EXHIBIT 10.18
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of March
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23, 2000 by and between @Road, Inc., a California corporation ("Buyer"), and
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Hynet Technologies, a California corporation ("Seller").
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RECITALS
A. Buyer is an Internet-based productivity enhancement service for companies
with a mobile workforce leveraging GPS, wireless data networks and the Internet.
Seller conducts a business that (i) provides leading financial institutions,
high-tech companies and semiconductor manufacturers with a solution for creating
dynamic, reusable information units that can then be leveraged to rapidly create
and deploy dynamic customer content for use on the web and in printed materials
and (ii) includes a mobile portal technology, xxXxxxxXx.xxx, that is designed to
deliver Internet content to wireless and mobile appliances (the "Business").
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B. Buyer desires to acquire from Seller, and Seller desires to sell to Buyer,
substantially all of the assets of the Business on the terms and subject to the
conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual agreements, representations, warranties and
covenants set forth below, Buyer and Seller agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
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following meanings:
"Affiliate" means with respect to any Person, a Person directly or
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indirectly controlling or controlled by or under common control with such
Person.
"Closing" means the consummation of the transactions contemplated hereby.
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"Closing Date" means the date of the Closing as set forth in Section 3.1
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herein.
"Code" means the Internal Revenue Code of 1986, as amended.
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"GAAP" means generally accepted accounting principles of the United States
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as set forth by the Financial Accounting Standards Board.
"Governmental Authorizations" means the permits, authorizations, consents
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or approvals of any Governmental Entity that are a condition to the lawful
consummation of the transactions contemplated hereby as listed on Schedule
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1.1(i) to this Agreement.
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"Governmental Entity" means any court, or any federal, state, municipal or
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other governmental authority, department, commission, board, agency or other
instrumentality (domestic or foreign).
"Lien" means any mortgage, pledge, lien, security interest, option,
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covenant, condition, restriction, encumbrance, charge or other third-party claim
of any kind.
"Material Adverse Effect" with respect to a Person means any event, change
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or effect that is materially adverse to the condition (financial or otherwise),
properties, assets, liabilities, business, operations, results of operations or
prospects of such Person and its Affiliates, taken as a whole.
"Person" means an individual, corporation, partnership, association, trust,
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government or political subdivision or agent or instrumentality thereof, or
other entity or organization.
"Seller Balance Sheet" means the unaudited balance sheet of the Business,
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prepared by Seller in accordance with GAAP, consistently applied, and delivered
to Buyer upon the Closing Date, which includes the Seller's asset and liability
accounts as of the Closing Date.
"Taxes" means all taxes, however denominated, including any interest,
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penalties or other additions to tax that may become payable in respect thereof,
(i) imposed by any federal, territorial, state, local or foreign government or
any agency or political subdivision of any such government, for which Buyer
could become liable as successor to or transferee of the Business or the
Purchased Assets or that could become a charge against or lien on any of the
Purchased Assets, which taxes shall include, without limiting the generality of
the foregoing, all sales and use taxes, ad valorem taxes, excise taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, real property gains taxes, transfer taxes, payroll and
employee withholding taxes, unemployment insurance contributions, social
security taxes, and other governmental charges, and other obligations of the
same or of a similar nature to any of the foregoing, which are required to be
paid, withheld or collected, or (ii) any liability for amounts referred to in
(i) as a result of any obligations to indemnify another person.
2. Sale and Purchase
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2.1 Transfer of Assets. Subject to the terms and conditions of this
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Agreement, Seller shall sell, assign, grant, transfer, and deliver (or cause to
be sold, assigned, granted, transferred and delivered) to Buyer, or to any
Affiliate of Buyer designated by Buyer, and Buyer shall purchase and accept from
Seller, as of the Closing Date, free and clear of all Liens, all of the Seller's
rights, title and interest in and to all of the assets, properties and business,
other than the Excluded Assets, owned, held or used in the conduct of the
Business by Seller as the same shall exist on the Closing Date (the "Purchased
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Assets"), including, without limitation:
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(a) all tangible personal property and leases of and other interests
in tangible personal property used in connection with the Business, including,
without limitation, the items listed on Schedule 2.1(a);
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(b) all raw materials, work-in-process, finished goods, supplies and
other inventories of the Business (the "Inventories");
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(c) all rights under contracts, agreements, leases and other interests
in real and personal property, licenses, commitments, sales and purchase orders
and other instruments, including without limitation the items listed on Schedule
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2.1(c) (collectively the "Contracts");
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(d) all accounts receivable, notes receivable and other receivables;
(e) all prepaid expenses relating to the operation of the Business
including, but not limited to, Taxes, leases and rentals;
(f) all of Seller's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Purchased Assets,
including, without limitation, unliquidated rights under warranties;
(g) all copyrights, copyright registrations, proprietary processes,
trade secrets, license rights, specifications, technical manuals and data,
drawings, inventions, designs, patents, patent applications, trade names,
trademarks, service marks, product information and data, know-how and
development work-in-progress, customer lists, software modules and engines,
business and marketing plans and other intellectual or intangible property
embodied in or pertaining to the Business, whether pending, applied for or
issued, whether filed in the United States or in other countries, including
without limitation the items listed in Schedule 2.1(g), together with all
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associated goodwill;
(h) all things authored, discovered, developed, made, perfected,
improved, designed, engineered, acquired, produced, conceived or first reduced
to practice by Seller or any of its employees or agents that are embodied in,
derived from or relate to the Business, in any stage of development, including,
without limitation, modifications, enhancements, designs, concepts, techniques,
methods, ideas, flow charts, coding sheets, notes and all other information
relating to the Business;
(i) any and all design and code documentation, methodologies,
processes, trade secrets, copyrights, design information, product information,
technology, formulae, routines, engineering specifications, technical manuals
and data, drawings, inventions, know-how, techniques, engineering work papers,
and notes, development work-in-process, and other proprietary information and
materials of any kind relating to, used in, or derived from the Purchased Assets
(collectively with subsections (g) and (h), the "Intellectual Property");
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(j) all permits, authorizations, consents and approvals of any
Governmental Entity affecting or relating in any way to the Business, including
without limitation, the items listed on Schedule 2.1(j) (the "Permits");
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(k) all books, records files and papers, whether in hard copy or
electronic format, used in the Business, including without limitation,
engineering information, sales and promotional literature, manuals and data,
sales and purchase correspondence, lists of present, former and prospective
suppliers or customers, personnel and employment records, and any information
relating to Taxes imposed on the Business or Purchased Assets;
(l) all computer software programs, data and associated licenses used
in connection with the Business; and
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(m) all goodwill associated with the Business or the Purchased Assets,
together with the right to represent to third parties that Buyer is the
successor to the Business.
2.2 Excluded Assets. Buyer agrees that the following assets of Seller
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(the "Excluded Assets" shall be excluded from the Purchased Assets:
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(a) $12,500 for the purpose of satisfying the claims of all creditors
of Seller;
(b) Network Access Services Agreement and Metered Access Services
Agreement with Epoch Internet, each dated 11/30/98;
(c) Business Product Purchase Agreement with Lucent Technologies dated
5/5/98;
(d) Business Services Agreement and Subscription Agreement with AT&T
each dated 3/9/98 and Lease Agreement with AT&T dated 5/5/98;
(e) Lease Agreement with Xerox dated 1/8/97;
(f) Corporate travel plan with Avis;
(g) Software License and Service Agreement with 3Com dated 10/3/99;
(h) Software License and Service Agreement with Common Wealth Magazine
dated 2/28/98;
(i) Software License and Service Agreement with Xxxxxxxx-Xxxx dated
10/7/97;
(j) All agreements with Xxxxxxx Xxxxxx & Co;
(k) All Seller nondisclosure agreement and all Seller consulting
agreements;
(l) Distributor Agreement with Cyberbiz E-World dated 9/14/99;
(m) Lease Agreement with The Landmark dated October 16, 1997;
(n) Sublease Agreement with TeVeo, Inc. dated February 8, 2000;
(o) Sublease Agreement with Cohesive Networks dated May 1, 1998;
(p) Note and Warrant Purchase Agreement, Promissory Note and Warrant
with Maui Investment Holding Co. dated November 1, 1999;
(q) All agreements with employment and consultant recruiting firms
and consultants, including without limitation those with Xxxxxxx Xxxxxx, Cross
Creek, Connexion and Solutions;
(r) Agreement with CAP Ventures dated 5/26/98;
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(n) All employee benefit plans and all assets or funds held in trust,
or otherwise, associated with or used in connection with the employee benefit
plans, including those with TriNet Employer Group; and
(o) All insurance contracts relating to the Business, including the
cash surrender value thereof, and all insurance proceeds or claims relating to
the operations of the Business prior to the Closing Date.
2.3 Transfer of Liabilities. Subject to the terms and conditions of this
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Agreement, Buyer or an Affiliate of Buyer designated by Buyer agrees, effective
as of the Closing Date, to assume the liabilities and obligations of Seller
arising under the Contracts, other than the liabilities attributable to any
failure by Seller to comply with the terms thereof (the "Assumed Liabilities").
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2.4 Excluded Liabilities. Except for those liabilities expressly assumed
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by Buyer or any Affiliate designated by Buyer pursuant to Section 2.3, Buyer
shall not assume and shall not be liable for, and Seller and its direct or
indirect subsidiaries shall retain and remain solely liable for and obligated to
discharge, all of the debts, contracts, agreements, commitments, obligations and
other liabilities of any nature whatsoever of Seller and its direct and indirect
subsidiaries, whether known or unknown, accrued or not accrued, fixed or
contingent, including without limitation the following:
(a) Any liability for breaches by Seller or any of its respective
direct or indirect subsidiaries on or prior to the Closing Date of any contract
or any other instrument, contract or purchase order or any liability for
payments or amounts due under any Contract or any other instrument, contract or
purchase order on or prior to the Closing Date;
(b) Any liability or obligation for Taxes attributable to or imposed
upon Seller or any of its direct or indirect subsidiaries, or attributable to or
imposed upon the Purchased Assets for any period (or portion thereof) through
the Closing Date, including, without limitation, any Taxes attributable to or
arising from the transactions contemplated by this Agreement;
(c) Any liability or obligation for or in respect of any loan, other
indebtedness for money borrowed, or account payable of Seller or any of its
direct or indirect subsidiaries, including without limitation debts to Maui
Investment Holding Co. which Maui Investment Holding Co. by its signature hereto
agrees shall be canceled as of the Closing Date and any such liabilities owed to
Affiliates of Seller;
(d) Any liability or obligation arising as a result of any legal or
equitable action or judicial or administrative proceeding initiated at any time,
to the extent relating to any action or omission on or prior to the Closing Date
by or on behalf of Seller or any of its direct or indirect subsidiaries,
including, without limitation, any liability for fraudulent conveyance,
infringement of intellectual property rights, breach of product warranty, injury
or death caused by products, or violations of federal or state securities or
other laws;
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(e) Any liability or obligation arising on or prior to the Closing
Date out of any "employee benefit plan," as such term is defined by the Employee
Retirement Income Security Act of 1974 ("ERISA") or other employee benefit
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plans;
(f) Any liability or obligation for making payments of any kind
(including as a result of the sale of Purchased Assets or as a result of the
termination of employment by Seller of employees, or other claims arising out of
the terms and conditions of employment with Seller, or for vacation or severance
pay or otherwise) to employees of Seller or in respect of payroll taxes for
employees of Seller;
(g) Any liability of Seller incurred in connection with the making or
performance of this Agreement and the transactions contemplated hereby and any
liability or obligation for or in respect of any of the Excluded Assets;
(h) Any liability of Seller arising out of the violation of or failure
to comply with any Environmental Regulations (as hereinafter defined) applicable
to any aspect of the Business;
(i) Any costs or expenses of Seller incurred in connection with
shutting down, deinstalling and removing equipment not purchased by Buyer, and
the costs associated with all contracts and agreements not assumed by Buyer; and
(j) Obligations or liabilities under any assumed Contract for which a
Required Consent has not been obtained as of the Closing.
