authorizations required by Buyer to operate the business from
and after the Closing Date and either transferring existing Governmental
Authorizations of Seller to Buyer, where permissible, or obtaining new
Governmental Authorizations for Buyer;
25
(l) upon request from time to time, execute and deliver all
documents, make all truthful oaths, testify in any Proceedings and do all
other acts that may be reasonably necessary or desirable in the opinion of
Buyer to consummate the Contemplated Transactions, all without further
consideration; and
(m) maintain all books and Records of Seller relating to Seller's
business in the Ordinary Course of Business.
5.3 Negative Covenant
Except as otherwise expressly permitted herein, between the date of this
Agreement and the Closing Date, Seller shall not, without the prior written
Consent of Buyer, (a) take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the changes or
events listed in Sections 3.15 or 3.19 would be likely to occur; (b) make any
modification to any material Contract or Governmental Authorization; (c) allow
the levels of raw materials, supplies or other materials included in the
Inventories to vary materially from the levels customarily maintained; or (d)
enter into any compromise or settlement of any litigation, proceeding or
governmental investigation relating to the Assets, the business of Seller or the
Assumed Liabilities.
5.4 Required Approvals
As promptly as practicable after the date of this Agreement, Seller shall
make all filings reasonably required by Legal Requirements to be made by it in
order to consummate the Contemplated Transactions. Seller also shall cooperate
with Buyer and its Representatives with respect to all filings that Buyer elects
to make or, pursuant to Legal Requirements, shall be required to make in
connection with the Contemplated Transactions. Seller also shall cooperate with
Buyer and its Representatives in obtaining all Material Consents.
5.5 Notification
Between the date of this Agreement and the Closing, Seller shall promptly
notify Buyer in writing if any of them becomes aware of (a) any fact or
condition that causes or constitutes a Breach of any of Seller's representations
and warranties made as of the date of this Agreement or (b) the occurrence after
the date of this Agreement of any fact or condition that would or be reasonably
likely to (except as expressly contemplated by this Agreement) cause or
constitute a Breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or
Seller's discovery of, such fact or condition. Should any such fact or condition
require any change to the Disclosure Letter, Seller shall promptly deliver to
Buyer a supplement to the Disclosure Letter specifying such change. Such
delivery shall not affect any rights of Buyer under Section 9.2 and Article 11.
During the same period, Seller also shall promptly notify Buyer of the
occurrence of any Breach of any covenant of Seller in this Article 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Article 7 impossible or unlikely.
5.6 No Negotiation
Until such time as this Agreement shall be terminated pursuant to Section
9.1, Seller shall not directly or indirectly solicit, initiate, encourage or
entertain any inquiries or proposals from, discuss or negotiate with, provide
any nonpublic information to or consider the merits of any inquiries or
proposals from any Person (other than Buyer) relating to any business
combination transaction involving Seller, including the merger or consolidation
of Seller or the sale of Seller's business or any of the Assets (other
26
than in the Ordinary Course of Business). Seller shall notify Buyer of any such
inquiry or proposal within twenty-four (24) hours of receipt or awareness of the
same by Seller.
5.7 Commercially Reasonable Efforts
Seller shall use their Commercially Reasonable Efforts to cause the
conditions in Article 7to be satisfied.
5.8 [Reserved]
5.9 Payment of Liabilities
Seller shall pay or otherwise satisfy in the Ordinary Course of Business
all of its Liabilities and obligations. Buyer and Seller hereby waive compliance
with the bulk-transfer provisions of the Uniform Commercial Code (or any similar
law) ("BULK SALES LAWS") in connection with the Contemplated Transactions.
6. COVENANTS OF BUYER PRIOR TO CLOSING
6.1 Required Approvals
As promptly as practicable after the date of this Agreement, Buyer shall
make, or cause to be made, all filings required by Legal Requirements to be made
by it to consummate the Contemplated Transactions. Buyer also shall cooperate,
and cause its Related Persons to cooperate, with Seller (a) with respect to all
filings Seller shall be required by Legal Requirements to make and (b) in
obtaining all Consents identified in Part 3.2(c), provided, however, that Buyer
shall not be required to dispose of or make any change to its business, expend
any material funds or incur any other burden in order to comply with this
Section 6.1.
6.2 Efforts
Buyer shall use its Commercially Reasonable Efforts to cause the
conditions in Article 8 and Section 7.3 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations
(a) All of Seller's representations and warranties in this Agreement
(considered collectively), and each of these representations and
warranties (considered individually), shall have been accurate in all
material respects as of the date of this Agreement, and shall be accurate
in all material respects as of the time of the Closing as if then made,
without giving effect to any supplement to the Disclosure Letter.
(b) Each of the representations and warranties in Sections 3.2(a)
and 3.4, and each of the representations and warranties in this Agreement
that contains an express materiality qualification, shall have been
accurate in all respects as of the date of this Agreement, and shall
27
be accurate in all respects as of the time of the Closing as if then made,
without giving effect to any supplement to the Disclosure Letter.
7.2 Seller's Performance
All of the covenants and obligations that Seller are required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), shall have been duly performed and complied with in
all material respects.
7.3 Consents
Each of the Consents identified in Schedule 7.3 (the "MATERIAL CONSENTS")
shall have been obtained and shall be in full force and effect.
