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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
ADAPTEC, INC.,
COGENT DATA TECHNOLOGIES, INC.
CDT ACQUISITION CORP.
AND CERTAIN SHAREHOLDERS OF
COGENT DATA TECHNOLOGIES, INC.
May 31, 1996
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TABLE OF CONTENTS
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1 . Certain Definitions ............................................. 1
2. The Merger ...................................................... 3
2.1 Merger; Effective Time of the Merger .................... 3
2.2 Closing ................................................. 3
2.3 Effect of the Merger .................................... 3
2.4 Tax-Free Reorganization; Pooling of Interests ........... 4
3. Effect of Merger on the Capital Stock of the Constituent
Corporations; Exchange of Certificates .......................... 4
3.1 Exchange of Stock ....................................... 4
3.2 Dissenters'Rights ....................................... 5
3.3 Fractional Shares ....................................... 5
3.4 Exchange of Certificates ................................ 6
3.5 Taking of Necessary Action; Further Action .............. 7
3.6 Escrow Agreement ........................................ 7
4. Representations and Warranties of Cogent ........................ 7
4.1 Organization, Qualification, and Corporate Power ........ 7
4.2 Authorization ........................................... 8
4.3 Capitalization .......................................... 8
4.4 Noncontravention ........................................ 8
4.5 Fees .................................................... 9
4.6 Financial Statements .................................... 9
4.7 Subsidiaries ............................................ 9
4.8 Title to Assets ......................................... 9
4.9 Events Subsequent to Most Recent Fiscal Year End ........ 9
4.10 Undisclosed Liabilities ................................. 12
4.11 Legal Compliance ........................................ 12
4.12 Tax Matters ............................................. 12
4.13 Properties . ............................................ 13
4.14 Intellectual Property ................................... 14
4.15 Tangible Assets ......................................... 15
4.16 Inventory ............................................... 15
4.17 Contracts ............................................... 16
4.18 Notes and Accounts Receivable ........................... 17
4.19 Power of Attorney ....................................... 17
4.20 Insurance ............................................... 18
4.21 Litigation .............................................. 18
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TABLE OF CONTENTS
(Continued)
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4.22 Product Warranty ........................................ 18
4.23 Product Liability ....................................... 18
4.24 Employees ............................................... 18
4.25 Employee Benefits ....................................... 19
4.26 Guaranties .............................................. 21
4.27 Environment, Health, and Safety ......................... 21
4.28 Certain Business Relationships With Cogent .............. 22
4.29 Fun Disclosure .......................................... 22
4.30 Information Supplied .................................... 23
4.31 Accounting Matters ...................................... 23
5. Representation of the Majority Shareholders ..................... 23
6. Representations and Warranties of Adaptec and Acquisition Sub ... 23
6.1 Organization of Adaptec ................................. 23
6.2 Capitalization .......................................... 23
6.3 Authorization ........................................... 24
6.4 Noncontravention ........................................ 24
6.5 SEC Filings; Financial Statements ....................... 25
6.6 No Undisclosed Liabilities .............................. 25
6.7 Absence of Certain Changes or Events .................... 25
6.8 Absence of Litigation ................................... 26
6.9 Information Supplied .................................... 26
6.10 Brokers' Fees ........................................... 26
6.11 Full Disclosure ......................................... 26
7. Conduct and Transactions Prior to Effective Time;
Additional Agreements ........................................... 26
7.1 General ................................................. 26
7.2 Notices and Consents .................................... 26
7.3 Operation of Business ................................... 27
7.4 Preservation of Business ................................ 27
7.5 Access to Information ................................... 27
7.6 Notice of Developments .................................. 27
7.7 Best Efforts ............................................ 27
7.8 Employment Agreements ................................... 27
7.9 Preparation of S-4 and the Proxy Statement; Other Filings 28
7.10 Shareholder Approval .................................... 28