2.5 Purchase Price.
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(a) Subject to the performance by Seller of all of its obligations
under this Agreement (including delivering all documents required to be
delivered) at the Closing and Section 10 hereof, in consideration of the
acquisition of the Purchased Assets under Section 2.1, Buyer agrees (a) to
deliver to Seller 50,000 shares of duly issued, fully-paid Buyer common stock,
par value $0.0001 per share (the "Purchase Price" or the "Shares") and (b) to
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assume the Assumed Liabilities. The Shares will not be registered under the
Securities Act of 1933, as amended.
2.6 Allocation of Purchase Price. The Purchase Price shall be allocated
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among the Purchased Assets as provided in an exhibit to be prepared by Buyer for
purposes of complying with the requirements of Code Section 1060 and the
regulations thereunder. Buyer and Seller agree to each prepare and file on a
timely basis with the Internal Revenue Service (and applicable state tax
authorities) substantially identical and supplemental Internal Revenue Service
Forms 8594 (and corresponding state tax forms) consistent with Buyer's
allocation of the Purchase Price. If any Tax authority challenges such
allocation, the party receiving notice of such challenge shall give the other
prompt written notice thereof and the parties shall cooperate in order to
preserve the effectiveness of such allocation.
3. Closing
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3.1 Closing. Subject to the terms and conditions of this Agreement, the
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Closing shall take place on such date, as soon as practicable after all
conditions precedent in Sections 8 and 9 have been satisfied or waived, as the
parties may agree, but in any case, no later than April 25, 2000 (the "Closing
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Date").
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3.2 Actions at the Closing. At the Closing, Seller shall deliver the
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Purchased Assets to Buyer, Buyer shall deliver the Purchase Price to Seller, and
Buyer and Seller shall take such actions and execute and deliver such
agreements, bills of sale, and other instruments and documents as necessary or
appropriate to effect the transactions contemplated by this Agreement in
accordance with its terms, including without limitation the following:
(a) Xxxx of Sale; Assignment and Assumption Agreement. Buyer shall
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deliver to Seller for Seller's execution thereof a general Xxxx of Sale
substantially in the form attached as Exhibit A and with respect to each
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Contract, or item of Intellectual Property, an Assignment and Assumption
Agreement substantially in the form attached as Exhibit B, a Patent Assignment
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substantially in the form attached as Exhibit C, a Trademark Assignment
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substantially in the form attached as Exhibit D and a Copyright Assignment
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substantially in the form attached as Exhibit E (the "Transfer Documents") in
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each case duly executed by Seller, and in the aggregate assigning to Buyer all
of Seller's right, title and interest in and to the Purchased Assets. Buyer may
designate one or more of its Affiliates as the recipient of certain of the
Purchased Assets, and as the party to assume certain of the Assumed Liabilities,
in which case Seller shall transfer such Purchased Assets and Assumed
Liabilities to Buyer or the Affiliate(s) designated by Buyer pursuant to such
Transfer Documents.
(b) Purchase Price. Buyer shall deliver the Shares to Seller issued
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in the name of Seller.
(c) Title. Seller shall provide reasonable evidence of valid title to
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such of the Purchased Assets as Buyer may reasonably request in writing prior to
the Closing, in form and substance reasonably satisfactory to Buyer.
(d) Third Party Consents and Assignments. Buyer shall prepare for
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Seller's delivery to Buyer any assignments, and any required consents to
assignment, that Seller has obtained in respect of the Contracts, duly executed
by parties having the authority to so assign or consent to assign, in form and
substance as Buyer shall reasonably request, as well as a written confirmation
from such third parties that the Contracts are in good standing.
(e) Seller Documents. At the Closing, Seller shall deliver to Buyer
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any and all documents required to satisfy the conditions set forth in Section 9
of this Agreement and any other closing documents reasonably requested by Buyer.
(f) Buyer Documents. At the Closing, Buyer shall deliver to Seller
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any and all documents required to satisfy the conditions set forth in Section 8
of this Agreement.
(g) Post-Closing Actions. Subsequent to the Closing Date, Seller
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shall, and shall cause any Affiliate of Seller to, from time to time execute and
deliver, upon the request of Buyer, all such other and further materials and
documents and instruments of conveyance, transfer or assignment as may
reasonably be requested by Buyer to effect, record or verify the
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transfer to and vesting in Buyer of Seller's and any of Seller's Affiliates'
right, title and interest in and to the Purchased Assets, free and clear of all
Liens in accordance with the terms of this Agreement.
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4. Representations and Warranties of Seller
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Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Seller Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
Seller represents and warrants to Buyer as follows:
4.1 Organization, Standing and Power. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Seller has the requisite corporate power and
authority and all permits, authorizations, consents, and approvals of all
Governmental Entities to own, lease and operate its properties and to carry on
the Business as now being conducted and as proposed to be conducted, except
where the failure to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Material Adverse Effect on the
Business. Seller is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect on the Business.
4.2 Authority. As of the Closing, the execution and delivery of this
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Agreement (and all other agreements and instruments contemplated under this
Agreement) by Seller, the performance by Seller of its obligations hereunder and
thereunder, and the consummation by Seller of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action by the
Board of Directors and shareholders of Seller, and no other act or proceeding on
the part of or on behalf of Seller or its shareholders is necessary to approve
the execution and delivery of this Agreement and such other agreements and
instruments, the performance by Seller of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby. The signatory officers of Seller have the power and authority to
execute and deliver this Agreement and all of the other agreements and
instruments to be executed and delivered by Seller pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Seller pursuant to the provisions hereof
and thereof.
4.3 Execution and Binding Effect. This Agreement has been duly and
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validly executed and delivered by Seller and constitutes, and the other
agreements and instruments to be executed and delivered by Seller pursuant
hereto, upon their execution and delivery by Seller, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Buyer), legal, valid and binding agreements of Seller, enforceable against
Seller in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (b) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies, and (c) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable federal or
state securities laws.
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4.4 Consents and Approvals of Governmental Entities. Other than the
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Governmental Authorizations there is no requirement applicable to Seller to make
any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Seller of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Seller pursuant hereto or the consummation by Seller of the transactions
contemplated herein or therein.
4.5 No Violation. Neither the execution, delivery and performance of this
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Agreement and all of the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of Seller,
(b) conflict with or result in a violation or breach of, or constitute a default
or require consent of any Person (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any contract, notice, bond, mortgage, indenture, license, franchise, permit,
agreement, lease or other instrument or obligation to which Seller is a party or
by which Seller or any of the Purchased Assets may be bound, (c) violate any
material statute, ordinance or law or any rule, regulation, order, writ,
injunction or decree of any Governmental Entity applicable to Seller or by which
any properties or assets of Seller may be bound, or (d) result in any
cancellation of, or obligation to repay, any grant, loan or other financial
assistance received by Seller from any Governmental Entity.
4.6 Consents. Schedule 4.6 sets forth each agreement, contract or other
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instrument binding upon Seller requiring a consent as a result of the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, except such consents as would not,
individually or in the aggregate, have a Material Adverse Effect if not received
by the Closing Date (each a "Required Consent").
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4.7 Financial Information. Seller has delivered to Buyer an unaudited
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balance sheet for the Business at September 30, 1999 (the " September 30,
1999 Balance Sheet"), unaudited statements of income and balance sheet for the
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Business for the three-month period ended December 31, 1999 and audited
statements of income and balance sheet for the Business for the fiscal year
September 30, 1998 (together with the September 30, 1999 Balance Sheet, the
"Financial Statements"), copies of which are set forth in the Seller Disclosure
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Schedule. The Financial Statements have been prepared consistently for all
periods presented, and revenues presented on the Financial Statements have been
recognized in accordance with GAAP, consistently applied. The Financial
Statements present fairly the financial condition, operating results and cash
flows of the Business as of the dates and during the periods indicated therein,
subject to normal year-end adjustments, which will not be material in amount or
significance.
4.8 No Undisclosed Liabilities. Seller does not have any liability,
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indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, in excess of $5,000 individually or in the aggregate, whether accrued,
absolute, contingent, matured, unmatured or other (whether or not required by
GAAP to be reflected in the Financial Statements that (i) has not been reflected
in the September 30, 1999 Balance Sheet, or (ii) has not arisen in the ordinary
course of the Seller's business since September 30, 1999.
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4.9 Absence of Certain Changes. Since September 30, 1999, Seller has
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conducted the Business in the ordinary course consistent with past practice and
Seller:
(a) has not created, incurred or assumed (i) any borrowings under
capital leases, or (ii) any obligation which in any material way affect the
Business, the Purchased Assets or Buyer's ability to conduct the Business in
substantially the same manner and condition as conducted by Seller on the date
of this Agreement;
(b) has not changed in any manner the compensation of, or agreed to
provide additional benefits to, or enter into any employment agreement with, any
Employee (as hereinafter defined);
(c) has maintained insurance coverage in amounts adequate to cover
the reasonably anticipated risks of the business conducted with the Purchased
Assets;
(d) has not acquired or agreed to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
Business.
(e) has not sold, disposed of or encumbered any of the Purchased
Assets or licensed any Purchased Assets to any Person except for the sale of
Inventory in the normal course of business consistent with past practice;
(f) has not engaged in any special promotion which promotes the sale
of Inventory with highly discounted terms;
(g) has not entered into any agreements or commitments relating to
the business conducted with the Purchased Assets, except on commercially
reasonable terms in the ordinary course of business;
(h) has complied in all material respects with all laws and
regulations applicable to the Business;
(i) has not entered into any agreement with any third party for the
distribution of any of the Purchased Assets;
(j) has not changed or announced any change to the products or
services sold by the Business except with Buyer's written consent or at Buyer's
request;
(k) has not expanded the use of the Purchased Assets within the
organization of Seller;
(l) has not violated, amended or otherwise change in any way the
terms of any of the Contracts;
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(m) has not commenced a lawsuit related to or involving the Purchased
Assets other than (i) for the routine collection of bills or (ii) for a breach
of this Agreement;
(p) has not assigned, sold or otherwise conveyed to any third party,
any of its accounts receivable prior to the Closing Date; or
(q) made any agreement to do any of the foregoing.
4.10 Assets Generally.
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(a) The Purchased Assets include all properties, tangible and
intangible, and only such properties, currently used by Seller in operating the
Business and necessary for Buyer to operate the Business after the Closing Date
in a manner substantially equivalent to the manner in which Seller has operated
the Business prior to and through the Closing Date. Other than the Required
Consents and the Governmental Approvals, no licenses or other consents from, or
payments to, any other Person are or will be necessary for Buyer to operate the
Business and use the Purchased Assets in the manner in which Seller has operated
the same.