7.4 Additional Documents
Seller shall have caused the documents and instruments required by Section
2.7(a) and the following documents to be delivered (or tendered subject only to
Closing) to Buyer:
(a) an opinion of Venture Law Group, dated the Closing Date, in a
form reasonably acceptable to Buyer and Buyer's counsel;
(b) Releases of all Encumbrances on the Assets, other than Permitted
Encumbrances;
(c) Certificates dated as of a date not earlier than the third
business day prior to the Closing as to the good standing of Seller and
payment of all applicable state Taxes by Seller, executed by the
appropriate officials of the State of California and each jurisdiction in
which Seller is licensed or qualified to do business as a foreign
corporation as specified in Part 3.1(a); and
(d) Such other documents as Buyer may reasonably request for the
purpose of:
(i) evidencing the accuracy of any of Seller's representations
and warranties;
(ii) evidencing the performance by Seller of, or the
compliance by Seller with, any covenant or obligation required to be
performed or complied with by Seller;
(iii) evidencing the satisfaction of any condition referred to
in this Article 7; or
(iv) otherwise facilitating the consummation or performance of
any of the Contemplated Transactions.
7.5 No Proceedings
Since the date of this Agreement, there shall not have been commenced or
threatened against Buyer, or against any Related Person of Buyer, any Proceeding
(a) involving any challenge to, or seeking Damages or other relief in connection
with, any of the Contemplated Transactions or (b) that may have
28
the effect of preventing, delaying, making illegal, imposing limitations or
conditions on or otherwise interfering with any of the Contemplated
Transactions.
7.6 No Conflict
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause Buyer or
any Related Person of Buyer to suffer any material adverse consequence under any
applicable Legal Requirement or Order, excluding Bulk Sales Laws.
7.7 Governmental Authorizations
Buyer shall have received such Governmental Authorizations as are
reasonably necessary or desirable to allow Buyer to operate the Assets from and
after the Closing.
7.8 Employment Agreements
Key Employees shall have entered into the Employment Agreements.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Assets and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller in whole or in part):
8.1 Accuracy of Representations
All of Buyer's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), shall have been accurate in all material respects as
of the date of this Agreement and shall be accurate in all material respects as
of the time of the Closing as if then made.
8.2 Buyer's Performance
All of the covenants and obligations that Buyer is required to perform or
to comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), shall have been performed and complied with in all material
respects.
8.3 [Reserved]
8.4 Additional Documents
Buyer shall have caused the documents and instruments required by Section
2.7(b) and the following documents to be delivered (or tendered subject only to
Closing) to Seller:
(a) an opinion of Xxxxxx & Xxxx PC, dated the Closing Date, in a
form reasonably acceptable to Seller and Seller's counsel; and
(b) such other documents as Seller may reasonably request for the
purpose of
29
(i) evidencing the accuracy of any representation or warranty
of Buyer,
(ii) evidencing the performance by Buyer of, or the compliance
by Buyer with, any covenant or obligation required to be performed
or complied with by Buyer or
(iii) evidencing the satisfaction of any condition referred to
in this Article 8.
8.5 No Injunction
There shall not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the consummation of the Contemplated Transactions
and (b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
9. TERMINATION
9.1 Termination Events
By notice given prior to or at the Closing, subject to Section 9.2, this
Agreement may be terminated as follows:
(a) by Buyer if a material Breach of any provision of this Agreement
has been committed by Seller and such Breach has not been waived by Buyer
and has not been cured by Seller within ten days after the date Buyer
gives notice to Seller of the material breach and its intention to
terminate this Agreement as a result of such Breach;
(b) by Seller if a material Breach of any provision of this
Agreement has been committed by Buyer and such Breach has not been waived
by Seller and has not been cured by Buyer within ten days after the date
Seller gives notice to Buyer of the material breach and its intention to
terminate this Agreement as a result of such Breach;
(c) by Buyer if any condition in Article 7 has not been satisfied as
of the date specified for Closing in the first sentence of Section 2.6 or
if satisfaction of such a condition by such date is or becomes impossible
(in each case, other than through the failure of Buyer to comply with its
obligations under this Agreement), and Buyer has not waived such condition
on or before such date;
(d) by Seller if any condition in Article 8 has not been satisfied
as of the date specified for Closing in the first sentence of Section 2.6
or if satisfaction of such a condition by such date is or becomes
impossible (in each case, other than through the failure of Seller to
comply with their obligations under this Agreement), and Seller has not
waived such condition on or before such date; or
(e) by mutual consent of Buyer and Seller.
9.2 Effect of Termination
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
such right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2 and Articles 12 and 13 (except for those in Section 13.5) will
survive, provided, however, that, if this Agreement is terminated
30
because of a Breach of this Agreement by the nonterminating party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
10. ADDITIONAL COVENANTS
10.1 Employees and Employee Benefits
(a) Employment of Active Employees by Buyer. It is understood and
agreed that (A) Buyer's prior expressed intention to extend offers of
employment to certain of Seller's employees shall not constitute any
commitment, Contract or understanding (expressed or implied) of any
obligation on the part of Buyer to a post-Closing employment relationship
of any fixed term or duration or upon any terms or conditions other than
those that Buyer may establish pursuant to individual offers of
employment, and (B) employment offered by Buyer is "at will" and may be
terminated by Buyer or by an employee at any time for any reason (subject
to any written commitments to the contrary made by Buyer or an employee
and Legal Requirements). Coverage under Buyer's benefit plans for
employees of Seller who become employees of Buyer in connection with the
Contemplated Transactions (the "TRANSFERRED EMPLOYEES") shall commence as
of 12:01 a.m. on August 1, 2003, prior to which date the Transferred
Employees shall be covered under Seller's benefit plans. Coverage under
Buyer's compensation and other programs for the Transferred Employees
shall commence as of 12:01 a.m. on the day after the Closing Date. Buyer
shall offer benefit plans of the same type or with terms similar to the
terms of Buyer's current employee benefit plans. Buyer shall give each
Transferred Employee credit for such Transferred Employee's years of most
recent continuous service with Seller for purposes of determining benefit
levels under Buyer's vacation policies.