7.11 Nasdaq National Market .................................. 29
7.12 Affiliates .............................................. 29
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TABLE OF CONTENTS
(Continued)
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7.13 Pooling Accounting ................................................ 29
7.14 Exclusivity ....................................................... 29
7.15 Post-Closing Cooperation .......................................... 29
7.16 Litigation Support ................................................ 29
7.17 Transition ........................................................ 30
7.18 Confidentiality ................................................... 30
7.19 Cogent Employees .................................................. 30
8. Conditions to Obligation to Close ........................................ 30
8.1 Conditions to Each Party's Obligation to Effect the Merger ........ 30
8.2 Conditions to Adaptec's Obligation to Close ....................... 31
8.3 Conditions to Cogent's Obligation ................................. 33
9. Survival of Representations, Warranties and Covenants; Indemnification ... 34
9.1 Survival .......................................................... 34
9.2 Indemnification Provisions for Benefit of Adaptec ................. 34
9.3 Procedure for Indemnification Claims .............................. 34
9.4 Exclusivity of Remedy ............................................. 35
10. Termination .............................................................. 35
10.1 Termination of the Agreement ...................................... 35
10.2 Effect of Termination ............................................. 35
11. Miscellaneous ............................................................ 35
11.1 Press Releases and Public Announcements ........................... 36
11.2 No Third-Party Beneficiaries ...................................... 36
11.3 Entire Agreement .................................................. 36
11.4 Succession and Assignment ......................................... 36
11.5 Counterparts ...................................................... 36
11.6 Headings .......................................................... 36
11.7 Notices ........................................................... 36
11.8 Governing Law ..................................................... 38
11.9 Forum Selection; Consent to Jurisdiction .......................... 38
11.10 Amendments and Waivers ............................................ 38
11.11 Severability ...................................................... 38
11.12 Expenses .......................................................... 38
11.13 Construction ...................................................... 38
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TABLE OF CONTENTS
(Continued)
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11.14 Incorporation of Exhibits and Schedules ........ 38
11.15 Shareholders' Representative ................... 38
11.16 Attorneys' Fees ................................ 39
12. Location of Definitions ............................... 39
EXHIBITS
Exhibit 3.6 Escrow Agreement
Exhibit 4 Cogent Disclosure Schedule
Exhibit 6 Adaptec Disclosure Schedule
Exhibit 7.8(a) List of Key Employees
Exhibit 7.8(b) Employment Agreement
Exhibit 7.12 Affiliate Agreement
Exhibit 8.2(m) General Release
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is entered
into as of May 31, 1996, by and among ADAPTEC, INC., a California corporation
("Adaptec"), COGENT DATA TECHNOLOGIES, INC., a Washington corporation
("Cogent"), CDT ACQUISITION CORP., a Delaware corporation and a wholly-owned
subsidiary of Adaptec ("Acquisition Sub"), and Xxxxxxx Xxxxxxxx, Xxxxxx
Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxxxx Rome, Xxxx Xxxxxxxx and Xxxxx Xxxxxx (the
"Majority Shareholders"). Adaptec, Cogent, Acquisition Sub and the Majority
Shareholders are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
RECITALS
A. Pursuant to the Agreement and Plan of Merger in the form attached
hereto as Exhibit 2.1 providing for the merger of Acquisition Sub into Cogent
pursuant to the Washington Business Corporation Act (the "WBCA" the shares of
Common Stock of Cogent issued and outstanding immediately prior to the effective
time of the Merger will be converted into shares of Common Stock of Adaptec.
B. The Parties desire to enter into this Agreement for the purpose of
setting forth certain representations, warranties and covenants made by each to
the other as an inducement to the execution and delivery of this Agreement, and
to serve as conditions precedent to the consummation of the merger of
Acquisition Sub into Cogent.
C. The respective Boards of Directors of Adaptec, Cogent and
Acquisition Sub have approved and adopted this Agreement, and the agreement is
intended to be a plan of reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended;
D. For accounting purposes, it is intended that the transaction be
accounted for as a pooling of interests under United States generally accepted
accounting principles.