(b) Seller holds good and marketable title, license to or leasehold
interest in all of the Purchased Assets and has the complete and unrestricted
power and the unqualified right to sell, assign and deliver the Purchased Assets
to Buyer. Upon consummation of the transactions contemplated by this Agreement,
Buyer will acquire good and marketable title, license or leasehold interest to
the Purchased Assets free and clear of any Liens and there exists no restriction
on the use or transfer of the Purchased Assets, except as may be assumed
hereunder by Buyer as an Assumed Liability and except for liens arising in the
ordinary course of business and not yet known.. No Person other than Seller has
any right or interest in the Purchased Assets, including the right to grant
interests in the Purchased Assets to third parties, except for Purchased Assets
licensed or leased from third parties which are set forth in the Seller
Disclosure Schedule and identified as such.
(c) None of the Purchased Assets that constitute tangible personal
property is held under any lease, security agreement, conditional sales
contract, lien, or other title retention or security arrangement.
(d) Except as provided in this Agreement, no restrictions will exist
on Buyer's right to sell, resell, license or sublicense any of the Purchased
Assets or engage in the Business, nor will any such restrictions be imposed on
Buyer as a consequence of the transactions contemplated by this Agreement or by
any agreement referenced in this Agreement.
(e) All of the Purchased Assets are in good operating condition and
repair, as required for their use in the Business as presently conducted, and
conform to all applicable laws, and no notice of any violation of any law
relating to any of the Purchased Assets or Assumed Liabilities has been received
by Seller.
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4.11 Intellectual Property.
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(a) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (including without
limitation the continued conduct by Buyer after the Closing Date of the Business
as presently conducted by Seller and the incorporation of any Intellectual
Property in any product of Buyer or an affiliate of Buyer) will not breach,
violate or conflict with any instrument or agreement governing any intellectual
property necessary or required for, or used in, the conduct of the Business as
presently conducted and will not cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any such Intellectual Property
or in any material way impair the right of Buyer or any of its affiliates to
use, sell, license or dispose of, or to bring any action for the infringement
of, any such intellectual property or portion thereof;
(b) Neither the development, manufacture, marketing, license, sale or
use of any product or intellectual property currently licensed, used or sold by
Seller or currently under development violates or will violate any license or
agreement to which Seller is a party or to the best of Seller's knowledge
infringes or will infringe any copyright, patent, trademark, service xxxx, trade
secret or other intellectual property or other proprietary right of any other
party. All registered trademarks, service marks, patents and copyrights held by
Seller are valid and subsisting. There is no pending or threatened claim or
litigation contesting the validity, ownership or right to use, sell, license or
dispose of any of the Purchased Assets (including without limitation the
Intellectual Property) necessary or required for, or used in, the conduct of the
business of Seller as presently conducted nor is there any basis for any such
claim, nor has Seller received any notice asserting that any such Purchased
Asset (including without limitation the Intellectual Property) or the proposed
use, sale, license or disposition thereof conflicts or will conflict with the
rights of any other party, nor is there any basis for any such assertion. There
is no material unauthorized use, infringement or misappropriation on the part of
any third party of the Purchased Assets (including without limitation the
Intellectual Property); and
(c) Seller has taken reasonable steps (including, without limitation,
entering into confidentiality and non-disclosure agreements with all officers
and employees of and consultants to Seller with access to or knowledge of the
Purchased Assets (including without limitation the Intellectual Property) to
maintain the secrecy and confidentiality of, and its proprietary rights in, the
Purchased Assets (including without limitation the Intellectual Property)
necessary or required for, or used in, the conduct of the business of Seller as
presently conducted. The Seller Disclosure Schedule contains a complete and
accurate list of all applications, filings and other formal actions made or
taken pursuant to federal, state, local and foreign laws by Seller to perfect or
protect its interest in the Purchased Assets, including, without limitation, all
patents, patent applications, trademarks, trademark applications, service marks
and copyright or mask work registrations.
(d) All fees to maintain Seller's rights in the Intellectual Property,
including, without limitation, patent and trademark registration and prosecution
fees and all professional fees in connection therewith pertaining to the
Intellectual Property due and payable on or before the Closing Date, have been
paid by Seller or will be paid by Seller within a reasonable period after the
Closing.
13
4.12 Supply Agreements.
-----------------
(a) The Seller Disclosure Schedule contains a list (including names,
addresses, contact names and telephone numbers), which is complete in all
material respects, of all agreements or other arrangements pursuant to which
Seller is obligated to supply products, perform services or otherwise engage in
the conduct of the Business (such agreements, as supplemented below, are
referred to collectively as the "Supply Agreements"). Seller has provided a
-----------------
true and complete copy of all Supply Agreements to Buyer. All such Supply
Agreements are in full force and effect and are valid and effective in
accordance with their respective terms against Seller, as the case may be, and
against the other party thereto. Seller holds right, title and interest under
the terms of each Supply Agreement free of all Liens. Seller is not in default
under any such Supply Agreements (or has caused an event which with notice or
lapse of time, or both, would constitute a default), nor is the other party
thereto in default (or has caused an event which with notice or lapse of time,
or both, would constitute a default) under any such Supply Agreements.
(b) Seller has not entered into any agreement under which Seller is
restricted from selling, licensing or otherwise distributing any products or
services to any class of customers, in any geographic area, during any period of
time or in any segment of the market.
(c) After the Closing, Buyer will not be prevented by any act of
Seller from changing prices charged to existing or future customers of any
products or services.
(d) Seller has not granted any third party the right to supply any
products or services of the Business to any other third party. No agreement for
supply of the products or services by Seller obligates Seller, and no agreement
would obligate Buyer after the Closing Date, to provide any change in
specification of such products or services or to provide new products or
services. No agreement pursuant to which Seller has licensed the use of any
products to any third party obligates Seller to provide any change in
specification in the performance of such products or to provide new products or
services.
4.13 Warranties and Indemnities. The Seller Disclosure Schedule sets
--------------------------
forth a summary of all warranties and indemnities, express or implied, relating
to products sold or services rendered by Seller, and no warranty or indemnity
has been given by Seller which is not listed on the Seller Disclosure Schedule
or which differs therefrom in any respect. Seller is in compliance with all
warranties described in the Seller Disclosure Schedule. The Seller Disclosure
Schedule also indicates all warranty and indemnity claims currently pending
against Seller.
4.14 Real Property.
-------------
(a) Schedule 2.1(a) sets forth a list of all real property currently
owned or leased by Seller and which relates to the Business, are in full force
and effect. To the best of Seller's knowledge, all such current leases are
valid and effective in accordance with their respective terms against Seller and
the other party thereto. Seller has delivered to Buyer a true, correct and
complete copy of each lease identified on Schedule 2.1(a). The premises or
property described in said leases are presently occupied or used by Seller as
lessee or sublessor under the
14
terms of said leases. Seller is the legal and equitable owner and holder of the
leasehold interest in each such lease. Seller has all right, title and interest
of the lessee under the terms of said leases, free of all Liens. Seller is not
in default under any such leases (and has not caused an event which with notice
or lapse of time, or both, would constitute a default), and to the Seller's
knowledge, the other parties thereto are not in default (and have not caused an
event which with notice or lapse of time, or both, would constitute a default)
under any such leases.
(b) No violation of any law, regulation or ordinance, including
without limitation, laws, regulations or ordinances relating to zoning,
environmental, city planning or similar matters) relating to the Business or any
Purchased Asset currently exists or has existed at any time except for
violations which have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Business or
the Purchased Assets. There are no developments affecting any of the Purchased
Assets pending or, to the knowledge of Seller threatened, which might materially
detract from the value of such Purchase Assets, materially interfere with any
present or intended use of any such Purchased Assets or have a Material Adverse
Effect on the marketability of the Purchased Assets.
4.15 Inventories. To the best of Seller's knowledge, all of the
-----------
Inventories are and will be items of a quality usable or salable in the ordinary
and usual course of business. The value at which the Inventories are carried on
the September 30, 1999 Balance Sheet reflects an inventory valuation policy of
Seller which is consistent with industry practice and which is in accordance
with GAAP, consistently applied.
4.16 Accounts Receivable. All accounts receivable, notes receivable and
-------------------
other receivables included in the Purchased Assets are valid, genuine and fully
collectible in the aggregate amount thereof, subject to normal and customary
trade discounts less any reserves for doubtful accounts recorded on the
September 30, 1999 Balance Sheet. All accounts, notes receivable, and other
receivables arising out of or relating to the Business on September 30, 1999
have been included in the September 30, 1999 Balance Sheet.
4.17 Licenses and Permits. Seller holds all consents, approvals,
--------------------
registrations, certifications, authorizations, permits and licenses of, and has
made all filings with, or notifications to, all Governmental Entities pursuant
to applicable requirements of all federal, state, local and foreign laws,
ordinances, governmental rules or regulations applicable to the business,
including, but not limited to, all such laws, ordinances, governmental rules or
regulations relating to registration of the products of the Business (at their
current level of development and use) and certification of the facilities of the
Business. The Business is in compliance with all federal, state, local and
foreign laws, ordinances, governmental rules and regulations relating to the
products manufactured by the Business or otherwise related to the Business and
Seller has no reason to believe that any consents, approvals, authorizations,
registrations, certifications, permits, filings or notifications that it has
received or made to operate the Business are invalid or have been or are being
suspended, canceled, revoked or questioned. There is no investigation or
inquiry to which Seller is a party or, to Seller's knowledge, pending or
threatened, relating to the Business and its compliance with applicable foreign,
state, local or foreign laws, ordinances, governmental rules or regulations.
Each such consent, approval, registration, certification, authorization, permit
or license is transferable and shall be transferred to Buyer in accordance with
the terms of this Agreement.
15
4.18 Employees.
---------
(a) Schedule 4.18 sets forth the names, home addresses, compensation
-------------
levels, share option position, if any, and job titles of all of the Employees.
All employees, consultants, officers, directors and shareholders of Seller or
any Seller Subsidiary that have had access to the Purchased Assets are parties
to a written agreement (a "Confidentiality Agreement"), under which each such
-------------------------
person or entity (i) is obligated to disclose and transfer to Seller, without
the receipt by such person of any additional value therefor (other than normal
salary or fees for consulting services), all inventions, developments and
discoveries which, during the period of employment with or performance of
services for Seller, he or she makes or conceives of either solely or jointly
with others, that relate to any subject matter with which his or her work for
Seller may be concerned, or relate to or are connected with the Business,
products or projects of Seller, or involve the use of the time, material or
facilities of Seller, and (ii) is obligated to maintain the confidentiality of
proprietary information of Seller. None of Seller's employees, consultants,
officers or directors is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
conflict with their obligation to promote the interests of Seller with regard to
the Business or the Purchased Assets or that would conflict with the Business or
the Purchased Assets. Neither the execution nor the delivery of this Agreement,
nor the carrying on of the Business by its employees and consultants, will
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such persons or entities are now obligated. It is currently not
necessary nor will it be necessary for Seller to utilize in the Business any
inventions of any of such persons or entities (or people it currently intends to
hire) made or owned prior to their employment by or affiliation with Seller, nor
is it or will it be necessary to utilize any other assets or rights of any such
persons or entities (or people it currently intends to hire) made or owned prior
to their employment with or engagement by Seller, in violation of any registered
patents, trade names, trademarks or copyrights or any other limitations or
restrictions to which any such persons or entity is a party or to which any of
such assets or rights may be subject. To the Seller's knowledge, none of
Seller's employees, consultants, officers, directors or shareholders that has
had knowledge or access to information relating to the Purchased Assets has
taken, removed or made use of any proprietary documentation, manuals, products,
materials, or any other tangible item from his or her previous employer relating
to the Purchased Assets by such previous employer which has resulted in Seller's
access to or use of such proprietary items included in the Purchased Assets, and
Seller will not gain access to or make use of any such proprietary items in the
Business, except to the extent that any such activities would not have a
material adverse effect on the Purchased Assets or the Business.