(b) Salaries and Benefits.
(i) Seller shall be responsible for (A) the payment of all
wages and other remuneration due to its employees with respect to
their services as employees of Seller through the close of business
on the Closing Date, including pro rata bonus payments and all
vacation pay earned prior to the Closing Date; (B) the payment of
any termination or severance payments and the provision of health
plan continuation coverage in accordance with the requirements of
COBRA and Sections 601 through 608 of ERISA; and (C) any and all
payments to employees required under the WARN Act.
(ii) Seller shall be liable for any claims made or incurred by
its Employees and their beneficiaries through the Closing Date under
the Employee Plans. For purposes of the immediately preceding
sentence, a claim will be deemed incurred, in the case of hospital,
medical or dental benefits, when the services that are the subject
of the claim are performed and, in the case of other benefits (such
as disability or life insurance), when an event has occurred or when
a condition has been diagnosed that entitles the employee to the
benefit.
(c) No Transfer of Assets. Neither Seller nor any Related Persons
will make any transfer of pension or other employee benefit plan assets to
Buyer.
(d) General Employee Provisions.
31
(i) Seller and Buyer shall give any notices required by Legal
Requirements and take whatever other actions with respect to the
plans, programs and policies described in this Section 10.1 as may
be necessary to carry out the arrangements described in this Section
10.1.
(ii) Seller and Buyer shall provide each other with such plan
documents and summary plan descriptions, employee data or other
information as may be reasonably required to carry out the
arrangements described in this Section 10.1.
(iii) Seller shall provide Buyer with completed I-9 forms and
attachments with respect to all active Employees hired by Buyer,
except for such employees as Seller certifies in writing to Buyer
are exempt from such requirement.
(iv) Buyer shall not have any responsibility, liability or
obligation, whether to Seller's employees, former employees, their
beneficiaries or to any other Person, with respect to any employee
benefit plans, practices, programs or arrangements (including the
establishment, operation or termination thereof and the notification
and provision of COBRA coverage extension) maintained by Seller.
10.2 Payment of All Taxes Resulting from Sale of Assets By Seller
Seller shall pay in a timely manner all Taxes imposed upon or payable in
connection with the sale of the Assets pursuant to this Agreement, regardless of
the Person on whom such Taxes are imposed by Legal Requirements. Seller and
Buyer agree to cooperate with each other to avoid or minimize any sales or use
Taxes due in connection with the sale of the Assets. Notwithstanding anything to
the contrary contained herein, the parties agree that those Assets that are
treated as prewritten computer programs under California Sales and Use Tax
Regulations Section 1502(f) shall be transferred in accordance with California
Sales and Use Tax Regulation 1502(f)(1)(D) either (i) by means of electronic
transmission from Seller's place of business to Buyer's computers or (ii) by
installation of such prewritten computer programs directly onto computer
equipment owned by Buyer, in either such case with Seller having no obligation
to deliver any tangible materials in connection with the delivery of such
Assets. Buyer agrees to accept delivery of Assets that are treated as prewritten
computer programs under California Sales and Use Tax Regulations Section 1502(f)
in accordance with the prior sentence.
10.3 Payment of Other Retained Liabilities
In addition to payment of Taxes pursuant to Section 10.2, Seller shall
pay, or make adequate provision for the payment, in full of all of the Retained
Liabilities and other Liabilities of Seller under this Agreement. Seller shall
pay in full immediately following the Closing all amounts due and payable as of
the time of such payment to (i) Silicon Valley Bank pursuant to that certain
Loan Agreement dated October 7, 2002 and (ii) Lighthouse Capital Partners II,
L.P. pursuant to that certain Master Equipment Lease Agreement dated December
17, 1998.
10.4 Orderly Transition.
Seller shall reasonably cooperate with Buyer to facilitate the orderly
transition of the Assets and Transferred Employees to Seller following Closing.
32
10.5 Reports and Returns
Seller shall promptly after the Closing prepare and file all reports and
returns required by Legal Requirements relating to the business of Seller as
conducted using the Assets, to and including the Effective Time.
10.6 Assistance in Proceedings
After the Closing and until December 1, 2003, Seller will cooperate with
Buyer and its counsel in the contest or defense of, and make available its
personnel and provide any testimony and access to its books and Records in
connection with, any Proceeding to which Buyer is subject and involving or
relating to (a) any Contemplated Transaction or (b) any action, activity,
circumstance, condition, conduct, event, fact, failure to act, incident,
occurrence, plan, practice, situation, status or transaction on or before the
Closing Date involving Seller.
