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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CLICKOVER, INC.,
FOCALINK ACQUISITION CORPORATION,
FOCALINK COMMUNICATIONS, INC.,
CUPERTINO NATIONAL BANK & TRUST,
XXXXXXXX VII
AND
XXXXXXXX ASSOCIATES FUND II
Dated as of November 22, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER........................................................................... 1
1.1 The Merger........................................................................... 1
1.2 Effective Time....................................................................... 2
1.3 Effect of the Merger................................................................. 2
1.4 Articles of Incorporation; Bylaws.................................................... 2
1.5 Directors and Officers............................................................... 2
1.6 Consideration to Be Issued; Effect on Capital Stock.................................. 2
1.7 Surrender of Certificates and Notes.................................................. 6
1.8 Certificate of Focalink Securityholder Agent; Release................................ 8
1.9 No Further Rights in Focalink Capital Stock or Focalink Debt......................... 9
1.10 Waiver of Right to Receive ClickOver Capital Stock................................... 9
1.11 Lost, Stolen or Destroyed Focalink Certificates...................................... 9
1.12 Tax Consequences..................................................................... 9
1.13 Taking of Necessary Action; Further Action........................................... 10
1.14 Definition of Knowledge.............................................................. 10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF FOCALINK........................................... 10
2.1 Organization of Focalink............................................................. 10
2.2 Focalink Capital Structure........................................................... 10
2.3 Subsidiaries......................................................................... 11
2.4 Authority............................................................................ 11
2.5 Focalink Financial Statements........................................................ 12
2.6 No Undisclosed Liabilities........................................................... 12
2.7 No Changes........................................................................... 13
2.8 Tax and Other Returns and Reports.................................................... 14
2.9 Restrictions on Business Activities.................................................. 16
2.10 Title to Properties; Absence of Liens and Encumbrances............................... 16
2.11 Intellectual Property................................................................ 16
2.12 Agreements, Contracts and Commitments................................................ 18
2.13 Interested Party Transactions........................................................ 19
2.14 Compliance with Laws................................................................. 19
2.15 Litigation........................................................................... 19
2.16 Insurance............................................................................ 20
2.17 Minute Books......................................................................... 20
2.18 Relationships With Suppliers and Licensors........................................... 20
2.19 Trade Secrets........................................................................ 20
2.20 Environmental Matters................................................................ 20
2.21 Brokers' and Finders' Fees: Third Party Expenses..................................... 22
2.22 Permits and Licenses................................................................. 22
2.23 Employee Matters and Benefit Plans................................................... 22
2.24 Employees............................................................................ 25
2.25 Representation Complete.............................................................. 25
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF CLICKOVER AND
MERGER SUB........................................................................... 26
3.1 Organization, Standing and Power..................................................... 26
3.2 Capital Structure.................................................................... 26
3.3 Subsidiaries......................................................................... 27
3.4 Authority............................................................................ 27
3.5 ClickOver Financial Statements....................................................... 28
3.6 No Undisclosed Liabilities........................................................... 28
3.7 No Changes........................................................................... 28
3.8 Tax and Other Returns and Reports.................................................... 30
3.9 Restrictions on Business Activities.................................................. 31
3.10 Title to Properties; Absence of Liens and Encumbrances............................... 32
3.11 Intellectual Property................................................................ 32
3.12 Agreements, Contracts and Commitments................................................ 33
3.13 Interested Party Transactions........................................................ 35
3.14 Compliance with Laws................................................................. 35
3.15 Litigation........................................................................... 35
3.16 Insurance............................................................................ 35
3.17 Minute Books......................................................................... 36
3.18 Relationships With Suppliers and Licensors........................................... 36
3.19 Trade Secrets........................................................................ 36
3.20 Environmental Matters................................................................ 36
3.21 Brokers' and Finders' Fees: Third Party Expenses..................................... 37
3.22 Permits and Licenses................................................................. 37
3.23 Employee Matters and Benefit Plans................................................... 37
3.24 Employees............................................................................ 40
3.25 Representation Complete.............................................................. 40
ARTICLE IV CONDUCT BY FOCALINK PRIOR TO THE EFFECTIVE TIME...................................... 41
4.1 Conduct of Business of Focalink...................................................... 41
4.2 No Solicitation...................................................................... 43
ARTICLE V ADDITIONAL AGREEMENTS................................................................ 44
5.1 Sale of Shares; Shareholder Matters.................................................. 44
5.2 Access to Information................................................................ 46
5.3 Confidentiality...................................................................... 46
5.4 Intellectual Property................................................................ 46
5.5 Expenses............................................................................. 46
5.6 Public Disclosure.................................................................... 47
5.7 Consents............................................................................. 47
5.8 FIRPTA Compliance.................................................................... 47
5.9 Reasonable Efforts................................................................... 47
5.10 Notification of Certain Matters...................................................... 47
5.11 Certain Benefit Plans................................................................ 48
5.12 Voting Agreement..................................................................... 48
5.13 Additional Documents and Further Assurances.......................................... 48
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5.14 ClickOver Board of Directors......................................................... 48
5.15 Future Amendment to ClickOver Articles............................................... 48
ARTICLE VI CONDITIONS TO THE MERGER............................................................. 48
6.1 Conditions to Obligations of Each Party to Effect the Merger......................... 48
6.2 Additional Conditions to Obligations of Focalink..................................... 49
6.3 Additional Conditions to Obligations of ClickOver.................................... 50
ARTICLE VII ESCROW.................................................................................... 52
7.1 Escrow Period........................................................................ 52
7.2 Escrow Arrangements.................................................................. 52
ARTICLE VIII LIABILITY OF CLICKOVER................................................................... 59
8.1 Claims Against ClickOver............................................................. 59
8.2 Resolution of Conflicts; Arbitration................................................. 60
8.3 Limitation of Liability.............................................................. 60
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.......................................................... 61
9.1 Termination.......................................................................... 61
9.2 Effect of Termination................................................................ 62
9.3 Amendment............................................................................ 62
9.4 Extension; Waiver.................................................................... 62
ARTICLE X GENERAL PROVISIONS.......................................................................... 62
10.1 Survival of Representations, Warranties and Agreements............................... 62
10.2 Notices.............................................................................. 63
10.3 Interpretation....................................................................... 64
10.4 Counterparts......................................................................... 64
10.5 Entire Agreement: Assignment......................................................... 64
10.6 Severability......................................................................... 65
10.7 Other Remedies....................................................................... 65
10.8 Governing Law........................................................................ 65
10.9 Rules of Construction................................................................ 65
10.10 Dispute Resolution................................................................... 65
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INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
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Exhibit A Form of Amended and Restated Articles of Incorporation
Exhibit B Addresses of holders of Focalink Capital Stock
Exhibit C Form of Shareholder Questionnaire and Release
Exhibit D Form of Shareholder Voting Agreement
Exhibit E Form of Legal Opinion of Counsel to ClickOver
Exhibit F Form of Amendment No. 1 to Investor Rights Agreement
Exhibit G Form of Legal Opinion of Counsel to Focalink
Exhibit H Form of Right of First Refusal Agreement
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INDEX OF FOCALINK SCHEDULES
SCHEDULE DESCRIPTION
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1.6(c) List of Warrantholders
1.6(e) List of Debtors
1.14(a) Directors, Officers and Employees with Knowledge
2.2(a) List of Shareholders
2.2(b) List of Option/Warrantholders
2.4 Authority
2.5 Focalink Financials
2.6 No Undisclosed Liabilities
2.7 No Changes
2.8 Tax and Other Returns and Reports
2.10(a) Title to Properties
2.10(b) Absence of Liens and Encumbrances
2.11 Intellectual Property
2.11(c) Proceedings Related to Intellectual Property
2.12(a) Agreements, Contracts and Commitments
2.12(b) Breaches and Defaults
2.13 Interested Party Transactions
2.15 Litigation
2.16 Insurance
2.19 Trade Secrets
2.20 Environmental Matters
2.21 Brokers and Finders Fees: Third-Party Expenses
2.22 Permits and Licenses
2.23(b) Benefit Plans
2.23(d) Employee Plan Compliance
2.23(g) No Post Employment Obligations
2.23(h)(i)&(ii) Effect of Transaction
2.23(j) Labor
4.1(m) Severance Agreements
5.12 Shareholders Signing Voting Agreements
6.2(c) Third Party Consents Required of Focalink
6.3(j) Focalink Debt
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INDEX OF CLICKOVER SCHEDULES
SCHEDULE DESCRIPTION
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1.14(b) Directors, Officers and Employees with Knowledge
3.2(a) Shareholder List
3.2(b) Option and Warrant Holder List
3.4 Authority
3.5 ClickOver Financials
3.6 Undisclosed Liabilities
3.7 No Changes
3.8 Tax Returns and Audits
3.9 Restrictions on Business Activities
3.10(a) Leased Real Property
3.10(b) Liens on Property
3.11 Intellectual Property
3.12(a) Agreements, Contracts and Commitments
3.12(b) Alleged Breach of Contracts
3.13 Interested Party Transactions
3.15 Litigation
3.16 Insurance
3.19 Exceptions to Trade Secrets
3.21 Brokers and Finders Fees: Third-Party Expenses
3.22 Permits and Licenses
3.23(b) Employee Plan and Employee Agreements
3.23(d) Employee Plan Compliance
3.23(g) Post Employment Obligations
3.23(h)(i) Effect of Transaction
3.23(h)(ii) Excess Parachute Payments
3.23(j) Labor
6.3(c) Third Party Consents Required of ClickOver
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of November 22, 1997 by and among ClickOver Inc., a California
corporation ("ClickOver"), Focalink Acquisition Corporation, a California
corporation and a wholly-owned subsidiary of ClickOver ("Merger Sub"), Focalink
Communications, Inc., a California corporation ("Focalink"), Cupertino National
Bank & Trust ("Cupertino"), Xxxxxxxx VII and Xxxxxxxx Associates Fund II
(together with Xxxxxxxx VII, "Xxxxxxxx").
RECITALS
A. The Boards of Directors of each of Focalink, ClickOver and Merger
Sub believe it is in the best interests of each company and their respective
shareholders that ClickOver acquire Focalink through the statutory merger of
Merger Sub with and into Focalink (the "Merger"), and in furtherance thereof,
have approved the Merger.
B. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, all of the issued and outstanding shares of
capital stock of Focalink ("Focalink Capital Stock") and all of the debt of
Focalink outstanding immediately prior to the Effective Time not expressly
assumed by ClickOver shall be converted into shares of capital stock of
ClickOver ("ClickOver Capital Stock"), all outstanding options to purchase
Focalink Capital Stock shall be cancelled and all outstanding warrants to
acquire shares of Focalink Capital Stock shall be converted into warrants to
acquire shares of ClickOver Capital Stock.
C. A portion of the shares of ClickOver Capital Stock otherwise
issuable by ClickOver in connection with the Merger shall be placed in escrow by
ClickOver, the release of which amount shall be contingent upon certain events
and conditions, all as set forth in Article VII hereof.
D. ClickOver and Focalink desire to make certain representations and
warranties and other agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Corporations Code of California ("California Law"),
Merger Sub shall be merged with and
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into Focalink, the separate corporate existence of Merger Sub shall cease, and
Focalink shall continue as the surviving corporation and as a wholly-owned
subsidiary of ClickOver. Focalink as the surviving corporation after the Merger
is hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Effective Time. Unless this Agreement is earlier terminated
pursuant to Section 9.1, the closing of the Merger (the "Closing") will take
place as promptly as practicable, but no later than five (5) business days,
following satisfaction or waiver of the conditions set forth in Article VI, at
the offices of Xxxxxxx, Phleger & Xxxxxxxx LLP, 0000 Xxxx Xxxx, Xxxx Xxxx, XX
00000, unless another place or time is agreed to by ClickOver and Focalink. The
date upon which the Closing actually occurs is herein referred to as the
"Closing Date." On the Closing Date, the parties hereto shall cause the Merger
to be consummated by filing an Agreement or Certificate of Merger (or like
instrument) with the Secretary of State of the State of California (the "Merger
Agreement"), in accordance with the relevant provisions of applicable law (the
time of confirmation by the Secretary of State of the State of California of
such filing being referred to herein as the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of California Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
Merger Sub and Focalink shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Merger Sub and Focalink shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) Unless otherwise determined by mutual agreement of
ClickOver and Focalink prior to the Effective Time, the Articles of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Articles of Incorporation.
(b) Unless otherwise determined by mutual agreement of
ClickOver and Focalink prior to the Effective Time, the Bylaws of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended.
1.5 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation. The officers of Merger
Sub immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office in accordance with the Bylaws of the
Surviving Corporation.
1.6 Consideration to Be Issued; Effect on Capital Stock. The
consideration to be issued by ClickOver in the Merger shall be the number of
shares of ClickOver Capital Stock
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and the warrants to acquire shares of ClickOver Capital Stock as set forth in
this Section 1.6 (the "Consideration"), all of which shall be delivered to the
holders of Focalink Capital Stock as described in Section 1.7 below. No
adjustment shall be made to the Consideration issued in the Merger as a result
of any cash proceeds received by Focalink from the date hereof to the Effective
Time pursuant to the exercise of options, warrants or other rights to acquire
Focalink Capital Stock. Subject to the terms and conditions of this Agreement,
as of the Effective Time, by virtue of the Merger and without any action on the
part of Focalink or the holder of any shares of Focalink Capital Stock (the
"Focalink Shareholders"), the following shall occur:
(a) Focalink Capital Stock. At the Effective Time, each share
of Focalink Capital Stock issued and outstanding immediately prior to the
Effective Time shall be canceled and extinguished and be converted automatically
into a right to receive shares of ClickOver Capital Stock. Except for the shares
of ClickOver Capital Stock contributed to the Escrow Fund (as defined in Section
7.2(a)) on behalf of the Participating Shareholders (as defined below), at the
Effective Time each holder of Focalink Capital Stock shall be entitled to
receive the number of shares of ClickOver Capital Stock as described below:
(i) Common Stock. Each share of Focalink Common
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for that number of validly issued, fully paid and
nonassessable shares of ClickOver Common Stock equal to the Exchange Ratio. Each
stock certificate of Focalink evidencing ownership of any such shares of
Focalink Common Stock shall, as of the Effective Time, evidence ownership of
such shares of ClickOver Common Stock, provided, however, that if any holder of
Focalink Common Stock does not have a fully vested interest in such shares of
Focalink Common Stock, then the shares of Clickover Common Stock issuable to the
respective holder shall be subject to the same vesting schedule so that the
number of shares of Common Stock of ClickOver vest in the same proportion as the
number of shares of Focalink which would have vested multiplied by the Exchange
Ratio.
(ii) Preferred Stock. Each share of Focalink Series A
Preferred Stock, Series B Preferred Stock and Series A-1 Preferred Stock issued
and outstanding immediately prior to the Effective Time shall be converted into
and exchanged for that number of validly issued, fully paid and nonassessable
shares of ClickOver Series C-1 Preferred Stock, Series C-2 Preferred Stock and
Series C-3 Preferred Stock, respectively, equal to the Exchange Ratio. Each
stock certificate of Focalink evidencing ownership of any such shares of
Focalink Series A Preferred Stock, Series B Preferred Stock and Series A-1
Preferred Stock shall, as of the Effective Time, evidence ownership of such
shares of ClickOver Series C-1 Preferred Stock, Series C-2 Preferred Stock and
Series C-3 Preferred Stock, respectively. The rights, privileges and preferences
of the ClickOver Series C-1 Preferred Stock, Series C-2 Preferred Stock and
Series C-3 Preferred Stock will be as stated in ClickOver's Amended and Restated
Articles of Incorporation substantially in the form attached hereto as Exhibit A
which shall be filed with the Secretary of State of the State of California
prior to the Closing with any modifications to the amount of the preferences of
the ClickOver Series C-1 Preferred Stock, Series C-2 Preferred Stock and Series
C-3 Preferred
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Stock approved by both the Board of Directors of Focalink and the Board of
Directors of ClickOver (the "Filed Articles").
(b) Focalink Debt. At the Effective Time, all Focalink Debt
(as defined below) outstanding immediately prior to the Effective Time shall be
converted into and exchanged for that number of validly issued, fully paid and
nonassessable shares of ClickOver Series C-3 Preferred Stock equal to the
Exchange Ratio multiplied by the quotient obtained by dividing the total amount
of such Focalink Debt by the Effective Issue Price (as defined below). All of
the promissory notes or similar instruments held by Cupertino and Xxxxxxxx
evidencing the Focalink Debt shall, as of the Effective Time, evidence ownership
of such shares of ClickOver Series C-3 Preferred Stock. The rights, privileges
and preferences of the ClickOver Series C-3 Preferred Stock will be as stated in
the Filed Articles.
(c) Warrants. At the Effective Time, the warrants to purchase
shares of Focalink Capital Stock listed on Schedule 1.6(c) then outstanding
(each a "Focalink Warrant") shall be assumed by ClickOver in accordance with the
provisions described below:
(i) At the Effective Time, each Focalink Warrant
shall be, in connection with the Merger, assumed by ClickOver. Each Focalink
Warrant so assumed by ClickOver under this Agreement shall continue to have, and
be subject to, the same terms and conditions set forth in the respective
agreement governing such Focalink Warrant immediately prior to the Effective
Time, except that (A) each such Focalink Warrant to purchase Focalink Series A
Preferred Stock shall be exercisable for that number of whole shares of
ClickOver Series C-1 Preferred Stock equal to the product of the number of
shares of Focalink Series A Preferred Stock that were issuable upon exercise of
such Focalink Warrant immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded to the nearest whole number of shares of ClickOver
Series C-1 Preferred Stock, with one-half share being rounded up, at that
exercise price per share equal to the quotient determined by dividing the
exercise price per share at which such Focalink Warrant was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded to the
nearest whole cent, with one-half cent being rounded up, (B) each such Focalink
Warrant to purchase Focalink Series B Preferred Stock shall be exercisable for
that number of whole shares of ClickOver Series C-2 Preferred Stock equal to the
product of the number of shares of Focalink Series B Preferred Stock that were
issuable upon exercise of such Focalink Warrant immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded to the nearest whole
number of shares of ClickOver Series C-2 Preferred Stock, with one-half share
being rounded up, at that exercise price per share equal to the quotient
determined by dividing the exercise price per share at which such Focalink
Warrant was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded to the nearest whole cent, with one-half cent being rounded up,
and (C) each such Focalink Warrant to purchase Focalink Series A-1 Preferred
Stock shall be exercisable for that number of whole shares of ClickOver Series
C-3 Preferred Stock equal to the product of the number of shares of Focalink
Series A-1 Preferred Stock that were issuable upon exercise of such Focalink
Warrant immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded to the nearest whole number of shares of ClickOver Series C-3
Preferred Stock, with one-half share being rounded up, at that exercise price
per share equal to the quotient determined by dividing the exercise price per
share at which such Focalink
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Warrant was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded to the nearest whole cent, with one-half cent being rounded up.
(ii) Promptly following the Effective Time, ClickOver
will issue to each holder of an outstanding Focalink Warrant a document
evidencing the foregoing assumption of such Focalink Warrant by ClickOver.
(d) Fractional Shares. No fraction of a share of ClickOver
Capital Stock will be issued in the Merger, but in lieu thereof, each holder of
shares of Focalink Capital Stock or Focalink Debt who would otherwise be
entitled to a fraction of a share of ClickOver Common Stock, Series C-1
Preferred Stock, Series C-2 Preferred Stock or Series C-3 Preferred Stock (after
aggregating all the fractional shares of ClickOver Common Stock, Series C-1
Preferred Stock, Series C-2 Preferred Stock or Series C-3 Preferred Stock by
class and series of such shares to be received by such holder) shall be entitled
to receive, without any interest, from ClickOver an amount of cash (rounded to
the nearest whole cent) equal to the product of (i) such fraction, multiplied by
(ii) the value of one share of ClickOver Common Stock, Series C-1 Preferred
Stock, Series C-2 Preferred Stock or Series C-3 Preferred Stock, as the case may
be. For purposes of this Section only, the value of each share of ClickOver
Common Stock shall be equal to ten percent (10%) of the Series C-3 Liquidation
Price (as defined in the Filed Articles), the value of each share of ClickOver
Series C-1 Preferred Stock shall be equal to the Series C-1 Liquidation Price
(as defined in the Filed Articles), the value of each share of ClickOver Series
C-2 Preferred Stock shall be equal to the Series C-2 Liquidation Price (as
defined in the Filed Articles) and the value of each share of ClickOver Series
C-3 Preferred Stock shall be equal to the Series C-3 Liquidation Price (as
defined in the Filed Articles).
(e) Assumption of Debt. At the Effective Time, ClickOver shall
assume those debts and liabilities, and only those debts and liabilities, of
Focalink listed on Schedule 1.6(e) (the "Assumed Debt").
(f) Stock Options. No options to purchase shares of Focalink
Capital Stock, whether outstanding under Focalink's 1995 Stock Plan (the
"Focalink Plan") or otherwise (each a "Focalink Option"), shall be assumed by
ClickOver in the Merger and all such Focalink Options shall be cancelled and
extinguished as of the Effective Time without any action on the part of
Focalink, ClickOver or any holder of a Focalink Option.
(g) Definitions.
(A) ClickOver Total Shares. The "ClickOver
Total Shares" shall mean that number of shares of Clickover Capital Stock that
are outstanding immediately prior to the Effective Time, plus that number of
shares of ClickOver Capital Stock issuable upon exercise of all options and
warrants to purchase ClickOver Capital Stock that are outstanding immediately
prior to the Effective Time.
(B) Focalink Total Shares. The "Focalink
Total Shares" shall mean that number of shares of Focalink Capital Stock that
are outstanding immediately prior
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to the Effective Time, plus that number of shares of Focalink Capital Stock
issuable upon exercise of all Focalink Options that are outstanding at the close
of business on the day immediately preceding the Closing Date, plus that number
of shares of Focalink Capital Stock issuable upon exercise of all Focalink
Warrants outstanding immediately prior to the Effective Time, plus that number
of shares of Focalink Capital Stock that would have been issued and outstanding
immediately prior to the Effective Time if all of the Focalink Debt had been
converted into Focalink Capital Stock at the Effective Issue Price immediately
prior to the Effective Time.
(C) Focalink Debt. The "Focalink Debt" shall
mean all of the outstanding principal plus all accrued but unpaid interest,
whether matured or unmatured, owing by Focalink to Cupertino and/or Xxxxxxxx
immediately prior to the Effective Time other than the Assumed Debt.
(D) Exchange Ratio. The "Exchange Ratio"
shall mean the quotient obtained by dividing (x) 0.25 times the ClickOver Total
Shares by (y) 0.75 times the Focalink Total Shares.
(E) Effective Issue Price. The "Effective
Issue Price" shall be the price per share at which shares of Focalink Capital
Stock would be issued to enable a holder of $2,000,000 of the Focalink Debt to
receive twenty-five percent (25%) of the total Focalink Capital Stock
outstanding immediately prior to the Effective Time (including in the
calculation of such Focalink Capital Stock all shares of Focalink Capital Stock
issuable upon exercise of all outstanding options and warrants to acquire
Focalink Capital Stock), if all of such Focalink Debt were converted into shares
of Focalink Capital Stock immediately prior to the Effective Time.
(F) Escrow Amount. The "Escrow Amount" shall
be that number of shares of ClickOver Common Stock equal to 0.20 times the total
number of shares of ClickOver Common Stock issued at the Closing to the
Participating Shareholders (as defined below) plus that number of shares of
Preferred Stock of ClickOver equal to 0.20 times the total number of shares of
Preferred Stock of ClickOver issued at the Closing to the Participating
Shareholders, excluding shares issuable upon exercise of Focalink Warrants
assumed by ClickOver.
(G) Participating Shareholders. The
"Participating Shareholders" shall be Xxxxxxxx and those shareholders of
Focalink Capital Stock who have consented to depositing their proportionate
share of the Escrow Amount into the Escrow Fund, provided, however, that
Cupertino shall not be obligated to deposit any shares of ClickOver Capital
Stock it receives in the Merger into the Escrow Fund.
1.7 Surrender of Certificates and Notes.
(a) ClickOver to Provide Capital Stock. Promptly after the
Effective Time, ClickOver shall make available the aggregate number of shares of
ClickOver Capital Stock issuable pursuant to Section 1.6 in exchange for
outstanding shares of Focalink Capital Stock
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and the Focalink Debt; provided that, on behalf of the Participating
Shareholders, ClickOver shall deposit into an escrow account a number of shares
of ClickOver Capital Stock equal to the Escrow Amount out of the aggregate
number of shares of ClickOver Capital Stock otherwise issuable to such
Participating Shareholders pursuant to Section 1.6.
(b) Exchange Procedures.
(i) Focalink Capital Stock. Prior to the Effective
Time, each Focalink Shareholder shall surrender to ClickOver, or to such other
agent or agents as may be appointed by ClickOver, all certificate(s)
representing shares of Focalink Capital Stock (the "Focalink Certificates") duly
completed and validly executed in accordance with the instructions thereto. Upon
surrender of all Focalink Certificates for cancellation the holder of each
Focalink Certificate shall be entitled to receive in exchange therefore
certificate(s) representing the number of whole shares of ClickOver Capital
Stock plus cash in lieu of fractional shares in accordance with Section 1.6,
less, in the case of each Participating Shareholder, the number of shares of
ClickOver Capital Stock to be deposited in the Escrow Fund on such Participating
Shareholder's behalf pursuant to Article VII. Subject to the provisions of
Section 1.7(b)(iii) below, as soon as practicable after the Effective Time
ClickOver shall cause to be mailed to each Focalink Shareholder to the
respective address listed on Exhibit B a certificate or certificates
representing the shares of ClickOver Capital Stock (the "ClickOver
Certificates") issuable to such Focalink Shareholder in the Merger; thereafter
the Focalink Certificates so surrendered shall be canceled.
(ii) Focalink Debt. Prior to or at the Effective
Time, Cupertino and Xxxxxxxx shall each surrender to ClickOver, or to such other
agent or agents as may be appointed by ClickOver, for cancellation any evidence
of the Focalink Debt (the "Focalink Notes") or shall execute an instrument of
cancellation in form and substance acceptable to ClickOver. In addition,
Cupertino and Xxxxxxxx shall each deliver to ClickOver a properly executed Form
UCC-2 termination statement and any other documents required to release any
security interest that Cupertino and/or Xxxxxxxx may have in any of the assets
of Focalink. Upon surrender of all Focalink Notes for cancellation, Cupertino
and Xxxxxxxx shall each be entitled to receive in exchange therefore
certificate(s) representing the number of whole shares of ClickOver Capital
Stock plus cash in lieu of fractional shares in accordance with Section 1.6,
less, in the case of Xxxxxxxx, the number of shares of ClickOver Capital Stock
to be deposited in the Escrow Fund on Xxxxxxxx'x behalf pursuant to Article VII.
Subject to the provisions of Section 1.7(b)(iii) below, as soon as practicable
after the Effective Time ClickOver shall cause to be mailed to Cupertino and
Xxxxxxxx to the respective address listed in Section 10.2 the ClickOver
Certificates issuable to them in the Merger in exchange for the cancellation of
the Focalink Debt; thereafter the Focalink Notes so surrendered shall be
canceled.