(b) Except for the Confidentiality Agreements, there are no written
or oral contracts of employment between Seller and any Employee.
(c) The Seller is not a party to a collective bargaining agreement
with any trade union, the Seller's employees are not members of a trade union
certified as a bargaining agent with the Seller and no proceedings to implement
any such collective bargaining agreement or certifications are pending.
16
4.19 Employee Benefit and Compensation Plans. Buyer will incur no
---------------------------------------
liability with respect to, or on account of, and Seller will retain any
liability for, and on account of, any employee benefit plan of Seller, any of
its Affiliates or any predecessor employer of any employee, including, but not
limited to, liabilities Seller may have to such employees under all employee
benefit schemes, incentive compensation plans, bonus plans, pension and
retirement plans, vacation, profit-sharing plans (including any profit-sharing
plan with a cash-or-deferred arrangement) share purchase and option plans,
savings and similar plans, medical, dental, travel, accident, life, disability
and other insurance and other plans or arrangements, whether written or oral and
whether "qualified" or "non-qualified," or to any employee as a result of
termination of employment by Seller as contemplated by this Agreement. Seller
has not, with respect to any employee, maintained or contributed to, or been
obligated or required to contribute to, any retirement or pension plan or any
employee benefit plan. The Seller has complied with all of its obligations
(including obligations to make contributions) in respect of the pension funds of
which its employees are members, there is no outstanding liability of the Seller
or any of its Affiliates to any such funds and all such funds are fully funded
to meet all potential claims for benefits by any and all such employees and any
former employee.
4.20 Taxes. To the best of the Seller's knowledge, all Taxes have been or
-----
will be paid by Seller for all periods (or portions thereof) prior to and
including the Closing Date except for those Taxes not yet due. Seller and any
other person required to file returns or reports of Taxes have duly and timely
filed (or will file prior to the Closing Date) all returns and reports of Taxes
required to be filed prior to such date, and all such returns and reports are
true, correct, and complete. There are no liens for Taxes on any of the
Purchased Assets. Seller has complied with all record keeping and tax reporting
obligations relating to income and employment taxes due with respect to
compensation paid to employees or independent contractors providing services to
the Business. There are no pending or, to Seller's knowledge, threatened
proceedings with respect to Taxes, and there are no outstanding waivers or
extensions of statutes of limitations with respect to assessments of Taxes.
4.21 Compliance with Law. The operation of the Business has been
-------------------
conducted in all material respects in accordance with all applicable and
material laws, regulations and other requirements of Governmental Entities
having jurisdiction over the same.
4.22 Environmental Matters. Seller has not caused or allowed, or
---------------------
contracted with any party for, the generation, use, transportation, treatment,
storage or disposal of any Hazardous Substances (as defined below) in connection
with the operation of its Business or otherwise. To the best of Seller's
knowledge, Seller, the operation of the Business, and any real property that
Seller owns, leases or otherwise occupies or uses (the "Premises") are in
compliance with all applicable Environmental Laws (as defined below) or orders
or directives of any governmental authorities having jurisdiction under such
Environmental Laws. Seller has not received any citation, directive, letter or
other communication, written or oral, or any notice of any proceedings claim or
lawsuit, from any person arising out of the ownership or occupation of the
Premises, or the conduct of the Business, and Seller is not aware of any basis
therefor. For purposes of this Agreement, the term "Environmental Laws" shall
mean any federal, state or local law or ordinance or regulation pertaining to
the protection of public health or safety or damage to protection of the
environment in connection with the use, storage, disposal, transport or handling
of Hazardous Substances. For purposes of this Agreement, the term "Hazardous
17
Substances" shall include any materials classified as hazardous or toxic under
any Environmental Laws.
4.23 Material Contracts.
------------------
(a) Schedule 4.23 contains a list of all Contracts which are material
-------------
to the Business ("Material Contracts"). "Material Contracts" shall include,
------------------ ------------------
without limitation, the following and shall be categorized in the Seller
Disclosure Schedule as follows:
(i) each Contract (other than routine purchase orders given and
pricing quotes received in the ordinary course of the Business and covering a
period of less than one year) for the purchase of inventory, spare parts, other
materials or personal property with any supplier or for the furnishing of
services to the Business under the terms of which Seller, on behalf of the
Business: (A) paid or otherwise gave consideration of more than $5,000 in the
aggregate during the fiscal year ended September 30, 1999, (B) is likely to pay
or otherwise give consideration of more than $5,000 in the aggregate during the
fiscal year ended September 30, 2000, (C) is likely to pay or otherwise give
consideration of more than $5,000 in the aggregate over the remaining term of
such contract or (D) cannot be canceled without penalty or further payment of
less than $5,000;
(ii) each customer contract and agreement of the Business (other
than routine purchase orders, pricing quotes with open acceptance and other
tender bids, in each case, entered into in the ordinary course of business and
covering a period of less than one year) which (A) involved consideration of
more than $5,000 in the aggregate during the fiscal year ended September 30,
1999, (B) is likely to involve consideration of more than $5,000 in the
aggregate during the fiscal year ended September 30, 2000, (C) is likely to
involve consideration of more than $5,000 in the aggregate over the remaining
term of the contract or (D) cannot be canceled without penalty or further
payment of less than $5,000;
(iii) (A) all distributor, manufacturer's representative, broker,
franchise, agency and dealer contracts and agreements of the Business
(specifying on a matrix, in the case of distributor agreements, the name of the
distributor, product, territory, termination date and exclusivity provisions)
and (B) all sales promotion, market research, marketing and advertising
contracts and agreements of the Business which: (1) involved consideration of
more than $5,000 in the aggregate during the fiscal year ended September 30,
1999 or (2) are likely to involve consideration of more than $5,000 in the
aggregate during the fiscal year ended September 30, 2000 or (3) are likely to
involve consideration of more than $5,000 in the aggregate over the remaining
term of the contract;
(iv) all management contracts with independent contractors or
consultants (or similar arrangements) of the Business and which (A) involved
consideration or more than $5,000 in the aggregate during the fiscal year ended
September 30, 1999, (B) are likely to involve consideration of more than $5,000
in the aggregate during the fiscal year ended September 30, 2000, or (C) are
likely to involve consideration of more than $5,000 in the aggregate over the
remaining term of the contract;
18
(v) all contracts and agreements (excluding routine checking
account overdraft agreements involving xxxxx cash amounts) under which the
Business has created, incurred, assumed or guaranteed (or may create, incur,
assume or guarantee) indebtedness or under which the Business has imposed (or
may impose) a security interest or lien on any of its assets, whether tangible
or intangible, to secure indebtedness;
(vi) all contracts and agreements that limit the ability of any
Person related to the Business, or any of its affiliates, to compete in any line
of business or with any person or in any geographic area or during any period of
time, or to solicit any customer or client;
(viii) all Contracts pursuant to which the Business has agreed to
supply products to a customer at specified prices, whether directly or through a
specific distributor, manufacturer's representative or dealer; and
(ix) all other Contracts (A) which are material to the
Business or (B) the absence of which would have a Material Adverse Effect on the
Business, or (C) which are believed by Seller to be of unique value even though
not material to the Business.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Business, each license, each Material Contract,
is a legal, valid and binding agreement, and none of the Material Contracts is
in default by its terms or has been canceled by the other party; Seller is not
in receipt of any claim of default under any such agreement; and Seller does not
anticipate any termination or change to, or receipt of a proposal with respect
to, any such agreement as a result of the transactions contemplated hereby.
Seller has furnished Buyer with true and complete copies of all such agreements
together with all amendments, waivers or other changes thereto.
4.24 Products. Each of the products and services produced, sold or
--------
provided by Seller in connection with the Business is, and at all times has
been, in compliance in all material respects with all applicable federal, state,
local and foreign laws and regulations and is, and at all relevant times has
been, fit for the ordinary purposes for which it is intended to be used and
conforms in all material respects to any promises or affirmations of fact made
in connection with the sale of such product or service. There is no design
defect with respect to any of such products, and each of such products contains
adequate warnings, presented in a reasonably prominent manner, in accordance
with applicable laws and current industry practice with respect to its contents
and use.
4.25 Product Liability. There are no claims, actions, suits, inquiries,
-----------------
proceedings or investigations pending by or against Seller, relating to any
products the Business and containing allegations that such products are
defective or were improperly designed or manufactured or improperly labeled or
otherwise improperly described for use.
4.26 Litigation; Other Claims.
------------------------
(a) There are no claims, actions, suits, inquiries, proceedings, or
investigations against Seller, or any of its officers, directors or
shareholders, relating to the Business, the Purchased Assets or Seller's
employees which are currently pending or threatened,
19
at law or in equity or before or by any Governmental Entity, or which challenges
or seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated hereby, nor is Seller aware of any basis for such claims, actions,
suits, inquiries, proceedings, or investigations; and no Governmental Entity has
at any time challenged or questioned the legal right of Seller to manufacture,
offer or sell any of its products or services in the present manner or style
thereof.
(b) There are no grievance or arbitration proceedings pending or
threatened, and there are no actual or threatened strikes or work stoppages with
respect to the Business, the Purchased Assets or Seller's employees, nor is
Seller aware of any basis for such proceedings or events.
4.27 Defaults. Seller is not in default under or with respect to any
--------
judgment, order, writ, injunction or decree of any court or any Governmental
Entity which could reasonably be expected to have a Material Adverse Effect on
the Business or any of the Purchased Assets. There does not exist any default
by Seller or by any other Person, or event that, with notice or lapse of time,
or both, would constitute a default under any agreement entered into by Seller
as part of the operations of the Business which could reasonably be expected to
have a Material and Adverse Effect on the Business or the Purchased Assets, and
no notices of breach thereof have been received by Seller.
4.28 Schedules. The schedules describing the Purchased Assets are
---------
complete and accurate and describe the material assets in the possession of, or
used by Seller in connection with the Business. The property listed in such
Schedules constitutes all of the material tangible and intangible property
necessary for the conduct by Seller of the Business.
4.29 Full Disclosure. Seller is not aware of any facts pertaining to the
---------------
Purchased Assets which affect the Business or the Purchased Assets in a
materially adverse manner or which will in the future affect the Business or the
Purchased Assets in a materially adverse manner. Neither this Agreement nor any
other agreement, exhibit, schedule or officer's certificate being entered into
or delivered pursuant to this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained in such document not misleading.
4.30 Brokers and Finders. Neither Seller nor any of its officers,
-------------------
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finder's fee in connection with
the transactions contemplated by this Agreement.
4.31 Fair Consideration; No Fraudulent Conveyance. The sale of the
--------------------------------------------
Purchased Assets pursuant to this Agreement is made in exchange for fair and
equivalent consideration. Seller is not now insolvent and will not be rendered
insolvent by the sale, transfer and assignment of the Purchased Assets pursuant
to the terms of this Agreement. Seller is not entering into this Agreement or
any of the other agreements referenced in this Agreement with the intent to
defraud, delay or hinder its creditors and the consummation of the transactions
contemplated by this Agreement, and the other agreements referenced in this
Agreement, will not have any such effect. The transactions contemplated in this
Agreement or any agreements referenced in this Agreement will not constitute a
fraudulent conveyance, or otherwise give rise to any right of any creditor of
Seller to any of the Purchased Assets after the Closing.