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements, representations, warranties and covenants herein contained, the
parties hereto do hereby agree as follows:
AGREEMENT
1. Certain Definitions. As used in this Agreement the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa). Certain other terms are defined
in the text of this Agreement, the location of which is set forth in Section 11
hereof.
"Affiliate" of a Person means any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person.
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"Business Condition" means the current business, financial condition,
results of operations and assets of such corporate entity.
"Confidential Information" means any information concerning the
business and affairs of Cogent or its subsidiaries that is designated by Cogent
as confidential except for information which (i) was known to, or had been (or
was in the process of being) independently developed by, Adaptec or an Affiliate
of Adaptec prior to the receipt thereof from Cogent; (ii) was at the time of
disclosure by Cogent a matter of public knowledge through no fault of Adaptec or
an Affiliate of Adaptec; or (iii) was or hereafter is obtained by Adaptec or an
Affiliate of Adaptec from a third party under no duty of confidentiality to
Cogent or it subsidiaries.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation, retirement plan, severance plan or similar plan or arrangement;
(b) Employee Pension Benefit Plan; (c) Employee Welfare Benefit Plan; (d)
Multiemployer Plan; and (e) any other nonqualified plan providing welfare
benefits, including but not limited to medical, dental, life insurance and
disability benefits.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec,
3(l).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Gross Negligence" consists of an intentional act, or the failure to
perform a duty, with reckless disregard for the consequences of such act or
failure.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, drawings, specifications, customer and
supplier lists, pricing and cost information, financial information, and
business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
"Material Adverse Effect" on any corporation shall mean a material
adverse effect on the Business Condition of such corporation.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37) and
Code Sec. 414(f).
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"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
2. The Merger.
2.1 Merger; Effective Time of the Merger. Subject to the terms
and conditions of this Agreement, Acquisition Sub will be merged with and into
Cogent (the "Merger") in accordance with the WBCA and the Delaware General
Corporation Law (the "DGCL"). In accordance with the provisions of this
Agreement, Articles of Merger in such form as is required by, and executed in
accordance with, the WBCA, shall be filed with the Washington Secretary of State
and the Delaware Secretary of State in accordance with the WBCA and the DGCL on
the Closing Date (as defined in Section 2.2) and each issued and outstanding
share of Common Stock of Cogent ("Cogent Common Stock"), shall be converted into
shares of Common Stock, $.001 par value, of Adaptec (" Adaptec Common Stock")
in the manner contemplated by Section 3. The Merger shall become effective at
the time of the filing of such Articles of Merger with the Washington Secretary
of State (the date of such filing being hereinafter referred to as the
"Effective Date of the Merger" and the time of such filing being hereinafter
referred to as the "Effective Time of the Merger").
2.2 Closing. The closing of the Merger (the "Closing") will
take place as soon as practicable on the first business day after satisfaction
or waiver of the latest to occur of the conditions set forth in Section 7 (the
"Closing Date"), at the offices of Wilson, Sonsini, Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000,
unless a different date or place is agreed to by the Parties.
2.3 Effect of the Merger. At the Effective Time of the Merger,
(i) the separate existence of Acquisition Sub shall cease and Acquisition Sub
shall be merged with and into Cogent (Cogent and Acquisition Sub are sometimes
referred to herein as the "Constituent Corporations" and Cogent after the Merger
is sometimes referred to herein as the "Surviving Corporation"), (ii) the
Articles of Incorporation of Cogent shall be the Articles of Incorporation of
the Surviving Corporation, (iii) the Bylaws of Acquisition Sub shall be the
Bylaws of the Surviving Corporation, (iv) the directors of Acquisition Sub shall
be the directors of the Surviving Corporation, (v) the officers of Acquisition
Sub shall be the officers of the Surviving Corporation and (vi) the Merger
shall, from and after the Effective Time of the Merger, have all the effects
provided by applicable law.
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2.4 Tax-Free Reorganization; Pooling of Interests. The Merger
is intended to qualify as a tax free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and to be accounted for as a pooling of interests pursuant to Opinion No. 16 of
the Accounting Principles Board.