(iii) Deposit of Escrow Amount. As soon as
practicable after the Effective Time, and subject to and in accordance with the
provisions of Article VII hereof, ClickOver shall cause to be distributed to the
Escrow Agent (as defined in Article VII) a certificate or certificates
representing the number of shares of ClickOver Capital Stock equal to the Escrow
Amount, which certificate or certificates shall be registered in the name of the
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Escrow Agent. Such shares shall be beneficially owned by the Participating
Shareholders on whose behalf such shares were deposited in the Escrow Fund and
shall be available to compensate ClickOver as provided in Article VII.
(c) Distributions with Respect to Unexchanged Shares or Notes.
No dividends or other distributions with respect to ClickOver Capital Stock
declared or made after the Effective Time and with a record date after the
Effective Time will be paid to the holder of any unsurrendered Focalink
Certificate or Focalink Note with respect to the shares of ClickOver Capital
Stock represented thereby until the holder of record of such Focalink
Certificate or Focalink Note shall surrender such Focalink Certificate or
Focalink Note. Subject to applicable law, following surrender of any such
Focalink Certificate or Focalink Note, there shall be paid to the record holder
of the ClickOver Certificates representing whole shares of ClickOver Capital
Stock issued in exchange therefore, without interest, at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time theretofore payable with respect to such whole shares
of ClickOver Capital Stock.
(d) Transfers of Ownership. If any ClickOver Certificate is to
be issued in a name other than that in which the Focalink Certificate or
Focalink Note surrendered in exchange therefore is registered, it will be a
condition of the issuance thereof that the Focalink Certificate or Focalink Note
so surrendered will be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange will have paid to
ClickOver or any agent designated by it any transfer or other taxes required by
reason of the issuance of a ClickOver Certificate in any name other than that of
the registered holder of the Focalink Certificate or Focalink Note surrendered,
or established to the satisfaction of ClickOver or any agent designated by it
that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in
this Section 1.7, neither ClickOver nor any other party to this Agreement shall
be liable to a holder of shares of ClickOver Capital Stock or Focalink Capital
Stock or Focalink Note for any amount not distributed to such holder if such
holder fails to present his or her Focalink Certificate or Focalink Note to
ClickOver for exchange within two (2) years after the Effective Time.
1.8 Focalink Certificate; Release.
(a) Certificate. At or prior to the Closing, Focalink shall
deliver to ClickOver a certificate signed on behalf of Focalink by the chief
executive office and chief financial officer of Focalink (the "Focalink
Certificate") identifying each of the holders of Focalink Capital Stock,
Focalink Warrants and the Focalink Debt and the portion of the Consideration
that each such holder is entitled to receive pursuant to Section 1.6 above.
ClickOver shall be entitled to rely without investigation on the information set
forth in the Focalink Certificate in delivering the Consideration to the holders
of Focalink Capital Stock, Focalink Warrants and the Focalink Debt.
Notwithstanding anything to the contrary in this Agreement, ClickOver shall not
be obligated to deliver any portion of the Consideration to the holders of
Focalink Capital Stock, Focalink Warrants and/or the Focalink Debt unless and
until Focalink shall have delivered the Focalink Certificate to ClickOver.
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(b) Release. Focalink, for itself, and each of its officers,
directors, shareholders, partners, agents, administrators, representatives,
affiliates, predecessors in interest, successors and assigns, hereby
unconditionally and forever releases and discharges ClickOver, each of its
subsidiaries (including the Surviving Corporation), and each of their respective
officers, directors, stockholders, partners, agents, administrators,
representatives, affiliates, predecessors in interest, successors and assigns
(the "Released Parties") of and from any and all claims, causes of action,
liabilities, obligations, costs and expenses of every kind and nature
whatsoever, at law or in equity, whether contractual, common law, statutory,
federal, state or otherwise, known or unknown, suspected or unsuspected, direct
or derivative, which now exists or may exist at any time in the future based
upon or relating in any manner to the amount of the Consideration pursuant to
Section 1.6 or any dispute with respect to the interpretation of the manner in
which the Consideration is to be distributed pursuant to Section 1.7. This
release shall not apply to ClickOver's obligation to deliver the Consideration
to the holders of Focalink Capital Stock, Focalink Warrants and the Focalink
Debt in accordance with the information contained in the Focalink Certificate.
1.9 No Further Rights in Focalink Capital Stock or Focalink Debt. All
shares of ClickOver Capital Stock issued upon the surrender for exchange of
shares of Focalink Capital Stock and the Focalink Debt in accordance with the
terms hereof (including any cash paid in respect thereof) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Focalink Capital Stock and all rights associated with such Focalink Debt, and
there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Focalink Capital Stock or any amounts of
Focalink Debt which were outstanding immediately prior to the Effective Time.
1.10 Waiver of Right to Receive ClickOver Capital Stock. If Focalink
Certificates or Focalink Notes are presented to ClickOver for any reason within
two (2) years after the Effective Time, the Focalink Certificates and Focalink
Notes shall be canceled and exchanged as provided in this Article 1. Each holder
of a Focalink Certificate or a Focalink Note waives any right to have ClickOver,
and ClickOver shall have no obligation to, exchange any Focalink Certificate or
Focalink Note presented to ClickOver more than two (2) years after the Effective
Time.
1.11 Lost, Stolen or Destroyed Focalink Certificates. In the event any
Focalink Certificates shall have been lost, stolen or destroyed, ClickOver shall
issue in exchange for such lost, stolen or destroyed Focalink Certificates, upon
the making of an affidavit of that fact by the holder thereto, such shares of
ClickOver Capital Stock and cash for a fractional share, if any, as may be
required pursuant to Section 1.6; provided, however, that ClickOver may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Focalink Certificates to deliver a bond
in such sum as it may reasonably direct as indemnity against any claim that may
be made against ClickOver with respect to the Focalink Certificates alleged to
have been lost, stolen or destroyed.
1.12 Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code.
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1.13 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Merger Sub and Focalink, the officers and directors of
Merger Sub and Focalink are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
1.14 Definition of Knowledge. The term "Knowledge of Focalink" shall
mean the actual knowledge at or prior to the Closing and that knowledge which
they should, as reasonably prudent business persons, have acquired and
maintained, of those directors, officers and employees of Focalink set forth on
Schedule 1.14(a). The term "Knowledge of ClickOver" shall mean the actual
knowledge at or prior to the Closing and that knowledge which they should, as
reasonably prudent business persons, have acquired and maintained, of those
directors, officers and employees of ClickOver set forth on Schedule 1.14(b).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FOCALINK
Focalink hereby represents and warrants to ClickOver and Merger Sub,
subject to such exceptions as are specifically disclosed in the disclosure
letter (referencing the appropriate schedule or section number) supplied by
Focalink to ClickOver (the "Focalink Schedules") and dated as of the date
hereof, as follows:
2.1 Organization of Focalink. Focalink is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Focalink has the corporate power to own, operate and lease its properties and to
carry on its business as now being conducted. Focalink is duly qualified or
licensed to conduct its business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have, or would reasonably be expected to have, a material adverse effect on the
business, assets (including intangible assets), financial condition, results of
operations, liabilities or prospects of Focalink (hereinafter referred to as a
"Material Adverse Effect on Focalink"). Focalink has delivered a true and
correct copy of its Articles of Incorporation and Bylaws, each as amended to
date, to ClickOver.
2.2 Focalink Capital Structure.
(a) The authorized capital stock of Focalink consists of
11,400,000 shares of Common Stock, and 8,200,000 shares of Preferred Stock, of
which 2,500,000 shares are designated as Series A Preferred Stock, 2,700,000
shares are designated as Series B Preferred Stock and 3,000,000 shares are
designated as Series A-1 Preferred Stock. As of the date hereof, there are
1,472,699 shares of Common Stock outstanding, 2,500,000 shares of Series A
Preferred Stock outstanding, 2,656,250 shares of Series B Preferred Stock
outstanding and no shares of Series A-1 Preferred Stock outstanding. Focalink
Capital Stock is held of record
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by the persons, with the addresses of record and in the amounts set forth on
Schedule 2.2(a). All outstanding shares of Focalink Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights created by statute, the Articles of Incorporation or Bylaws of
Focalink or any agreement to which Focalink is a party or by which it is bound.
(b) Focalink has reserved 1,537,187 shares of Common Stock for
issuance to employees and consultants pursuant to the Focalink Plan, of which
922,836 shares are subject to outstanding, unexercised options, 570,599 shares
remain available for future grant and 43,752 shares have been issued pursuant to
the exercise of options issued under the Focalink Plan. Focalink has reserved
(i) no shares of Common Stock for issuance upon exercise of outstanding Focalink
Options granted outside the Focalink Plan and (ii) 773,453 shares of Focalink
Capital Stock for issuance upon exercise of the Focalink Warrants. Schedule
2.2(b) sets forth for each outstanding Focalink Option and Focalink Warrant, the
name of the holder of such Focalink Option or Focalink Warrant, the domicile
address of such holder, the number of shares of Focalink Capital Stock subject
to such Focalink Option or Focalink Warrant, the exercise price of such Focalink
Option and Focalink Warrant and the vesting schedule for such Focalink Option
and Focalink Warrant, including the extent vested to date and whether the
exercisability of such Focalink Option and Focalink Warrant will be accelerated
and become exercisable by reason of the transactions contemplated by this
Agreement. Except for the Focalink Options and Focalink Warrants described in
Schedule 2.2(b), there are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which Focalink is a party or by
which it is bound obligating Focalink to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock of Focalink or obligating Focalink to grant, extend,
accelerate the vesting of, change the price of, otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. The holders of
Focalink Options and Focalink Warrants have been or will be given, or shall have
properly waived, any required notice prior to the Merger, and all such rights
will be terminated at or prior to the Effective Time. As a result of the Merger,
ClickOver will be the record and sole beneficial owner of all capital stock of
Focalink and rights to acquire or receive such capital stock.
2.3 Subsidiaries. Focalink does not have and has never had any
subsidiaries or affiliated companies and does not otherwise own and has never
otherwise owned any shares of capital stock or any interest in, or control,
directly or indirectly, any other corporation, partnership, association, joint
venture or other business entity.
2.4 Authority. Subject only to the requisite approval of the Merger and
this Agreement by the Focalink Shareholders, Focalink has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The vote required of the Focalink Shareholders
to duly approve the Merger and this Agreement is (i) a majority of all issued
and outstanding Focalink Capital Stock, and (ii) greater than 50% of each class
of all issued and outstanding Focalink Capital Stock. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Focalink, subject only to the approval of the Merger and this Agreement by the
Focalink
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Shareholders. Focalink's Board of Directors has unanimously approved the Merger
and this Agreement. This Agreement has been duly executed and delivered by
Focalink and constitutes the valid and binding obligation of Focalink,
enforceable in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. Except as set forth on Schedule 2.4, subject
only to the approval of the Merger and this Agreement by Focalink's
shareholders, the execution and delivery of this Agreement by Focalink does not,
and, as of the Effective Time, the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the Articles
of Incorporation or Bylaws of Focalink or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Focalink or its properties or assets. No consent, waiver,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other federal, state,
country, local or foreign governmental authority, instrumentality, agency or
commission ("Governmental Entity") or any third party (so as not to trigger any
Conflict) is required by or with respect to Focalink in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Merger Agreement with the
California Secretary of State, (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws and (iii) such other consents,
waivers, authorizations, filings, approvals and registrations which are set
forth on Schedule 2.4.
2.5 Focalink Financial Statements.
(a) Schedule 2.5 sets forth (i) Focalink's audited balance
sheet as of December 31, 1996 (the "Focalink Balance Sheet"), and the related
audited statements of operations and cash flows for the twelve-month period then
ended, and (ii) Focalink's unaudited balance sheet as of October 31, 1997 and
the related unaudited statements of operations and cash flows for the ten-month
period then ended (collectively, the "Focalink Financials"). The Focalink
Financials are correct in all material respects and have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
basis consistent throughout the periods indicated and consistent with each
other. The Focalink Financials present fairly the financial condition and
operating results of Focalink as of the dates and during the periods indicated
therein, subject to normal year-end adjustments, which adjustments will not be
material in amount or significance.
2.6 No Undisclosed Liabilities. To the Knowledge of Focalink, except as
set forth in Schedule 2.6, Focalink does not have any liability, indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement of any type,
whether accrued, absolute, contingent, matured, unmatured or other (whether or
not required to be reflected in financial statements in
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accordance with GAAP), which individually or in the aggregate, has not been
reflected in the Focalink Financials.
2.7 No Changes. Except as set forth in Schedule 2.7, since the date of
the Focalink Balance Sheet, there has not been, occurred or arisen any:
(a) transaction by Focalink except in the ordinary course of
business as conducted on the date of the Focalink Balance Sheet and consistent
with past practices;
(b) amendments or changes to the Articles of Incorporation or
Bylaws of Focalink;
(c) capital expenditures or commitments by Focalink, either
individually or in the aggregate, exceeding $10,000;
(d) destruction of, damage to or loss of any material assets,
business or customers of Focalink (whether or not covered by insurance);
(e) labor trouble or claims of wrongful discharge or other
unlawful labor practices or actions;
(f) resignation or termination of any key officers or
employees of Focalink, and to the Knowledge of Focalink, no impending
resignation or termination of employment of any such officer or employee;
(g) revaluation by Focalink of any of its assets;
(h) declaration, setting aside or payment of a dividend or
other distribution with respect to the capital stock of Focalink, or any direct
or indirect redemption, purchase or other acquisition by Focalink of any
Focalink Capital Stock;
(i) sale, lease, license or other disposition of any of the
assets or properties of Focalink, except in the ordinary course of business as
conducted on that date and consistent with past practices;
(j) except as contemplated herein, amendment or termination of
any material contract, agreement or license to which Focalink is a party or by
which it is bound;
(k) loans by Focalink to any person or entity, incurring by
Focalink of any indebtedness, guaranteeing by Focalink of any indebtedness,
issuance or sale of any debt securities of Focalink or guaranteeing of any debt
securities of others, except for advances to employees for travel and business
expenses in the ordinary course of business, consistent with past practices;
(l) waiver or release of any right or claim of Focalink,
including any write-off or other compromise of any account receivable of
Focalink;
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(m) commencement or notice or threat of commencement of any
lawsuit or proceeding against or investigation of Focalink or its affairs;
(n) notice of any claim of ownership by a third party of any
Focalink Intellectual Property Rights (as defined in Section 2.11 below) or of
infringement by Focalink of any third party's intellectual property rights;
(o) issuance or sale by Focalink of any of its shares of
capital stock, or securities exchangeable, convertible or exercisable therefore,
or of any other of its securities;
(p) change in pricing or royalties set or charged by Focalink
to its customers or licensees or in pricing or royalties set or charged by
persons who have licensed Focalink Intellectual Property Rights to Focalink;
(q) event or condition of any character that has had or could
be reasonably expected to have a Material Adverse Effect on Focalink; or
(r) negotiation or agreement by Focalink or any officer or
employees thereof to do any of the things described in the preceding clauses (a)
through (q) (other than negotiations with ClickOver and its representatives
regarding the transactions contemplated by this Agreement).
2.8 Tax and Other Returns and Reports.
(a) Definition of Taxes. For the purposes of this Agreement,
"Tax" or, collectively, "Taxes" means any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, exercise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) Tax Returns and Audits. Except as set forth in
Schedule 2.8:
(i) Focalink as of the Effective Time will have
prepared and filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("Returns") relating to any and
all Taxes concerning or attributable to Focalink or its operations and such
Returns are true and correct in all material respects and have been completed in
accordance with applicable law.
(ii) Focalink as of the Effective Time: (A) will have
paid or accrued all material Taxes it is required to pay or accrue and (B) will
have withheld with respect to its employees all material federal and state
income taxes, FICA, FUTA and other material Taxes required to be withheld.
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(iii) Focalink has not been delinquent in the payment
of any Tax nor is there any material Tax deficiency outstanding, proposed or
assessed against Focalink, nor has Focalink executed any waiver of any statute
of limitations on or extending the period for the assessment or collection of
any Tax.
(iv) To the Knowledge of Focalink, no audit or other
examination of any Return of Focalink is currently in progress, nor has Focalink
been notified of any request for such an audit or other examination.
(v) Focalink does not have any liabilities for unpaid
federal, state, local and foreign Taxes which have not been accrued or reserved
against in accordance with GAAP on the Focalink Balance Sheet, whether asserted
or unasserted, contingent or otherwise, and to the Knowledge of Focalink, is
unaware of any basis of the assertion of any such liability attributable to
Focalink, its assets or operations.
(vi) Focalink has provided to ClickOver copies of all
federal and state income and all state sales and use Tax Returns for all periods
since the date of Focalink's incorporation.
(vii) There are (and as of immediately following the
Effective Time there will be) no liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("Liens") on the assets of Focalink
relating to or attributable to Taxes, except for liens for Taxes not yet due and
payable.
(viii) To the Knowledge of Focalink, there is no
basis for the assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of Focalink.
(ix) None of Focalink's assets are treated as
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(x) As of the Effective Time, there will not be any
contract, agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of
Focalink that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G of the Code.
(xi) Focalink has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by Focalink.
(xii) Focalink is not a party to a tax sharing or
allocation agreement nor does Focalink owe any amount under any such agreement.
(xiii) Focalink is not, and has not been at any time,
a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
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(xiv) Focalink's tax basis in its assets for purposes
of determining its future amortization, depreciation and other federal income
tax deductions is accurately reflected on Focalink's tax books and records.
2.9 Restrictions on Business Activities. There is no agreement
(noncompete or otherwise), commitment, judgment, injunction, order or decree to
which Focalink is a party or otherwise binding upon Focalink which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice of Focalink, any acquisition of property (tangible or
intangible) by Focalink or the conduct of business by Focalink. Without limiting
the foregoing, Focalink has not entered into any agreement under which Focalink
is restricted from selling, licensing or otherwise distributing any of its
products or services to any class of customers, in any geographic area, during
any period of time or in any segment of the market.
2.10 Title to Properties; Absence of Liens and Encumbrances.
(a) Focalink does not own any real property, nor has it ever
owned any real property. Schedule 2.10(a) sets forth a list of all real property
currently leased by Focalink, the name of the lessor, the date of the lease and
each amendment thereto and, with respect to any current lease, the aggregate
annual rental and/or other fees payable under any such lease. All such current
leases are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default).
(b) Focalink has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
and intangible properties and assets, real, personal and mixed, used or held for
use in its business, free and clear of any Liens (as defined in Section
2.8(b)(vii)), except as reflected in the Focalink Financials or in Schedule
2.10(b) and except for liens for Taxes not yet due and payable and such
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby.
2.11 Intellectual Property.
(a) Focalink owns, or is licensed or otherwise possesses
legally enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights, and any applications therefore, and tangible or intangible
proprietary information or material that are used in the business of Focalink as
currently conducted or as proposed to be conducted by Focalink (the "Focalink
Intellectual Property Rights").
(b) Schedule 2.11 sets forth a complete list of all patents,
registered and material unregistered trademarks, registered copyrights, trade
names and service marks, and any applications therefore, included in Focalink
Intellectual Property Rights, and specifies, where applicable, the jurisdictions
in which each such Focalink Intellectual Property Right has been issued or
registered or in which an application for such issuance and registration has
been filed, including the respective registration or application numbers and the
names of all
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registered owners. Schedule 2.11 sets forth a complete list of all licenses,
sublicenses and other agreements as to which Focalink is a party and pursuant to
which Focalink or any other person is authorized to use any Focalink
Intellectual Property Right (excluding object code end user licenses granted to
end-users in the ordinary course of business that permit use of software
products without a right to modify, distribute or sublicense the same ("End-User
Licenses")) or trade secret of Focalink, and includes the identity of all
parties thereto, a description of the nature and subject matter thereof, the
applicable royalty or other fees and the term thereof. The execution and
delivery of this Agreement by Focalink, and the consummation of the transactions
contemplated hereby, will neither cause Focalink to be in violation or default
under any such license, sublicense or agreement, nor entitle any other party to
any such license, sublicense or agreement to terminate or modify such license,
sublicense or agreement. Except as set forth in Schedule 2.11, Focalink is the
sole and exclusive owner or licensee of, with all right, title and interest in
and to (free and clear of any liens or encumbrances), Focalink Intellectual
Property Rights, and has sole and exclusive rights (and is not contractually
obligated to pay any compensation to any third party in respect thereof) to the
use thereof or the material covered thereby in connection with the services or
products in respect to which Focalink Intellectual Property Rights are being
used.
(c) Except as set forth on Schedule 2.11(c), no claims with
respect to Focalink's Intellectual Property Rights have been asserted or are, to
the Knowledge of Focalink, threatened by any person, nor are there any valid
grounds for any bona fide claims, (i) to the effect that the manufacture, sale,
licensing or use of any of the products of Focalink infringes on any copyright,
patent, trade xxxx, service xxxx, trade secret or other proprietary right, (ii)
against the use by Focalink of any trademarks, service marks, trade names, trade
secrets, copyrights, maskworks, patents, technology, know-how or computer
software programs and applications used in Focalink's business as currently
conducted or as proposed to be conducted by Focalink, or (iii) challenging the
ownership by Focalink, validity or effectiveness of any of Focalink Intellectual
Property Rights. All registered trademarks, service marks and copyrights held by
Focalink are valid and subsisting. Focalink has not infringed, and to the
Knowledge of Focalink, the business of Focalink as currently conducted or as
proposed to be conducted does not infringe, any copyright, patent, trademark,
service xxxx, trade secret or other proprietary right of any third party. To the
Knowledge of Focalink, there is no material unauthorized use, infringement or
misappropriation of any of Focalink Intellectual Property Rights by any third
party, including any employee or former employee of Focalink. No Focalink
Intellectual Property Right or product of Focalink is subject to any outstanding
decree, order, judgment, or stipulation restricting in any manner the licensing
thereof by Focalink. Each employee, consultant or contractor of Focalink has
executed a proprietary information and confidentiality agreement substantially
in Focalink's standard form, a copy of which Focalink has delivered to
ClickOver. All software included in Focalink Intellectual Property Rights is
original with Focalink and has been either created by employees of Focalink, by
consultants or contractors on a work-for-hire basis or by consultants or
contractors who have created such software themselves and have assigned all
rights they may have had in such software to Focalink.
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2.12 Agreements, Contracts and Commitments.
(a) Except as set forth on Schedule 2.12(a), Focalink does not
have, is not a party to nor is it bound by:
(i) any collective bargaining agreements;
(ii) any agreements or arrangements that contain any
severance pay or post-employment liabilities or obligations;
(iii) any bonus, deferred compensation, pension,
profit sharing or retirement plans, or any other employee benefit plans or
arrangements;
(iv) any employment or consulting agreement, contract
or commitment with an employee or individual consultant or salesperson or any
consulting or sales agreement, contract or commitment under which any firm or
other organization provides services to Focalink;
(v) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased or accrue, or the
vesting of benefits of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Agreement or the value of any benefits
which will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(vi) any fidelity or surety bond or completion bond;
(vii) any material agreement, contract or commitment
under which it has limited or restricted its right to compete with any person in
any material respect;
(viii) any agreement of indemnification or guaranty;
(ix) any agreement, contract or commitment containing
any covenant limiting the freedom of Focalink to engage in any line of business
or to compete with any person;
(x) any agreement, contract or commitment relating to
capital expenditures and involving future payments in excess of $10,000;
(xi) any agreement, contract or commitment relating
to the disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of Focalink's business (except for the
transactions provided for in this Agreement);
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(xii) any mortgages, indentures, loans or credit
agreements, security agreements or other arrangements or instruments relating to
the borrowing of money or extension of credit, including guaranties referred to
in clause (viii) hereof;
(xiii) any purchase order or contract for the
purchase of raw materials involving $10,000 or more;
(xiv) any distribution, joint marketing or
development agreement;
(xv) any assignment, license or other agreement with
respect to any form of intangible property; or,
(xvi) any other agreement, contract or commitment
that involves $10,000 or more or is not cancelable without penalty within thirty
(30) days.
(b) Except for such alleged breaches, violations and defaults,
and events that would constitute a breach, violation or default with the lapse
of time, giving of notice, or both, all of which are noted in Schedule 2.12(b),
Focalink has not materially breached, violated or defaulted under, or received
notice that it has materially breached, violated or defaulted under, any of the
terms or conditions of any agreement, contract or commitment required to be set
forth on Schedule 2.11 or Schedule 2.12(a) (any such agreement, contract or
commitment, a "Focalink Contract"). Each Focalink Contract is in full force and
effect and, except as otherwise disclosed in Schedule 2.12(b), to the Knowledge
of Focalink is not subject to any default thereunder by any party obligated to
Focalink pursuant thereto.
2.13 Interested Party Transactions. Except as set forth on Schedule
2.13, no officer, director or shareholder of Focalink (nor any ancestor,
sibling, descendant or spouse of any of such persons, or any trust, partnership
or corporation in which any of such persons has or has had an interest), has or
has had, directly or indirectly, (i) an economic interest in any entity which
furnished or sold, or furnishes or sells, services or products that Focalink
furnishes or sells or proposes to furnish or sell, (ii) an economic interest in
any entity that purchases from or sells or furnishes to Focalink any goods or
services or (iii) a beneficial interest in any contract or agreement set forth
in Schedule 2.11 or Schedule 2.12(a); provided, that ownership of no more than
one percent (1%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "economic interest in any entity" for
purposes of this Section 2.13.
2.14 Compliance with Laws. Focalink has complied in all material
respects with, is not in material violation of, and has not received any notices
of material violation with respect to, any foreign, federal, state or local
statute, law or regulation.
2.15 Litigation. To the Knowledge of Focalink, except as set forth in
Schedule 2.15 there is no action, suit or proceeding of any nature pending or
threatened against Focalink, its properties or any of its officers or directors,
in their respective capacities as such. To the Knowledge of Focalink, except as
set forth in Schedule 2.15 there is no investigation pending or threatened
against Focalink, its properties or any of its officers or directors by or
before
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any governmental entity. To the Knowledge of Focalink, Schedule 2.15 sets forth,
with respect to any pending or threatened action, suit, proceeding or
investigation, the forum, the parties thereto, the subject matter thereof and
the amount of damages, claims or other remedy requested. To the Knowledge of
Focalink, no governmental entity has at any time challenged or questioned the
legal right of Focalink to conduct its business as it is currently being
conducted.
2.16 Insurance. All insurance policies maintained by Focalink are
identified in Schedule 2.16 and are valid and enforceable, and there is no claim
by Focalink pending under any of such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies. All
premiums due and payable under all such policies have been paid and Focalink is
otherwise in material compliance with the terms of such policies. To the
Knowledge of Focalink, there is no threatened termination of, or material
premium increase with respect to, any of such policies.
2.17 Minute Books. The minute books of Focalink made available to
counsel for ClickOver are the only minute books of Focalink and contain a
reasonably accurate summary of all meetings of directors (or committees thereof)
and shareholders or actions by written consent since the time of incorporation
of Focalink. Focalink is in full compliance with all of the terms and provisions
of its Articles of Incorporation and Bylaws.