20
4.32 Insurance. The Seller Disclosure Schedule lists all insurance
---------
policies and fidelity bonds covering the Purchased Assets. There is no claim by
Seller pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies and bonds.
All premiums due and payable under all such policies and bonds have been paid
and Seller is otherwise in material compliance with the terms of such policies
and bonds (or other policies and bonds providing substantially similar insurance
coverage). There is no threatened termination of, or material premium increase
with respect to, any of such policies.
4.33 Capitalization.
--------------
(a) The authorized capital stock of Seller will, upon the Closing
Date, consist of 20,000,000 shares of common stock and 8,008,530 shares of
preferred stock, 558,560 of which have been designated Series A Preferred Stock,
all of which are issued and outstanding immediately prior to Closing, 949,970 of
which have been designated Series B Preferred Stock, all of which are issued and
outstanding immediately prior to Closing, and 6,500,000 of which have been
designated Series C Preferred Stock, 6,243,247 of which are issued and
----------
outstanding immediately prior to Closing. As of the Closing Date, the total
number of outstanding shares of common stock is 2,962,960. The designations,
---------
rights, preferences and limitations in respect of each class of capital stock of
Seller are set forth in its Articles of Incorporation. All outstanding shares
of capital stock of Seller are duly authorized and validly issued, fully-paid
and nonassessable and were issued in compliance with applicable securities laws.
(b) Except as referenced above and for (i) conversion privileges of
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock (ii) outstanding options to purchase 498,500 shares of common stock under
-------
Seller's 1998 Equity Incentive Plan, (iii) 2,486,540 shares of Common Stock
---------
remaining available for future issuance to employees, directors and consultants
under Seller's 1998 Equity Incentive Plan, (v) outstanding warrants to purchase
425,676 shares of Series C Preferred Stock, and (vi) the rights set forth in the
------- --------------------
Amended and Restated Investors' Rights Agreement dated June 19, 1998 among
-------------
Seller and certain holders of Seller's capital stock, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements, orally or in writing, for the purchase or acquisition from Seller of
any shares of its capital stock.
5. Representations and Warranties of Buyer
---------------------------------------
Each representation and warranty set forth below is qualified by any
exception or disclosures set forth in the Buyer Disclosure Schedule attached
hereto, which exceptions specifically reference the Section(s) to be qualified.
Buyer represents and warrants to Seller as follows:
5.1 Organization. Buyer is a corporation duly formed and validly existing
------------
and in good standing under the laws of California, and has full corporate power
and authority and the legal right to execute and deliver this Agreement and all
of the other agreements and instruments to be executed and delivered by Buyer
pursuant hereto, and to consummate the transactions contemplated hereby and
thereby. Buyer is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties
21
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for failures to be so qualified or
licensed and in good standing that would not, individually or in the aggregate,
have a Material Adverse Effect on Buyer's business.
5.2 Authority. The execution and delivery of this Agreement (and all
---------
other agreements and instruments contemplated hereunder) by Buyer, the
performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of Buyer,
and no other act or proceeding on the part of Buyer or its shareholders is
necessary to approve the execution and delivery of this Agreement and such other
agreements and instruments, the performance by Buyer of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. The signatory officers of Buyer have the power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Buyer pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Buyer pursuant to the provisions hereof
and thereof.
5.3 Execution and Binding Effect. This Agreement has been duly and
----------------------------
validly executed and delivered by Buyer and constitutes, and the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, upon their execution and delivery by Buyer, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Seller), legal, valid and binding agreements of Buyer, enforceable against Buyer
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, or other laws affecting the
enforcement of creditors' rights generally or provisions limiting competition,
and by equitable principles.
5.4 Consent and Approvals. There is no requirement applicable to Buyer to
---------------------
make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto, except for filings (a) which are referred to in the
Seller Disclosure Schedule or (b) the failure of making which would not have a
Material Adverse Effect on the transactions contemplated hereby.
5.5 No Violation. Neither the execution, delivery and performance of this
------------
Agreement and of all the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of Buyer,
(b) conflict with or result in a violation or breach of, or constitute a default
or require consent of any Person (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any notice, bond, mortgage, indenture, license, franchise, permit, agreement,
lease or other instrument or obligation to which Buyer is a party or by which
Buyer or any of its properties or assets may be bound, or (c) violate any
statute, ordinance or law or any rule, regulation, order, writ, injunction or
decree of any Governmental Entity applicable to Buyer or by which any of its
properties or assets may be bound.
22
5.6 Capitalization.
--------------
(a) The authorized capital stock of Buyer will, upon the Closing Date,
consist of 48,072,114 shares of common stock and 26,927,886 shares of preferred
stock, 3,750,000 of which have been designated Series A Preferred Stock, all of
which are issued and outstanding immediately prior to Closing, 12,413,793 of
which have been designated Series B Preferred Stock, all of which are issued and
outstanding immediately prior to Closing, 6,956,400 of which have been
designated Series C Preferred Stock, all of which are issued and outstanding
immediately prior to Closing, and 3,807,693 of which have been designated Series
D Preferred Stock, 3,590,763 of which are issued and outstanding immediately
prior to Closing. As of the Closing Date, the total number of outstanding
shares of Common Stock is 9,087,440. The designations, rights, preferences and
limitations in respect of each class of capital stock of Buyer are set forth in
its Articles of Incorporation. All outstanding shares of capital stock of Buyer
are duly authorized and validly issued, fully-paid and nonassessable and were
issued in compliance with applicable securities laws. Buyer has reserved 50,000
shares of common stock for issuance hereunder.
(b) Except as referenced above and for (i) conversion privileges of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock (ii) outstanding options to purchase 3,976,075
shares of common stock under the Buyer's 1996 Stock Option Plan, (iii) 1,014,801
shares of common stock remaining available for future issuance to employees,
directors and consultants under Buyer's 1996 Stock Option Plan, and (iv) the
rights set forth in the Amended and Restated Investors' Rights Agreement dated
December 17, 1999 among Buyer and certain holders of Buyer's capital stock,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements, orally or in writing, for the purchase or
acquisition from Buyer of any shares of its capital stock.
5.7 Valid Issuance of Securities. The Shares being issued to Seller
----------------------------
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer under this Agreement and pursuant to applicable state
and federal securities laws.
5.8 Title to Property and Assets. Buyer owns its property and assets
----------------------------
free and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair Buyer's ownership or use of such property or assets. With
respect to the property and assets it leases, Buyer is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
5.9 Tax Returns and Payments. Buyer has filed all federal, state and
------------------------
local tax returns and reports as required by law. These returns and reports are
true and correct in all material respects. Buyer has paid all taxes and other
assessments due. Buyer has no knowledge of any liability of any tax to be
imposed upon its properties or assets as of the date of this Agreement that is
not adequately provided for.
6. Covenants.
---------
23
6.1 Access to Information.
---------------------
(a) Prior and subsequent to the Closing, Seller will permit Buyer to
make a full and complete investigation of the Purchased Assets and to receive
from Seller all information of Seller relating to the Purchased Assets or
reasonably related to Seller's conduct of the Business. Without limiting this
right, Seller will give to Buyer and its accountants, legal counsel, and other
representatives full access, during normal business hours, at a mutually
agreeable location arranged in advance, to all of the books, records, files,
documents, properties, and contracts of Seller relating to the Purchased Assets
or reasonably related to Seller's conduct of the Business and allow Buyer and
any such representatives to make copies thereof, all of which shall be made
available in an organized fashion and so as to facilitate an orderly review.
This Section 6.1 shall not affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the transactions contemplated by this Agreement. Seller shall
maintain and make available the information and records specified in this
Section 6.1(a) in the ordinary course of Seller's business and document
retention policies, as if the transactions contemplated by this Agreement had
not occurred.
(b) At all times following the Closing, each party shall provide the
other party (at such other party's expense) with such reasonable assistance,
including the provision of available relevant records or other information and
reasonable access to and cooperation of any employees, as may be reasonably
requested by either of them in connection with the preparation of any financial
statement or tax return, any audit or examination by any taxing authority, or
any judicial or administrative proceeding relating to liability for Taxes.
6.2 Third Party Consents. Seller and Buyer shall use commercially
--------------------
reasonable efforts to obtain, within the applicable time periods required, all
Required Consents, waivers, permits, consents and approvals and to effect all
registrations, filings and notices with or to third parties or Governmental
Entities which are necessary to consummate the transactions contemplated by this
Agreement so as to preserve all rights of, and benefits to, the Buyer in the
Purchased Assets.
6.3 Certain Notifications. At all times prior to the Closing, Seller and
---------------------
Buyer shall promptly notify the other party in writing of the occurrence of any
event which will result, or has a reasonable prospect of resulting, in the
failure to satisfy any of the conditions specified in Section 8 or Section 9 of
this Agreement.
6.4 Best Efforts. The Seller shall use its best efforts (i) to cause to
------------
be fulfilled and satisfied all of the conditions to the Closing set forth in
Section 8 below, (ii) to cause to be performed all of the matters required of it
at the Closing and (iii) to cause the Contracts to be assigned to Buyer.
6.5 Seller's Conduct of the Business Prior to Closing. During the period
-------------------------------------------------
from the date of this Agreement to the Closing Date, Seller will conduct the
Business in its ordinary and usual course, consistent with past practice, and
will use all reasonable efforts to preserve intact all rights, privileges,
franchises and other authority of the Business, to retain the employees, and to
maintain favorable relationships with licensors, licensees, suppliers,
contractors, distributors, customers, and others having relationships with the
Business. Seller shall promptly notify Buyer
24
of any event or occurrence or emergency not in the ordinary course of business,
and any material event involving the Business or the Purchased Assets. Without
limiting the generality of the foregoing, and except as approved in writing by
Buyer in advance, prior to the Closing, Seller:
(a) except for funds borrowed by Seller from certain of its
shareholders after the date first set forth above, will not create, incur or
assume (i) any borrowings under capital leases, or (ii) any obligation which
would in any material way affect the Business, the Purchased Assets or Buyer's
ability to conduct the Business in substantially the same manner and condition
as conducted by Seller on the date of this Agreement;
(b) will not change in any manner the compensation of, or agree to
provide additional benefits to, or enter into any employment agreement with, any
employee;
(c) will maintain insurance coverage in amounts adequate to cover the
reasonably anticipated risks of the business conducted with the Purchased
Assets;
(d) will not acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
Business.
(e) will not sell, dispose of or encumber any of the Purchased Assets
or license any Purchased Assets to any Person except for the sale of Inventory
in the normal course of business consistent with past practice;
(f) will not engage in any special promotion which promotes the sale
of Inventory with highly discounted terms;
(g) will not enter into any agreements or commitments relating to the
Business, except on commercially reasonable terms in the ordinary course of
business of the Business;
(h) will comply in all material respects with all laws and
regulations applicable to the Business;
(i) will not enter into any agreement with any third party for the
distribution of any of the Purchased Assets;
(j) will use reasonable efforts to assist Buyer in employing after the
Closing Date those employees to whom offers of employment are made by Buyer, and
will not (and will cause its Affiliates not to) solicit such employees to remain
in the employ of Seller or any of its Affiliates after the Closing Date;
(k) will not change or announce any change to the products or
services sold by the Business except with Buyer's written consent or at Buyer's
request;
(l) will not expand the use of the Purchased Assets within the
organization of Seller;
25
(m) will not violate, amend or otherwise change in any way the terms
of any of the Contracts;
(n) will not commence a lawsuit related to or involving the Purchased
Assets other than (a) for the routine collection of bills; (b) for injunctive
relief on the grounds that Seller has suffered immediate and irreparable harm
not compensable in money damages, provided that Seller has obtained the prior
written consent of Buyer, such consent not to be unreasonably withheld; or (c)
for a breach of this Agreement;
(p) will not assign, sell or otherwise convey to any third party,
without obtaining Buyer's prior written consent, any of its accounts receivable
prior to the Closing Date.