3. Effect of Merger on the Capital Stock of the Constituent
Corporations; Exchange of Certificates.
3.1 Exchange of Stock. As of the Effective Time of the Merger,
each share of Cogent Common Stock that is issued and outstanding immediately
prior to the Effective Time of the Merger (other than shares, if any, held by
persons exercising dissenters' rights in accordance with Chapter 23B.13 of the
WBCA ("Dissenting Shares") as provided for in Section 3.2 below), shall, by
virtue of the Merger and without any action on the part of the Cogent
shareholders, be converted into the right to receive, subject to the provisions
of the Escrow Agreement, that number of shares of Adaptec Common Stock as is
determined in accordance with the formula set forth below. The number of shares
of Adaptec Common Stock into which each share of Cogent Common Stock is
convertible as determined under the formula set forth below is hereinafter
referred to as the "Exchange Ratio".
A. Unless B or C applies, the Exchange Ratio shall be:
PP/APS = ER
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OS
B. If the Average Price - Closing is greater than 1.05
multiplied by the Average Price at Signing (APC>1.05 x APS)
then the Exchange Ratio shall be computed as:
PP x LO5/APC = ER
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OS
C. If Average Price - Closing is less than 0.95 multiplied by the
Average Price at Signing (APC<0.95 x APS) then the Exchange
Ratio shall be computed as:
PP x 0.95/APC = ER
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OS
where:
ER = Exchange Ratio
PP = $68,763,558 minus any expenses payable by the shareholders
of Cogent pursuant to Section 10.12 hereof
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APS = Average of the closing prices of the Adaptec Common Stock as
reported on the NASDAQ National Market for the five trading
days prior to the date of execution of this Agreement (the
"Average Price at Signing").
APC = Average of the closing prices of the Adaptec Common Stock as
reported on the NASDAQ National Market for the five trading
days prior to the Closing Date (the "Average Price at
Closing").
OS = The total number of shares of Cogent Common Stock that are
issued and outstanding immediately prior to the Effective
Time of the Merger.
3.2 Dissenters' Rights. If holders of Cogent Common Stock are entitled
to dissenters' rights at the Effective Time of the Merger under Chapter 23B.13
of the WBCA, the shares as to which dissenters' rights are available
("Dissenting Shares") shall not be converted into Adaptec Common Stock on or
after the Effective Time of the Merger, but shall instead be converted into the
right to receive from the Surviving Corporation such consideration as may be
determined to be due with respect to such Dissenting Shares pursuant to the
WBCA. Each holder of Dissenting Shares (a "Dissenting Shareholder") who,
pursuant to the provisions of Chapter 23B.13 of the WBCA, becomes entitled to
payment of the value of shares of Cogent Common Stock held by such Dissenting
Shareholder shall receive payment therefor (but only after the value therefor
shall have been agreed upon or finally determined pursuant to such provisions).
In the event of the legal obligation, after the Effective Time of the Merger, to
deliver shares of Adaptec Common Stock to any Dissenting Shareholder who shall
have failed to make an effective demand for appraisal or shall have lost his
status as a Dissenting Shareholder, the Surviving Corporation shall issue and
deliver, upon surrender by such Dissenting Shareholder of his certificate or
certificates representing shares of Cogent Common Stock, the shares of Adaptec
Common Stock to which such Dissenting Shareholder is then entitled under this
Section 3.2 and Chapter 23B.13 of the WBCA. The Surviving Corporation will pay
all sums due to holders of Dissenting Shares on account of such shares.
3.3 Fractional Shares. No fractional share of Adaptec Common Stock
shall be issued in the Merger. In lieu thereof, each holder of shares of Cogent
Common Stock who would otherwise be entitled to receive a fraction of a share of
Adaptec Common Stock shall receive from Adaptec an amount of cash (rounded to
the nearest whole cent) equal to the product of the fraction of a share of
Adaptec Common Stock to which such holder would otherwise be entitled,
multiplied by the per share market value of Adaptec Common Stock (based on the
closing price of Adaptec Common Stock as reported on the Nasdaq National Market
on the Effective Date of the Merger). For the purpose of determining fractional
shares, all shares of Adaptec Common Stock to be issued to any Cogent
shareholder shall be aggregated.