10.7 Customer and Other Business Relationships
After the Closing and until December 1, 2003, Seller will cooperate with
Buyer in its efforts to continue and maintain for the benefit of Buyer those
business relationships of Seller existing prior to the Closing and relating to
the business to be operated by Buyer after the Closing, including relationships
with lessors, employees, regulatory authorities, licensors, customers, suppliers
and others, and Seller will satisfy the Retained Liabilities in a manner that is
not detrimental to any of such relationships. After the Closing and until
December 1, 2003, Seller will refer to Buyer all inquiries relating to such
business. Neither Seller nor any of its officers, employees, agents or
shareholders shall take any action that would tend to diminish the value of the
Assets after the Closing or that would interfere with the business of Buyer to
be engaged in after the Closing, including disparaging the name or business of
Buyer.
10.8 Retention of and Access to Records
After the Closing and until December 1, 2003, Buyer shall retain for a
period consistent with Buyer's record-retention policies and practices those
Records of Seller delivered to Buyer. After the Closing and until December 1,
2003, Buyer also shall provide Seller and its Representatives reasonable access
thereto, during normal business hours and on at least three days' prior written
notice, to enable them to prepare financial statements or tax returns or deal
with tax audits. After the Closing and until December 1, 2003, Seller shall
provide Buyer and its Representatives reasonable access to Records that are
Excluded Assets, during normal business hours and on at least three days' prior
written notice, for any reasonable business purpose specified by Buyer in such
notice.
10.9 Further Assurances
Subject to the proviso in Section 6.1, the parties shall cooperate
reasonably with each other and with their respective Representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish upon request to each
other such further information; (b) execute and deliver to each other such other
documents; and (c) do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the Contemplated Transactions.
33
11. INDEMNIFICATION; REMEDIES; ESCROW
11.1 Survival
All representations, warranties, covenants and obligations in this
Agreement, the Disclosure Letter, the supplements to the Disclosure Letter, the
certificates delivered pursuant to Section 2.7 and any other certificate or
document delivered pursuant to this Agreement shall survive the Closing and the
consummation of the Contemplated Transactions until July 23, 2004 (the "REMEDY
TERMINATION DATE"), subject to Section 11.7. The right to indemnification,
reimbursement or other remedy based upon such representations, warranties,
covenants and obligations shall not be affected by any investigation conducted
with respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with any such representation, warranty, covenant or obligation. The waiver of
any condition based upon the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, reimbursement or other remedy based upon
such representations, warranties, covenants and obligations.
11.2 Indemnification and Reimbursement by Seller
Subject to the limitations set forth in Sections 11.1, 11.5, and 11.7,
Seller will indemnify and hold harmless Buyer, and its Representatives,
shareholders, subsidiaries and Related Persons (collectively, the "BUYER
INDEMNIFIED PERSONS"), and will reimburse the Buyer Indemnified Persons for any
loss, liability, claim, damage, expense (including costs of investigation and
defense and reasonable attorneys' fees and expenses) or diminution of value,
whether or not involving a Third-Party Claim (collectively, "DAMAGES"), arising
from or in connection with:
(a) any Breach of any representation or warranty made by Seller in
(i) this Agreement, (ii) the Disclosure Letter, (iii) the certificates
delivered pursuant to Section 2.7, (iv) any transfer instrument or (v) any
other certificate, document, writing or instrument delivered by Seller
pursuant to this Agreement;
(b) any Breach of any covenant or obligation of Seller in this
Agreement or in any other certificate, document, writing or instrument
delivered by Seller pursuant to this Agreement;
(c) any Liability arising out of the ownership or operation of the
Assets prior to the Effective Time other than the Assumed Liabilities;
(d) any brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding made, or alleged to
have been made, by any Person with Seller (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions except as
set forth in Section 13.1;
(e) any noncompliance with any fraudulent transfer law in respect of
the Contemplated Transactions;
(f) any liability under the WARN Act or any similar state or local
Legal Requirement that may result from an "Employment Loss", as defined by
29 U.S.C. sect. 2101(a)(6), caused by any action of Seller prior to the
Closing or by Buyer's decision not to hire previous employees of Seller;
34
(g) any Employee Plan established or maintained by Seller; or
(h) any Retained Liabilities.
11.3 [Reserved]
11.4 Indemnification and Reimbursement by Buyer
Subject to the limitations set forth in Sections 11.1, 11.6, and 11.7,
Buyer will indemnify and hold harmless Seller, and will reimburse Seller, for
any Damages arising from or in connection with:
(a) any Breach of any representation or warranty made by Buyer in
this Agreement or in any certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement;
(b) any Breach of any covenant or obligation of Buyer in this
Agreement or in any other certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement;
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting
on Buyer's behalf) in connection with any of the Contemplated
Transactions; or
(d) any Assumed Liabilities.
11.5 Limitations On Amount of Liability -- Seller
Seller shall have no liability (for indemnification or otherwise) with
respect to claims under Section 11.2(a) until the total of all Damages with
respect to such matters exceeds $100,000 (at which point Seller shall be
obligated to indemnify Buyer from and against all Claims relating back to the
first dollar).
Notwithstanding any other provision of this Agreement, the aggregate
liability (for indemnification or otherwise) of Seller under this Agreement to
Buyer Indemnified Persons shall not exceed $2,500,000 (the "LIABILITY LIMIT").
Any liability (for indemnification or otherwise) of Seller under this Agreement
to Buyer Indemnified Persons that is within the Liability Limit shall be
satisfied solely from the Escrow Fund and the Escrow Fund shall be the exclusive
remedy for damages of Buyer Indemnified Persons under this Agreement. The
maximum liability of any shareholder of Seller under this Agreement shall be
limited to such shareholder's interest in the Escrow Fund.