2.18 Relationships With Suppliers and Licensors. No current supplier to
Focalink has notified it of an intention to terminate or substantially alter its
existing business relationship with Focalink nor has any licensor under a
license agreement with Focalink notified Focalink of an intention to terminate
or substantially alter Focalink's rights under such license.
2.19 Trade Secrets. Focalink has taken reasonable security measures to
protect the confidentiality of its trade secrets. All current and past employees
or consultants of Focalink, who, either alone or in concert with others,
developed, invented, discovered, derived, programmed or designed such trade
secrets, or who have or had access to information disclosing such trade secrets,
have entered into confidentiality and non-disclosure agreements with Focalink
(the "Focalink Trade Secret Agreements"). Any exception which has been taken to
the Focalink Trade Secrets Agreements (for example an employee or consultant
excluding a prior invention) is described in Schedule 2.19, including the
exception taken and the employee taking such exception. To the Knowledge of
Focalink, neither Focalink, nor its employees or its consultants have caused any
of Focalink's trade secrets to become part of the public knowledge or
literature, nor has Focalink, its employees or consultants permitted any such
trade secrets to be used, divulged or appropriated for the benefit of persons to
the material detriment of Focalink.
2.20 Environmental Matters.
(a) Focalink is not in violation of any federal, state or
local Environmental Law (as defined below), which violation could reasonably be
expected to result in a material liability to Focalink or its properties and
assets. Neither Focalink nor, to the Knowledge of
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Focalink, any third party, has used, released, discharged, generated,
manufactured, produced, stored, or disposed of in, on, under or about its owned
or leased property or other assets, or transported thereto or therefrom, any
Hazardous Materials (as defined below) in a manner that could reasonably be
expected to subject Focalink to a material liability under any Environmental
Law; there are no underground tanks, whether operative or temporarily or
permanently closed, located on its owned or leased property or other assets;
there are no polychlorinated biphenyls ("PCBs") or items containing PCBs used,
stored or present at, on or, to the Knowledge of Focalink, near its owned or
leased property or assets; and there is or has been no condition, circumstance,
action, activity or event that could reasonably be expected to form the basis of
any violation of, or material liability to Focalink under, any local, state or
Federal Environmental Law.
(b) There is no proceeding, investigation or inquiry by any
local, state or Federal governmental authority or any non-governmental third
party with respect to the presence or release of such Hazardous Materials in,
on, from or to Focalink's owned or leased property and, to the Knowledge of
Focalink, no such proceedings are threatened or contemplated by any such
governmental authorities or non-governmental third parties.
(c) For purposes of this Agreement, (i) "Environmental Law"
means the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended (42 U.S.C. Sections 9601, et seq.) ("CERCLA"); the Federal
Clean Water Act (33 U.S.C. Section 1251, et seq.); the Federal Clean Air Act (42
U.S.C. Section 7401); the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Section 136 et seq.); the Toxic Substances Control Act (15 U.S.C. Section
2601 et seq.); the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.) ("RCRA"); and the Emergency Planning and Community Right to Know
Act (42 U.S.C. Section 11001 et seq.), together with applicable state and local
laws of similar substance, and (ii) "Hazardous Materials" shall mean substances
defined as "hazardous substances," "hazardous materials," or "toxic substances"
in CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801,
et seq.) and RCRA; those substances defined as "hazardous waste," "hazardous
materials" or "regulated substances" by RCRA; those substances defined as
"hazardous waste," "extremely hazardous waste" or "restricted hazardous waste"
under Sections 25115, 25117 or 25122.7 of the California Health and Safety Code;
those substances listed under Article 9 or defined as "hazardous" or "extremely
hazardous" pursuant to Article 11 of Title 22 of the California Administrative
Code, Division 4, Chapter 20; those substances designated as a "hazardous
substance" pursuant to Section 311 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1317); those substances regulated as a hazardous chemical
substance or mixture or as an imminently hazardous chemical substance or mixture
pursuant to Section 6 or 7 of the Toxic Substances Control Act (15 U.S.C.
Sections 2605, 2606); those substances defined as a pesticide pursuant to
Section 136(u) of the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Section 136(u)); those substances defined as hazardous waste constituents
in 40 CFR 260.10, specifically including Appendix VII and VIII of Subpart D of
40 CFR 261; and those substances defined by the Atomic Energy Act of 1954, as
amended (42 U.S.C. Sections 3011, et seq., as amended) as a source,
special nuclear or by-product material; and in the regulations adopted and
publications promulgated pursuant to said laws.
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2.21 Brokers' and Finders' Fees: Third Party Expenses. Except as set
forth on Schedule 2.21, Focalink has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby. Schedule 2.21 sets forth the principal terms
and conditions of any agreement, written or oral, with respect to such fees.
Schedule 2.21 sets forth Focalink's current reasonable estimate of all Third
Party Expenses (as defined in Section 5.5) expected to be incurred by Focalink
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby.
2.22 Permits and Licenses. Schedule 2.22 contains a complete and
correct copy of (i) each pending application or registration for governmental
approval and each governmental approval held by Focalink to import, export,
store, market and sell Focalink's products or services, and (ii) the most recent
report by or on behalf of any governmental body involving or relating to any
facility inspection of Focalink's facilities. Except as set forth in Schedule
2.22, (i) Focalink possesses such governmental approvals from all governmental
bodies necessary to permit the operation of its business in the manner as the
same is currently conducted, and to operate, own or occupy its properties, (ii)
there have been no product recalls, field corrective activity, warning letters
or administrative actions by any governmental body, and (iii) to the Knowledge
of Focalink (aa) there is no administrative action pending or threatened for the
revocation of any such governmental approval and (bb) assuming the obtaining of
the authorizations, consents, approvals and other actions listed in Schedule
2.22, no governmental approval by any governmental body having jurisdiction over
the operation of Focalink's businesses, whether in whole or in part, will be
revoked, or become ineffective or subject to revocation, as a consequence of the
transactions contemplated by this Agreement.
2.23 Employee Matters and Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 2.23(a)(i) below (which definition shall apply
only to this Section 2.23), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity
under common control with Focalink within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations thereunder;
(ii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;
(iii) "Focalink Employee Plan" shall refer to any
plan, program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, performance awards,
stock or stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether formal or informal, funded or unfunded and
whether or not legally binding, including without limitation, each "employee
benefit plan" within the meaning of Section 3(3) of ERISA, which is or has been
maintained, contributed to, or required to be contributed to, by Focalink or any
Affiliate for the benefit of
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any "Employee" (as defined below), and pursuant to which Focalink or any
Affiliate has or may have any material liability contingent or otherwise;
(iv) "Employee" shall mean any current, former or
retired employee, officer, or director of Focalink or any Affiliate;
(v) "Employee Agreement" shall refer to each
management, employment, severance, consulting, relocation, repatriation,
expiration, visas, work permit or similar agreement or contract between Focalink
or any Affiliate and any Employee or consultant;
(vi) "IRS" shall mean the Internal Revenue Service;
(vii) "Multiemployer Plan" shall mean any "Pension
Plan" (as defined below) which is a "multiemployer plan," as defined in Section
3(37) of ERISA; and
(viii) "Pension Plan" shall refer to each Focalink
Employee Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Schedule 2.23(b) contains an accurate and
complete list of each Focalink Employee Plan and each Employee Agreement.
Focalink does not have any plan or commitment, whether legally binding or not,
to establish any new Focalink Employee Plan or Employee Agreement, to modify any
Focalink Employee Plan or Employee Agreement (except to the extent required by
law or to conform any such Focalink Employee Plan or Employee Agreement to the
requirements of any applicable law, in each case as previously disclosed to
ClickOver in writing, or as required by this Agreement), or to enter into any
Focalink Employee Plan or Employee Agreement, nor does it have any intention or
commitment to do any of the foregoing.
(c) Documents. Focalink has provided to ClickOver (i) correct
and complete copies of all documents embodying or relating to each Focalink
Employee Plan and each Employee Agreement including all amendments thereto and
written interpretations thereof; (ii) the most recent annual actuarial
valuations, if any, prepared for each Focalink Employee Plan; (iii) the three
most recent annual reports (Series 5500 and all schedules thereto), if any,
required under ERISA or the Code in connection with each Focalink Employee Plan
or related trust; (iv) if the Focalink Employee Plan is funded, the most recent
annual and periodic accounting of Focalink Employee Plan assets; (v) the most
recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
Focalink Employee Plan; (vi) all IRS determination letters and rulings relating
to Focalink Employee Plans and copies of all applications and correspondence to
or from the IRS or the Department of Labor ("DOL") with respect to any Focalink
Employee Plan; (vii) all communications material to any Employee or Employees
relating to any Focalink Employee Plan and any proposed Focalink Employee Plans,
in each case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which
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would result in any material liability to Focalink; and (viii) all registration
statements and prospectuses prepared in connection with each Focalink Employee
Plan.
(d) Employee Plan Compliance. Except as set forth on Schedule
2.23(d), (i) Focalink has performed in all material respects all obligations
required to be performed by it under each Focalink Employee Plan, and each
Focalink Employee Plan has been established and maintained in all materials
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code; (ii) no "prohibited transaction," within the meaning of
Section 4975 of the Code or Section 406 of ERISA, has occurred with respect to
any Focalink Employee Plan; (iii) there are no actions, suits or claims pending,
or, to the Knowledge of Focalink, threatened or anticipated (other than routine
claims for benefits) against any Focalink Employee Plan or against the assets of
any Focalink Employee Plan; (iv) each Focalink Employee Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance with
its terms, without liability to Focalink, ClickOver or any of its Affiliates
(other than ordinary administration expenses typically incurred in a termination
event); (v) there are no inquiries or proceedings pending or, to the Knowledge
of Focalink, threatened by the IRS or DOL with respect to any Focalink Employee
Plan; and (vi) Focalink is not subject to any penalty or tax with respect to any
Focalink Employee Plan under Section 402(i) of ERISA or Section 4975 through
4980 of the Code.
(e) Pension Plans. Focalink does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title
IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Focalink contributed
to or been required to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. Except as set forth in
Schedule 2.23(g), no Focalink Employee Plan provides, or has any liability to
provide, life insurance, medical or other employee benefits to any Employee upon
his or her retirement or termination of employment for any reason, except as may
be required by statute, and Focalink has never represented, promised or
contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) that such Employee(s) would be provided
with life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required by
statute.
(h) Effect of Transaction.
(i) Except as set forth on Schedule 2.23(h)(i), the
execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Focalink Employee
Plan, Employee Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
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(ii) Except as set forth on Schedule 2.23(h)(ii), no
payment or benefit of which will or may be made by Focalink, ClickOver or any of
their respective Affiliates with respect to any Employee will be characterized
as an "excess parachute payment" within the meaning of Section 280G(b)(1) of the
Code.
(i) Employment Matters. Focalink (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries, and other payments to Employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any payment to any
trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice).
(j) Labor. No work stoppage or labor strike against Focalink
is pending or, to the Knowledge of Focalink, threatened. Except as set forth in
Schedule 2.23(j), Focalink is not involved in or, to the Knowledge of Focalink,
threatened with, any labor dispute, grievance, or litigation relating to labor,
safety or discrimination matters involving any Employee, including, without
limitation, charges of unfair labor practices or discrimination complaints,
which, if adversely determined, would, individually or in the aggregate, result
in liability to Focalink in excess of $10,000. Focalink has not engaged in any
unfair labor practices within the meaning of the National Labor Relations Act
which would, individually or in the aggregate, directly or indirectly result in
a liability to Focalink in excess of $10,000. Except as set forth in Schedule
2.23(j), Focalink is not presently, nor has it been in the past, a party to, or
bound by, any collective bargaining agreement or union contract with respect to
Employees and no collective bargaining agreement is being negotiated by
Focalink. To the Knowledge of Focalink, no labor union is attempting to organize
the employees of Focalink into one or more collective bargaining units.
2.24 Employees. To the Knowledge of Focalink, no employees of Focalink
are in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by Focalink
because of the nature of the business conducted or presently proposed to be
conducted by Focalink or due to the use of trade secrets or proprietary
information of others.
2.25 Representation Complete. None of the representations or warranties
made by Focalink (as modified by the Focalink Schedules), nor any statement made
in any schedule or certificate furnished by Focalink pursuant to this Agreement,
or furnished in or in connection with documents mailed or delivered to the
Focalink Shareholders in connection with soliciting their consent to this
Agreement and the Merger, contains or will contain at the Effective Time, any
untrue statement of a material fact, or omits or will omit at the Effective Time
to
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state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CLICKOVER AND MERGER SUB
ClickOver and Merger Sub hereby represent and warrant to Focalink,
subject to such exceptions as are specifically disclosed in the disclosure
letter (referencing the appropriate schedule or section number) supplied by
ClickOver to Focalink (the "ClickOver Schedules") and dated as of the date
hereof, as follows:
3.1 Organization, Standing and Power. ClickOver is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Each of ClickOver and
Merger Sub has the corporate power to own, operate and lease its properties and
to carry on its business as now being conducted. Each of ClickOver and Merger
Sub is duly qualified or licensed to conduct its business and is in good
standing as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have, or would reasonably be expected to have, a material
adverse effect on the business, assets (including intangible assets), financial
condition, results of operations, liabilities or prospects of ClickOver
(hereinafter referred to as a "Material Adverse Effect on ClickOver"). ClickOver
has delivered a true and correct copy of its Articles of Incorporation and
Bylaws, each as amended to date, to Focalink.
3.2 Capital Structure.
(a) The authorized capital stock of ClickOver currently
consists of shares of 14,000,000 Common Stock, and 6,037,000 shares of Preferred
Stock, of which 525,000 shares are designated as Series A Preferred Stock and
5,512,000 shares are designated as Series B Preferred Stock. As of the date
hereof, there are 5,856,721 shares of Common Stock outstanding, 525,000 shares
of Series A Preferred Stock outstanding and 5,512,000 shares of Series B
Preferred Stock outstanding. ClickOver Capital Stock is held of record by the
persons, with the addresses of record and in the amounts set forth on Schedule
3.2(a). All issued and outstanding shares of ClickOver Capital Stock are duly
authorized, validly issued, fully paid and non-assessable.
(b) ClickOver has reserved 2,650,000 shares of Common Stock
for issuance to employees and consultants pursuant to its Stock Option Plan (the
"ClickOver Plan"), of which 622,942 shares are subject to outstanding,
unexercised options, 945,338 shares remain available for future grant and
1,081,720 shares have been issued pursuant to the exercise of options issued
under the ClickOver Plan. Schedule 3.2(b) sets forth for each outstanding option
to purchase shares of ClickOver Capital Stock (a "ClickOver Option") or warrant
to purchase shares of ClickOver Capital Stock (a "ClickOver Warrant"), the name
of the holder of such ClickOver Option or ClickOver Warrant, the domicile
address of such holder, the
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number of shares of Common Stock subject to such ClickOver Option or ClickOver
Warrant, the exercise price of such ClickOver Option or ClickOver Warrant and
the vesting schedule for such ClickOver Option or ClickOver Warrant, including
the extent vested to date and whether the exercisability of such ClickOver
Option or ClickOver Warrant will be accelerated and become exercisable by reason
of the transactions contemplated by this Agreement. Except for ClickOver Options
and ClickOver Warrants described in Schedule 3.2(b), there are no options,
warrants, calls, rights, commitments or agreements of any character, written or
oral, to which ClickOver is a party or by which it is bound obligating ClickOver
to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of the capital stock of ClickOver or
obligating ClickOver to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. The holders of ClickOver Options and ClickOver Warrants
have been or will be given, or shall have properly waived, any required notice
prior to the Merger, and all such rights will be terminated at or prior to the
Effective Time.
(c) The authorized capital stock of Merger Sub consists of 100
shares of Common Stock, all of which, as of the date hereof, are issued and
outstanding and are held by ClickOver.
3.3 Subsidiaries. Except for Merger Sub, ClickOver does not have and
has never had any subsidiaries or affiliated companies and does not otherwise
own and has never otherwise owned any shares of capital stock or any interest
in, or control, directly or indirectly, any other corporation, partnership,
association, joint venture or other business entity. Merger Sub was incorporated
in contemplation of the Merger and has had no operations as of the date hereof.
3.4 Authority. Subject only to the requisite approval of the Merger and
this Agreement by ClickOver's shareholders, ClickOver and Merger Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The vote required of
ClickOver's shareholders to duly approve the Merger and this Agreement is (i) a
majority of all issued and outstanding ClickOver Capital Stock, and (ii) greater
than 50% of each class of all issued and outstanding ClickOver Capital Stock.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of ClickOver, subject only to the approval of the
Merger and this Agreement by ClickOver's shareholders. ClickOver's Board of
Directors and Merger Sub's Board of Directors have unanimously approved the
Merger and this Agreement. This Agreement has been duly executed and delivered
by ClickOver and Merger Sub and constitutes the valid and binding obligation of
ClickOver and Merger Sub, enforceable in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies. Except as set forth
on Schedule 3.4, subject only to the approval of the Merger and this Agreement
by ClickOver's shareholders, the execution and delivery of this Agreement by
ClickOver does not, and, as of
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the Effective Time, the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the Articles
of Incorporation or Bylaws of ClickOver or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to ClickOver or its properties or assets. No consent, waiver,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other federal, state,
country, local or foreign governmental authority, instrumentality, agency or
commission ("Governmental Entity") or any third party (so as not to trigger any
Conflict) is required by or with respect to ClickOver in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Merger Agreement with the
California Secretary of State, (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws and (iii) such other consents,
waivers, authorizations, filings, approvals and registrations which are set
forth on Schedule 3.4.
3.5 ClickOver Financial Statements.
(a) Schedule 3.5 sets forth ClickOver's unaudited balance
sheet as of October 31, 1997 (the "ClickOver Balance Sheet"), and the related
unaudited statements of operations and cash flows for the ten-month period then
ended (collectively, the "ClickOver Financials"). The ClickOver Financials are
correct in all material respects and have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a basis consistent
throughout the periods indicated and consistent with each other, except that the
unaudited ClickOver Financials do not contain all of the footnotes required by
GAAP. The ClickOver Financials present fairly the financial condition and
operating results of ClickOver as of the dates and during the periods indicated
therein, subject to normal year-end adjustments, which adjustments will not be
material in amount or significance.
3.6 No Undisclosed Liabilities. To the Knowledge of ClickOver, except
as set forth in Schedule 3.6, ClickOver does not have any liability,
indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, whether accrued, absolute, contingent, matured, unmatured or other
(whether or not required to be reflected in financial statements in accordance
with GAAP), which individually or in the aggregate, has not been reflected in
the ClickOver Financials.
3.7 No Changes. Except as set forth in Schedule 3.7, since the date of
the ClickOver Balance Sheet, there has not been, occurred or arisen any:
(a) transaction by ClickOver except in the ordinary course of
business as conducted on the date of the ClickOver Balance Sheet and consistent
with past practices;
(b) amendments or changes to the Articles of Incorporation or
Bylaws of ClickOver;
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(c) capital expenditure or commitment by ClickOver, either
individually or in the aggregate, exceeding $10,000;
(d) destruction of, damage to or loss of any material assets,
business or customer of ClickOver (whether or not by covered by insurance);
(e) labor trouble or claim of wrongful discharge or other
unlawful labor practice or action;
(f) resignation or termination of any key officers or
employees of ClickOver, and to the Knowledge of ClickOver, no impending
resignation or termination of employment of any such officer or employee;
(g) revaluation by ClickOver of any of its assets;
(h) declaration, setting aside or payment of a dividend or
other distribution with respect to the ClickOver Capital Stock, or any direct or
indirect redemption, purchase or other acquisition by ClickOver of any ClickOver
Capital Stock;
(i) sale, lease, license or other disposition of any of the
assets or properties of ClickOver, except in the ordinary course of business as
conducted on that date and consistent with past practices;
(j) except as contemplated herein, amendment or termination of
any material contract, agreement or license to which ClickOver is a party or by
which it is bound;
(k) loans by ClickOver to any person or entity, incurring by
ClickOver of any indebtedness, guaranteeing by ClickOver of any indebtedness,
issuance or sale of any debt securities of ClickOver or guaranteeing of any debt
securities of others, except for advances to employees for travel and business
expenses in the ordinary course of business, consistent with past practices;
(l) waiver or release of any right or claim of ClickOver,
including any write-off or other compromise of any account receivable of
ClickOver;
(m) commencement or notice or threat of commencement of any
lawsuit or proceeding against or investigation of ClickOver or its affairs;
(n) notice of any claim of ownership by a third party of any
ClickOver Intellectual Property Rights (as defined in Section 3.11 below) or of
infringement by ClickOver of any third party's intellectual property rights;
(o) issuance or sale by ClickOver of any of its shares of
ClickOver Capital Stock, or securities exchangeable, convertible or exercisable
therefore, or of any other of its securities;
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(p) change in pricing or royalties set or charged by ClickOver
to its customers or licensees or in pricing or royalties set or charged by
persons who have licensed ClickOver Intellectual Property Rights to ClickOver;
(q) event or condition of any character that has had or could
be reasonably expected to have a Material Adverse Effect on ClickOver; or
(r) negotiation or agreement by ClickOver or any officer or
employees thereof to do any of the things described in the preceding clauses (a)
through (q) (other than negotiations with Focalink and its representatives
regarding the transactions contemplated by this Agreement).
3.8 Tax and Other Returns and Reports.
(a) Definition of Taxes. For the purposes of this Agreement,
"Tax" or, collectively, "Taxes" means any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, exercise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) Tax Returns and Audits. Except as set forth in Schedule
3.8:
(i) ClickOver as of the Effective Time will have
prepared and filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("Returns") relating to any and
all Taxes concerning or attributable to ClickOver or its operations and such
Returns are true and correct in all material respects and have been completed in
accordance with applicable law.
(ii) ClickOver as of the Effective Time: (A) will
have paid or accrued all material Taxes it is required to pay or accrue and (B)
will have withheld with respect to its employees all material federal and state
income taxes, FICA, FUTA and other material Taxes required to be withheld.
(iii) ClickOver has not been delinquent in the
payment of any Tax nor is there any material Tax deficiency outstanding,
proposed or assessed against ClickOver, nor has ClickOver executed any waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) To the Knowledge of ClickOver, no audit or other
examination of any Return of ClickOver is currently in progress, nor has
ClickOver been notified of any request for such an audit or other examination.
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(v) ClickOver does not have any liabilities for
unpaid federal, state, local and foreign Taxes which have not been accrued or
reserved against in accordance with GAAP on the ClickOver Balance Sheet, whether
asserted or unasserted, contingent or otherwise, and to the Knowledge of
ClickOver, is unaware of any basis of the assertion of any such liability
attributable to ClickOver, its assets or operations.
(vi) ClickOver has provided to Focalink copies of all
federal and state income and all state sales and use Tax Returns for all periods
since the date of ClickOver's incorporation.
(vii) There are (and as of immediately following the
Effective Time there will be) no Liens on the assets of ClickOver relating to or
attributable to Taxes.
(viii) To the Knowledge of ClickOver, there is no
basis for the assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the assets of ClickOver.
(ix) None of ClickOver's assets are treated as
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(x) As of the Effective Time, there will not be any
contract, agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of
ClickOver that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G or 162 of the
Code.
(xi) ClickOver has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by ClickOver.
(xii) ClickOver is not a party to a tax sharing or
allocation agreement nor does ClickOver owe any amount under any such agreement.
(xiii) ClickOver is not, and has not been at any
time, a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
(xiv) ClickOver's tax basis in its assets for
purposes of determining its future amortization, depreciation and other federal
income tax deductions is accurately reflected on ClickOver's tax books and
records.
3.9 Restrictions on Business Activities. There is no agreement
(noncompete or otherwise), commitment, judgment, injunction, order or decree to
which ClickOver is a party or otherwise binding upon ClickOver which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice of ClickOver, any acquisition of property (tangible or
intangible) by ClickOver or the conduct of business by ClickOver. Without
limiting the foregoing, ClickOver has not entered into any agreement under which
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ClickOver is restricted from selling, licensing or otherwise distributing any of
its products to any class of customers, in any geographic area, during any
period of time or in any segment of the market.
3.10 Title to Properties; Absence of Liens and Encumbrances.
(a) ClickOver owns no real property, nor has it ever owned any
real property. Schedule 3.10(a) sets forth a list of all real property currently
leased by ClickOver, the name of the lessor, the date of the lease and each
amendment thereto and, with respect to any current lease, the aggregate annual
rental and/or other fees payable under any such lease. All such current leases
are in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default).
(b) ClickOver has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Liens except as reflected in the ClickOver
Financials or in Schedule 3.10(b) and except for liens for Taxes not yet due and
payable and such imperfections of title and encumbrances, if any, which are not
material in character, amount or extent, and which do not materially detract
from the value, or materially interfere with the present use, of the property
subject thereto or affected thereby.
3.11 Intellectual Property.
(a) ClickOver owns, or is licensed or otherwise possesses
legally enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights, and any applications therefore, and tangible or intangible
proprietary information or material that are used in the business of ClickOver
as currently conducted or as proposed to be conducted by ClickOver (the
"ClickOver Intellectual Property Rights").
(b) Schedule 3.11 sets forth a complete list of all patents,
registered and material unregistered trademarks, registered copyrights, trade
names and service marks, and any applications therefore, included in ClickOver
Intellectual Property Rights, and specifies, where applicable, the jurisdictions
in which each such ClickOver Intellectual Property Right has been issued or
registered or in which an application for such issuance and registration has
been filed, including the respective registration or application numbers and the
names of all registered owners. Schedule 3.11 sets forth a complete list of all
licenses, sublicenses and other agreements as to which ClickOver is a party and
pursuant to which ClickOver or any other person is authorized to use any
ClickOver Intellectual Property Right (excluding object code end user licenses
granted to end-users in the ordinary course of business that permit use of
software products without a right to modify, distribute or sublicense the same
("End-User Licenses")) or trade secret of ClickOver, and includes the identity
of all parties thereto, a description of the nature and subject matter thereof,
the applicable royalty or other fees and the term thereof. The execution and
delivery of this Agreement by ClickOver, and the consummation of the
transactions contemplated hereby, will neither cause ClickOver to be in
violation or default under any such license, sublicense or agreement, nor
entitle any other
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party to any such license, sublicense or agreement to terminate or modify such
license, sublicense or agreement. Except as set forth in Schedule 3.11,
ClickOver is the sole and exclusive owner or licensee of, with all right, title
and interest in and to (free and clear of any liens or encumbrances), ClickOver
Intellectual Property Rights, and has sole and exclusive rights (and is not
contractually obligated to pay any compensation to any third party in respect
thereof) to the use thereof or the material covered thereby in connection with
the services or products in respect to which ClickOver Intellectual Property
Rights are being used.