6.6 No Other Bids. Until the earlier to occur of (a) the Closing or (b)
-------------
the termination of this Agreement pursuant to its terms, Seller shall not, and
Seller shall not authorize any of its officers, directors, employees or other
representatives to, directly or indirectly, (i) initiate, solicit or encourage
(including by way of furnishing information regarding the Business or the
Purchased Assets) any inquiries, or make any statements to third parties which
may reasonably be expected to lead to any proposal concerning the sale of
Seller, the Business or the Purchased Assets (whether by way of merger, purchase
of capital shares, purchase of assets or otherwise) (a "Transaction Proposal"),
--------------------
(ii) negotiate, engage in any substantive discussions, or enter into any
agreement, with any Person concerning a Transaction Proposal or (iii) execute
and deliver any written letter of intent or similar document with any third
party relating to a Transaction Proposal. Seller will (x) notify Buyer
immediately if any inquiry or proposal is made or any information or access is
requested (other than by Buyer) in connection with a potential Transaction
Proposal and (y) immediately communicate to Buyer the terms and conditions of
any such Transaction Proposal or potential Transaction Proposal or inquiry and
the identity of the offeror or potential offeror.
6.7 Tax Returns. Seller shall, to the extent that failure to do so could
-----------
adversely affect the Business or the Purchased Assets following Closing, (a)
continue to file in a timely manner all returns and reports relating to Taxes,
and such returns and reports shall be true, correct and complete and shall be
subject to the review and consent of Buyer which consent shall not be
unreasonably withheld, and (b) be responsible for and pay when due any and all
Taxes.
6.8 Post-Closing Access to Information. If, after the Closing Date, in
----------------------------------
order properly to operate the Business or prepare documents or reports required
to be filed with governmental authorities or Buyer's financial statements, it is
necessary that Buyer obtain additional information within Seller's possession
relating to the Purchased Assets or the Business, Seller will furnish or cause
its representatives to furnish such information to Buyer. Such information
shall include, without limitation, all agreements between Seller and any Person
relating to the Business. Seller shall maintain and make available the
information and records specified in this Section 6.8 for a period of seven (7)
years after the Closing Date.
6.9 Post-Closing Cooperation. Seller agrees that, if reasonably requested
------------------------
by Buyer, it will cooperate with Buyer, at Buyer's expense, in enforcing the
terms of any agreements between Seller and any third party involving the
Business, including without limitation terms relating to confidentiality and the
protection of intellectual property rights. In the event that
26
Buyer is unable to enforce its intellectual property rights against a third
party as a result of a rule or law barring enforcement of such rights by a
transferee of such rights, Seller agrees to reasonably cooperate with Buyer by
assigning to Buyer such rights as may be required by Buyer to enforce its
intellectual property rights in its own name. If such assignment still does not
permit Buyer to enforce its intellectual property rights against the third
party, Seller agrees to initiate proceedings against such third party in
Seller's name, provided that Buyer shall be entitled to participate in such
proceedings and provided further that Buyer shall be responsible for the
expenses of such proceedings.
6.10 No Post-Closing Retention of Copies. Immediately after the Closing,
-----------------------------------
Seller shall deliver to Buyer or destroy copies of Purchased Assets in Seller's
possession that are in addition to copies delivered to Buyer as part of the
Closing, whether such copies are in paper form, on computer media or stored in
another form; provided, however, that Seller may retain and use copies of
------------------
financial books and records relating to the Business as well as other documents
required by law to be kept by Seller for the sole purpose of preparing its
statutory accounts. The Seller shall not be permitted to use the financial
books and records of the Business for any other reason.
6.11 Public Announcements. The parties hereby agree that upon execution
--------------------
of this Agreement, Buyer may issue a press release in the form reasonably
acceptable to the Seller and Buyer.. On and prior to the Closing Date, Buyer and
Seller shall advise and confer with each other prior to the issuance of any
reports, statements or releases concerning this Agreement (including the
exhibits and schedules hereto) and the transactions contemplated herein.
Neither Buyer nor Seller will make any public disclosure prior to the Closing or
with respect to the Closing unless both parties agree on the text and timing of
such public disclosure; provided, however, that nothing contained herein shall
-----------------
prevent either party at any time from furnishing any information to any
Governmental Entity. Immediately after this Agreement is signed, both parties
will make public announcements to their respective share exchanges; the text of
such public announcements will be reviewed by the parties prior to release.
6.12 Post-Closing Actions. Subsequent to the Closing Date, Seller shall,
--------------------
from time to time, execute and deliver, upon the request of Buyer, all such
other and further materials and documents and instruments of conveyance,
transfer or assignment as may reasonably be requested by Buyer to effect, record
or verify the transfer to, and vesting in Buyer, of Seller's right, title and
interest in and to the Purchased Assets, free and clear of all Liens, in
accordance with the terms of this Agreement.
6.13 Future Agreements. In the event Seller enters into any material
-----------------
agreement between the date of this Agreement and the Closing that relates
primarily to the Business, at the request of Buyer, Seller agrees to include any
such agreement within the Contracts.
6.14 Non-Competition Agreement.
-------------------------
(a) In consideration of the Buyer entering into this Agreement, Seller
undertakes that for three (3) years after the Closing Date and within the
counties, cities and states of the United States of America and each political
subdivision and/or nation throughout the
27
world (the "Territory") neither it nor any Affiliate (on its own behalf and not
---------
on behalf of its holders of preferred stock in their individual capacities) of
it will:
(i) participate, assist or otherwise be directly or indirectly
involved or concerned, financially or otherwise, as a member, shareholder,
unitholder, director, consultant, adviser, contractor, principal, agent,
manager, beneficiary, partner, associate, trustee, financier or otherwise in any
business or activity which is the same as or substantially similar to the
Business or any material part of it (a "Restricted Business");
--------------------
(ii) solicit, canvass, induce or encourage directly or indirectly
any employee of Buyer to leave the employment of Buyer;
(iii) solicit, canvass, approach or accept any offer from any
person or entity who was at any time during the 24 months immediately preceding
the Closing Date a customer or supplier of the Business with a view to
establishing a relationship with or obtaining the patronage of that person or
entity in a Restricted Business;
(iv) interfere or seek to interfere, directly or indirectly, with
any relationship between Buyer and any client, customer, employee or supplier of
the Business.
(b) If any of the separate and independent covenants and restraints
referred to in clause (a) of this Section 6.14 are or become invalid or
unenforceable for any reason then that invalidity or unenforceability will not
affect the validity or enforceability of any other separate and independent
covenants and restraints.
(c) If any prohibition or restriction contained in clause (a) of this
Section 6.14 is judged to go beyond what is reasonable in the circumstances, but
would be judged reasonable if that activity was deleted or that period or area
was reduced, then the prohibitions or restrictions apply with that activity
deleted or period or area reduced by the minimum amount necessary.
(d) Seller acknowledges that:
(i) the prohibitions and restrictions contained in clause (a)
of this Section 6.14 are reasonable and necessary; and
(ii) Seller has received valuable consideration for agreeing to
the covenants in clause (a) of this Section 6.14.
(e) Seller and Buyer acknowledge and agree that it will be difficult
to compute the amount of damage or loss to Buyer if Seller violated any of their
agreements under this Section 6.14, that Buyer will be without an adequate legal
remedy if Seller violated the provisions of this Section 6.14, and that any such
violation may cause substantial irreparable injury and damage to Buyer not fully
compensable by monetary damages. Therefore, Seller and Buyer agree that in the
event of any violation by Seller of this Section 6.14, Buyer shall be entitled
(i) to recover from Seller monetary damages, (ii) to obtain specific
performance, injunctive or other equitable relief, of either a preliminary or
permanent type, and (iii) to seek any other available rights or remedies at law
or in equity which may be exercised concurrently with the rights granted
hereunder.
28
6.15 Permits. Seller will assist Buyer in obtaining any licenses, permits
-------
or authorizations required for carrying on the Business but which are not
transferable.
6.16 Bulk Sales Law. Buyer shall assist Seller in making all such filings
--------------
as are required in connection with the Bulk Sales laws of California, including,
without limitation, the filings and public notice requirements of the California
Uniform Commercial Code.
6.17 Taxes. Seller shall be responsible for paying, shall promptly
-----
discharge when due, and shall reimburse, indemnify and hold harmless Buyer from,
any sales or use, transfer, real property gains, excise, stamp, income,
alternative minimum income or other similar Taxes arising from, imposed on or
attributable to the transactions contemplated by this Agreement.
6.18 Indebtedness. On or prior to the Closing Date, Seller shall have
------------
fully discharged, satisfied or cancelled all loans, other indebtedness for money
borrowed, accounts payable and equipment leases of Seller and any of its direct
or indirect subsidiaries, including without limitation (i) all debts to Maui
Investment Holding Co., (ii) all debts to the shareholders of Seller
("Shareholder Discharge"), and (iii) all such liabilities owed to Affiliates of
-----------------------
Seller, and all security interests or other rights related thereto shall have
terminated, and Seller shall provide Buyer with evidence of all such discharges,
satisfactions or cancellations in the forms reasonably acceptable to Buyer (each
a "Discharge"). Maui Investment Holding Co. shall have delivered a release of
---------
all claims in connection with the Discharge of all indebtedness between Seller
and Maui Investment Holding Co. in the form reasonably satisfactory to Buyer and
Buyer's counsel, as the same shall have been delivered to Seller by Buyer at the
Closing ("Maui Discharge").
---------------
6.19 Expenses. Seller and Buyer shall each pay all costs and expenses
--------
incurred by it or on its behalf in connection with this Agreement and the
transactions contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel. Seller shall be solely
responsible for all costs and expenses necessary or incident to the transfer of
any of the Purchased Assets to Buyer.
6.20 Settlement with Commerce One. Prior to the Closing, Seller shall
----------------------------
fully and finally settle all claims with and against Commerce One, including
without limitation the dismissal with prejudice of all actions between the
parties and execution and performance of the Mutual Release and Settlement
Agreement in substantially the form attached hereto as Exhibit F (the "Commerce
- --------
One Agreement").
-------------
6.21 Termination of 1998 Equity Incentive Plan and Stock Options. Seller
-----------------------------------------------------------
hereby acknowledges and agrees that Buyer will not assume Seller's 1998 Equity
Incentive Plan or any other stock plan of Seller and any stock options granted
or issuable thereunder and that Seller shall take all such actions as are
necessary to terminate the 1998 Equity Incentive Plan and all stock options
granted or issuable thereunder as of the Closing Date and the 1998 Equity
Incentive Plan and all stock options granted or issuable thereunder shall be
terminated on or before the Closing Date (the "Termination of Plans and
------------------------
Options").
6.22 Termination of Director of Professional Services. If the employment
------------------------------------------------
or consulting relationship between Seller and Xxxxxx Xxxxxxxx, Director of
Professional Services, is terminated on or prior to the Closing, Seller shall
make best efforts to execute a Release
29
of Claims between Seller and Xxxxxx Xxxxxxxx in connection with such termination
on or before the Closing Date (the "Termination of Director").