11.6 Limitations on Amount of Liability -- Buyer
Buyer will have no liability (for indemnification or otherwise) with
respect to claims under Section 11.4(a) until the total of all Damages with
respect to such matters exceeds $100,000 (at which point buyer shall be
obligated to indemnify Seller from and against all Claims relating back to the
first dollar); provided, however, that Buyer's obligation under this Section
11.6 shall not exceed $2,500,000.
11.7 Time Limitations
(a) If the Closing occurs, Seller will not have any liability (for
indemnification or otherwise) under this Agreement except to the extent
Buyer notifies Seller on or before the
35
Remedy Termination Date of a claim specifying the factual basis of the
claim in reasonable detail to the extent then known by Buyer.
(b) If the Closing occurs, Buyer will not have any liability (for
indemnification or otherwise) under this Agreement except to the extent
Seller notifies Buyer on or before the Remedy Termination Date of a claim
specifying the factual basis of the claim in reasonable detail to the
extent then known by Seller.
11.8 Escrow
The Escrow Fund shall be governed by the terms set forth herein and in the
Escrow Agreement. In the event that any Damages arise, the Escrow Fund shall be
available to compensate the Buyer Indemnified Persons pursuant to the
indemnification obligations of Seller set forth in Section 11.2.
11.9 Third-Party Claims
(a) Promptly after receipt by a Person entitled to indemnity under
Section 11.2 or 11.4 (an "INDEMNIFIED PERSON") of notice of the assertion
of a Third-Party Claim against it, such Indemnified Person shall give
notice to the Person obligated to indemnify under such Section (an
"INDEMNIFYING PERSON") of the assertion of such Third-Party Claim,
provided that the failure to notify the Indemnifying Person will not
relieve the Indemnifying Person of any liability that it may have to any
Indemnified Person, except to the extent that the Indemnifying Person
demonstrates that the defense of such Third-Party Claim is prejudiced by
the Indemnified Person's failure to give such notice.
(b) If an Indemnified Person gives notice to the Indemnifying Person
pursuant to Section 11.9(a) of the assertion of a Third-Party Claim, the
Indemnifying Person shall be entitled to participate in the defense of
such Third-Party Claim and, to the extent that it wishes (unless (i) the
Indemnifying Person is also a Person against whom the Third-Party Claim is
made and the Indemnified Person determines in good faith that joint
representation would be inappropriate or (ii) the Indemnifying Person
fails to provide reasonable assurance to the Indemnified Person of its
financial capacity to defend such Third-Party Claim and provide
indemnification with respect to such Third-Party Claim), to assume the
defense of such Third-Party Claim with counsel reasonably satisfactory to
the Indemnified Person. After notice from the Indemnifying Person to the
Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person shall not, so long as it
diligently conducts such defense, be liable to the Indemnified Person
under this Article 11 for any fees of other counsel or any other expenses
with respect to the defense of such Third-Party Claim, in each case
subsequently incurred by the Indemnified Person in connection with the
defense of such Third-Party Claim, other than reasonable costs of
investigation. If the Indemnifying Person assumes the defense of a
Third-Party Claim, (i) such assumption will conclusively establish for
purposes of this Agreement that the claims made in that Third-Party Claim
are within the scope of and subject to indemnification, and (ii) no
compromise or settlement of such Third-Party Claims may be effected by the
Indemnifying Person without the Indemnified Person's Consent unless (A)
there is no finding or admission of any violation of Legal Requirement or
any violation of the rights of any Person; (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Person; and (C)
the Indemnified Person shall have no liability with respect to any
compromise or settlement of such Third-Party Claims effected without its
Consent. If notice is given to an Indemnifying Person of the assertion of
any Third-Party Claim and the Indemnifying Person does not, within ten
(10) days after the Indemnified Person's notice is given, give notice to
the Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person will be
36
bound by any determination made in such Third-Party Claim or any
compromise or settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
Third-Party Claim may adversely affect it or its Related Persons other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by
notice to the Indemnifying Person, assume the exclusive right to defend
such Third-Party Claim, but the Indemnified Person will not settle or
compromise such Third Party Claim without the Indemnifying Person's
Consent (which may not be unreasonably withheld).
(d) Notwithstanding the provisions of Section 13.4, Seller hereby
consent to the nonexclusive jurisdiction of any court in which a
Proceeding in respect of a Third-Party Claim is brought against any Buyer
Indemnified Person for purposes of any claim that a Buyer Indemnified
Person may have under this Agreement with respect to such Proceeding or
the matters alleged therein and agree that process may be served on Seller
with respect to such a claim anywhere in the world.
(e) With respect to any Third-Party Claim subject to indemnification
under this Article 11: (i) both the Indemnified Person and the
Indemnifying Person, as the case may be, shall keep the other Person fully
informed of the status of such Third-Party Claim and any related
Proceedings at all stages thereof where such Person is not represented by
its own counsel, and (ii) the parties agree (each at its own expense) to
render to each other such assistance as they may reasonably require of
each other and to cooperate in good faith with each other in order to
ensure the proper and adequate defense of any Third-Party Claim.