(c) No claims with respect to ClickOver's Intellectual
Property Rights have been asserted or are, to the Knowledge of ClickOver,
threatened by any person, nor are there any valid grounds for any bona fide
claims, (i) to the effect that the manufacture, sale, licensing or use of any of
the products of ClickOver infringes on any copyright, patent, trade xxxx,
service xxxx, trade secret or other proprietary right, (ii) against the use by
ClickOver of any trademarks, service marks, trade names, trade secrets,
copyrights, maskworks, patents, technology, know-how or computer software
programs and applications used in ClickOver's business as currently conducted or
as proposed to be conducted by ClickOver, or (iii) challenging the ownership by
ClickOver, validity or effectiveness of any of ClickOver Intellectual Property
Rights. All registered trademarks, service marks and copyrights held by
ClickOver are valid and subsisting. ClickOver has not infringed, and to the
Knowledge of ClickOver, the business of ClickOver as currently conducted or as
proposed to be conducted does not infringe, any copyright, patent, trademark,
service xxxx, trade secret or other proprietary right of any third party. To the
Knowledge of ClickOver, there is no material unauthorized use, infringement or
misappropriation of any of ClickOver Intellectual Property Rights by any third
party, including any employee or former employee of ClickOver. No ClickOver
Intellectual Property Right or product of ClickOver is subject to any
outstanding decree, order, judgment, or stipulation restricting in any manner
the licensing thereof by ClickOver. Each employee, consultant or contractor of
ClickOver has executed a proprietary information and confidentiality agreement
substantially in ClickOver's standard form, a copy of which ClickOver has
delivered to Focalink. All software included in ClickOver Intellectual Property
Rights is original with ClickOver and has been either created by employees of
ClickOver, by consultants or contractors on a work-for-hire basis or by
consultants or contractors who have created such software themselves and have
assigned all rights they may have had in such software to ClickOver.
3.12 Agreements, Contracts and Commitments.
(a) Except as set forth on Schedule 3.12(a), ClickOver does
not have, is not a party to nor is it bound by:
(i) any collective bargaining agreements;
(ii) any agreements or arrangements that contain any
severance pay or post-employment liabilities or obligations;
(iii) any bonus, deferred compensation, pension,
profit sharing or retirement plans, or any other employee benefit plans or
arrangements;
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(iv) any employment or consulting agreement, contract
or commitment with an employee or individual consultant or salesperson or any
consulting or sales agreement, contract or commitment under which any firm or
other organization provides services to ClickOver;
(v) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased or accrue, or the
vesting of benefits of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(vi) any fidelity or surety bond or completion bond;
(vii) any material agreement, contract or commitment
under which it has limited or restricted its right to compete with any person in
any material respect;
(viii) any agreement of indemnification or guaranty;
(ix) any agreement, contract or commitment containing
any covenant limiting the freedom of ClickOver to engage in any line of business
or to compete with any person;
(x) any agreement, contract or commitment relating to
capital expenditures and involving future payments in excess of $10,000;
(xi) any agreement, contract or commitment relating
to the disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of ClickOver's business (except to the
transactions provided for in this Agreement);
(xii) any mortgages, indentures, loans or credit
agreements, security agreements or other arrangements or instruments relating to
the borrowing of money or extension of credit, including guaranties referred to
in clause (viii) hereof;
(xiii) any purchase order or contract for the
purchase of raw materials involving $10,000 or more;
(xiv) any distribution, joint marketing or
development agreement;
(xv) any assignment, license or other agreement with
respect to any form of intangible property; or,
(xvi) any other agreement, contract or commitment
that involves $10,000 or more or is not cancelable without penalty within thirty
(30) days.
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(b) Except for such alleged breaches, violations and defaults,
and events that would constitute a breach, violation or default with the lapse
of time, giving of notice, or both, all of which are noted in Schedule 3.12(b),
ClickOver has not materially breached, violated or defaulted under, or received
notice that it has materially breached, violated or defaulted under, any of the
terms or conditions of any agreement, contract or commitment required to be set
forth on Schedule 3.11 or Schedule 3.12(a) (any such agreement, contract or
commitment, a "ClickOver Contract"). Each ClickOver Contract is in full force
and effect and, except as otherwise disclosed in Schedule 3.12(b), to the
Knowledge of ClickOver is not subject to any default thereunder by any party
obligated to ClickOver pursuant thereto.
3.13 Interested Party Transactions. Except as set forth on Schedule
3.13, no officer, director or shareholder of ClickOver (nor any ancestor,
sibling, descendant or spouse of any of such persons, or any trust, partnership
or corporation in which any of such persons has or has had an interest), has or
has had, directly or indirectly, (i) an economic interest in any entity which
furnished or sold, or furnishes or sells, services or products that ClickOver
furnishes or sells or proposes to furnish or sell, (ii) an economic interest in
any entity that purchases from or sells or furnishes to, ClickOver, any goods or
services or (iii) a beneficial interest in any contract or agreement set forth
in Schedule 3.11 or Schedule 3.12(a); provided, that ownership of no more than
one percent (1%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "economic interest in any entity" for
purposes of this Section 3.13.
3.14 Compliance with Laws. ClickOver has complied in all material
respects with, is not in material violation of, and has not received any notices
of violation with respect to, any foreign, federal, state or local statute, law
or regulation.
3.15 Litigation. To the Knowledge of ClickOver, except as set forth in
Schedule 3.15 there is no action, suit or proceeding of any nature pending or
threatened against ClickOver, its properties or any of its officers or
directors, in their respective capacities as such. To the Knowledge of
ClickOver, except as set forth in Schedule 3.15 there is no investigation
pending or threatened against ClickOver, its properties or any of its officers
or directors by or before any governmental entity. To the Knowledge of
ClickOver, Schedule 3.15 sets forth, with respect to any pending or threatened
action, suit, proceeding or investigation, the forum, the parties thereto, the
subject matter thereof and the amount of damages, claims or other remedy
requested. To the Knowledge of ClickOver, no governmental entity has at any time
challenged or questioned the legal right of ClickOver to conduct its business as
it is currently being conducted.
3.16 Insurance. All insurance policies maintained by ClickOver are
identified in Schedule 3.16 and are valid and enforceable, and there is no claim
by ClickOver pending under any of such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies. All
premiums due and payable under all such policies have been paid and ClickOver is
otherwise in material compliance with the terms of such policies. To the
Knowledge of ClickOver, there is no threatened termination of, or material
premium increase with respect to, any of such policies.
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3.17 Minute Books. The minute books of ClickOver made available to
counsel for Focalink are the only minute books of ClickOver and contain a
reasonably accurate summary of all meetings of directors (or committees thereof)
and shareholders or actions by written consent since the time of incorporation
of ClickOver. ClickOver is in full compliance with all of the terms and
provisions of its Articles of Incorporation and Bylaws.
3.18 Relationships With Suppliers and Licensors. No current supplier to
ClickOver has notified it of an intention to terminate or substantially alter
its existing business relationship with ClickOver nor has any licensor under a
license agreement with ClickOver notified ClickOver of an intention to terminate
or substantially alter ClickOver's rights under such license.
3.19 Trade Secrets. ClickOver has taken reasonable security measures to
protect the confidentiality of its trade secrets. All current and past employees
or consultants of ClickOver, who, either alone or in concert with others,
developed, invented, discovered, derived, programmed or designed such trade
secrets, or who have or had access to information disclosing such trade secrets,
have entered into confidentiality and non-disclosure agreements with ClickOver
(the "ClickOver Trade Secret Agreements"). Any exception which has been taken to
the ClickOver Trade Secrets Agreements (for example an employee or consultant
excluding a prior invention) is described in Schedule 3.19, including the
exception taken and the employee taking such exception. To the Knowledge of
ClickOver, neither ClickOver, nor its employees or its consultants have caused
any of ClickOver's trade secrets to become part of the public knowledge or
literature, nor has ClickOver, its employees or consultants permitted any such
trade secrets to be used, divulged or appropriated for the benefit of persons to
the material detriment of ClickOver.
3.20 Environmental Matters.
(a) ClickOver is not in violation of any Federal, state or
local Environmental Law, which violation could reasonably be expected to result
in a material liability to ClickOver or its properties and assets. Neither
ClickOver nor, to the Knowledge of ClickOver, any third party, has used,
released, discharged, generated, manufactured, produced, stored, or disposed of
in, on, under or about its owned or leased property or other assets, or
transported thereto or therefrom, any Hazardous Materials in a manner that could
reasonably be expected to subject ClickOver to a material liability under any
Environmental Law. To the Knowledge of ClickOver, there are no underground
tanks, whether operative or temporarily or permanently closed, located on its
owned or leased property or other assets. There are no PCBs or items containing
PCBs used, stored or present at, on or, to the Knowledge of ClickOver, near its
owned or leased property or assets. To the Knowledge of ClickOver, there is or
has been no condition, circumstance, action, activity or event that could
reasonably be expected to form the basis of any violation of, or material
liability to ClickOver under, any local, state or Federal Environmental Law.
(b) There is no proceeding, investigation or inquiry by any
local, state or Federal governmental authority or any non-governmental third
party with respect to the presence or release of such Hazardous Materials in,
on, from or to ClickOver's owned or
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leased property and to the Knowledge of ClickOver no such proceedings are
threatened or contemplated by any such governmental authorities or
non-governmental third parties.
3.21 Brokers' and Finders' Fees: Third Party Expenses. Except as set
forth on Schedule 3.21, ClickOver has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby. Schedule 3.21 sets forth the principal terms
and conditions of any agreement, written or oral, with respect to such fees.
Schedule 3.21 sets forth ClickOver's current reasonable estimate of all Third
Party Expenses (as defined in Section 5.5) expected to be incurred by ClickOver
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby.
3.22 Permits and Licenses. Schedule 3.22 contains a complete and
correct copy of (i) each pending application or registration for governmental
approval and each governmental approval held by ClickOver to import, export,
store, market and sell ClickOver's products or services, and (ii) the most
recent report by or on behalf of any governmental body involving or relating to
any facility inspection of ClickOver facilities. Except as set forth in Schedule
3.22, (i) ClickOver possesses such governmental approvals from all governmental
bodies necessary to permit the operation of its business in the manner as the
same is currently conducted, and to operate, own or occupy its properties, (ii)
there have been no product recalls, field corrective activity, warning letters
or administrative actions by any governmental body, and (iii) to the Knowledge
of ClickOver (aa) there is no administrative action pending or threatened for
the revocation of any such governmental approval and (bb) assuming the obtaining
of the authorizations, consents, approvals and other actions listed in Schedule
3.22, no governmental approval by any governmental body having jurisdiction over
the operation of ClickOver's businesses, whether in whole or in part, will be
revoked, or become ineffective or subject to revocation, as a consequence of the
transactions contemplated by this Agreement.
3.23 Employee Matters and Benefit Plans.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 3.23(a)(i) below (which definition shall apply
only to this Section 3.23), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity
under common control with ClickOver within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations thereunder;
(ii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;
(iii) "ClickOver Employee Plan" shall refer to any
plan, program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, performance awards,
stock or stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether formal or informal, funded
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or unfunded and whether or not legally binding, including without limitation,
each "employee benefit plan" within the meaning of Section 3(3) of ERISA, which
is or has been maintained, contributed to, or required to be contributed to, by
ClickOver or any Affiliate for the benefit of any "Employee" (as defined below),
and pursuant to which ClickOver or any Affiliate has or may have any material
liability contingent or otherwise;
(iv) "Employee" shall mean any current, former or
retired employee, officer, or director of ClickOver or any Affiliate;
(v) "Employee Agreement" shall refer to each
management, employment, severance, consulting, relocation, repatriation,
expiration, visas, work permit or similar agreement or contract between
ClickOver or any Affiliate and any Employee or consultant;
(vi) "IRS" shall mean the Internal Revenue Service;
(vii) "Multiemployer Plan" shall mean any "Pension
Plan" (as defined below) which is a "multiemployer plan," as defined in Section
3(37) of ERISA; and
(viii) "Pension Plan" shall refer to each ClickOver
Employee Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Schedule 3.23(b) contains an accurate and
complete list of each ClickOver Employee Plan and each Employee Agreement,
together with a schedule of all liabilities, whether or not accrued, under each
such ClickOver Employee Plan or Employee Agreement. ClickOver does not have any
plan or commitment, whether legally binding or not, to establish any new
ClickOver Employee Plan or Employee Agreement, to modify any ClickOver Employee
Plan or Employee Agreement (except to the extent required by law or to conform
any such ClickOver Employee Plan or Employee Agreement to the requirements of
any applicable law, in each case as previously disclosed to Focalink in writing,
or as required by this Agreement), or to enter into any ClickOver Employee Plan
or Employee Agreement, nor does it have any intention or commitment to do any of
the foregoing.
(c) Documents. ClickOver has provided to Focalink (i) correct
and complete copies of all documents embodying or relating to each ClickOver
Employee Plan and each Employee Agreement including all amendments thereto and
written interpretations thereof; (ii) the most recent annual actuarial
valuations, if any, prepared for each ClickOver Employee Plan; (iii) the three
most recent annual reports (Series 5500 and all schedules thereto), if any,
required under ERISA or the Code in connection with each ClickOver Employee Plan
or related trust; (iv) if the ClickOver Employee Plan is funded, the most recent
annual and periodic accounting of the ClickOver Employee Plan assets; (v) the
most recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
ClickOver Employee Plan; (vi) all IRS determination letters and rulings relating
to ClickOver Employee Plans and copies of all applications and correspondence to
or from the IRS or the Department of Labor ("DOL") with respect to any ClickOver
Employee Plan; (vii) all communications material to
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any Employee or Employees relating to any ClickOver Employee Plan and any
proposed ClickOver Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to ClickOver; and (viii) all registration statements and
prospectuses prepared in connection with each ClickOver Employee Plan.
(d) Employee Plan Compliance. Except as set forth on Schedule
3.23(d), (i) ClickOver has performed in all material respects all obligations
required to be performed by it under each ClickOver Employee Plan, and each
ClickOver Employee Plan has been established and maintained in all materials
respects in accordance with its terms and in compliance with all applicable
laws, statutes, orders, rules and regulations, including but not limited to
ERISA or the Code; (ii) no "prohibited transaction," within the meaning of
Section 4975 of the Code or Section 406 of ERISA, has occurred with respect to
any ClickOver Employee Plan; (iii) there are no actions, suits or claims
pending, or, to the Knowledge of ClickOver, threatened or anticipated (other
than routine claims for benefits) against any ClickOver Employee Plan or against
the assets of any ClickOver Employee Plan; (iv) each ClickOver Employee Plan can
be amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to ClickOver, Focalink or any of
its Affiliates (other than ordinary administration expenses typically incurred
in a termination event); (v) there are no inquiries or proceedings pending or,
to the Knowledge of ClickOver, threatened by the IRS or DOL with respect to any
ClickOver Employee Plan; and (vi) ClickOver is not subject to any penalty or tax
with respect to any ClickOver Employee Plan under Section 402(i) of ERISA or
Section 4975 through 4980 of the Code.
(e) Pension Plans. ClickOver does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title
IV of ERISA or Section 4.12 of the Code.
(f) Multiemployer Plans. At no time has ClickOver contributed
to or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. Except as set forth in
Schedule 3.23(g), no ClickOver Employee Plan provides, or has any liability to
provide, life insurance, medical or other employee benefits to any Employee upon
his or her retirement or termination of employment for any reason, except as may
be required by statute, and ClickOver has never represented, promised or
contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) that such Employee(s) would be provided
with life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required by
statute.
(h) Effect of Transaction.
(i) Except as set forth on Schedule 3.23(h)(i), the
execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under
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any ClickOver Employee Plan, Employee Agreement, trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee.
(ii) Except as set forth on Schedule 3.23(h)(ii), no
payment or benefit of which will or may be made by ClickOver or Focalink or any
of their respective Affiliates with respect to any Employee will be
characterized as an "excess parachute payment," within the meaning of Section
280G(b)(1) of the Code.
(i) Employment Matters. ClickOver (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries, and other payments to Employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any payment to any
trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice).
(j) Labor. No work stoppage or labor strike against ClickOver
is pending or, to the Knowledge of ClickOver, threatened. Except as set forth in
Schedule 3.23(j), ClickOver is not involved in or, to the Knowledge of
ClickOver, threatened with, any labor dispute, grievance, or litigation relating
to labor, safety or discrimination matters involving any Employee, including,
without limitation, charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would, individually or in the
aggregate, result in a liability to ClickOver in excess of $10,000. ClickOver
has not engaged in any unfair labor practices within the meaning of the National
Labor Relations Act which would, individually or in the aggregate, directly or
indirectly result in a liability to ClickOver in excess of $10,000. Except as
set forth in Schedule 3.23(j), ClickOver is not presently, nor has it been in
the past, a party to, or bound by, any collective bargaining agreement or union
contract with respect to Employees and no collective bargaining agreement is
being negotiated by ClickOver. To the Knowledge of ClickOver, no labor union is
attempting to organize the employees of ClickOver into one or more collective
bargaining units.
3.24 Employees. To the Knowledge of ClickOver, no employees of
ClickOver are in violation of any term of any employment contract, patent
disclosure agreement, non-competition agreement, or any restrictive covenant to
a former employer relating to the right of any such employee to be employed by
ClickOver because of the nature of the business conducted or presently proposed
to be conducted by ClickOver or due to the use of trade secrets or proprietary
information of others.
3.25 Representation Complete. None of the representations or warranties
made by ClickOver (as modified by the ClickOver Schedules), nor any statement
made in any schedule
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or certificate furnished by ClickOver pursuant to this Agreement, or furnished
in or in connection with documents mailed or delivered to the shareholders of
ClickOver in connection with soliciting their consent to this Agreement and the
Merger, contains or will contain at the Effective Time, any untrue statement of
a material fact, or omits or will omit at the Effective Time to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
ARTICLE IV
CONDUCT BY FOCALINK PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of Focalink. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Focalink agrees (except to the extent that
ClickOver shall otherwise consent in writing) to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay its debts and Taxes when due, to pay or perform
other obligations when due, and, to the extent consistent with such business, to
use all reasonable efforts consistent with past practice and policies to
preserve intact its present business organization, keep available the services
of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors and others having business
dealings with it, all with the goal of preserving unimpaired its goodwill and
ongoing business at the Effective Time. Focalink shall promptly notify ClickOver
of any event or occurrence or emergency not in the ordinary course of its
business, and any material event involving or adversely affecting Focalink or
its business. Except as expressly contemplated by this Agreement, Focalink shall
not, without the prior written consent of ClickOver:
(a) Enter into any commitment, activity or transaction not in
the ordinary course of business;
(b) Transfer to any person or entity any rights to any
Focalink Intellectual Property (other than pursuant to end-user licenses in the
ordinary course of business);
(c) Enter into or amend any agreements pursuant to which any
other party is granted manufacturing, marketing, distribution or similar rights
of any type or scope with respect to any products or services of Focalink;
(d) Amend or otherwise modify (or agree to do so), except in
the ordinary course of business, or violate the terms of, any of the agreements
set forth or described in the Focalink Schedules;
(e) Commence any litigation or any dispute resolution process;
(f) Declare, set aside or pay any dividends on or make any
other distributions (whether in cash, stock or property) in respect of any
Focalink Capital Stock, or
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split, combine or reclassify any Focalink Capital Stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of Focalink Capital Stock, or repurchase, redeem or
otherwise acquire, directly or indirectly, any shares of Focalink Capital Stock
(or options, warrants or other rights exercisable for Focalink Capital Stock);
(g) Except for the issuance of shares of Focalink Capital
Stock upon exercise or conversion of presently outstanding Focalink Options or
Focalink Warrants, issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase of or propose the purchase of,
any shares of Focalink Capital Stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities;
(h) Cause or permit any amendments to its Articles of
Incorporation or Bylaws;
(i) 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 of Focalink;
(j) Fail in any material respect to comply with any laws,
ordinances, regulations or other governmental restrictions applicable to
Focalink;
(k) Sell, lease, license or otherwise dispose of any of its
properties or assets except in the ordinary course of business and consistent
with past practice;
(l) Incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities of Focalink or guarantee
any debt securities of others;
(m) Grant any severance or termination pay to any director,
officer, employee or consultant, except payments made pursuant to standard
written agreements outstanding on the date hereof (which agreements are
disclosed on Schedule 4.1(m));
(n) Adopt or amend any employee benefit plan, program, policy
or arrangement, or enter into any employment contract, extend any employment
offer, pay or agree to pay any special bonus or special remuneration to any
director, employee or consultant, or increase the salaries or wage rates of its
employees;
(o) Revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business and consistent with past practice;
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(p) Pay, discharge or satisfy, in an amount in excess of
$10,000, in any one case, or $25,000 in the aggregate, any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in the Focalink Financial
Statements;
(q) Take any action that could jeopardize the qualification of
the Merger as a reorganization within the meaning of Section 368(a) of the Code;
(r) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(s) Enter into any strategic alliance, joint development or
joint marketing arrangement or agreement;
(t) Fail to pay or otherwise satisfy its monetary obligations
as they become due, except such as are being contested in good faith;
(u) Waive or commit to waive any rights with a value in excess
of $10,000, in any one case, or $25,000 in the aggregate;
(v) Cancel, materially amend or renew any insurance policy
other than in the ordinary course of business;
(w) Alter, or enter into any commitment to alter, its interest
in any corporation, association, joint venture, partnership or business entity
in which Focalink directly or indirectly holds any interest on the date hereof;
or
(x) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through (w) above, or any other action that
would prevent Focalink from performing or cause Focalink not to perform its
covenants hereunder.
4.2 No Solicitation. Until the earlier of the Effective Time or the
date of termination of this Agreement pursuant to the provisions of Section 9.1
hereof, Focalink, Cupertino and Xxxxxxxx will not (nor will Focalink permit any
of Focalink's officers, directors, shareholders, agents, representatives or
affiliates to), directly or indirectly, take any of the following actions with
any party other than to ClickOver and its designees: (a) solicit, initiate,
entertain, or encourage any proposals or offers from, or conduct discussions
with or engage in negotiations with, any person relating to any possible
acquisition of Focalink (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise), any material portion of its or their capital
stock or assets or any equity interest in Focalink; (b) provide information with
respect to it to any person, other than ClickOver, relating to, or otherwise
cooperate with, facilitate or encourage any effort or attempt by any such person
with regard to, any possible acquisition of Focalink (whether by way of merger,
purchase of
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capital stock, purchase of assets or otherwise), any material portion of its or
their capital stock or assets or any equity interest in Focalink; (c) enter into
an agreement with any person, other than ClickOver, providing for the
acquisition of Focalink (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise), any material portion of its or their capital
stock or assets or any equity interest in Focalink; or (d) make or authorize any
statement, recommendation or solicitation in support of any possible acquisition
of Focalink (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise), any material portion of its or their capital stock or
assets or any equity interest in Focalink by any person, other than by
ClickOver. Focalink shall immediately cease and cause to be terminated any such
contacts or negotiations with third parties relating to any such transaction or
proposed transaction. In addition to the foregoing, if Focalink receives prior
to the Effective Time or the termination of this Agreement any offer or proposal
relating to any of the above, Focalink shall immediately notify ClickOver
thereof, including information as to the identity of the offeror or the party
making any such offer or proposal and the specific terms of such offer or
proposal, as the case may be, and such other information related thereto as
ClickOver may reasonably request. Except as contemplated by this Agreement,
disclosure by Focalink of the terms hereof (other than the prohibition of this
section) shall be deemed to be a violation of this Section 4.2. The provisions
of this Section 4.2 shall not prohibit Cupertino from exercising its rights and
remedies under Sections 8.3, 8.4, 8.5 or 8.6 of that certain Loan and Security
Agreement dated as of March 13, 1997 between Cupertino and Focalink based upon a
default under any such Section that does not exist as of the date of this
Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Sale of Shares; Shareholder Matters.
(a) Sale of Shares. The parties hereto acknowledge and agree
that the shares of ClickOver Capital Stock issuable to the holders of Focalink
Capital Stock and the Focalink Debt pursuant to Section 1.6 hereof shall
constitute "restricted securities" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"). The certificates for shares of
ClickOver Capital Stock to be issued in the Merger shall bear appropriate
legends to identify such privately placed shares as being restricted under the
Securities Act and to comply with applicable state securities laws. It is
acknowledged and understood that ClickOver is relying upon the written
representations made by each Focalink Shareholder and each holder of any
Focalink Debt in the Shareholder Questionnaire in determining the availability
of exemptions from the registration and qualification provisions of applicable
securities laws for the issuance of the ClickOver Capital Stock in the Merger.
(b) Shareholder Questionnaire. Focalink will cause each
Focalink Shareholder and each holder of any Focalink Debt to execute and deliver
to ClickOver a Shareholder Questionnaire and Release in the form attached hereto
as Exhibit C (the "Shareholder Questionnaire").
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(c) Focalink Shareholder Approval. As promptly as practicable
after the execution of this Agreement, Focalink shall submit this Agreement and
the transactions contemplated hereby to its shareholders for approval and
adoption as provided by California Law and its Articles of Incorporation and
Bylaws. Focalink shall use reasonable efforts to solicit and obtain the written
consent of the Focalink Shareholders to approve the Merger and this Agreement
and to enable the Closing to occur as promptly as practicable. In connection
with such shareholder approval as soon as practicable after the execution of
this Agreement, Focalink shall prepare, with the cooperation of ClickOver, an
Information Statement for purposes of soliciting such written consent of the
Focalink Shareholders. The Information Statement shall also constitute a
disclosure document for the offer and sale of the shares of ClickOver Capital
Stock to be received by the holders of Focalink's Capital Stock in the Merger.
Focalink shall use its best efforts, with the cooperation of ClickOver, to cause
such Information Statement to be distributed to the Focalink Shareholders no
later than November 26, 1997. Each of ClickOver and Focalink agrees to provide
promptly to the other such information concerning its business and financial
statements and affairs as, in the reasonable judgment of the providing party or
its counsel, may be required or appropriate for inclusion in the Information
Statement or in any amendments or supplements thereto, and to cause its counsel
and auditors to cooperate with the other's counsel and auditors in the
preparation of the Information Statement. Each of the parties hereto will
promptly advise the other party in writing if at any time prior to the Effective
Time either Focalink or ClickOver shall obtain knowledge of any facts that might
make it necessary or appropriate to amend or supplement the Information
Statement in order to make the statements contained therein not misleading or to
comply with applicable law. The Information Statement shall contain the
unanimous recommendation of the Board of Directors of Focalink that the Focalink
Shareholders approve the Merger and this Agreement and the transactions
contemplated hereby and the conclusion of the Board of Directors that the terms
and conditions of the Merger are fair and reasonable to the Focalink
Shareholders. Anything to the contrary contained herein notwithstanding,
Focalink shall not include in the Information Statement any information with
respect to ClickOver or its affiliates or associates, the form and content of
which information shall not have been approved by ClickOver prior to such
inclusion. Focalink shall use its best efforts to obtain the consent of all of
its shareholders to depositing the Escrow Amount into the Escrow Fund.