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3.4 Exchange of Certificates.
(a) Exchange Agent. Prior to the Closing Date, Adaptec
shall appoint Chemical Trust Company of California to act as the exchange agent
(the "Exchange Agent") in the Merger.
(b) Adaptec to Provide Adaptec Common Stock. Promptly
after the Effective Date of the Merger (but in no event later than ten business
days thereafter), Adaptec shall make available for exchange in accordance with
this Section 3, through such reasonable procedures as Adaptec may adopt, the
shares of Adaptec Common Stock issuable pursuant to Section 3.1 in exchange for
outstanding shares of Cogent Common Stock.
(c) Exchange Procedures. Within ten days after the
Effective Date of the Merger, the Exchange Agent shall mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Date of the Merger represented outstanding shares of Cogent Common Stock (the
"Certificates") whose shares are being converted into Adaptec Common Stock
pursuant to Section 3.1 hereof, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
which shall be in such form and have such other provisions as Adaptec may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for Adaptec Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Adaptec with the reasonable concurrence of the
former Cogent shareholders, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the number of shares of Adaptec Common Stock to which the
holder of Cogent Common Stock is entitled pursuant to Section 3.1 hereof. The
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Cogent Common Stock which is not registered on the
transfer records of Cogent, the appropriate number of shares of Adaptec Common
Stock may be delivered to a transferee if the Certificate representing such
Cogent Common Stock is presented to the Exchange Agent and accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. From and after the Effective
Date of the Merger, until surrendered as contemplated by this Section 3.4, each
Certificate shall be deemed for all corporate purposes to evidence the number of
shares of Adaptec Common Stock into which the shares of Cogent Common Stock
represented by such Certificate have been converted and shall have the rights
with respect thereto as provided by the California General Corporation Law.
(d) No Further Ownership Rights in Capital Stock of
Cogent. All Adaptec Common Stock delivered upon the surrender for exchange of
shares of Cogent Common Stock in accordance with the terms hereof shall be
deemed to have been delivered in full satisfaction of all rights pertaining to
such Cogent Common Stock. There shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of Cogent Common Stock
which were outstanding immediately prior to the Effective Date of the Merger.
If, after the Effective Date of the Merger, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled
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and exchanged as provided in this Section 3.4, provided that the presenting
holder is listed on Cogent's shareholder list as a holder of Cogent Common
Stock.
3.5 Taking of Necessary Action; Further Action. Adaptec, Cogent and
Acquisition Sub shall take all such action as may be necessary or appropriate in
order to effect the Merger as promptly as possible provided that nothing herein
shall obligate any Majority Shareholder to vote in favor of the Merger. If, at
any time after the Effective Date of the Merger, any 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 either Cogent or
Acquisition Sub, the officers and directors of such corporation are fully
authorized in the name of the corporation or otherwise to take, and shall take,
all such action.
3.6 Escrow Agreement. At the Closing, the Majority Shareholders and
Adaptec shall execute and deliver an escrow agreement (the "Escrow Agreement"),
substantially in the form attached hereto as Exhibit 3.6 Pursuant to the Escrow
Agreement, the Escrow Amount shall be deducted, pro rata, from the number of
shares of Adaptec Common Stock otherwise issuable to the Majority Shareholders
and shall be placed in escrow for the purpose of securing the indemnity
obligations set forth in Section 9 hereof. As used herein "Escrow Amount" shall
mean 10% of the shares of Adaptec Common Stock (rounded to the nearest whole
share) issuable to the Majority Shareholders in the Merger pursuant to Section
3.1.