(f) With respect to any Third-Party Claim subject to indemnification
under this Article 11, the parties agree to cooperate in such a manner as
to preserve in full (to the extent possible) the confidentiality of all
Confidential Information and the attorney-client and work-product
privileges. In connection therewith, each party agrees that: (i) it will
use its Commercially Reasonable Efforts, in respect of any Third-Party
Claim in which it has assumed or participated in the defense, to avoid
production of Confidential Information (consistent with applicable law and
rules of procedure), and (ii) all communications between any party hereto
and counsel responsible for or participating in the defense of any
Third-Party Claim shall, to the extent possible, be made so as to preserve
any applicable attorney-client or work-product privilege.
11.10 Other Claims
A claim for indemnification for any matter not involving a Third-Party
Claim may be asserted by notice to the party from whom indemnification is
sought.
11.11 Escrow Period
Subject to the following requirements, the Escrow Fund shall remain in
existence until the Remedy Termination Date (the "Escrow Period"). Upon the
expiration of the Escrow Period, the Escrow Fund shall terminate and any
remaining funds shall be released to Seller; provided, however, that the amount
of the Escrow Fund, which, in the reasonable judgment of Buyer, subject to the
objection of the Seller and the subsequent arbitration of the claim in the
manner provided in the Escrow Agreement, are necessary to satisfy any
unsatisfied claims with respect to which Buyer timely delivers notice to Seller
pursuant to Section 11.7 shall remain in the Escrow Fund (and the Escrow Fund
shall remain in existence)
37
until such claims have been resolved. As soon as all such claims have been
resolved, the escrow agent shall deliver to Seller all of the Escrow Fund not
required to satisfy such claims.
12. CONFIDENTIALITY
12.1 Definition of Confidential Information
(a) As used in this Article 12, the term "Confidential Information"
includes any and all of the following information of Seller or Buyer that
has been or may hereafter be disclosed in any form, whether in writing,
orally, electronically or otherwise, or otherwise made available by
observation, inspection or otherwise by either party or its
Representatives (collectively, a "DISCLOSING PARTY") to the other party or
its Representatives (collectively, a "RECEIVING PARTY"):
(i) all information that is a trade secret under applicable
trade secret or other law;
(ii) all information concerning product specifications, data,
know-how, formulae, compositions, processes, designs, sketches,
photographs, graphs, drawings, samples, inventions and ideas, past,
current and planned research and development, current and planned
manufacturing or distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists, market
studies, business plans, computer hardware, Software and computer
software and database technologies, systems, structures and
architectures;
(iii) all information concerning the business and affairs of
the Disclosing Party (which includes historical and current
financial statements, financial projections and budgets, tax returns
and accountants' materials, historical, current and projected sales,
capital spending budgets and plans, business plans, strategic plans,
marketing and advertising plans, publications, client and customer
lists and files, contracts, the names and backgrounds of key
personnel and personnel training techniques and materials, however
documented), and all information obtained from review of the
Disclosing Party's documents or property or discussions with the
Disclosing Party regardless of the form of the communication; and
(iv) all notes, analyses, compilations, studies, summaries and
other material prepared by the Receiving Party to the extent
containing or based, in whole or in part, upon any information
included in the foregoing.
(b) Any trade secrets of a Disclosing Party shall also be entitled
to all of the protections and benefits under applicable trade secret law
and any other applicable law. If any information that a Disclosing Party
deems to be a trade secret is found by a court of competent jurisdiction
not to be a trade secret for purposes of this Article 12, such information
shall still be considered Confidential Information of that Disclosing
Party for purposes of this Article 12 to the extent included within the
definition. In the case of trade secrets, each of Buyer or Seller hereby
waives any requirement that the other party submit proof of the economic
value of any trade secret or post a bond or other security.
12.2 Restricted Use of Confidential Information
(a) Each Receiving Party acknowledges the confidential and
proprietary nature of the Confidential Information of the Disclosing Party
and agrees that such Confidential
38
Information (i) shall be kept confidential by the Receiving Party; (ii)
shall not be used for any reason or purpose other than to evaluate and
consummate the Contemplated Transactions; and (iii) without limiting the
foregoing, shall not be disclosed by the Receiving Party to any Person,
except in each case as otherwise expressly permitted by the terms of this
Agreement or with the prior written consent of an authorized
representative of Seller with respect to Confidential Information of
Seller (each, a "SELLER CONTACT") or an authorized representative of Buyer
with respect to Confidential Information of Buyer (each, a "BUYER
CONTACT"). Each of Buyer and Seller shall disclose the Confidential
Information of the other party only to its Representatives who require
such material for the purpose of evaluating the Contemplated Transactions
and are informed by Buyer or Seller, as the case may be, of the
obligations of this Article 12 with respect to such information. Each of
Buyer and Seller shall (iv) enforce the terms of this Article 12 as to its
respective Representatives; (v) take such action to the extent necessary
to cause its Representatives to comply with the terms and conditions of
this Article 12; and (vi) be responsible and liable for any breach of the
provisions of this Article 12 by it or its Representatives.
(b) Unless and until this Agreement is terminated, Seller shall
maintain as confidential any Confidential Information (including for this
purpose any information of Seller of the type referred to in Sections
12.1(a)(i), (ii) and (iii), whether or not disclosed to Buyer) of the
Seller relating to any of the Assets or the Assumed Liabilities.
Notwithstanding the preceding sentence, Seller may use any Confidential
Information of Seller before the Closing in the Ordinary Course of
Business in connection with the transactions permitted by Section 5.2.
(c) From and after the Closing, the provisions of Section 12.2(a)
above shall not apply to or restrict in any manner Buyer's use of any
Confidential Information of the Seller relating to any of the Assets or
the Assumed Liabilities.