(d) ClickOver Shareholder Approval. As promptly as practicable
after the execution of this Agreement, ClickOver shall submit this Agreement and
the transactions contemplated hereby to its shareholders for approval and
adoption as provided by California Law and its Articles of Incorporation and
Bylaws. ClickOver shall use reasonable efforts to solicit and obtain the written
consent of its shareholders to approve the Merger and this Agreement and to
enable the Closing to occur as promptly as practicable. In connection with such
shareholder approval as soon as practicable after the execution of this
Agreement, ClickOver shall prepare, with the cooperation of Focalink, an
Information Statement for purposes of soliciting such written consent of the
ClickOver Shareholders. The Information Statement shall contain the unanimous
recommendation of the Board of Directors of ClickOver that the ClickOver
Shareholders approve the Merger and this Agreement and the transactions
contemplated hereby and the conclusion of the Board of Directors that the terms
and conditions of the Merger are fair and reasonable to the ClickOver
Shareholders.
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Anything to the contrary contained herein notwithstanding, ClickOver shall not
include in the Information Statement any information with respect to Focalink or
its affiliates or associates, the form and content of which information shall
not have been approved by Focalink prior to such inclusion.
(e) Additional Assurances. Each of Focalink and ClickOver
shall use its best efforts to cause its respective shareholders to execute and
deliver such instruments and do and perform such acts and things as may be
necessary or desirable for complying with all applicable securities laws and
state corporate law.
5.2 Access to Information. Focalink and ClickOver shall each afford the
other and its accountants, counsel and other representatives, reasonable access
during normal business hours during the period prior to the Effective Time to
(a) all of its properties, books, contracts, commitments and records, and (b)
all other information concerning its business, properties and personnel (subject
to restrictions imposed by applicable law) as the other may reasonably request,
subject to reasonable limits on access to technical and other non-public
information. No information or knowledge obtained in any investigation pursuant
to this Section 5.2 shall affect or be deemed to modify any representation or
warranty contained herein.
5.3 Confidentiality. Each of the parties hereto hereby agrees to keep
such information or knowledge obtained in any investigation pursuant to Section
5.2, or pursuant to the negotiation and execution of this Agreement or the
effectuation of the transactions contemplated hereby, confidential; provided,
however, that the foregoing shall not apply to information or knowledge which
(a) a party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other party, (b) is generally known to the public and
did not become so known through any violation of law, (c) became known to the
public through no fault of such party, (d) is later lawfully acquired by such
party from other sources, (e) is required to be disclosed by order of court or
government agency with subpoena powers or (f) which is required to be disclosed
in the course of any litigation between any of the parties hereto.
5.4 Intellectual Property. ClickOver and Focalink each agree that prior
to the Merger, any and all intellectual property, including trade secrets,
created or developed by either party shall remain the exclusive property of the
party who created or developed such property, notwithstanding the sharing of
information prior to the Merger.
5.5 Expenses. At the Closing, ClickOver shall pay all reasonable legal
and accounting fees and expenses incurred by Focalink in connection with the
Merger; provided, however, that Xxxxxxxx shall pay all reasonable fees and
expenses incurred (i) by Focalink in connection with the restructuring of the
Focalink Debt and (ii) by Cupertino in connection with the Merger. If the Merger
is not consummated, all fees and expenses incurred in connection with the Merger
including, without limitation, all legal, accounting, financial advisory,
consulting and all other fees and expenses of third parties ("Third Party
Expenses") incurred by a party in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions
contemplated hereby shall be the obligation
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of the respective party incurring such fees and expenses, provided, however,
that Cupertino's expenses shall remain the responsibility of Xxxxxxxx.
5.6 Public Disclosure. Unless otherwise required by law, prior to the
Effective Time, no disclosure (whether or not in response to an inquiry) of the
specific terms of this Agreement shall be made by any party to this Agreement
unless approved by Focalink and ClickOver prior to release, provided that such
approval shall not be unreasonably withheld.
5.7 Consents. Each of Focalink and ClickOver shall use reasonable
efforts to obtain the consents, waivers and approvals under any of the Focalink
Contracts or ClickOver Contracts, respectively, as may be required in connection
with the Merger (all of such consents, waivers and approvals are set forth in
the Focalink Schedules and the ClickOver Schedules, respectively) so as to
preserve all rights of and benefits to the Surviving Corporation thereunder.
5.8 FIRPTA Compliance. On or prior to the Closing Date, Focalink shall
deliver to ClickOver a properly executed statement in a form reasonably
acceptable to ClickOver for purposes of satisfying ClickOver's obligations under
Treasury Regulation Section 1.1445- 2(c)(3).
5.9 Reasonable Efforts. Subject to the terms and conditions provided in
this Agreement, each of the parties hereto shall use its reasonable efforts to
ensure that its representations and warranties remain true and correct in all
material respects, and to take promptly, or cause to be taken, all actions, and
to do promptly, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings, and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement; provided, however, that ClickOver shall not be required to agree
to any divestiture by ClickOver or affiliates of shares of capital stock or any
business, assets or property of ClickOver or its affiliates or Focalink or its
affiliates, or the imposition of any material limitation on the ability of any
of them to conduct their businesses or to own or exercise control of such
assets, properties and stock.
5.10 Notification of Certain Matters. Focalink and ClickOver shall each
give prompt notice to the other of (i) the occurrence or non-occurrence of any
event, the occurrence or non-occurrence of which is likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time and (ii) its failure to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.10 shall not limit or otherwise affect any remedies available to
the other.
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5.11 Certain Benefit Plans. ClickOver shall take such reasonable
actions as are necessary to allow eligible employees of Focalink that are hired
by ClickOver to participate in the benefit programs of ClickOver as soon as
practicable after the Effective Time.
5.12 Voting Agreement. Focalink shall deliver or cause to be delivered
to ClickOver, concurrently with the execution of this Agreement, from each
person listed on Schedule 5.12, an executed Voting Agreement in the form
attached hereto as Exhibit D (the "Voting Agreements"), agreeing, among other
things, to vote in favor of the Merger and against any competing proposals.
5.13 Additional Documents and Further Assurances. Each party hereto, at
the request of the other party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
5.14 ClickOver Board of Directors. ClickOver shall use reasonable
efforts to ensure that the Board of Directors of ClickOver, effective upon the
Closing, will consist of Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx and
Xxxxx Xxxxx.
5.15 Future Amendment to ClickOver Articles. In the event that, as part
of the first equity financing of ClickOver after the Closing of the Merger in
which the total proceeds received by ClickOver are $3,000,000 or more, ClickOver
issues a new series of ClickOver Preferred Stock that has price-based
antidilution protection for issuances of equity securities by ClickOver at less
than 25/32 of the Effective Issue Price (as defined in the Filed Articles) of
the ClickOver Series C-3 Preferred Stock, ClickOver shall use its reasonable
efforts to obtain the approval of its board of directors and shareholders to
amend the Filed Articles to provide price-based antidilution protection for the
ClickOver Series C-3 Preferred Stock for issuances of equity securities by
ClickOver at less than 25/32 of the Effective Issue Price (as defined in the
Filed Articles) of the ClickOver Series C-3 Preferred Stock.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of Focalink, ClickOver and Merger Sub to effect the
Merger shall be subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) Shareholder Approvals of the Merger. This Agreement and
the Merger shall have been approved and adopted by the Focalink Shareholders by
the requisite vote under applicable law and Focalink's Articles of Incorporation
and by the shareholders of ClickOver by the requisite vote under applicable law
and ClickOver's Articles of Incorporation.
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(b) Other Shareholder Approvals. If required by law, any other
agreement or document shall have been approved and adopted by the Focalink
Shareholders by the requisite vote under applicable law and Focalink's Articles
of Incorporation and/or by the shareholders of ClickOver by the requisite vote
under applicable law and ClickOver's Articles of Incorporation, including,
without limitation, the approval of the Filed Articles by the shareholders of
ClickOver.
(c) Government Approvals. All approvals of governments and
governmental agencies necessary to consummate the transactions hereunder shall
have been received.
(d) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect.
6.2 Additional Conditions to Obligations of Focalink. The obligations
of Focalink to consummate the Merger and the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, in writing,
exclusively by Focalink:
(a) Representations and Warranties. The representations and
warranties of ClickOver and Merger Sub contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Date, except for
changes contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall have
been true and correct as of such date), with the same force and effect as if
made on and as of the Closing Date, except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties which
have neither had nor reasonably would be expected to have a Material Adverse
Effect on ClickOver; and Focalink shall have received a certificate to such
effect signed on behalf of ClickOver by the chief executive officer and chief
financial officer of ClickOver.
(b) Agreements and Covenants. ClickOver shall have performed
or compiled in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by ClickOver on or prior to
the Effective Time, and Focalink shall have received a certificate to such
effect signed by the chief executive officer and chief financial officer of
ClickOver.
(c) Third Party Consents. Focalink shall have been furnished
with evidence satisfactory to it that ClickOver has obtained the consents,
approvals and waivers set forth in Schedule 6.2(c).
(d) Legal Opinion. Focalink shall have received a legal
opinion from Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel to ClickOver, in
substantially the form attached hereto as Exhibit E, as the same may be amended
by the mutual agreement of Focalink and ClickOver.
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(e) Amendment of Investor Rights Agreement. ClickOver and the
holders of a majority of the Registrable Securities (as defined in that certain
Investor Rights Agreement dated March 14, 1997 (the "Investor Rights
Agreement")) shall have executed the Amendment No. 1 to the Investor Rights
Agreement substantially in the form attached hereto as Exhibit F.
(f) Material Adverse Change. There shall not have occurred any
material adverse change in the business, assets (including intangible assets),
liabilities, financial condition or results of operations of ClickOver since the
date of the ClickOver Balance Sheet.
(g) Director Voting Agreement. KPCB shall have executed and
delivered a voting agreement (the "Director Voting Agreement") whereby, for so
long as Xxxxxxxx and Cupertino together hold in the aggregate ten percent (10%)
or more of the outstanding ClickOver Capital Stock on a fully diluted basis,
KPCB shall agree to vote all of its shares of ClickOver Capital Stock now or
hereafter owned by it for Xxxxx Xxxxx as a director of ClickOver.
6.3 Additional Conditions to Obligations of ClickOver. The obligations
of ClickOver to consummate the Merger and the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, in writing,
exclusively by ClickOver:
(a) Representations and Warranties. The representations and
warranties of Focalink contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall have
been true and correct as of such date), with the same force and effect as if
made on and as of the Closing Date, except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties which
have neither had nor reasonably would be expected to have a Material Adverse
Effect on Focalink; and ClickOver shall have received a certificate to such
effect signed on behalf of Focalink by the chief executive officer and chief
financial officer of Focalink.
(b) Agreements and Covenants. Focalink shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be preformed or complied with by it on or prior to the
Effective Time, and ClickOver shall have received a certificate to such effect
signed by the chief executive officer and chief financial officer of Focalink.
(c) Third Party Consents. ClickOver shall have been furnished
with evidence satisfactory to it that Focalink has obtained the consents,
approvals and waivers set forth in Schedule 6.3(c).
(d) Legal Opinion. ClickOver shall have received a legal
opinion from Xxxxxx & Xxxxxxx, legal counsel to Focalink, in substantially the
form attached hereto as Exhibit G, as the same may be amended by the mutual
agreement of ClickOver and Focalink.
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(e) Shareholder Questionnaire. Each of Focalink's Shareholders
and each holder of any Focalink Debt shall have delivered to ClickOver an
executed Shareholder Questionnaire which shall be in full force and effect.
(f) Purchaser Representative. There shall be a Purchaser
Representative, as defined in Regulation D under the Securities Act, reasonably
satisfactory to ClickOver representing each of the Focalink Shareholders and
each holder of any Focalink Debt who are not "accredited" as defined in
Regulation D, and such Purchaser Representative shall have executed
documentation reasonably satisfactory to ClickOver.
(g) Material Adverse Change. There shall not have occurred any
material adverse change in the business, assets (including intangible assets),
liabilities, financial condition or results of operations of Focalink since the
date of the Focalink Balance Sheet.
(h) Dissenters' Rights. No holders of the outstanding shares
of Focalink Capital Stock shall have exercised, nor shall they have any
continued right to exercise, appraisal, dissenters' or similar rights under
applicable law with respect to their shares by virtue of the Merger.
(i) Exemption from Registration; Permit. In the judgment of
ClickOver's counsel (a) an exemption from registration under Section 4(2) or
Regulation D of the Securities Act shall be available for the issuance of
ClickOver Capital Stock and any other securities issued by ClickOver in the
Merger and (b) an exemption from registration and qualification under any
applicable state securities laws shall be available for the issuance of
ClickOver Capital Stock and any other securities issued by ClickOver in the
Merger or ClickOver shall have obtained a permit qualifying the issuance of such
ClickOver Capital Stock and other securities.
(j) Limited Focalink Trade Debt. At the Effective Time,
Focalink shall have no outstanding debts or liabilities other than (i) those
accounts payable, debts and liabilities, and for the stated amounts, set forth
in Schedule 6.3(j), and (ii) the Focalink Debt which shall be converted to
shares of Preferred Stock of ClickOver at the Closing.
(k) Focalink Employees and Burn Rate. At the Effective Time,
Focalink shall have no more than 26 full and part-time employees and Focalink's
aggregate operating expenses shall have been no greater than $300,000 for the
month of November 1997.
(l) Restructure of Focalink Debt. ClickOver shall have
received from Focalink documents or other evidence satisfactory to ClickOver in
the opinion of ClickOver's counsel showing that Xxxxxxxx has purchased from
Cupertino a portion of the Focalink Debt so that the outstanding principal
amount of the Focalink Debt held by Cupertino has been reduced to $2,000,000.
(m) Delivery of Focalink Certificates. The Focalink
Shareholders shall have delivered to ClickOver all original Focalink
Certificates.
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(n) Delivery of Focalink Notes; Release of Security Interest.
Cupertino and Xxxxxxxx shall have delivered to ClickOver the Focalink Notes or
shall have executed an instrument of cancellation in form and substance
acceptable to ClickOver. In addition, Cupertino and Xxxxxxxx shall have
delivered to ClickOver a properly executed Form UCC-2 termination statement and
any other documents required to release any security interest that Cupertino
and/or Xxxxxxxx may have in any of the assets of Focalink.
(o) Waiver of Rights to Purchase Additional Focalink Capital
Stock. ClickOver shall have received from Focalink documents or other evidence
satisfactory to ClickOver in the opinion of ClickOver's counsel showing that
Cupertino and Xxxxxxxx have waived all of each such party's respective right (i)
to purchase an increased number of shares of Focalink Capital Stock and (ii) to
purchase such Focalink Capital Stock at a price per share less than the Series
C-3 Liquidation Price (as defined in the Filed Articles) multiplied by the
Exchange Ratio, which rights may have accrued because of Focalink's failure to
pay the outstanding principal and interest of any Focalink Notes held by
Cupertino or Xxxxxxxx.
(p) Right of First Refusal Agreement. Cupertino and Xxxxxxxx
shall have executed the Right of First Refusal Agreement substantially in the
form attached hereto as Exhibit H.
(q) Cancellation of Outstanding Focalink Options. All
outstanding Focalink Options shall terminate immediately as of the Effective
Time.
(r) Director Voting Agreement. Cupertino and Xxxxxxxx each
shall have executed and delivered the Director Voting Agreement.
ARTICLE VII
ESCROW
7.1 Escrow Period. Subject to the following requirements, the Escrow
Fund (as defined below) shall be in existence immediately following the Closing
Date and terminate at 5:00 p.m., California time, on the first anniversary of
the Closing Date (the "Escrow Period"), provided that the Escrow Period shall
not terminate with respect to such amount that is necessary in the reasonable
judgment of ClickOver, subject to the objection of the Focalink Securityholder
Agent (as defined in Section 7.2(h)) and the subsequent arbitration of the
matter in the manner provided in Section 7.2(e) hereof, to satisfy any
unsatisfied claims concerning facts and circumstances existing prior to the
termination of such Escrow Period specified in any ClickOver Certificate
delivered to the Escrow Agent (as defined below) prior to termination of such
Escrow Period.
7.2 Escrow Arrangements.
(a) Escrow Fund. At the Effective Time, the Participating
Shareholders will be deemed to have received and deposited with the Escrow Agent
(as defined below)
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shares of ClickOver Common Stock and ClickOver Preferred Stock (plus any
additional shares as may be issued upon any stock split, stock dividend or
recapitalization effected by ClickOver after the Effective Time) without any act
of any Participating Shareholder. As soon as practicable after the Effective
Time, the Escrow Amount, without any act of any Participating Shareholder, will
be deposited with an institution acceptable to ClickOver and the Focalink
Securityholder Agent as Escrow Agent (the "Escrow Agent"), such deposit to
constitute an escrow fund (the "Escrow Fund") to be governed by the terms set
forth herein and at ClickOver's cost and expense. The portion of the Escrow
Amount contributed on behalf of each Participating Shareholder shall be in
proportion to the aggregate ClickOver Common Stock and ClickOver Preferred Stock
which such holder would otherwise be entitled to receive under Section 1.6. No
portion of the Escrow Amount shall be contributed in respect of any Focalink
Warrants. Subject to the limits of Section 7.2(g) below, the Escrow Fund shall
be available to compensate ClickOver for any claims, losses, liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses, and expenses of investigation and defense (hereinafter
individually a "Loss" and collectively "Losses") incurred by ClickOver, its
officers, directors, or affiliates (including the Surviving Corporation)
directly or indirectly as a result of any inaccuracy or breach of a
representation or warranty of Focalink contained in Article II herein (as
modified by the Focalink Schedules), or any failure by Focalink to perform or
comply with any covenant contained herein. ClickOver and Focalink each
acknowledge that such Losses, if any, would relate to the unresolved
contingencies existing at the Effective Time, which, if resolved at the
Effective Time would have led to a reduction in the aggregate Merger
consideration.
(b) Distribution Upon Termination of Escrow Period. Upon
termination of the Escrow Period, the Escrow Agent shall deliver to the
Participating Shareholders the remaining portion of the Escrow Fund except for
any amount that is necessary to satisfy any unsatisfied claims, as determined in
accordance with Section 7.1. Deliveries of Escrow Amounts to the Participating
Shareholders pursuant to this Section 7.2(b) shall be made in proportion to
their respective original contributions to the Escrow Fund.
(c) Protection of Escrow Fund.
(i) The Escrow Agent shall hold and safeguard the
Escrow Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of ClickOver
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof.
(ii) Any shares of ClickOver Common Stock or other
equity securities issued or distributed by ClickOver (including shares issued
upon a stock split, stock dividend or recapitalization effected by ClickOver
after the Effective Time) ("New Shares") in respect of ClickOver Common Stock or
ClickOver Preferred Stock in the Escrow Fund which have not been released from
the Escrow Fund shall be added to the Escrow Fund and become a part thereof.
Cash dividends on ClickOver Common Stock or ClickOver Preferred Stock shall not
be added to the Escrow Fund but shall be distributed to the Participating
Shareholders who are the beneficial owners thereof.
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(iii) Each Participating Shareholder shall have
voting rights with respect to the shares of ClickOver Common Stock and ClickOver
Preferred Stock contributed to the Escrow Fund by such Participating Shareholder
(and any voting securities added to the Escrow Fund in respect of such shares of
ClickOver Common Stock and ClickOver Preferred Stock).
(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Escrow Agent at any time on
or before the last day of the Escrow Period of a certificate signed by any
officer of ClickOver (a "ClickOver Certificate"): (A) stating that ClickOver has
paid or properly accrued or reasonably anticipates that it will have to pay or
accrue Losses, and (B) specifying in reasonable detail the individual items of
Losses included in the amount so stated, the date each such item was paid or
properly accrued, or the basis for such anticipated liability, and the nature of
the misrepresentation, breach of warranty or covenant to which such item is
related, the Escrow Agent shall, subject to the provisions of Section 7.2(e)
hereof, deliver to ClickOver out of the Escrow Fund, as promptly as practicable,
shares of ClickOver Common Stock and ClickOver Preferred Stock held in the
Escrow Fund in an amount equal to such Losses, and on behalf of each
Participating Shareholder in proportion to the total value of the shares of
ClickOver Common Stock and ClickOver Preferred Stock deposited in the Escrow
Fund on behalf of such Participating Shareholder (with the value of all shares
in the Escrow Fund being determined as provided in Section 7.2(d)(ii) below),
provided, however, that ClickOver shall not be entitled to make any claim
against the Escrow Fund until the aggregate amount of the Losses claimed by
ClickOver exceeds $50,000.
(ii) For purposes of determining the number of shares
of ClickOver Capital Stock to be delivered to ClickOver out of the Escrow Fund
pursuant to Section 7.2(d)(i) hereof, the value of each share of ClickOver
Common Stock shall be valued at ten percent (10%) of the Series C-3 Liquidation
Price (as defined in the Filed Articles), the value of each share of ClickOver
Series C-1 Preferred Stock shall be valued at the Series C-1 Liquidation Price
(as defined in the Filed Articles), the value of each share of ClickOver Series
C-2 Preferred Stock shall be valued at the Series C-2 Liquidation Price (as
defined in the Filed Articles) and the value of each share of ClickOver Series
C-3 Preferred Stock shall be valued at the Series C-3 Liquidation Price (as
defined in the Filed Articles).
(e) Objections of Claims. At the time of delivery of any
ClickOver Certificate to the Escrow Agent, a duplicate copy of such certificate
shall be delivered to the Focalink Securityholder Agent and for a period of
thirty (30) days after such delivery, the Escrow Agent shall make no delivery to
ClickOver of any shares of ClickOver Common Stock or ClickOver Preferred Stock
held in the Escrow Fund pursuant to Section 7.2(d) hereof unless the Escrow
Agent shall have received written authorization from the Focalink Securityholder
Agent to make such delivery. After the expiration of such thirty (30) day
period, the Escrow Agent shall make delivery of shares of ClickOver Common Stock
and ClickOver Preferred Stock from the Escrow Fund in accordance with Section
7.2(d) hereof, provided that no such payment or delivery may be made if the
Focalink Securityholder Agent shall object in a written statement to the claim
made in the ClickOver Certificate, and such
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statement shall have been delivered to the Escrow Agent prior to the expiration
of such thirty (30) day period.
(f) Resolution of Conflicts; Arbitration.
(i) If the Focalink Securityholder Agent shall object
in writing to any claim or claims made in any ClickOver Certificate, the
Focalink Securityholder Agent and ClickOver shall attempt in good faith to agree
upon the rights of the respective parties with respect to each of such claims.
If the Focalink Securityholder Agent and ClickOver should so agree, a memorandum
setting forth such agreement shall be prepared and signed by both parties and
shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to
rely on any such memorandum and distribute shares of ClickOver Common Stock and
ClickOver Preferred Stock from the Escrow Fund in accordance with the terms
thereof.
(ii) If no such agreement can be reached after good
faith negotiation, either ClickOver or the Focalink Securityholder Agent may
demand arbitration of the matter unless the amount of the damage or loss is at
issue in pending litigation with a third party, in which event arbitration shall
not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by arbitration
conducted by three arbitrators. ClickOver and the Focalink Securityholder Agent
shall each select one arbitrator, and the two arbitrators so selected shall
select a third arbitrator. The arbitrators shall set a limited time period and
establish procedures designed to reduce the cost and time for discovery while
allowing the parties an opportunity, adequate in the sole judgment of the
arbitrators, to discover relevant information from the opposing parties about
the subject matter of the dispute. The arbitrators shall rule upon motions to
compel or limit discovery and shall have the authority to impose sanctions,
including attorneys' fees and costs, to the extent as a court of competent law
or equity, should the arbitrators determine that discovery was sought without
substantial justification or that discovery was refused or objected to without
substantial justification. The decision of a majority of the three arbitrators
as to the validity and amount of any claim in such ClickOver Certificate shall
be binding and conclusive upon the parties to this Agreement, and
notwithstanding anything in Section 7.2(e) hereof, the Escrow Agent shall be
entitled to act in accordance with such decision and make or withhold payments
out of the Escrow Fund in accordance therewith. Such decision shall be written
and shall be supported by written findings of fact and conclusions which shall
set forth the award, judgment, decree or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. Any such
arbitration shall be held in Santa Xxxxx County, California under the rules then
in effect of the American Arbitration Association. For purposes of this Section
7.2(f)(iii), in any arbitration hereunder in which any claim or the amount
thereof stated in the ClickOver Certificate is at issue, ClickOver shall be
deemed to be the Non-Prevailing Party in the event that the arbitrators award
ClickOver less than the sum of one-half (1/2) of the disputed amount plus any
amounts not in dispute; otherwise, the Participating Shareholders as represented
by the Focalink Securityholder Agent shall be deemed to be the Non-Prevailing
Party. The Non-Prevailing Party to an arbitration shall pay its own expenses,
the fees of each arbitrator, the administrative costs of the arbitration and the
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expenses, including without limitation, reasonable attorneys' fees and costs,
incurred by the other party to the arbitration.
(g) Limitation of Liability. In no event will the
Participating Shareholders be liable (i) for any claims alleging incidental,
consequential, special or indirect damages (including without limitation, any
damages arising from the loss of business, data, profits or goodwill) incurred
or suffered by ClickOver with respect to this Agreement or the transactions
contemplated hereby, even if the Participating Shareholders have been apprised
of the likelihood of any such claim and (ii) for any damages incurred or
suffered by ClickOver unless such claim is received by the Participating
Shareholders in accordance with Section 7.2(d)(i) within one year after the
Closing Date. Focalink shall not be liable to ClickOver for any amounts, in the
aggregate, which exceed the value of the ClickOver Capital Stock placed in
escrow pursuant to Article VII of this Agreement with the value of such
ClickOver Capital Stock being determined in accordance with the provisions of
Section 7.2(d)(ii).
(h) Focalink Securityholder; Power of Attorney.
(i) In the event that the Merger is approved,
effective upon such vote, and without further act of any Participating
Shareholder, Xxxxx Xxxxx shall be appointed as agent and attorney-in-fact (the
"Focalink Securityholder Agent") for and on behalf of the Participating
Shareholders, to give and receive notices and communications, to authorize
delivery to ClickOver of shares of ClickOver Common Stock and ClickOver
Preferred Stock from the Escrow Fund in satisfaction of claims by ClickOver, to
object to such deliveries, to agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of the Focalink Securityholder Agent
for the accomplishment of the foregoing. Such agency may be changed by the
Participating Shareholders from time to time upon not less than thirty (30) days
prior written notice to ClickOver; provided that the Focalink Securityholder
Agent may not be removed unless holders of two-thirds in interest of the Escrow
Fund (based on the value of the shares in the Escrow Fund determined pursuant to
Section 7.2(d)(ii)) agree to such removal and to the identity of the substituted
agent. Any vacancy in the position of the Focalink Securityholder Agent may be
filled by approval of the holders of a majority in interest of the Escrow Fund.
No bond shall be required of the Focalink Securityholder Agent, and the Focalink
Securityholder Agent shall not receive compensation for his or her services.
Notice or communications to or from the Focalink Securityholder Agent shall
constitute notice to or from each of the Participating Shareholders.
(ii) The Focalink Securityholder Agent shall not be
liable for any act done or omitted hereunder as Focalink Securityholder Agent
while acting in good faith and in the exercise of reasonable judgement. The
Participating Shareholders shall severally indemnify the Focalink Securityholder
Agent and hold the Focalink Securityholder Agent harmless against any loss,
liability or expense incurred without negligence or bad faith on the part of the
Focalink Securityholder Agent and arising out of or in connection with the
acceptance or administration of the Focalink Securityholder Agent's duties
hereunder,
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including the reasonable fees and expenses of any legal counsel retained by the
Focalink Securityholder Agent.