-----------------------
6.23 Termination of Agreements. Prior to the Closing, Seller shall use its
-------------------------
best efforts to fully and finally settle all claims in connection with Sections
2.2(b), (c), (d) and (e).
7. Employee Matters
----------------
7.1 Transferred Employees.
---------------------
(a) Offer of Employment. Subject to and in accordance with the
-------------------
provisions of this Section 7, Buyer may offer employment to any or all of the
employees who are employed by Seller in the Business as of the date of this
Agreement (the "Employees"). Seller agrees that it will cooperate with Buyer to
---------
identify those employees of Seller who are necessary for the conduct the
Business. Prior to the Closing, Buyer, shall have the right to contact any or
all of the Employees for the purposes of making offers of employment with Buyer
(or any Affiliate designated by Buyer) after the Closing Date and receiving
written acceptances of such employment (in each case contingent on consummation
of the transactions contemplated by this Agreement). Each Key Employee (as
defined in Section 8.14 hereof) or other Employee who is employed by Seller on
the Closing Date and who actually transfers to employment with Buyer (or any
Affiliate designated by Buyer) at or after the Closing Date as a result of an
offer of employment made by Buyer is hereafter referred to as a "Transferred
-----------
Employee." Transferred Employees shall not include any person on a disability
--------
leave of more than twenty-six (26) weeks. Buyer shall not be obligated to hire
any employee unless an offer of employment is subsequently made to, and accepted
by, such employee; in addition, Buyer shall have no obligation to hire any
employees of Seller after the Closing Date. The employment of any Transferred
Employee shall be subject to Buyer's established policies generally applicable
to new employees, including the execution of Buyer's standard form of
confidentiality and invention assignment agreement.
(b) Transition. The employment by Seller of the Transferred Employees
----------
shall end at the close of business on the Closing Date and the employment of the
Transferred Employees by Buyer shall commence at 12:01 a.m. on the day after the
Closing Date. The terms of employment with Buyer (or Buyer's Affiliates) shall
be as mutually agreed to between each Transferred Employee and Buyer (or Buyer's
Affiliate, as the case may be), subject to the provisions of this Section 7.1.
Between the date of this Agreement and the Closing Date, Seller will provide
each Transferred Employee with the same level of compensation as that currently
provided by Seller. Buyer shall have no obligation with respect to payments of
salary, compensation, wages, health or similar benefits, commissions, bonuses
(deferred or otherwise), severance, stock or stock options or any other sums due
to any Transferred Employee that accrued before the Closing Date. Seller will
be fully responsible for all amounts payable to any employee, including (without
limitation) all termination payments, redundancy compensation, severance pay,
accrued vacation pay and other amounts payable in respect of the termination of
employment of any employee in connection with the sale of the Purchased Assets
to the Buyer. In addition, Seller will be fully responsible for all amounts
owing to Transferred Employees prior to Closing.
30
(c) Retention of Employees Prior to Closing. Seller agrees to use
---------------------------------------
reasonable efforts to retain the Employees as employees of the Business until
the Closing Date, and to assist Buyer in securing the employment after the
Closing Date of those Employees to whom Buyer (or designated by Buyer) makes or
intends to make offers of employment under subsection (a) above. Seller shall
not transfer any Employee to employment with Seller outside of the Business
prior to the Closing or without the consent of Buyer. Seller shall notify Buyer
promptly if, notwithstanding the foregoing, any Employee terminates employment
with Seller after the date of this Agreement but prior to the Closing. Buyer
may request Seller to hire additional employees for the Business, in which case
Seller will use commercial reasonable efforts to identify and hire such
employees.
(d) Bonus. Buyer will pay to the Key Employees, including Xxxxxx
-----
Xxxxx, an aggregate of the lesser of $150,000 or 50% of revenue net of expenses
received by Buyer as of the one year anniversary of the Closing Date that are a
direct result of Seller's Hynet Directive product (the "One Year Bonus"), so
--------------
long as such Key Employee and Xx. Xxxxx remain employed by Buyer one year after
the Closing Date. The One Year Bonus will be distributed among the Key
Employees as determined by Xx. Xxxxx, subject to the reasonable consent of
Buyer.
7.2 Compensation and Benefits of Transferred Employees. Coverage for
--------------------------------------------------
Transferred Employees under Buyer's compensation and benefit plans and other
programs shall commence as of 12:01 a.m. on the day after the Closing Date.
Buyer shall be free to establish its own employee benefit plans; Buyer shall
have no obligation to offer benefit plans of the same type or with terms similar
to or better than the terms of Seller's current employee benefit plans. Buyer
may, at its option, give each Transferred Employee credit for such Transferred
Employee's years of most recent continuous service with Seller for purposes of
determining participation and benefit levels under all of Buyer's vacation
policies and benefit plans and programs.
7.3 Other Employees of the Business. With respect to each employee of the
-------------------------------
Business as of the Closing Date who is not a Transferred Employee (each a "Non-
---
Transferred Employee"), Seller agrees to either terminate such Non-Transferred
--------------------
Employee's employment with Seller, effective prior to the Closing or offer such
Non-Transferred Employee continued employment with Seller other than in the
Business. Seller further acknowledges that the Non-Transferred Employees shall
not be employees of Buyer after the Closing.
7.4 No Right to Continued Employment or Benefits. No provision in this
--------------------------------------------
Agreement shall create any third party beneficiary or other right in any Person
(including any beneficiary or dependent thereof) for any reason, including,
without limitation, in respect of continued, resumed or new employment with
Seller or Buyer (or any Affiliate of Seller or Buyer) or in respect of any
benefits that may be provided, directly or indirectly, under any plan or
arrangement maintained by Seller, Buyer or any Affiliate of Seller or Buyer.
Except as otherwise expressly provided in this Agreement, Buyer is under no
obligation to hire any employee of Seller, provide any employee with any
particular benefits, or make any payments or provide any benefits to those
employees of Seller whom Buyer chooses not to employ.
31
7.5 No Solicitation or Hire by Seller. For a period of one year after
---------------------------------
the Closing, Seller will not solicit any Transferred Employee for employment.
For purposes of this Section 7.5, the term "solicit" shall not include the
following activities by Seller: (i) advertising for employment in any bulletin
board (including electronic bulletin boards), newspaper, trade journal or other
publication available for general distribution to the public without specific
reference to any particular employees; (ii) participation in any hiring fair or
similar event open to the public not targeted at Buyer's employees; and (iii)
use of recruiting or employee search firms that have been instructed by Seller
not to target any Transferred Employee.
8. Conditions to Buyer's Obligations
---------------------------------
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived by Buyer in writing, except as
otherwise provided by law:
8.1 Representations and Warranties True; Performance; Certificate.
-------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
(b) Seller shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date;
(c) The conditions set forth in this Section 8 have been fulfilled or
satisfied, unless otherwise waived in writing by Buyer; and
(d) Buyer shall have received a certificate, dated as of the Closing
Date, signed and verified by an officer of Seller on behalf of Seller certifying
to the matters set forth in Sections 8.1(a) and 8.1(b) above.
8.2 Deliverables and Consents. At the Closing, Seller shall deliver (i)
--------
all Governmental Authorizations, Discharges, Required Consents and consents
required to transfer the Contracts to Buyer on the terms and conditions provided
to Seller, without change as a result of the transfer to Buyer, (ii) the Maui
Discharge, Commerce One Agreement, Termination of Plans and Options and
Termination of Director, and (iii) the Settlement Agreement between Seller and
the shareholders of Seller owned, beneficially owned, controlled, under common
control, managed or affiliated with Xxxxxxxxx Xxx.
8.3 No Proceedings or Litigation.
----------------------------
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
32
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have a Material Adverse Effect on the Business or the
Purchased Assets.
8.4 Documents. This Agreement, the exhibits and schedules attached
---------
hereto, and any other instruments of conveyance and transfer and all other
documents to be delivered by Seller at the Closing and all actions of Seller
required by this Agreement and the exhibit agreements, or incidental thereto,
and all related matters, shall be in form and substance reasonably satisfactory
to Buyer and Buyer's counsel and shall be in full force and effect.
8.5 Governmental Filings. The parties shall have made any required filing
--------------------
with Governmental Entities in connection with this Agreement and the exhibit
agreements, and any approvals related thereto shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Buyer shall not be required to consummate the transactions contemplated by this
Agreement until such decision is reached or rendered, notwithstanding Buyer's
legal ability to consummate the transactions contemplated by this Agreement
prior to such decision being reached or rendered.
8.6 No Material Adverse Change. There shall have been no material adverse
--------------------------
change in the financial condition or results of operations of the Business on
the Closing Date as compared with the date of this Agreement.
8.7 Termination of Benefit Plans. Seller shall have provided Buyer with
----------------------------
evidence, reasonably satisfactory to Buyer as to the termination of all benefit
plans and payments owing by Seller relating to all Employees and the termination
of all Non-Transferred Employees' benefit plans.
8.8 Legal Opinions. Buyer shall have received a legal opinion from legal
--------------
counsel to Seller, dated the Closing Date, in a form satisfactory to Buyer.
8.9 Shareholder Approval. This Agreement and the transactions it
--------------------
contemplates shall have been approved and adopted by such vote of the holders of
the outstanding shares of Seller's capital stock entitled to vote thereon as is
required to approve such transactions, including the unanimous consent of the
holders of Seller's common stock, and shall have otherwise been approved as
required by law and the charter documents of Seller.
8.10 Bulk Sales. The notice required by the California Uniform Commercial
----------
Code shall have been prepared and published in accordance with the terms
thereof, and any waiting periods or hearings shall have terminated with respect
thereto. No other waiting periods or notices shall be required in order for
Seller to be in compliance with such Section.
8.11 Other Conditions. Buyer and Xxxxxxxxx Xxxxx shall have entered to a
----------------
consulting agreement in the form attached hereto as Exhibit G, and Buyer and
Nai-Yu Pai shall have entered to a consulting agreement in the form attached
hereto as Exhibit H.
33
8.12 Non-Competition Agreements. Each of the persons listed on Schedule
--------------------------
8.12 shall have entered into a non-competition agreement, in the form attached
hereto as Exhibit I, which provides that such persons will not engage in any
activity which competes in any aspect of the business conducted by Buyer or
Seller for two (2) years following the Closing.
8.13 Key Employees. On or before the Closing, each of the Employees
-------------
listed on Schedule 8.13 (the "Key Employees") shall have accepted employment
-------------
with Buyer pursuant to Buyer's standard form of offer letter and Proprietary
Rights and Confidentiality Agreement.
8.14 Investor Representation Letter. In connection with the issuance of
------------------------------
the Shares, Seller shall have entered into an Investor Representation Letter in
the form reasonably acceptable to Buyer and Buyer's counsel.
9. Conditions to Seller's Obligations
----------------------------------
The obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in writing by Seller, except as
otherwise provided by law:
9.1 Representations and Warranties True; Performance.
------------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
(b) Buyer shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date;
(c) Seller shall have received a certificate, dated as of the Closing
Date, signed and verified by an officer of Buyer on behalf of Buyer certifying
to the matters set forth in Sections 9.1(a) and 9.1(b) above.
9.2 No Proceeding or Litigation.
---------------------------
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent the sale of the Purchased Assets or asserting that
the sale of the Assets would be illegal or create liability for damages.