12.3 Exceptions
(a) Sections 12.2(a) and (b) do not apply to that part of the
Confidential Information of a Disclosing Party that a Receiving Party
demonstrates (a) was, is or becomes generally available to the public
other than as a result of a breach of this Article 12 or the
[Confidentiality Agreement] by the Receiving Party or its Representatives;
(b) was or is developed by the Receiving Party independently of and
without reference to any Confidential Information of the Disclosing Party;
or (c) was, is or becomes available to the Receiving Party on a
nonconfidential basis from a Third Party not bound by a confidentiality
agreement or any legal, fiduciary or other obligation restricting
disclosure. Seller shall not disclose any Confidential Information of
Seller relating to any of the Assets or the Assumed Liabilities in
reliance on the exceptions in clauses (b) or (c) above.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, including Section 12.2 hereof, or in any other written or oral
understanding or agreement to which the parties hereto are parties or by
which they are bound, the parties acknowledge and agree that any
obligations of confidentiality contained herein and therein shall not
apply to the tax treatment and tax structure of the transactions
contemplated hereby upon the earlier to occur of (i) the date of the
public announcement of discussions relating to the transactions
contemplated hereby, (ii) the date of the public announcement of the
transactions contemplated hereby or (iii) the Agreement Date, all within
the meaning of Treasury Regulations Section 1.6011-4; provided, however,
that each party recognizes that the privilege each has to maintain, in its
sole discretion, the confidentiality of a communication relating to such
transactions, including a confidential
39
communication with its attorney or a confidential communication with a
federally authorized tax practitioner under Section 7525 of the Code, is
not intended to be affected by the foregoing.
12.4 Legal Proceedings
If a Receiving Party becomes compelled in any Proceeding or is requested
by a Governmental Body having regulatory jurisdiction over the Contemplated
Transactions to make any disclosure that is prohibited or otherwise constrained
by this Article 12, that Receiving Party shall provide the Disclosing Party with
prompt notice of such compulsion or request so that it may seek an appropriate
protective order or other appropriate remedy or waive compliance with the
provisions of this Article 12. In the absence of a protective order or other
remedy, the Receiving Party may disclose that portion (and only that portion) of
the Confidential Information of the Disclosing Party that, based upon advice of
the Receiving Party's counsel, the Receiving Party is legally compelled to
disclose or that has been requested by such Governmental Body, provided,
however, that the Receiving Party shall use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded by any Person to
whom any Confidential Information is so disclosed. The provisions of this
Section 12.4 do not apply to any Proceedings between the parties to this
Agreement.
12.5 Return or Destruction of Confidential Information
If this Agreement is terminated, each Receiving Party shall (a) destroy
all Confidential Information of the Disclosing Party prepared or generated by
the Receiving Party without retaining a copy of any such material; (b) promptly
deliver to the Disclosing Party all other Confidential Information of the
Disclosing Party, together with all copies thereof, in the possession, custody
or control of the Receiving Party or, alternatively, with the written consent of
a Seller Contact or a Buyer Contact (whichever represents the Disclosing Party)
destroy all such Confidential Information; and (c) certify all such destruction
in writing to the Disclosing Party, provided, however, that the Receiving Party
may retain a list that contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any controversies after
the Disclosing Party's Confidential Information is returned.
12.6 Attorney-Client Privilege
The Disclosing Party is not waiving, and will not be deemed to have waived
or diminished, any of its attorney work product protections, attorney-client
privileges or similar protections and privileges as a result of disclosing its
Confidential Information (including Confidential Information related to pending
or threatened litigation) to the Receiving Party, regardless of whether the
Disclosing Party has asserted, or is or may be entitled to assert, such
privileges and protections. The parties (a) share a common legal and commercial
interest in all of the Disclosing Party's Confidential Information that is
subject to such privileges and protections; (b) are or may become joint
defendants in Proceedings to which the Disclosing Party's Confidential
Information covered by such protections and privileges relates; (c) intend that
such privileges and protections remain intact should either party become subject
to any actual or threatened Proceeding to which the Disclosing Party's
Confidential Information covered by such protections and privileges relates; and
(d) intend that after the Closing the Receiving Party shall have the right to
assert such protections and privileges. No Receiving Party shall admit, claim or
contend, in Proceedings involving either party or otherwise, that any Disclosing
Party waived any of its attorney work-product protections, attorney-client
privileges or similar protections and privileges with respect to any
information, documents or other material not disclosed to a Receiving Party due
to the Disclosing Party disclosing its Confidential Information (including
Confidential Information related to pending or threatened litigation) to the
Receiving Party.
40
13. GENERAL PROVISIONS
13.1 Expenses
Except as otherwise provided in this Agreement, each party to this
Agreement will bear its respective fees and expenses incurred in connection with
the preparation, negotiation, execution and performance of this Agreement and
the Contemplated Transactions, including all fees and expense of its
Representatives. If the Closing occurs, Buyer will reimburse Seller at the
Closing for legal, financial, investment banking and accounting fees and
expenses incurred by Seller in connection with the Contemplated Transactions,
which amount shall not exceed $650,000. If this Agreement is terminated, the
obligation of each party to pay its own fees and expenses will be subject to any
rights of such party arising from a Breach of this Agreement by another party.