(i) Actions of the Focalink Securityholder Agent. A decision,
act, consent or instruction of the Focalink Securityholder Agent shall
constitute a decision of all the Participating Shareholders and shall be final,
binding and conclusive upon each of such Participating Shareholders, and the
Escrow Agent and ClickOver may rely upon any such decision, act, consent or
instruction of the Focalink Securityholder Agent as being the decision, act,
consent or instruction of each and every such Participating Shareholder. The
Escrow Agent and ClickOver are hereby relieved from any liability to any person
for any acts done by them in accordance with such decision, act, consent or
instruction of the Focalink Securityholder Agent.
(j) Third Party Claims. In the event ClickOver becomes aware
of a third party claim which ClickOver believes may result in a demand against
the Escrow Fund, ClickOver shall notify the Focalink Securityholder Agent of
such claim, and the Focalink Securityholder Agent, as representative for the
Participating Shareholders, shall be entitled, at the Participating
Shareholders' expense, to participate in any defense of such claim. ClickOver
shall have the right in its sole discretion to settle any such claim; provided,
however, that except with the consent of the Focalink Securityholder Agent, no
settlement of any such claim with third party claimants shall be determinative
of the amount of any claims against the Escrow Fund. In the event that the
Focalink Securityholder Agent has consented to any such settlement, the Focalink
Securityholder Agent shall have no power or authority to object under any
provision of this Article VII to the amount of any claim by ClickOver against
the Escrow Fund with respect to such settlement.
(k) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of
ClickOver and the Focalink Securityholder Agent, and may rely and shall be
protected in relying or refraining from acting on any instruction reasonably
believed to be genuine and to have been signed or presented by the proper party
or parties. The Escrow Agent shall not be liable for any act done or omitted
hereunder as Escrow Agent while acting in good faith and in the exercise of
reasonable judgment, and any act done or omitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized
to comply with and obey orders, judgments or decrees of any court of law,
notwithstanding any notices, warning or other communications form any party or
any other person to the contrary. In case the Escrow Agent obeys or complies
with any such order, judgment or decree of any court, the Escrow Agent shall not
be liable to any of the parties hereto or to any other person by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without justification.
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(iii) The Escrow Agent shall not be liable in any
respect on account of the identity, authority or rights of the parties executing
or delivering or purporting to execute or deliver this Agreement or any
documents or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement, the
Escrow Agent shall not be liable to any party for damages, losses, or expenses,
except for gross negligence or willful misconduct on the part of the Escrow
Agent. The Escrow Agent shall not incur any such liability for (A) any act or
failure to act made or omitted in good faith, or (B) any action taken or omitted
in reliance upon any instrument, including any written statement or affidavit
provided for in this Agreement that the Escrow Agent shall in good faith believe
to be genuine, nor will the Escrow Agent be liable or responsible for forgeries,
fraud, impersonations, or determining the scope of any representative authority.
In addition, the Escrow Agent may consult with legal counsel in connection with
the Escrow Agent's duties under this Agreement and shall be fully protected in
any act taken, suffered, or permitted by it in good faith in accordance with the
advice of counsel. The Escrow Agent is not responsible for determining and
verifying the authority of any person acting or purporting to act on behalf of
any party to this Agreement.
(vi) If any controversy arises between the parties to
this Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and shares of ClickOver Common Stock and Click Over
Preferred Stock and may wait for settlement of any such controversy by final
appropriate legal proceedings or other means as, in the Escrow Agent's
discretion, the Escrow Agent may require, despite what may be set forth
elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for damage. Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and shares of ClickOver Common Stock and ClickOver
Preferred Stock held in the Escrow Fund except all cost, expenses, charges and
reasonable attorneys' fees incurred by the Escrow Agent due to the interpleader
action and which the parties jointly and severally agree to pay. Upon initiating
such action, the Escrow Agent shall be fully released and discharged of and from
all obligations and liability imposed by the terms of this Agreement.
(vii) The parties and their respective successors and
assigns agree jointly and severally to indemnify and hold the Escrow Agent
harmless against all losses, claims, damages, liabilities, and expenses,
including reasonable costs of investigation and reasonable attorneys' fees and
disbursements that may be imposed on the Escrow Agent or incurred by the Escrow
Agent in connection with the performance of his or her duties under
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this Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter.
(viii) The Escrow Agent may resign at any time upon
giving at least thirty (30) days written notice to the parties; provided,
however, that no such resignation shall become effective until the appointment
of a successor escrow agent which shall be accomplished as follows: the parties
shall use their best efforts to mutually agree on a successor escrow agent
within thirty (30) days after receiving such notice. If the parties fail to
agree upon a successor escrow agent within such time, the Escrow Agent shall
have the right to appoint a successor escrow agent authorized to do business in
the State of California. The successor escrow agent shall execute and deliver an
instrument accepting such appointment and it shall, without further acts, be
vested with all the estates, properties, rights, powers, and duties of the
predecessor escrow agent as if originally named as escrow agent. The Escrow
Agent shall be discharged from any further duties and liability under this
Agreement.
(l) Fees. All fees of the Escrow Agent for performance of its
duties hereunder shall be paid by ClickOver. It is understood that the fees and
usual charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the Escrow Agent renders any service not provided for in this Agreement, or if
the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs, reasonable attorneys' fees and expenses occasioned by such
default, delay, controversy or litigation.
ClickOver promises to pay these sums upon demand.
ARTICLE VIII
LIABILITY OF CLICKOVER
8.1 Claims Against ClickOver. Any claim or claims by any Focalink
Shareholder or any holder of any Focalink Debt (the "Claimant") against
ClickOver arising out of this Agreement or the transactions contemplated hereby
shall be set forth in writing, stating with reasonable detail the factual and
legal basis for such claim(s) and the individual dollar amount of such claim(s),
and shall be delivered to ClickOver on or before the first anniversary of the
Closing Date. The liability of ClickOver for any such claim shall be determined
in the manner provided in this Article VIII and shall be subject to the limits
set forth in Section 8.3. Nothing in this Article VIII shall grant or be
construed to grant any rights, including but not limited to any third party
beneficiary rights, to any Focalink Shareholder or any holder of any Focalink
Debt that they do not otherwise have.
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8.2 Resolution of Conflicts; Arbitration.
(a) Within thirty (30) days of receiving a claim or claims
from any Claimant, ClickOver shall notify the Claimant in writing whether it
objects to the claim(s). In the case ClickOver shall so object in writing to any
claim or claims, ClickOver and the Claimant shall attempt in good faith to agree
upon the rights of the respective parties with respect to each of such claims.
If the Claimant and ClickOver shall so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties. If no such agreement can
be reached after good faith negotiation, either ClickOver or the Claimant may
demand arbitration of the matter unless the amount of the damage or loss is at
issue in pending litigation with a third party, in which event arbitration shall
not be commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by arbitration
conducted by three arbitrators. ClickOver and the Claimant shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator.
The arbitrators shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrators, to discover
relevant information from the other party about the subject matter of the
dispute. The arbitrators shall rule upon motions to compel or limit discovery
and shall have the authority to impose sanctions, including attorneys' fees and
costs, to the extent as a court of competent law or equity, should the
arbitrators determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim by the Claimant shall be binding and conclusive
upon the Claimant and ClickOver. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrators.
(b) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Santa Xxxxx County, California under the rules then in effect of the American
Arbitration Association. For purposes of this Section 8.2(b), in any arbitration
hereunder in which any claim or the amount thereof is at issue, the Claimant
shall be deemed to be the Non-Prevailing Party in the event that the arbitrators
award the Claimant less than the sum of one-half (1/2) of the disputed amount
plus any amounts not in dispute; otherwise, ClickOver shall be deemed to be the
Non- Prevailing Party. The Non-Prevailing Party to an arbitration shall pay its
own expenses, the fees of each arbitrator, the administrative costs of the
arbitration and the expenses, including without limitation, reasonable
attorneys' fees and costs, incurred by the other party to the arbitration.
8.3 Limitation of Liability. In no event will ClickOver be liable to
Focalink or any Focalink Shareholder or any holder of any Focalink Debt (i) for
any claims alleging incidental, consequential, special or indirect damages
(including without limitation, any damages arising from the loss of business,
data, profits or goodwill) incurred or suffered by Focalink, the Focalink
Shareholder or the holder of any Focalink Debt with respect to this Agreement or
the transactions contemplated hereby, even if ClickOver has been apprised of the
likelihood of any such claim and (ii) for any damages incurred or suffered by
Focalink,
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the Focalink Shareholder or the holder of any Focalink Debt unless such claim is
received by ClickOver in accordance with Section 8.1 within one year after the
Closing Date. Focalink, any Focalink Shareholder or the holder of any Focalink
Debt shall not be entitled to make any claim against ClickOver until the
aggregate amount of the losses claimed by Focalink, all Focalink Shareholders
and all holders of any Focalink Debt exceeds $50,000. ClickOver shall not be
liable to Focalink, any Focalink Shareholder or the holder of any Focalink Debt
for any amounts, in the aggregate, which exceed the value of the ClickOver
Capital Stock placed in escrow pursuant to Article VII of this Agreement with
the value of such ClickOver Capital Stock being determined in accordance with
the provisions of Section 7.2(d)(ii).
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. Except as provided in Section 9.2 below, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual written consent of Focalink and ClickOver;
(b) by ClickOver or Focalink if: (i) the Effective Time has
not occurred before 5:00 p.m. (Pacific time) on December 31, 1997 (provided that
the right to terminate this Agreement under this clause 9.1(b)(i) shall not be
available to pay any party whose willful failure to fulfill any obligation
hereunder has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date); (ii) there shall be a final nonappealable
order of a federal or state court in effect preventing consummation of the
Merger; or (iii) there shall be any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the Merger by any governmental
entity that would make consummation of the Merger illegal;
(c) by ClickOver or Focalink if there shall be any action
taken, or any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the Merger, by any governmental entity, which would: (i)
prohibit ClickOver's ownership or operation of all or any portion of the
business of Focalink or (ii) compel ClickOver to dispose of or hold separate all
or a portion of the business or assets of Focalink or ClickOver as a result of
the Merger;
(d) by ClickOver if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Focalink and (i) such breach has not been cured within five (5)
business days after written notice to Focalink (provided that, no cure period
shall be required for a breach which by its nature cannot be cured), and (ii) as
a result of such breach the conditions set forth in Section 6.3(a) or 6.3(b), as
the case may be, would not then be satisfied; or
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(e) by Focalink if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of ClickOver and (i) such breach has not been cured within five (5)
business days after written notice to ClickOver (provided that, no cure period
shall be required for a breach which by its nature cannot be cured), and (ii) as
a result of such breach the conditions set forth in Section 6.2(a) or 6.2(b), as
the case may be, would not then be satisfied.
When action is taken to terminate this Agreement pursuant to this
Section 9.1, it shall be sufficient for such action to be authorized by the
Board of Directors (as applicable) of the party taking such action. Xxxxxxxx and
Cupertino shall have no right to terminate this Agreement.
9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of ClickOver, Merger
Sub, Focalink, Xxxxxxxx or Cupertino, or their respective officers, directors,
partners or shareholders, provided that each party shall remain liable for any
breaches of this Agreement prior to its termination; and provided further that
the provisions of Sections 5.3, 5.4 and 5.5 of this Agreement shall remain in
full force and effect and survive any termination of this Agreement.
9.3 Amendment. Except as is otherwise required by applicable law after
the shareholders of Focalink and ClickOver approve this Agreement, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time,
ClickOver, on the one hand, and Focalink (with the consent of Xxxxxxxx and
Cupertino), on the other, may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Representations, Warranties and Agreements. All
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the
consummation of the Merger and shall (except to the extent that survival is
necessary to effectuate the intent of such provisions) terminate on the first
anniversary of the Closing Date.
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10.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given upon (a) personal delivery to the party to
be notified, (b) upon facsimile transmission to the party to be notified at the
facsimile number indicated for such party below, if any, upon confirmation of
transmission or (c) one (1) day after deposit with a reputable overnight courier
service or three (3) days after deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party at the following address (or at
such other address for a party as shall be specified by like notice):
(a) If to ClickOver, to:
ClickOver, Inc.
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: President
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to Focalink, to:
Focalink Communications, Inc.
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxx
00 Xxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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(c) If to Cupertino, to:
Cupertino National Bank & Trust
0 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
(d) If to Xxxxxxxx:
Xxxxxxxx Fund
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(e) If to the Focalink Securityholder Agent:
Xxxxx Xxxxx
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
10.3 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.5 Entire Agreement: Assignment. This Agreement, the Schedules and
Exhibits hereto, and the documents and instruments and other agreements among
the parties hereto referenced herein: (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof; (b) are not intended to confer upon any
other person any rights or remedies hereunder; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
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10.6 Severability. In the event that any provision of this Agreement or
the application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonable
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
10.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by any party of any one remedy will not preclude
the exercise of any other remedy.
10.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof. Each of the parties hereto agrees that process may be served upon them
in any manner authorized by the laws of the State of California for such persons
and waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
10.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
10.10 Dispute Resolution.
(a) If this Agreement is terminated and the Merger is
abandoned at any time prior to the Effective Time, any dispute arising from or
specifically related to this Agreement or any alleged breach thereof, or with
respect to any of the transactions or events contemplated hereby, and if the
parties, after attempting to resolve the dispute in good faith by referring the
dispute to a corporate officer or partner of each party, have not been able to
resolve the dispute, the parties agree to endeavor first to settle the dispute
in an amicable manner by non-binding mediation in Santa Xxxxx County, California
before a retired judge of a Federal District Court or California Superior Court,
or some similarly qualified, mutually agreeable individual. The parties shall
bear the costs of such mediation equally.
(b) If the dispute is not resolved by mediation pursuant to
Section 10.10(a) above, or if the parties fail to agree upon a mediator within
thirty (30) days after their failure to resolve the dispute, or either party
declines mediation, the dispute shall be settled by arbitration which shall be
conducted in accordance with the rules and procedures of American Arbitration
Association ("AAA") then in effect with respect to commercial disputes and shall
be held in Palo Alto, California. The dispute shall be heard before a panel of
three arbitrators unless the parties agree in writing to a hearing by a sole
arbitrator. In the case of a panel of
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three arbitrators, ClickOver and Focalink will each select one arbitrator within
ten (10) days and such arbitrators shall jointly select a third arbitrator. If
the two arbitrators are unable to agree upon the third arbitrator within ten
(10) days of their appointment, the parties hereby consent to the selection of
the third arbitrator by the AAA administrator. The arbitrators shall determine
all issues regarding such dispute, including without limitation, procedure,
discovery, arbitrability and waiver. The arbitrators shall have the discretion
to order a prehearing exchange of information by the parties, including, without
limitation, production of requested documents, exchange of summaries of
testimony by proposed witnesses and examination by deposition of parties. The
parties shall instruct the arbitrators to render their decision no later than
ninety (90) days after submission of the dispute, which decision shall be in
writing and shall specify the factual and legal bases for the award. The
arbitration of such issues, including the determination of any amount of damages
suffered by any party hereto by reason of acts or omissions of the other party,
shall be final and binding upon all parties. Judgment on the arbitration award
may be entered in any court having jurisdiction thereof. Notwithstanding the
foregoing, the arbitrator or arbitrators shall not be authorized to award
punitive damages with respect to any such claim or controversy, nor shall any
party seek punitive damages relating to any matter under, arising out of or
relating to this Agreement under any circumstances. Except as otherwise set
forth in the Agreement, the cost of any arbitration or mediation hereunder,
including the cost of the record or transcripts thereof, if any, administrative
fees, and all other fees involved including reasonable attorneys' fees incurred
by the party determined by the arbitrators to be the prevailing party, shall be
paid by the party determined by the arbitrators not to be the prevailing party,
or otherwise allocated in an equitable manner as determined by the arbitrators.
(c) Notwithstanding any other provision of this Section 10.10
to the contrary, the parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity. The prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees and costs in connection
with any such proceedings.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, ClickOver, Merger Sub, Focalink, Cupertino,
Xxxxxxxx VII, Xxxxxxxx Associates Fund II and the Focalink Securityholder Agent
have each caused this Agreement to be executed by their duly authorized
respective officers, all as of the date first written above.
CLICKOVER, INC. FOCALINK COMMUNICATIONS, INC.
By:_______________________________ By: __________________________
Name: Name:
Title: Title:
FOCALINK ACQUISITION CORPORATION CUPERTINO NATIONAL BANK &
TRUST
By:_______________________________ By: __________________________
Name: Name:
Title: Title:
XXXXXXXX VII XXXXXXXX ASSOCIATES FUND II
By:_______________________________ By: __________________________
Name: Name:
Title: Title:
FOCALINK SECURITYHOLDER
AGENT
By: _______________________________
Name:
Title:
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SCHEDULE 1.14(a
DIRECTORS, OFFICERS AND EMPLOYEES OF FOCALINK WITH KNOWLEDGE
Xxxxx Xxxxx
Xxxxxx X. Xxxxx
Xxxxx Xxxxx
Xxxxx Xxxxx
Xxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxx
Xxxx Xxxxx
Xxxx Xxxxxx
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SCHEDULE 1.14(b
DIRECTORS, OFFICERS AND EMPLOYEES OF CLICKOVER WITH KNOWLEDGE
Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxxxxx
Xxxxxx Xxxxxxxxx
Xxxx-Xxxx Xxx
Thi Thumasathit
Xxxx Xxxxxxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxxx
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EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF CLICKOVER, INC.
A CALIFORNIA CORPORATION
The undersigned Xxxxx Xxxxxxxx and Thi Thumasathit hereby certify that:
ONE: They are the President and Assistant Secretary, respectively, of
ClickOver, Inc., a California corporation.
TWO: The Articles of Incorporation of this corporation are hereby amended
and restated to read in full as follows:
ARTICLE I
The name of this corporation is ClickOver, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. Classes of Stock. This corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares of all classes of stock which the corporation shall have
authority to issue is 35,000,000 shares. The total number of shares of Common
Stock which the corporation is authorized to issue is 25,000,000. The total
number of shares of Preferred Stock which the corporation is authorized to issue
is 10,000,000, of which 525,000 shares shall be Series A Preferred Stock,
5,512,000 shares shall be Series B Preferred Stock, 580,000 shares shall be
Series C-1 Preferred Stock, 620,000 shares shall be Series C-2 Preferred Stock
and 2,750,000 shares shall be Series C-3 Preferred Stock.
B. Rights, Preferences and Restrictions of the Preferred Stock. The rights,
preferences, privileges and restrictions granted to and imposed on the Preferred
Stock are as set forth below in this Article III(B). The Board of Directors of
this corporation (the "Board") is hereby authorized to fix or alter the rights,
preferences, privileges, and restrictions granted to or imposed upon additional
series of Preferred Stock, and the number of shares constituting any such series
and the designation thereof, or of any of them. Subject to compliance with the
applicable protective voting rights which have been or may be granted to the
Preferred Stock or any series thereof in Certificates of Determination or this
corporation's
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Articles of Incorporation ("Protective Provisions"), but notwithstanding any
other rights of the Preferred Stock or any series thereof, the rights,
privileges, preferences, and restrictions of any such additional series may be
subordinated to, pari passu with, or senior to any of those of any present or
future class or series of Preferred Stock or Common Stock. Subject to compliance
with any applicable Protective Provisions, the Board is also authorized to
increase or decrease the number of shares of any series prior or subsequent to
the issue of that series, but not below the number of shares of such series then
outstanding. If any shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
1. Dividend Provisions
(a) Subject to the rights of any additional series of Preferred
Stock that may from time to time come into existence, the holders of outstanding
shares of Preferred Stock shall be entitled to receive dividends at the rate of
$0.01 per share per annum for the Series A Preferred Stock, $0.03 per share per
annum for the Series B Preferred Stock, $0.05 per share per annum for the Series
C-1 Preferred Stock, $0.21 per share per annum for the Series C-2 Preferred
Stock and $0.12 per share per annum for the Series C-3 Preferred Stock, out of
any assets legally available therefor, prior and in preference to any
declaration or payment of any dividend (payable other than in Common Stock or
other securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of this
corporation) on the Common Stock of this corporation payable when, as and if
declared by a unanimous vote or consent of the Board. Such dividends shall not
be cumulative. Declared but unpaid dividends with respect to an outstanding
share of Preferred Stock shall, upon conversion of such share to Common Stock,
be paid to the extent assets are legally available therefor either in cash or in
Common Stock (valued at the fair market value on the date of payment as
determined by the Board). Any amounts for which such assets are not legally
available shall be paid promptly as assets become legally available therefor.
(b) After payment of any such dividends, any additional dividends
or distributions shall be distributed among all holders of Common Stock and all
holders of Preferred Stock in proportion to the number of shares of Common Stock
which would be held by each such holder if all outstanding shares of Preferred
Stock were converted to Common Stock at the then effective conversion rate.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of
this corporation, either voluntary or involuntary, subject to the rights of any
additional series of Preferred Stock that may from time to time come into
existence, the holders of the outstanding shares of Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of the corporation to the holders of Common Stock by reason of their
ownership thereof, (i) for the Series A Preferred Stock, an amount per share
equal to $0.20 for each outstanding share of Series A Preferred Stock, (ii) for
the Series B
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Preferred Stock, an amount per share equal to $0.4717 for each outstanding share
of Series B Preferred Stock, (iii) for the Series C-1 Preferred Stock, an amount
per share equal to $0.8451 for each outstanding share of Series C-1 Preferred
Stock (the "Series C-1 Liquidation Price"), (iv) for the Series C-2 Preferred
Stock, an amount per share equal to $3.2981 for each outstanding share of Series
C-2 Preferred Stock (the "Series C-2 Liquidation Price"), and (v) for the Series
C-3 Preferred Stock, an amount per share equal to $1.9129 for each outstanding
share of Series C-3 Preferred Stock (the "Series C-3 Liquidation Price"). If
upon the occurrence of such event, the assets and funds thus distributed among
the holders of the outstanding shares of Preferred Stock shall be insufficient
to permit the payment to such holders of the full aforesaid preferential
amounts, then, subject to the rights of any additional series of Preferred Stock
that may from time to time come into existence, the entire assets and funds of
the corporation legally available for distribution shall be distributed ratably
among the holders of the outstanding shares of Preferred Stock in proportion to
the preferential amount each such holder is otherwise entitled to receive.
(b) Upon the completion of the distribution required by
subparagraph (a) of this Section 2 and any other distribution that may be
required with respect to any additional series of Preferred Stock that may from
time to time come into existence, the remaining assets of the corporation
available for distribution to shareholders shall be distributed among the
holders of Preferred Stock and Common Stock pro rata based on the number of
shares of Common Stock held by each (assuming conversion of all such outstanding
shares of Preferred Stock) until, (i) with respect to the holders of Series A
Preferred Stock, such holders shall have received an aggregate of $0.80 per
share (including amounts paid pursuant to subsection (a) of this Section 2),
(ii) with respect to the holders of Series B Preferred Stock, such holders shall
have received an aggregate of $1.8868 per share (including amounts paid pursuant
to subsection (a) of this Section 2), (iii) with respect to the holders of
Series C-1 Preferred Stock, such holders shall have received an aggregate of
$3.3804 per share (including amounts paid pursuant to subsection (a) of this
Section 2), (iv) with respect to the holders of Series C-2 Preferred Stock, such
holders shall have received an aggregate of $13.1924 per share (including
amounts paid pursuant to subsection (a) of this Section 2) and (v) with respect
to the holders of Series C-3 Preferred Stock, such holders shall have received
an aggregate of $7.6516 per share (including amounts paid pursuant to subsection
(a) of this Section 2); thereafter, subject to the rights of any additional
series of Preferred Stock that may from time to time come into existence, if
assets remain in this corporation, the holders of the Common Stock of this
corporation shall receive all of the remaining assets of this corporation pro
rata based on the number of shares of Common Stock held by each.
(c) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of this corporation shall be deemed to be occasioned
by, or to include, (A) the acquisition of the corporation by another entity by
means of any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation but, excluding any
merger effected exclusively for the purpose of changing the domicile of the
corporation); or (B) a sale of all or substantially all of the assets of the
corporation; unless the corporation's shareholders of record as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as
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consideration for the corporation's acquisition or sale or otherwise) hold at
least 50% of the voting power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration received by
the corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to an investment letter or
other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through
NASDAQ-NMS, the value shall be deemed to be the average of the closing prices of
the securities on such exchange over the thirty-day period ending three (3) days
prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty-day period ending three (3) days prior to the
closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by the
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock, voting together as a single class.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by the corporation and the holders
of at least a majority of the voting power of all then outstanding shares of
Preferred Stock, voting together as a single class.
(iii) in the event the requirements of this subsection 2(c)
are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such time
as the requirements of this subsection 2(c) have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of outstanding shares of Preferred
Stock shall revert to and be the same as such rights, preferences and privileges
existing immediately prior to the date of the first notice referred to in
subsection 2(c)(iv) hereof.
(iv) The corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days
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prior to the closing of such transaction, whichever is earlier, and shall also
notify such holders in writing of the final approval of such transaction. The
first of such notices shall describe the material terms and conditions of the
impending transaction and the provisions of this Section 2, and the corporation
shall thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after the
corporation has given the first notice provided for herein or sooner than ten
(10) days after the corporation has given notice of any material changes
provided for herein; provided, however, that such periods may be shortened upon
the written consent of the holders of a majority of the voting power of all then
outstanding shares of Preferred Stock that are entitled to such notice rights or
similar notice rights, voting together as a single class.
(v) The rights granted pursuant to this subsection 2(c) are
in addition to the rights granted pursuant to Section 5 herein.
3. Redemption. The Preferred Stock is not redeemable.
4. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Effective Issue Price (as defined
below) for such series of Preferred Stock by the Conversion Price applicable to
such series, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. The Effective Issue Price for the
Series A Preferred Stock shall be $0.20 per share; the Effective Issue Price for
the Series B Preferred Stock shall be $0.4717 per share; the Effective Issue
Price for the Series C-1 Preferred Stock and Series C-2 Preferred Stock shall be
$0.8451 per share; and the Effective Issue Price for the Series C-3 Preferred
Stock shall be $1.9129 per share. The initial Conversion Price per share for
each series shall be the Effective Issue Price for such series; provided,
however, that the Conversion Price shall be subject to adjustment as set forth
in subsection 4(d).
(b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for the respective series of Preferred Stock immediately
upon the earlier of (A) except as provided below in subsection 4(c), the
corporation's sale of its Common Stock in a firm commitment underwritten public
offering pursuant to a registration statement under the Securities Act of 1933,
as amended, the public offering price of which was not less than $1.9129 per
share (adjusted to reflect subsequent stock dividends, stock splits or
recapitalizations) and $10 million in the aggregate or (B) the date specified by
written consent or agreement of the holders of at least a majority of the then
outstanding shares of Preferred Stock, voting together as a single class.