9.3 Documents. This Agreement, any other instruments of conveyance and
---------
transfer and all other documents to be delivered by Buyer to Seller at the
Closing and all actions of Buyer
34
required by this Agreement or incidental thereto, and all related matters, shall
be in form and substance reasonably satisfactory to Seller and Seller's counsel.
9.4 Governmental Filings. The parties shall have made any filing required
--------------------
with Governmental Entities, and any approvals shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review
process by a Governmental Entity is pending in which a decision is expected,
Seller shall not be required to consummate the transactions contemplated by
this Agreement until such decision is reached or rendered, notwithstanding
Seller's legal ability to consummate the transactions contemplated by this
Agreement prior to such decision being reached or rendered.
35
10. Indemnification
---------------
10.1 Survival of Representations and Warranties. All covenants to be
------------------------------------------
performed prior to the Closing Date, and all representations and warranties in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the consummation of the transactions contemplated hereby and continue
until three (3) years after Closing Date (the "Termination Date"); provided that
---------------- --------
if any claims for indemnification have been asserted with respect to any such
representations, warranties and covenants prior to the Termination Date, the
representations, warranties and covenants on which any such claims are based
shall continue in effect until final resolution of any claims. Except as
otherwise provided herein, all covenants to be performed after the Closing Date
shall continue indefinitely. Notwithstanding the foregoing, all
representations, warranties and covenants in this Agreement relating to Taxes
shall continue until thirty (30) days after expiration of all applicable
statutes of limitations.
10.2 Indemnification. Subject to the limitations set forth in this
---------------
Section 10, from and after the Closing Date, Seller shall protect, defend,
indemnify and hold harmless Buyer and Buyer's Affiliates, officers, directors,
employees, representatives and agents (each of the foregoing Persons is
hereinafter referred to individually as an "Indemnified Person" and collectively
------------------
as "Indemnified Persons") from and against any and all losses, costs, damages,
-------------------
liabilities, fees (including without limitation attorneys' fees) and expenses
(collectively, the "Damages"), that any of the Indemnified Persons incurs or
-------
reasonably anticipates incurring by reason of or in connection with (i) any
claim, demand, action or cause of action alleging misrepresentation, breach of,
or default in connection with, any of the representations, warranties, covenants
or agreements of the Seller contained in this Agreement, including any exhibits
or schedules attached hereto, known to Acquiror prior to the Escrow Termination
Date, (ii) any liabilities or obligations not specifically assumed by Buyer,
(iii) any failure of Seller to perform any of its obligations under this
Agreement or any agreement contemplated by this Agreement, (iv) any
noncompliance with or claims relating to applicable bulk sales laws, (v) any
claims brought by employees or consultants of Seller who were terminated prior
to the Closing Date, and (vi) any reduction in the value of the current assets
since the date of this Agreement. Damages in each case shall be net of the
amount of any insurance proceeds and indemnity and contribution actually
recovered by Buyer.
10.3 Method of Asserting Claims. All claims for indemnification by the
--------------------------
Buyer or any other Indemnified Person pursuant to this Section 10 shall be made
in accordance with the provisions of this section.
(a) Whenever any claim shall arise for indemnification hereunder, the
Buyer party or parties entitled to indemnification (the "indemnified party")
-----------------
shall promptly notify Seller or parties obligated to provide indemnification
(the "indemnifying party") of the claim and, when known, the facts constituting
------------------
the basis for such claim; provided, however, that the failure to so notify the
-------- -------
indemnifying party shall not relieve the indemnifying party of its obligation
hereunder to the extent such failure does not materially prejudice the
indemnifying party. In the event of any claim for indemnification hereunder
resulting from, arising out of, or in connection with any claim or legal
proceedings by a third party, the notice to the indemnifying party shall
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom.
36
(b) In connection with any claim giving rise to indemnity hereunder
resulting from or arising out of any claim or legal proceeding by a person who
is not a party to this Agreement, the indemnifying party at its sole cost and
expense and with counsel reasonably satisfactory to the indemnified party may,
upon written notice to the indemnified party, assume the defense of any such
claim or legal proceeding if:
(i) the indemnifying party acknowledges to the indemnified party
in writing, within fifteen (15) calendar days after receipt of notice from the
indemnified party, its obligations to indemnify the indemnified party with
respect to all elements of such claim;
(ii) the indemnifying party provides the indemnified party with
evidence reasonably acceptable to the indemnified party that the indemnifying
party will have the financial resources to defend against such third-party claim
and fulfill its indemnification obligations hereunder;
(ii) the third-party claim involves only money damages and does
not seek an injunction or other equitable relief; and
(iii) settlement or an adverse judgment of the third-party claim
is not, in the good faith judgment of the indemnified party, likely to establish
a pattern or practice adverse to the continuing business interests of the
indemnified party.
The indemnified party shall be entitled to participate in (but not control)
the defense of any such action, with its counsel and at its own expense;
provided, however, that if there are one or more legal defenses available to the
-------- -------
indemnified party that conflict with those available to the indemnifying party,
or if the indemnifying party fails to take reasonable steps necessary to defend
diligently the claim after receiving notice from the indemnified party that it
believes the indemnifying party has failed to do so, the indemnified party may
assume the defense of such claim; provided, further, that the indemnified party
-------- -------
may not settle such claim without the prior written consent of the indemnifying
party, which consent may not be unreasonably withheld, delayed or conditioned.
If the indemnified party assumes the defense of the claim, the indemnifying
party shall reimburse the indemnified party on a monthly basis for the actual
fees and expenses of counsel retained by the indemnified party and the
indemnifying party shall be entitled to participate in (but not control) the
defense of such claim, with its counsel and at its own expense. If the
indemnifying party thereafter seeks to question the manner in which the
indemnified party defended such third party claim or the amount or nature of any
such settlement, the indemnifying party shall have the burden to prove by a
preponderance of the evidence that the indemnified party did not defend or
settle such third party claim in a reasonably prudent manner. The parties agree
to render, without compensation, to each other such assistance as they may
reasonably require of each other in order to ensure the proper and adequate
defense of any action, suit or proceeding, whether or not subject to
indemnification hereunder.
37
(c) Any amount of money owed by an indemnifying party to an
indemnified party hereunder shall be paid with interest, at an annual rate equal
to the Prime Rate then in effect (or, if less, the maximum rate permitted by
law), from the date that the loss or damage was sustained or cash disbursement
made by the indemnified party until such amount is paid by the indemnifying
party.
(d) All indemnification payments hereunder shall be effected by
payment of cash or delivery of a certified or official bank check in the amount
of the indemnification liability. Each indemnified party shall be obligated in
connection with any claim for indemnification under this Section 10 to use
commercially reasonable efforts to mitigate damages upon and after becoming
aware of any event which could reasonably be expected to give rise to such
damages. Subject to the rights of the existing insurers of an indemnified party,
an indemnifying party shall be subrogated to any right of action which the
indemnified party may have against any other Person with respect to any matter
given rise to a claim for indemnification from such indemnitor hereunder.
11. Termination.
-----------
11.1 Termination of Agreement. This Agreement may be terminated at any
------------------------
time prior to the Closing:
(a) By mutual written consent of Buyer and Seller;
(b) By either party, if the other party goes into liquidation, has an
application or order made for its winding up or dissolution, has a resolution
passed or steps taken to pass a resolution for its winding up or dissolution,
becomes unable to pay its debts as and when they fall due, or has a receiver,
receiver and manager, administrator, liquidator, provisional liquidator,
official manager or administrator appointed to it or any of its assets; or
(c) By Buyer or Seller if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or
(d) By either party if the Closing does not occur by April 25, 2000.
11.2 Procedure and Effect of Termination. In the event of termination of
-----------------------------------
this Agreement by any or all of the parties pursuant to Section 11.1, written
notice shall be given to each other party specifying the provision of Section
11.1, pursuant to which such termination is made and shall become void and there
shall be no liability on the part of Buyer or Seller (or their respective
officers, directors, partners or Affiliates), except as a result of any breach
of this Agreement by such party or to the extent such a party is entitled to
indemnification under Section 10 of this Agreement.
12. Miscellaneous.
-------------
12.1 Amendments and Waivers. Any term of this Agreement may be amended or
----------------------
waived with the written consent of the parties or their respective successors
and assigns. Any
38
amendment or waiver effected in accordance with this Section 12.1 shall be
binding upon the parties and their respective successors and assigns.
12.2 Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
12.3 Governing Law. This Agreement and all acts and transactions pursuant
-------------
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
California.
12.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
12.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
12.6 Notices. Any notice required or permitted by this Agreement shall be
-------
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice:
If to Buyer: @Road, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: X.X. Xxx
Fax: (000) 000-0000
If to Seller: Hynet Technologies
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
-----
Attention: Xxxxxx Xxxxx
Fax: (000) 000-0000
--------
12.7 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
39
12.8 Entire Agreement. This Agreement and the documents referred to
----------------
herein are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein. Any and all other written
or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
12.9 Advice of Legal Counsel. Each party acknowledges and represents
-----------------------
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the person signing on its behalf
has read and understood all of the terms and provisions of this Agreement. This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.
12.10 Arbitration.
-----------
(a) Any controversy, dispute or claim arising under this Agreement
shall be settled by arbitration before a panel of three arbitrators conducted in
Santa Xxxxx County, California in accordance with the then existing Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon any
award rendered by the arbitrator may be entered by any federal or state court
having jurisdiction thereof. The parties expressly provide that the provisions
of Section 1283.05 of the California Code of Civil Procedure are incorporated
into, and made a part of, this Section 12.10. The decision of the arbitrator
shall be final and binding upon the parties. The arbitrator shall be authorized
to award any relief, whether legal or equitable, to the party so entitled to
such relief. In respect of any action, suit or other proceeding relating to the
enforcement of the award rendered by the arbitrator pursuant to this Section
12.10, each party hereby irrevocably submits to the non-exclusive jurisdiction
of any state or federal court located in the Santa Xxxxx County, State of
California. EACH PARTY HEREBY WAIVES ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS, TO ASSERT THAT IT IS NOT SUBJECT TO THE
----------
JURISDICTION OF THE AFORESAID COURTS, OR TO OBJECT TO VENUE TO THE EXTENT THAT
ANY ACTION, SUIT OR OTHER PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
12.10.
[SIGNATURE PAGE FOLLOWS]
40
This Agreement has been duly executed and delivered by the duly authorized
officers of Seller and Buyer as of the date first above written.
@ROAD, INC.
By: /s/ Xxxxx Xxxx
----------------
Name: Xxxxx Xxxx
-------------
Title: Chairman and CEO
------------------
HYNET TECHNOLOGIES
By: /s/ Xxxxxx Xxxxx
-----------------------
Name: Xxxxxx Xxxxx
---------------------
Title: President and CEO
-------------------
EXECUTING AS TO SECTION
2.3(c): MAUI INVESTMENT HOLDING CO.
By: /s/ Nai-Yu Pai
------------------------
Name: Nai-Yu Pai
----------------------
Title: Executive Director
--------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
41
SCHEDULE 8.12
EMPLOYEES EXECUTING NONCOMPETITION AGREEMENTS
---------------------------------------------
Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx
[any additional employee shareholders as of the Closing Date]
42
SCHEDULE 8.13
KEY EMPLOYEES
-------------
Xxxxxx Xxxxx
Xxxxx Xxxx
Xxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxxxxxxx Maniraju
Xxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxx
Xxxxx Xxxx
Xxxxxxxxx Mangalore
Xxxxx Xxxx
Xxxxxxxxx Xxxxxx
Xxxx Xxxx
43
LIST OF EXHIBITS
44