13.2 Public Announcements
Any public announcement, press release or similar publicity with respect
to this Agreement or the Contemplated Transactions will be issued, if at all, at
such time and in such manner as Buyer determines with the approval of Seller,
which approval shall not be unreasonably withheld. Except with the prior consent
of Buyer or as permitted by this Agreement, neither Seller nor any of its
Representatives shall disclose to any Person (a) the fact that any Confidential
Information of Seller has been disclosed to Buyer or its Representatives, that
Buyer or its Representatives have inspected any portion of the Confidential
Information of Seller, that any Confidential Information of Buyer has been
disclosed to Seller or its Representatives or that Seller or its Representatives
have inspected any portion of the Confidential Information of Buyer or (b) any
information about the Contemplated Transactions, including the status of such
discussions or negotiations, the execution of any documents (including this
Agreement) or any of the terms of the Contemplated Transactions or the related
documents (including this Agreement). Seller and Buyer will consult with each
other concerning the means by which Seller's employees, customers, suppliers and
others having dealings with Seller will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
13.3 Notices
All notices, Consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given to a
party when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); (b) sent by facsimile or
e-mail with confirmation of transmission by the transmitting equipment; or (c)
received or rejected by the addressee, if sent by certified mail, return receipt
requested, in each case to the following addresses, facsimile numbers or e-mail
addresses and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number, e-mail address or
person as a party may designate by notice to the other parties):
If to uRoam or UAC: uRoam, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Skip Glass, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxx@xxxxx.xxx
41
with a mandatory copy to: Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxxx@xxx.xxx
If to Buyer: F5 Networks, Inc.
000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, VP and
General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
email: x.xxxxxx@x0.xxx
with a mandatory copy to: Xxxxxx & Xxxx, PC
Pier 70
0000 Xxxxxxx Xxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
email: xxxxx@xxxxxxxxxx.xxx
13.4 Jurisdiction; Service of Process; Waiver of Trial by Jury
Any Proceeding arising out of or relating to this Agreement or any
Contemplated Transaction may be brought in the courts of the State of
Washington, County of King, or, if it has or can acquire jurisdiction, in the
United States District Court for the Western District of Washington, and each of
the parties irrevocably submits to the exclusive jurisdiction of each such court
in any such Proceeding, waives any objection it may now or hereafter have to
venue or to convenience of forum, agrees that all claims in respect of the
Proceeding shall be heard and determined only in any such court and agrees not
to bring any Proceeding arising out of or relating to this Agreement or any
Contemplated Transaction in any other court. The parties agree that either or
both of them may file a copy of this paragraph with any court as written
evidence of the knowing, voluntary and bargained agreement between the parties
irrevocably to waive any objections to venue or to convenience of forum. Process
in any Proceeding referred to in the first sentence of this section may be
served on any party anywhere in the world. THE PARTIES HEREBY WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY
OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF
THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY
TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING
TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED
IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
42
13.5 Waiver; Remedies Cumulative
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither any failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or any of the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of that party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
13.6 Entire Agreement and Modification
This Agreement supersedes all prior agreements, whether written or oral,
between the parties with respect to its subject matter (including any letter of
intent and any confidentiality agreement between Buyer and Seller) and
constitutes (along with the Disclosure Letter, Exhibits and other documents
delivered pursuant to this Agreement) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Agreement may not be amended, supplemented, or otherwise modified except by
a written agreement executed by uRoam and Buyer.
13.7 Disclosure Letter
(a) The information in the Disclosure Letter constitutes (i)
exceptions to particular representations, warranties, covenants and
obligations of Seller as set forth in this Agreement or (ii) descriptions
or lists of assets and liabilities and other items referred to in this
Agreement.
(b) Any disclosure under one Part of the Disclosure Letter shall be
deemed disclosure under all Parts of the Disclosure Letter and this
Agreement.
(c) To the extent that any representation or warranty set forth in
this Agreement is qualified by the materiality of the matter(s) to which
the representation or warranty relates, the inclusion of any matter in the
Disclosure Letter does not constitute a determination by Seller that any
such matter is material. The disclosure of any information concerning a
matter in the Disclosure Letter does not imply that any other, undisclosed
matter that has a greater significance or value is material.
13.8 Assignments, Successors and No Third-Party Rights
No party may assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other parties,
except that Buyer may assign any of its rights and delegate any of its
obligations under this Agreement to any Subsidiary of Buyer. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy or claim under or with respect to this Agreement or any provision
of this Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 13.8.
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13.9 Construction
The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Articles," "Sections" and "Parts" refer to the corresponding
Articles, Sections and Parts of this Agreement and the Disclosure Letter.
13.10 Time of Essence
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
13.11 Governing Law
This Agreement will be governed by and construed under the laws of the
State of Washington without regard to conflicts-of-laws principles that would
require the application of any other law.
13.12 Execution of Agreement
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. The
exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be deemed to
be their original signatures for all purposes.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
F5 NETWORKS, INC.,
a Washington corporation
By: /s/ XXXX XXXXXX
--------------------------------------------
Xxxx XxXxxx, President and Chief Executive
Officer
UROAM, INC.,
a California corporation
By: /s/ SKIP GLASS
--------------------------------------------
Skip Glass, President
UROAM ACQUISITION CORPORATION,
a California corporation
By: /s/ SKIP GLASS
--------------------------------------------
Skip Glass, President
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LISTING OF SCHEDULES AND EXHIBITS
SCHEDULE 2.2 - EXCLUDED ASSETS
SCHEDULE 7.3 - MATERIAL CONSENTS
SELLER DISCLOSURE LETTER