(c) Mechanics of Conversion. Before any holder of Preferred Stock
shall be entitled to convert the same into shares of Common Stock, such holder
shall
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surrender the certificate or certificates therefor, duly endorsed, at the office
of this corporation or of any transfer agent for such Preferred Stock, and shall
give written notice to this corporation at its principal corporate office, of
the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. This corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, as amended, the conversion
may, at the option of any holder tendering Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of such Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for Certain
Dilutive Issuances, Splits and Combinations. The Conversion Price of the Series
A, Series B, Series C-1, Series C-2 and Series C-3 Preferred Stock shall be
subject to adjustment from time to time as follows:
(i) (A) (1) If the corporation shall issue, after the date
upon which any shares of Series C-3 Preferred Stock were first issued (the
"Purchase Date"), any Additional Stock (as defined below) without consideration
or for a consideration per share less than the Conversion Price for the Series
A, Series B, Series C-1 and/or Series C-2 Preferred Stock in effect immediately
prior to the issuance of such Additional Stock, the Conversion Price of the
Series A, Series B, Series C-1 and/or Series C-2 Preferred Stock in effect
immediately prior to each such issuance shall forthwith (except as otherwise
provided in this clause d(i)) be adjusted to a price determined by multiplying
such Conversion Price by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issuance plus
the number of shares of Common Stock that the aggregate consideration received
by the corporation for such issuance would purchase at such Conversion Price and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock.
(2) If the corporation shall issue, after the
Purchase Date, any Additional Stock without consideration or for a consideration
per share less than the Conversion Price for the Series C-3 Preferred Stock in
effect immediately prior to the issuance of such Additional Stock, the
Conversion Price for the Series C-3 Preferred Stock in effect immediately prior
to the each such issuance shall forthwith (except as otherwise provided in this
clause d(i)) be adjusted to a price determined by multiplying such
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Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock that the aggregate consideration received by
the corporation for such issuance would purchase at such Conversion Price and
the denominator of which shall be the lesser of, or, if both such clauses are
equal, then the denominator shall be equal to, (I) the number of shares of
Common Stock outstanding immediately prior to such issuance plus the number of
shares of such Additional Stock or (II) the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of
Common Stock that the aggregate consideration received by the corporation for
such issuance would purchase at twenty-five thirty-seconds (25/32) of the
Effective Issue Price for the Series C-3 Preferred Stock (adjusted solely for
calculations under this clause (d)(i)(A)(2) to reflect subsequent stock
dividends, stock splits or recapitalizations).
(B) No adjustment of the Conversion Price for any
series of Preferred Stock shall be made in an amount less than one cent per
share, provided that any adjustments which are not required to be made by reason
of this sentence shall be carried forward and shall be either taken into account
in any subsequent adjustment made prior to 3 years from the date of the event
giving rise to the adjustment being carried forward, or shall be made at the end
of 3 years from the date of the event giving rise to the adjustment being
carried forward. Except to the limited extent provided for in subsections (E)(3)
and (E)(4), no adjustment of such Conversion Price pursuant to this subsection
4(d)(i) shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other expenses
allowed, paid or incurred by this corporation for any underwriting or otherwise
in connection with the issuance and sale thereof.
(D) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by the Board
irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on or
after the Purchase Date) of options to purchase or rights to subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such convertible
or exchangeable securities, the following provisions shall apply for all
purposes of this subsection 4(d)(i) and subsection 4(d)(ii):
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of time,
but without taking into account potential antidilution adjustments) of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights
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were issued and for a consideration equal to the consideration (determined in
the manner provided in subsections 4(d)(i)(C) and (d)(i)(D)), if any, received
by the corporation upon the issuance of such options or rights plus the minimum
exercise price provided in such options or rights (without taking into account
potential antidilution adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange for (assuming the
satisfaction of any conditions to convertibility or exchangeability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) any such convertible or exchangeable
securities or upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to the consideration, if any, received by the corporation for any such
securities and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the corporation (without taking into
account potential antidilution adjustments) upon the conversion or exchange of
such securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner provided in
subsections 4(d)(i)(C) and (d)(i)(D)).
(3) In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable to this
corporation upon exercise of such options or rights or upon conversion of or in
exchange for such convertible or exchangeable securities, including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Conversion Price of each series of Preferred Stock to the extent in any way
affected by or computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
securities.
(4) Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price of each series of Preferred Stock, to the
extent in any way affected by or computed using such options, rights or
securities or options or rights related to such securities, shall be recomputed
to reflect the issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities which remain in effect) actually issued
upon the exercise of such options or rights, upon the conversion or exchange of
such securities or upon the exercise of the options or rights related to such
securities.
(5) The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to subsections
4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change,
termination or expiration of the type described in either subsection
4(d)(i)(E)(3) or (4).
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(ii) "Additional Stock" shall mean any shares of Common
Stock issued (or deemed to have been issued pursuant to subsection 4(d)(i)(E))
by this corporation after the Purchase Date other than:
(A) Common Stock issued pursuant to a transaction
described in subsection 4(d)(iii) hereof;
(B) shares of Common Stock issuable or issued to
employees, consultants, directors or vendors (if in transactions with primarily
non-financing purposes) of this corporation directly or pursuant to a stock
option plan or restricted stock plan approved by the Board at any time when the
total number of shares of Common Stock so issuable or issued (and not
repurchased at cost by the corporation in connection with the termination of
employment) does not exceed 2,850,000;
(C) Common Stock issued upon conversion of shares of
Preferred Stock;
(D) up to 100,000 shares of Common Stock issued to
banks or equipment lessors, provided such issuances are for other than primarily
equity financing purposes and approval by the Board; and
(E) up to 250,000 shares of Common Stock issued in
connection with business combinations or corporate partnering agreements
approved by the Board.
(iii) In the event the corporation should at any time or
from time to time after the Purchase Date fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision if no record date is fixed), the Conversion
Price of each series of Preferred Stock shall be appropriately decreased so that
the number of shares of Common Stock issuable on conversion of each share of
such series shall be increased in proportion to such increase in the aggregate
number of shares of Common Stock outstanding and those issuable with respect to
such Common Stock Equivalents.
(iv) If the number of shares of Common Stock outstanding at
any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for each series of Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series
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shall be decreased in proportion to such decrease in the aggregate number of
shares of Common Stock outstanding.
(e) Other Distributions. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4(d)(iii), then,
in each such case for the purpose of this subsection 4(e), the holders of
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or Section 2) provision shall be made so that the holders of
Preferred Stock shall thereafter be entitled to receive upon conversion of such
series of Preferred Stock the number of shares of stock or other securities or
property of the corporation or otherwise, to which a holder of Common Stock
deliverable upon conversion of the Preferred Stock would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to the rights
of the holders of Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the Conversion Price then
in effect and the number of shares issuable upon conversion of the Preferred
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.
(g) No Impairment. This corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of Preferred Stock and against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the conversion
of any share or shares of Preferred Stock, and the number of shares of Common
Stock to be issued shall be rounded to the nearest whole share. Whether or not
fractional shares are issuable upon such conversion shall be determined on the
basis of the total number of shares of Preferred Stock the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion.
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(ii) Upon the occurrence of each adjustment or readjustment
of the Conversion Price of a series of Preferred Stock pursuant to this Section
4, this corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of such Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This corporation shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (A) such adjustment and readjustment,
(B) the Conversion Price for such series of Preferred Stock at the time in
effect, and (C) the number of shares of Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of such
series of Preferred Stock.
(i) Notices of Record Date. In the event of any taking by this
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Preferred Stock, at least 20 days prior
to the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, this corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain the
requisite shareholder approval of any necessary amendment to these Articles of
Incorporation.
(k) Notices. Any notice required by the provisions of this
Section 4 to be given to the holders of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his or her address appearing on the books
of this corporation.
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5. Voting Rights.
(a) The holder of each outstanding share of Preferred Stock shall
have the right to one vote for each share of Common Stock into which such
Preferred Stock could then be converted, and with respect to such vote, such
holder shall have full voting rights and powers equal to the voting rights and
powers of the holders of Common Stock and shall be entitled, notwithstanding any
provision hereof, to notice of any shareholders' meeting in accordance with the
bylaws of this corporation, and shall be entitled to vote, together with holders
of Common Stock, with respect to any question upon which holders of Common Stock
have the right to vote. Fractional votes shall not, however, be permitted and
any fractional voting rights available on an as-converted basis (after
aggregating all shares into which such outstanding shares of Preferred Stock
held by each holder could be converted) shall be rounded to the nearest whole
number (with one-half being rounded upward).
(b) Notwithstanding the provisions of Section 5(a) above, so long
as 2,650,000 shares of Series B Preferred Stock remain outstanding (as adjusted
for subsequent reverse stock splits, recapitalizations and the like), the
holders of Series B Preferred Stock, voting as a separate class, shall be
entitled to elect one (1) director of the corporation (the "Series B Director").
At any meeting held for the purpose of electing or nominating directors, the
presence in person or by proxy of the holders of a majority of the Series B
Preferred Stock then outstanding shall constitute a quorum of the Series B
Preferred Stock for the election or nomination of the Series B Director. A
vacancy in the directorship elected solely by the holders of Series B Preferred
Stock shall be filled only by vote of the holders of Series B Preferred Stock.
6. Protective Provisions. Subject to the rights of any additional
series of Preferred Stock which may from time to time come into existence, so
long as at least twenty-five percent (25%) of the shares of any series of
Preferred Stock remain outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of a majority of the then outstanding shares of Series A, Series B,
Series C-1, Series C-2 and Series C-3 Preferred Stock, voting together as a
single class:
(a) sell, convey, or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the corporation is disposed of;
(b) alter or change the rights, preferences or privileges of the
shares of any series of Preferred Stock so as to adversely affect the shares;
(c) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security having a preference over, or being on a parity with, any
then existing series of Preferred Stock with respect to voting, dividends,
redemption or upon liquidation; or
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(d) amend the corporation's Articles of Incorporation or bylaws.
7. Status of Converted Stock. In the event any shares of Preferred
Stock shall be converted pursuant to Section 4 hereof, the shares so converted
shall be cancelled and shall not be issuable by the corporation. The Articles of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in the corporation's authorized capital stock.
C. Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when, as and if
declared by the unanimous vote or written consent of the Board, out of any
assets of the corporation legally available therefor, such dividends as may be
declared from time to time by the Board.
2. Liquidation Rights. Upon the liquidation, dissolution or winding up
of the corporation, the assets of the corporation shall be distributed as
provided in Section 2 of Division (B) of this Article III.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. Except in the election of a director by the holders
of Series B Preferred Stock as provided in Section 5(b) of Division (B) of this
Article III, the holder of each share of Common Stock shall have the right to
one vote, and shall be entitled to notice of any shareholders' meeting in
accordance with the bylaws of this corporation, and shall be entitled to vote
upon such matters and in such manner as may be provided by law.
ARTICLE IV
A. The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
B. The corporation is authorized, to the fullest extent permissible under
California law, to provide indemnification of agents (as defined in Section 317
of the California Corporations Code) through bylaw provisions, agreements with
the agents, vote of shareholders or disinterested directors, or otherwise in
excess of the indemnification otherwise permitted by Section 317 of the
California Corporations Code, subject only to applicable limits set forth in
Section 204 of the California Corporations Code with respect to actions for
breach of duty to the corporation and its shareholders.
* * *
THREE: The foregoing amendment and restatement has been approved by the
Board.
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FOUR: The foregoing amendment and restatement was approved by the holders
of the requisite number of shares of the corporation in accordance with Sections
902 and 903 of the California General Corporation Law; the total number of
outstanding shares of each class entitled to vote with respect to the foregoing
amendment and restatement was 5,836,721 shares of Common Stock, 525,000 shares
of Series A Preferred Stock and 5,512,000 shares of Series B Preferred Stock.
The number of shares voting in favor of the foregoing amendment and restatement
equaled or exceeded the vote required, such required vote being (a) a majority
of the outstanding shares of Common Stock, Series A Preferred Stock and Series B
Preferred Stock, voting together as a single class, and (b) a majority of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
voting together as a single class.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this certificate on
December __, 1997.
_____________________________________
Xxxxx Xxxxxxxx, President
_____________________________________
Thi Thumasathit, Assistant Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Amended and Restated Articles of Incorporation and know the
contents thereof, and that the statements therein are true.
Executed at Palo Alto, California, on December __, 1997.
_____________________________________
Xxxxx Xxxxxxxx, President
_____________________________________
Thi Thumasathit, Assistant Secretary
[SIGNATURE PAGE TO AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF CLICKOVER, INC.]
92
SHAREHOLDER VOTING AGREEMENT
This Shareholder Voting Agreement (the "Agreement") is made and entered
into as of December 31, 1997 by and among ClickOver, Inc., a California
corporation ("ClickOver"), Focalink Communications, Inc., a California
corporation ("Focalink"), and the undersigned shareholder (the "Shareholder") of
Focalink. Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to them in the Merger Agreement (as defined below).
RECITALS
A. Concurrently with the execution of this Agreement, ClickOver,
Focalink Acquisition Corporation, a California corporation and a wholly-owned
subsidiary of ClickOver ("Merger Sub"), and Focalink have entered into an
Agreement and Plan of Merger, dated November 22, 1997 (the "Merger Agreement"),
which provides, among other things, for the merger (the "Merger") of Merger Sub
with and into Focalink. Pursuant to the Merger Agreement, all of the issued and
outstanding shares of capital stock of Focalink (the "Focalink Capital Stock")
and all of the outstanding warrants to acquire shares of Focalink Capital Stock
will be converted into the right to receive shares of the capital stock of
ClickOver (the "ClickOver Capital Stock") and warrants to acquire shares of
ClickOver Capital Stock, respectively.
B. The Shareholder is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) with
the right to vote or to direct the vote of such number of shares of Focalink
Capital Stock as indicated on the signature page of this Agreement (the
"Shares").
C. In consideration of the execution of the Merger Agreement by
ClickOver, the Shareholder agrees to restrict the transfer or disposition of any
of the Shares, or any other shares of Focalink Capital Stock acquired by the
Shareholder hereafter and prior to the Expiration Date (as defined in Section
1.1 below), agrees to vote or to direct the vote of the Shares and any other
such shares of Focalink Capital Stock so as to facilitate consummation of the
Merger, and agrees to grant ClickOver an irrevocable proxy to vote the Shares
and any other such shares of Focalink Capital Stock upon the terms and subject
to the conditions set forth herein.
D. As additional consideration for ClickOver's execution of the Merger
Agreement, the Shareholder agrees that twenty percent (20%) of all ClickOver
Capital Stock received by that Shareholder as part of the Merger will be
automatically deposited into and governed by the terms of an Escrow Fund
established under the Merger Agreement without any further act or approval of
the Shareholder.
93
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the promises and
covenants contained herein and other good and valuable consideration the receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO RETAIN SHARES.
1.1 TRANSFER AND ENCUMBRANCE. The Shareholder agrees, during
the period beginning on the date hereof and ending on the Expiration Date, not
to transfer, sell, exchange, pledge or otherwise dispose of or encumber
(collectively, "Transfer") any of the Shares or any New Shares (as defined in
Section 1.2 below). As used herein, the term "Expiration Date" shall mean the
earlier to occur of (i) such date and time as the Merger shall become effective
in accordance with the terms and provisions of the Merger Agreement or (ii) the
termination of the Merger Agreement in accordance with its terms.
1.2 NEW SHARES. The Shareholder agrees that any shares of
Focalink Capital Stock that the Shareholder purchases or with respect to which
the Shareholder otherwise acquires beneficial ownership with the right to vote
or direct the voting of such shares, after the date of this Agreement and prior
to the Expiration Date (collectively, the "New Shares"), shall be subject to the
terms and conditions of this Agreement to the same extent as if they constituted
Shares.
2. AGREEMENT TO VOTE SHARES. At every meeting of the shareholders of
Focalink called with respect to any of the following, and at every adjournment
thereof, and on every action or approval by written consent of the shareholders
of Focalink with respect to any of the following, the Shareholder shall vote or
direct the vote of the Shares and any New Shares: (i) in favor of approval of
the Merger Agreement and the Merger and in favor of any matter that could
reasonably be expected to facilitate the Merger and (ii) against approval of any
proposal made in opposition to or in competition with consummation of the Merger
and the Merger Agreement, against any merger, consolidation, sale of assets,
reorganization or recapitalization of Focalink with any party other than
ClickOver and its affiliates and against any liquidation or winding up of
Focalink (each of the foregoing is referred to as an "Opposing Proposal").
3. NON-SOLICITATION AGREEMENT. The Shareholder agrees, prior to the
Expiration Date, not to directly or indirectly take any of the following actions
with any party other than ClickOver and its affiliates, agents and
representatives and their designees: (i) solicit or encourage submission of any
inquiries, proposals or offers by any person, entity or group (other than
ClickOver, Merger Sub and their affiliates, agents and representatives), or (ii)
participate in any discussions or negotiations with, or disclose any information
concerning Focalink to, or afford any access to the properties, books or records
of Focalink to, or otherwise assist, facilitate or encourage, or enter into any
agreement or understanding with, any person, entity or group (other than
ClickOver, Merger Sub and their affiliates, agents and representatives), in
connection with any Acquisition Proposal. For the purposes of this Agreement, an
"Acquisition Proposal" shall
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mean any inquiry or proposal relating to (i) any merger, consolidation, sale of
substantial assets or similar transactions involving Focalink (other than sales
of assets or inventory in the ordinary course of business), or (ii) any sale of
equity interests in Focalink (including without limitation by way of a tender
offer or an exchange offer) other than pursuant to exercise of outstanding
options and warrants. In addition, subject to the other provisions of this
Section, from and after the date of this Agreement until the Expiration Date,
Shareholder agrees not to directly or indirectly through any of its directors,
officers, employees, representatives, investment bankers, agents or affiliates,
make or authorize any statement, recommendation or solicitation in support of
any Acquisition Proposal made by any person, entity or group (other than
ClickOver and/or Merger Sub). Upon execution of this Agreement, Shareholder
agrees to immediately cease any and all existing activities, discussions or
negotiations with any parties (other than ClickOver, Merger Sub, and their
affiliates, agents and representatives) conducted heretofore with respect to any
of the foregoing. In the event that the Shareholder receives from any third
party any offer or indication of interest (whether made in writing or otherwise)
regarding any of the transactions referred to in the foregoing sentence, or any
request for information about Focalink with respect to any of the foregoing,
then the Shareholder shall promptly communicate to ClickOver the material terms
of each such offer, indication of interest, or request, including the identity
of the third party.
4. IRREVOCABLE PROXY. Concurrently with the execution of this
Agreement, the Shareholder agrees to deliver to ClickOver a proxy in the form
attached as Annex A (the "Proxy"), which shall be irrevocable to the extent
provided in Section 705 of the General Corporation Law of the State of
California, covering the total number of Shares and New Shares of capital stock
of Focalink beneficially owned (as such term is defined in Rule 13d-3 under the
Exchange Act) by the Shareholder set forth therein.
5. ESCROW FUND. The Shareholder hereby agrees that twenty percent (20%)
of all ClickOver Capital Stock received by that Shareholder as part of the
Merger will be automatically deposited into and governed by the terms of an
Escrow Fund established under the Merger Agreement without any further act or
approval of the Shareholder.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER. The
Shareholder represents, warrants and covenants to ClickOver as follows: the
Shareholder: (i) is the beneficial owner of the Shares, which at the date of
this Agreement and at all times up until the Expiration Date will be free and
clear of any liens, claims, options, charges or other encumbrances, (ii) does
not beneficially own any shares of Focalink Capital Stock other than the Shares
(excluding shares as to which Shareholder currently disclaims beneficial
ownership in accordance with applicable law), and (iii) has full power and
authority to make, enter into and carry out the terms of this Agreement and the
Proxy.
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7. COVENANTS OF FOCALINK. Focalink hereby agrees and covenants that:
(a) Focalink will not and will not cause its stock transfer
agent to, register the transfer of any of the Shares or New Shares on the stock
transfer ledger of Focalink at any time prior to the termination of this
Agreement pursuant to Section 10; and
(b) Focalink agrees that any shares of Focalink Capital Stock
(including Focalink Common Stock) that the Shareholder purchases or with respect
to which the Shareholder otherwise acquires beneficial ownership after the date
of this Agreement and prior to the termination of this Agreement pursuant to
Section 10 shall be considered "New Shares" and subject to each of the terms and
conditions of this Agreement.
8. ADDITIONAL DOCUMENTS. The Shareholder and Focalink hereby covenant
and agree to execute and deliver any additional documents reasonably necessary
or desirable to carry out the purpose and intent of this Agreement.
9. CONSENT AND WAIVER. The Shareholder hereby gives any consents or
waivers that are reasonably required for the consummation of the Merger under
the terms of any agreement to which the Shareholder is a party or pursuant to
any rights the Shareholder may have.
10. TERMINATION. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
11. MISCELLANEOUS.
11.1 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
11.2 BINDING EFFECT AND ASSIGNMENT. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
any of the parties without the prior written consent of the other parties.
11.3 AMENDMENTS AND MODIFICATION. This Agreement may not be
modified, amended, altered or supplemented except by the execution and delivery
of a written agreement executed by the parties hereto.
11.4 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties
acknowledge that ClickOver will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
the Shareholder set forth herein. Therefore,
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96
it is agreed that, in addition to any other remedies that may be available to
ClickOver upon any such violation, ClickOver shall have the right to enforce
such covenants and agreements by specific performance, injunctive relief or by
any other means available to ClickOver at law or in equity.
11.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to ClickOver, to:
ClickOver, Inc.
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx Phleger & Xxxxxxxx LLP
000 Xxxx X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) If to Focalink, to:
Focalink Communications, Inc.
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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With a copy to:
Xxxxxx & Xxxxxxx
00 Xxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(c) If to the Shareholder, to the address set forth
on the last page hereof.
11.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by, construed and enforced in accordance with the internal
laws of the State of California, without giving effect to any choice or conflict
of law provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of California. Focalink and the Shareholder irrevocably
submit to the jurisdiction of any state or federal court sitting in the county
of Santa Clara, California in any action or proceeding arising out of or related
to this Agreement, and hereby irrevocably agree that all claims in respect of
such action or proceeding may be heard and determined in such state or federal
court. The Shareholder hereby irrevocably consents to the service of process
which may be served in any such action or proceeding by certified mail, return
receipt requested, by delivering a copy of such process to the Shareholder or by
any other method permitted by law.
11.7 ENTIRE AGREEMENT. This Agreement and the Proxy contain
the entire understanding of the parties in respect of the subject matter hereof
and supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
11.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
11.9 EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
CLICKOVER, INC. SHAREHOLDER
Name:_____________________
By:____________________________ By:_______________________
Name:
Title: Title:____________________
Shareholder's Address for Notice:
FOCALINK COMMUNICATIONS, INC.
By:_____________________________
Name:
Title: Shares beneficially owned:
_____ shares of Focalink Common Stock
_____ shares of Focalink Series A Preferred Stock
_____ shares of Focalink Series B Preferred Stock
_____ shares of Focalink Series A-1 Preferred
Stock
[SIGNATURE PAGE TO SHAREHOLDER VOTING AGREEMENT]
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Annex A
IRREVOCABLE PROXY
TO VOTE
FOCALINK STOCK
The undersigned shareholder of Focalink Communications, Inc., a
California corporation ("Focalink"), hereby irrevocably (to the fullest extent
permitted by Section 705 of the General Corporation Law of the State of
California) appoints the directors on the Board of Directors of ClickOver, Inc.,
a California corporation ("ClickOver"), and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to vote and exercise all voting and related
rights (to the fullest extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of Focalink which now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of Focalink issued or issuable in respect thereof on or
after the date hereof (collectively, the "Shares") in accordance with the terms
of this Proxy. The Shares beneficially owned by the undersigned shareholder of
Focalink as of the date of this Proxy are listed on the final page of this
Proxy, along with the number(s) of the share certificate(s) which represent such
Shares. Upon the undersigned's execution of this Proxy, any and all prior
proxies given by the undersigned with respect to any Shares are hereby revoked
and the undersigned agrees not to grant any subsequent proxies with respect to
the Shares until after the Expiration Date (as defined below).
This Proxy is granted pursuant to that certain Shareholder Voting
Agreement, dated as of November __, 1997, by and among ClickOver, Focalink and
the undersigned shareholder (the "Shareholder Agreement"), and is granted in
consideration of ClickOver entering into that certain Agreement and Plan of
Merger, dated as of November __, 1997 (the "Merger Agreement"), by and among
ClickOver, Focalink Acquisition Corporation, a California corporation and a
wholly-owned subsidiary of ClickOver ("Merger Sub"), Focalink, and others. The
Merger Agreement provides, among other things, for the merger of Merger Sub with
and into Focalink in accordance with its terms (the "Merger"), and the
undersigned shareholder will be receiving the capital stock of ClickOver under
the Merger. As used herein, the term "Expiration Date" shall mean the earlier to
occur of (i) such date and time as the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement or (ii) the
termination of the Merger Agreement in accordance with its terms.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents pursuant to Section 603 of the General Corporation Law of the
State of California) at every annual, special or adjourned meeting of the
shareholders
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100
of Focalink and in every written consent in lieu of any such meeting: (a) in
favor of approval of the Merger Agreement and the Merger and in favor of any
matter that could reasonably be expected to facilitate the Merger and (b)
against approval of any proposal made in opposition to or in competition with
the consummation of the Merger and the Merger Agreement, against any merger,
consolidation, sale of assets, reorganization or recapitalization of Focalink
with any party other than ClickOver and its affiliates and against any
liquidation or winding up of Focalink. The attorneys and proxies named above may
not exercise this Irrevocable Proxy on any other matter except as provided in
clauses (a) and (b) above. The undersigned shareholder may vote the Shares on
all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This Proxy is irrevocable (to the fullest extent permitted by Section
705 of the General Corporation Law of the State of California). This Proxy shall
terminate, and be of no further force and effect, automatically upon the
Expiration Date.
Dated: November __, 1997
Signature of Shareholder: ____________________
Print Name of Shareholder: ___________________
Shares beneficially owned: Certificate Nos.
-------------------------- ----------------
_____ shares of Focalink Common Stock ______________________
_____ shares of Focalink Series A Preferred Stock ______________________
_____ shares of Focalink Series B Preferred Stock ______________________
_____ shares of Focalink Series A-1 Preferred Stock ______________________
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101
CLICKOVER INC.
AMENDMENT NO. 1 TO THE INVESTOR RIGHTS AGREEMENT
This Amendment No. 1 ("Amendment") to the Investors' Rights Agreement
dated March 14, 1997 (the "Agreement") is made as of December __, 1997 by and
among ClickOver, Inc., a California corporation (the "Company"), each of the
individuals and entities listed on Schedule A to the Agreement, as amended (the
"Existing Shareholders"), and each of the individuals and entities listed as New
Shareholders on the signature page to this Amendment (the "New Shareholders").
Capitalized terms used herein which are not defined herein shall have the
definition ascribed to them in the Agreement.
RECITALS
A. The Company, Focalink Acquisition Corporation, Focalink
Communications, Inc. ("Focalink"), Xxxxxxxx VII, Xxxxxxxx Associates Fund II and
Cupertino National Bank & Trust have executed a certain Agreement and Plan of
Merger, dated November 22, 1997 (the "Merger Agreement"), pursuant to which a
wholly-owned subsidiary of ClickOver will merge with and into Focalink (the
"Merger").
B. Pursuant to the Merger Agreement, among other things, the Company
shall issue to the New Shareholders shares of the Company's Series C-1 Preferred
Stock, Series C- 2 Preferred Stock and Series C-3 Preferred Stock.
C. As a condition to the Merger, the Existing Shareholders and the
Company are willing to enter into this Amendment to permit the New Shareholders
to become a party to the Agreement, as amended.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
promises and covenants contained herein and other good and valuable
consideration the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. ADDITIONAL PARTIES TO THE AGREEMENT. The New Shareholders hereby
enter into and become parties to the Agreement. Schedule A to the Agreement is
hereby amended to include the New Shareholders.
2. AMENDMENTS TO AGREEMENT.
2.1 The New Shareholders and the Existing Shareholders are
collectively referred to as "Investors" for the purposes of the Agreement, as
amended hereby.
2.2 Section 1.1(f) of the Agreement is amended in its entirety
to read as follows:
102
"(f) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Series B Preferred
Stock, Series C-1 Preferred Stock, Series C-2 Preferred Stock and
Series C-3 Preferred Stock and (ii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of
such Series B Preferred Stock, Series C-1 Preferred Stock, Series C-2
Preferred Stock, Series C-3 Preferred Stock or Common Stock, excluding
in all cases, however, any Registrable Securities sold by a person in a
transaction in which his or her rights under this Section 1 are not
assigned."
3. CONSENT. Each Existing Shareholder, on behalf of himself or herself
and the other Investors under the Agreement, (a) consents to adding the New
Shareholders as parties to the Agreement, and (b) consents to the registration
rights hereby provided the New Shareholders, which consent is given pursuant to
Section 3.7 of the Agreement.
4. EFFECT OF AMENDMENT. Except as amended and set forth above, the
Agreement shall continue in full force and effect. In the event of any
inconsistency between the terms of the Agreement and this Amendment, the terms
of this Amendment shall govern and control.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each which will be deemed an original, and all of which together
shall constitute one instrument.
6. SEVERABILITY. If one or more provisions of this Amendment are held
to be unenforceable under applicable law, such provision shall be excluded from
this Amendment and the balance of the Amendment shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7. ENTIRE AGREEMENT. This Amendment, together with the Agreement,
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
8. GOVERNING LAW. This Amendment shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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This Amendment is hereby executed as of the date first above written.
CLICKOVER, INC., a California corporation
By: _________________________________
Xxxxx Xxxxxxxx, President
Address: 0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Existing Shareholders:
XXXXXXX XXXXXXX XXXXXXXX & XXXXX VIII
By: KPCB VIII Associates, its General
Partner
By: _____________________________
Name: _______________________
Title: ______________________
KPCB INFORMATION SCIENCES ZAIBATSU
FUND II
By: KPCB VII Associates, its General
Partner
By: _____________________________
Name: _______________________
Title: ______________________
KPCB JAVA FUND
By: KPCB VIII Associates, its General
Partner
By: _____________________________
Name: _______________________
Title: ______________________
Address: c/o Kleiner Xxxxxxx Xxxxxxxx & Xxxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000-0000
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
104
__________________________
Fah-Xxxx Xxxxxx
Address: 000 Xxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
105
______________________________
Xxxxxx Xxxxxxxxx
Address: 000 Xxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
106
______________________________
Xxxx-Xxxx Xxx
Address: 000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
107
______________________________
Xxxx-Xxxx Xxx
Address: 000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
108
______________________________
Xxxx Xxxxx
Address: 0000 Xxxxxxxx Xxx
Xxx Xxxxx, XX 00000
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
109
______________________________
Xxx Xxxxxxx
Address: 000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
110
New Shareholders:
CUPERTINO NATIONAL BANK & TRUST
By:____________________________
Name:__________________________
Title:_________________________
Address: _________________________________
_________________________________
XXXXXXXX VII
By:____________________________
Name:__________________________
Title:_________________________
XXXXXXXX ASSOCIATES FUND II
By:____________________________
Name:__________________________
Title:_________________________
XXXXXXXX SOFTWARE PARTNERS
By:____________________________
Name:__________________________
Title:_________________________
Address: _________________________________
_________________________________
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
111
CMP MEDIA, INC.
By:____________________________
Name:__________________________
Title:_________________________
Address: _________________________________
_________________________________
_____________________________
Xxxxx X. Xxxxxx
Address: _________________________________
_________________________________
WS INVESTMENT COMPANY 95B
By:____________________________
Name:__________________________
Title:_________________________
Address: _________________________________
_________________________________
[SIGNATURE PAGE TO AMENDMENT NO. 1 TO THE
INVESTOR RIGHTS AGREEMENT]
112
SCHEDULE A
List of Existing Shareholders
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx VIII
KPCB Information Sciences
Zaibatsu Fund II
KPCB Java Fund
Fah-Xxxx Xxxxxx
Xxxxxx Xxxxxxxxx
Xxxx-Xxxx Xxx
Xxxx-Xxxx Xxx
Xxxx Xxxxx
Xxx Xxxxxxx
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113
CLICKOVER, INC.
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (the "Agreement") is made as of
December __, 1997, by and among ClickOver, Inc., a California corporation
("ClickOver"), Cupertino National Bank & Trust ("Cupertino"), Xxxxxxx Xxxxxxx
Xxxxxxxx & Xxxxx VIII ("KPCB"), Xxxxxxxx VII and Xxxxxxxx Associates Fund II
(together with Xxxxxxxx VII, "Xxxxxxxx").
RECITALS
A. Cupertino has previously loaned the principal amount of $3,000,000
(the "Loan") to Focalink Communications, Inc., a California corporation
("Focalink"), and in connection with the Loan, received warrants to purchase up
to 600,000 shares of Focalink Series A-1 Preferred Stock.
B. ClickOver, Focalink, Xxxxxxxx and Cupertino have executed that
certain Agreement and Plan of Merger, dated as of November 22, 1997 (the "Merger
Agreement"), pursuant to which a wholly-owned subsidiary of ClickOver will merge
with and into Focalink (the "Merger").
C. In connection with the Merger, Xxxxxxxx has agreed to purchase from
Cupertino $1,000,000 of the principal amount of the Loan and warrants to
purchase up to 200,000 shares of Focalink Series A-1 Preferred Stock.
D. In connection with the Merger, among other things, Cupertino has
agreed at the closing of the Merger (i) to cancel all of the principal and
interest outstanding under its portion of the Loan in exchange for 1,045,555
shares of ClickOver Preferred Stock (as defined below) and (ii) to receive
ClickOver Warrants (as defined below) to purchase up to 90,505 shares of
ClickOver Preferred Stock in exchange for its remaining warrants to purchase up
to 400,000 shares of Focalink Series A-1 Preferred Stock.
E. In order to induce Xxxxxxxx to purchase a portion of the Loan from
Cupertino and to induce KPCB, a major shareholder of ClickOver, to vote in favor
of the Merger, Cupertino is willing to xxxxx Xxxxxxxx and KPCB rights of first
refusal with respect to all Stock (as defined below) it will receive in the
Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
a. "Stock" shall mean all shares of ClickOver Preferred Stock
and all
114
ClickOver Warrants received by Cupertino in the Merger, all shares of ClickOver
Preferred Stock issued upon exercise of the ClickOver Warrants and all shares of
ClickOver Common Stock issued upon conversion of any such ClickOver Preferred
Stock.
b. "ClickOver Preferred Stock" shall mean ClickOver's Series
C-3 Preferred Stock.
c. "ClickOver Warrants" shall mean warrants to purchase shares
of ClickOver's Series C-3 Preferred Stock.
d. "ClickOver Common Stock" shall mean ClickOver's Common
Stock.
e. "Next Qualified Equity Financing" shall mean the next
equity financing involving the receipt by ClickOver of at least $3,000,000.
2. Right of First Refusal.
a. Notice to ClickOver, Xxxxxxxx and KPCB.
(1) In the event Cupertino desires to sell or
transfer any Stock, Cupertino shall deliver a notice in writing by certified
mail ("Notice") to ClickOver, Xxxxxxxx and KPCB stating (A) its bona fide
intention to sell or transfer such Stock, (B) the number of shares of such Stock
to be sold or transferred, (C) the price, if any, for which it proposes to sell
or transfer such Stock, (D) the name of the proposed purchaser or transferee and
(E) all other terms of the proposed transaction.
(2) In the event the proposed transfer is partially
or completely in exchange for assets other than cash, then such assets shall be
deemed to have a cash value in the amount determined by ClickOver's Board of
Directors (the "Board") in its sole good faith, in which case such cash value
ascertained by the Board, when added to any cash to be exchanged and then
divided by the number of shares of Stock to be transferred, shall be deemed the
price per share set forth in the Notice. In the event of a gift, property
settlement or other transfer in which the proposed purchaser or transferee is
not paying the full price for the Stock, the price shall be deemed to be the
fair market value of the Stock as determined in good faith by the Board.
x. Xxxxxxxx Right of First Refusal. Xxxxxxxx shall have an
exclusive, irrevocable option (the "Xxxxxxxx Option"), at any time within ten
(10) days of receipt of the Notice (the "Xxxxxxxx Option Period"), to elect to
purchase all (but not less than all) of the Stock to which the Notice refers at
the price per share specified in the Notice (as determined in Section 2(a)).
Xxxxxxxx shall exercise the Xxxxxxxx Option by written notice signed by a duly
authorized partner of Xxxxxxxx and delivered or mailed to Cupertino and
ClickOver (the "Xxxxxxxx Settlement Notice"), which notice shall specify the
time, place and date for settlement of such purchase.
x. Xxxxxxxx Settlement. Within thirty (30) days of receipt of
the Xxxxxxxx
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115
Settlement Notice, Cupertino must deliver to ClickOver all certificates for the
Stock being acquired by Xxxxxxxx, together with proper assignments in blank of
the Stock with signatures properly guaranteed and with such other documents as
may be required by ClickOver to provide reasonable assurance that each necessary
endorsement is genuine and effective, and Xxxxxxxx must thereupon deliver to
Cupertino full cash payment for the Stock being acquired, provided that if the
terms of payment set forth in the Notice were other than cash against delivery,
Xxxxxxxx shall pay for the Stock on the same terms and conditions set forth in
the Notice.
d. KPCB Right of First Refusal. In the event that Xxxxxxxx
does not exercise the Xxxxxxxx Option, upon the expiration of the Xxxxxxxx
Option Period Cupertino shall promptly give written notice to KPCB of Xxxxxxxx'x
nonexercise of the Xxxxxxxx Option, which notice shall enclose the Notice (the
"KPCB Notice"). KPCB shall then have an exclusive, irrevocable option (the "KPCB
Option"), at any time within ten (10) days of receipt of the KPCB Notice, to
elect to purchase all (but not less than all) of the Stock to which the Notice
refers at the price per share specified in the Notice (as determined in Section
2(a)). KPCB shall exercise the KPCB Option by written notice signed by a duly
authorized partner of KPCB and delivered or mailed to Cupertino and ClickOver
(the "KPCB Settlement Notice"), which notice shall specify the time, place and
date for settlement of such purchase.
e. KPCB Settlement. Within thirty (30) days of receipt of the
KPCB Settlement Notice, Cupertino must deliver to ClickOver all certificates for
the Stock being acquired by KPCB, together with proper assignments in blank of
the Stock with signatures properly guaranteed and with such other documents as
may be required by ClickOver to provide reasonable assurance that each necessary
endorsement is genuine and effective, and KPCB must thereupon deliver to
Cupertino full cash payment for the Stock being acquired, provided that if the
terms of payment set forth in the Notice were other than cash against delivery,
KPCB shall pay for the Stock on the same terms and conditions set forth in the
Notice.
f. Assignment of Xxxxxxxx Option and KPCB Option. Xxxxxxxx may
assign its rights under this Section 2 to (i) any of its limited partners, (ii)
any entity related to or affiliated with Xxxxxxxx, (iii) KPCB or (iv) any entity
affiliated with KPCB and KPCB may assign its rights under this Section 2 to (w)
any of its limited partners, (x) any entity related to or affiliated with KPCB,
(y) Xxxxxxxx or (z) any entity affiliated with Xxxxxxxx.
3. Termination of Rights of First Refusal. The rights of first refusal
under Section 2 of this Agreement shall terminate upon the first to occur of the
following events: (a) the liquidation, dissolution or indefinite cessation of
the business operations of ClickOver; (b) the execution by ClickOver of a
general assignment for the benefit of creditors or the appointment of a receiver
or trustee to take possession of all or substantially all of the property and
assets of ClickOver; (c) upon the effective date of a bona fide firm commitment
underwritten public offering of ClickOver's Common Stock registered under the
Securities Act of 1933, as amended, on Form S-1 (or any successor form
designated by the Securities and Exchange Commission); or (d) upon the transfer
of any Stock as to which Xxxxxxxx and KPCB have elected not to exercise their
rights under Section 2 and, in such event, the rights
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116
of first refusal under Section 2 shall terminate only with respect to the Stock
so transferred.
4. Exempt Transfers. Notwithstanding the rights of first refusal set
forth in Section 2 of this Agreement, Cupertino may transfer all or any part of
its Stock (i) to its Affiliates, where "Affiliates" means any other person or
entity that, directly or indirectly, through one or more intermediaries, is in
control of, is controlled by, or is under common control with Cupertino, and
(ii) to its successors in interest; provided, however, any transfer of Stock
made pursuant to the provisions of this Section shall be subject to the
following (i) prior to the completion of such transfer, each such transferee
shall have executed documents in form and substance satisfactory to KPCB and
Xxxxxxxx, evidenced by KPCB's and Xxxxxxxx'x written acknowledgement of such
satisfaction, assuming the obligations of Cupertino under this Agreement with
respect to the transferred Stock and (ii) such transferred Stock shall remain
subject to the provisions of this Agreement, and the transferee shall be treated
as Cupertino for purposes of this Agreement.
5. Restriction on Transfer. Unless exempted under Section 4 of this
Agreement, Cupertino, Xxxxxxxx and KPCB each agree not to sell, pledge,
hypothecate or otherwise transfer all or any part of their Stock until the
earlier of (a) February 28, 1998, or (b) the closing date of ClickOver's Next
Qualified Equity Financing; provided, however, that the foregoing restriction
shall not prohibit any transfers of the Stock from Xxxxxxxx or KPCB to any of
their respective affiliates as long as such affiliates agree to be bound by the
restrictions of this Section 5.
6. Legends; Stop Transfer Instructions.
a. Legends. Each certificate representing shares of Stock now
or hereafter owned by Cupertino shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY AND SUBJECT
TO THE PROVISIONS OF A RIGHT OF FIRST REFUSAL AGREEMENT, AS
THE SAME MAY BE AMENDED FROM TIME TO TIME, AMONG THE PARTIES
NAMED THEREIN, A COPY OF WHICH IS AVAILABLE AT THE PRINCIPAL
OFFICE OF THE ISSUER OF SUCH SHARES."
b. Stop Transfer Instructions. Cupertino agrees that ClickOver
may instruct its transfer agent to impose transfer restrictions on the shares
represented by certificates bearing the legend referred to in Section 4(a) above
to enforce the provisions of this Agreement and ClickOver agrees to promptly do
so. The legend shall be removed upon termination of this Agreement.
7. Miscellaneous.
a. Notices. All notices and other communications hereunder
shall be in
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117
writing and shall be deemed given upon (i) personal delivery to the party to be
notified, (ii) upon facsimile transmission to the party to be notified at the
facsimile number indicated for such party below, if any, upon confirmation of
transmission or (iii) one (1) day after deposit with a reputable overnight
courier service or three (3) days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid and addressed to the
party to be notified at the address indicated for such party at the following
address (or at such other address for a party as shall be specified by like
notice):
If to ClickOver, to:
ClickOver, Inc.
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: President
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Cupertino, to:
Cupertino National Bank & Trust
0 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
If to Xxxxxxxx:
Xxxxxxxx Fund
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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If to KPCB:
Kleiner, Perkins, Xxxxxxxx & Xxxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
b. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
c. Entire Agreement. This Agreement and the documents and
instruments and other agreements among the parties hereto referenced herein: (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof;
and (b) are not intended to confer upon any other person any rights or remedies
hereunder.
d. Amendment. Any provision of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only by the written consent
of all of the parties hereto.
e. Assignment of Rights. This Agreement and the rights and
obligations of the parties hereunder shall inure to benefit of, and be binding
upon, their respective successors, permitted assigns and legal representatives.
f. Severability. In the event that any provision of this
Agreement or the application thereof becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonable to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
g. Other Remedies. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by any party of any one remedy
will not preclude the exercise of any other remedy.
h. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless of
the laws that might
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119
otherwise govern under applicable principles of conflicts of laws thereof. Each
of the parties hereto agrees that process may be served upon them in any manner
authorized by the laws of the State of California for such persons and waives
and covenants not to assert or plead any objection which they might otherwise
have to such jurisdiction and such process.
i. Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
j. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
k. Ownership. Cupertino represents and warrants that it is the
sole legal and beneficial owner of the Stock subject to this Agreement and that
no other person or entity has any interest in such Stock.
l. Attorneys' Fees. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing parties in
such dispute shall be entitled to recover from the losing party all reasonable
fees, costs and expenses of enforcing any right of such prevailing parties under
or with respect to this Agreement, including without limitation, the reasonable
fees and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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120
The foregoing Agreement is hereby executed as of the date first above
written.
CLICKOVER, INC.
By:__________________________________
Its:_________________________________
CUPERTINO NATIONAL BANK &
TRUST
By:__________________________________
Its:_________________________________
XXXXXXXX VII
By:__________________________________
Its:_________________________________
XXXXXXXX ASSOCIATES FUND II
By:__________________________________
Its:_________________________________
XXXXXXX XXXXXXX XXXXXXXX &
XXXXX VIII
By: KPCB VIII Associates, its General
Partner
By:____________________________
Name:__________________________
Title:_________________________
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
121
December 31, 1997
Focalink Communications, Inc.
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx Xxxxx
Xxxx Xxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel for ClickOver, Inc., a California
corporation ("Parent"), in connection with the merger of its wholly-owned
subsidiary, Focalink Acquisition Corporation, a California corporation ("Merger
Sub"), with and into Focalink Communications, Inc., a California corporation
(the "Company"), pursuant to the Agreement and Plan of Merger dated as of
November 22, 1997 by and among Parent, Merger Sub, the Company, Cupertino
National Bank & Trust, Xxxxxxxx VII and Xxxxxxxx Associates Fund II (the "Merger
Agreement"). This opinion is being rendered to you pursuant to Section 6.2(d) of
the Merger Agreement. Capitalized terms used herein and not otherwise defined
shall have the meanings given to them in the Merger Agreement.
In connection with this opinion, we have examined originals,
or copies certified or otherwise identified to our satisfaction, of such
documents, corporate records, certificates, including certificates of public
officials, and other instruments as we have deemed necessary or advisable for
purposes of this opinion, including those relating to the authorization,
execution and delivery of the Merger Agreement.
In such examination and review we have assumed the genuineness
of all signatures, the legal capacity of natural persons, the authenticity of
all documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to the
opinions hereinafter expressed which we did not independently establish or
verify, we have relied without investigation upon certificates, statements and
representations of representatives of Parent.
Whenever a statement herein is qualified by the expressions
"known to us," "to our knowledge," "we are not aware" or a similar phrase or
expression with respect to our knowledge of matters of fact, it is intended to
mean that our knowledge is based upon the records, documents, instruments and
certificates described above and the current actual knowledge of the
122
Focalink Communications, Inc. December 31, 1997
Page 2
attorneys in our firm who have devoted substantive attention to the transactions
contemplated by the Merger Agreement (but not including any constructive or
imputed notice of any information) and that we have not otherwise undertaken any
independent investigations for the purpose of rendering this opinion.
This opinion relates solely to the laws of the State of
California and applicable federal laws of the United States, and we express no
opinion with respect to the effect or applicability of the laws of other
jurisdictions.
Based upon our examination of and reliance upon the foregoing
and subject to the limitations, exceptions, qualifications and assumptions set
forth below and except as set forth in the Merger Agreement or the Schedule of
Exceptions thereto, we are of the opinion that as of the date hereof:
1. Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Each of Parent and Merger Sub has the requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as, to our knowledge, it is presently being conducted.
2. Each of Parent and Merger Sub has the requisite corporate
power and authority to enter into the Merger Agreement, to perform its
obligations thereunder and to consummate the transactions contemplated thereby.
The execution and delivery of the Merger Agreement, the performance by Parent
and Merger Sub of their obligations thereunder and the consummation of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and its shareholders and Merger
Sub and its sole shareholder. The Merger Agreement has been duly and validly
authorized, executed and delivered by Parent and Merger Sub, and has been
approved by the Board of Directors of Parent and its shareholders and by the
Board of Directors of Merger Sub and its sole shareholder.
3. The capitalization of Parent is as follows:
(a) Preferred Stock. 10,000,000 shares of Preferred
Stock (the "Preferred Stock"), of which (i) 525,000 shares have been designated
Series A Preferred Stock, to our knowledge 525,000 of which are currently issued
and outstanding, (ii) 5,512,000 shares have been designated Series B Preferred
Stock, to our knowledge 5,512,000 of which are currently issued and outstanding,
(iii) 580,000 shares have been designated Series C-1 Preferred Stock, some or
all of which may be issued pursuant to the Merger Agreement, (iv) 620,000 shares
have been designated Series C-2 Preferred Stock, some or all of which may be
issued pursuant to the Merger Agreement and (v) 2,750,000 shares have been
designated Series C-3 Preferred Stock, some or all of which may be issued
pursuant to the Merger Agreement. Such 525,000 shares of outstanding Series A
Preferred Stock and such 5,512,000 shares of outstanding
123
Focalink Communications, Inc. December 31, 1997
Page 3
Series B Preferred Stock have been duly authorized and validly issued, are
nonassessable and are fully paid.
(b) Common Stock. 25,000,000 shares of Common Stock
(the "Common Stock"), to our knowledge 5,856,721 of which are currently issued
and outstanding. Such 5,856,721 shares of outstanding Common Stock have been
duly authorized and validly issued, are nonassessable, and are fully paid.
(c) The Common Stock issuable upon conversion of the
Series C-1, Series C-2 and Series C-3 Preferred Stock to be issued at the
Closing has been duly and validly reserved for issuance and, when and if issued
upon such conversion in accordance with Parent's Amended and Restated Articles
of Incorporation, will be validly issued, fully paid and nonassessable.
(d) Except for (i) the conversion privileges of the
outstanding shares of Series A and Series B Preferred Stock; (ii) the conversion
privileges of the Series C-1, Series C-2 and Series C-3 Preferred Stock to be
issued at the Closing; (iii) outstanding options to purchase 622,942 shares of
Common Stock pursuant to the ClickOver Plan; and (iv) the outstanding Focalink
Warrants to be assumed by ClickOver at the Closing, to our knowledge, there are
no preemption rights, options, warrants, conversion privileges or other rights
(or agreements for any such rights) outstanding to purchase or otherwise obtain
from Parent any of Parent's equity securities.
4. Immediately prior to the Effective Time, the capital stock
of Merger Sub consists of 100 shares of Common Stock, all of which are issued
and outstanding and are held by Parent.
5. The shares of Parent Common and Preferred Stock to be
issued and delivered pursuant to the Merger Agreement have been duly authorized
and will, when issued in accordance with the terms of the Merger Agreement, be
validly issued, fully paid and nonassessable.
6. Neither the execution or delivery by Parent and Merger Sub
of the Merger Agreement nor the consummation by Parent and Merger Sub at the
Closing of the transactions contemplated thereby will (i) violate any provision
of the Amended and Restated Articles of Incorporation or the Bylaws of Parent or
the Articles of Incorporation or the Bylaws of Merger Sub, (ii) violate or be in
conflict with any federal or California laws which to our knowledge are
applicable to Parent or Merger Sub, or (iii) to our knowledge, violate or
contravene any judgment, decree, injunction or order of any federal or
California court having jurisdiction over Parent or Merger Sub or their
properties.
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Focalink Communications, Inc. December 31, 1997
Page 4
7. Based solely on a search of the civil court dockets of
Santa Xxxxx and San Mateo Municipal Courts and Santa Xxxxx and San Mateo
Superior Courts, we are not aware that there is any action, proceeding or
governmental investigation pending, or threatened in writing, against Parent or
Merger Sub which questions the validity or enforceability of the Merger
Agreement or the right of Parent or Merger Sub to enter into the Merger
Agreement.
Our opinions expressed above are specifically subject to the
following limitations, exceptions, qualifications and assumptions:
(A) We express no opinion as to Parent's or Merger Sub's
compliance or noncompliance with applicable federal or state antifraud or
antitrust statutes, laws, rules and regulations.
(B) We express no opinion as to the past, present or future
fair market value of Parent Preferred or Common Stock and/or Company Preferred
or Common Stock.
(C) Our opinions in paragraph 3 above as to the number of
issued and outstanding shares of Common Stock and Preferred Stock and to the
effect that such shares have been validly issued and are fully paid and
nonassessable, and as to the number of shares of Common Stock subject to
outstanding options and warrants are based solely on our review of Parent's
stock records made available to us and an Officers' Certificate of Parent.
(D) Our opinions in clause (ii) of paragraph 6 above are
limited to laws and regulations normally applicable to transactions of the type
contemplated in the Merger Agreement and do not extend to licenses, permits and
approvals necessary for the conduct of Parent's or Merger Sub's business. In
addition and without limiting the previous sentence, we express no opinion
herein with respect to the effect of any land use, environmental or similar law.
Further, we express no opinion as to the effect of or compliance with any state
or federal laws or regulations applicable to the transactions contemplated by
the Merger Agreement because of the nature of the business of any party thereto
other than Parent and Merger Sub.
(E) We express no opinion as to the effect of subsequent
issuances of securities of Parent to the extent that notwithstanding its
reservation of shares Parent may issue so many shares of Common Stock that there
are not enough remaining authorized but unissued shares of Common Stock for the
conversion of the Preferred Stock (or may issue securities which by antidilution
adjustment so reduce the Conversion Price of the Preferred Stock and/or other
derivative securities that the outstanding shares of the Preferred Stock become
convertible for more shares of Common Stock than remain authorized but
unissued).
125
Focalink Communications, Inc. December 31, 1997
Page 5
This opinion is rendered as of the date first written above
solely for your benefit in connection with the Merger Agreement and may not be
delivered to, quoted or relied upon by any person other than you, or for any
other purpose, without our prior written consent. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to Parent or Merger
Sub. We assume no obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.
Very truly yours,
XXXXXXX, XXXXXXX & XXXXXXXX LLP
126
Focalink Communications, Inc. December 31, 1997
Page 6
C:\BPHSD\TEH\0222768.04
BPH LEGAL OPINION TO BE DELIVERED TO
FOCALINK COMMUNICATIONS, INC. AT CLOSING