4. Representations and Warranties of Cogent. Cogent hereby represents and
warrants, to Adaptec and Acquisition Sub that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by Cogent
to Adaptec on the date hereof (and initialed by Adaptec), a copy of which is
attached hereto as Exhibit 4 (referred to herein as the "Cogent Disclosure
Schedule") and except for events occurring in the Ordinary Course of Business of
Cogent between the date of this Agreement and the Closing Date, which events are
not material individually or in the aggregate, do not violate any of the
covenants or agreements of Cogent, and are disclosed to Adaptec by means of an
updated Cogent Disclosure Schedule not less than two days prior to the Closing.
The Cogent Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 4.
4.1 Organization, Qualification, and Corporate Power. Cogent is a
corporation duly organized and validly existing under the laws of the
jurisdiction of the State of Washington. Cogent is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required. Cogent has full corporate power and authority, and
has all necessary licenses and permits, to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. Section 4.1
of the Cogent Disclosure Schedule lists the directors and officers of Cogent.
The operations now being conducted by Cogent have not been conducted under any
other name during the past five (5) years.
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4.2 Authorization. Cogent has full power and authority to execute and
deliver this Agreement, and, subject to receipt of the requisite approvals of
its shareholders, to consummate the transactions contemplated hereunder and to
perform its obligations hereunder and except as set forth on Section 4.2 of the
Cogent Disclosure Schedule no other proceedings on the part of Cogent are
necessary to authorize the execution, delivery and performance of this
Agreement. This Agreement constitutes the valid and legally binding obligation
of Cogent, enforceable against Cogent in accordance with its terms and
conditions. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency, commission,
regulatory authority or other governmental authority or instrumentality,
domestic or foreign, is required by or with respect to Cogent in connection with
the execution and delivery of this Agreement or the Articles of Merger by Cogent
or by consummation by Cogent of the transactions contemplated hereby or thereby,
except for (i) the filing of a premerger notification report by Cogent under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the distribution of the registration statement/proxy statement
relating to the Shareholders' Meeting (the "Registration Statement/Proxy
Statement") and the obtaining of the approval of the Merger by Cogent's
shareholders, and (iii) the filing of the Articles of Merger with the Secretary
of State of the State of Washington and the Secretary of the State of the State
of Delaware and appropriate documents with the relevant authorities of other
states in which Cogent is qualified to do business.
4.3 Capitalization.
(a) Capital Stock. The entire authorized capital stock of Cogent
consists of 10,000,000 shares of Common Stock without par value, 2,242,793 of
which are issued and outstanding, and 5,000,000 shares of Preferred Stock, none
of which are issued and outstanding. All of the issued and outstanding shares of
capital stock have been duly authorized, are validly issued, fully paid, and
non-assessable, and are held of record by the respective shareholders as set
forth in Section 4.3(a) of the Cogent Disclosure Schedule. All of the
outstanding shares of capital stock have been offered, issued and sold by Cogent
in compliance with applicable Federal and state securities laws.
(b) No Other Rights or Agreements. Section 4.3(b) of the Cogent
Disclosure Schedule lists all of the holders of options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights and other rights
that could require Cogent to issue, sell or otherwise cause to become
outstanding any of its capital stock (the "Stock Rights"), and if determinable,
the number of shares of Cogent Common Stock subject to such Stock Rights. Except
as set forth in Section 4.3(b) of the Cogent Disclosure Schedule, there are no
other outstanding or authorized Stock Rights. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to Cogent. Except as set forth in Section 4.3(b) of
the Cogent Disclosure Schedule, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
Cogent.
4.4 Noncontravention. Neither the execution and the delivery of this
Agreement nor the consummation of the transactions contemplated hereby, will (A)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Cogent is subject or any provision of its
Articles
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of Incorporation or bylaws, or (B) except as set forth in Section 4.4 of the
Cogent Disclosure Schedule, (i) conflict with, (ii) result in a breach of, (iii)
constitute a default under, (iv) result in the acceleration of, (v) create in
any party the right to accelerate, terminate, modify, or cancel, or (vi) require
any notice under, any agreement, contract, lease, license, instrument, franchise
permit or other arrangement to which Cogent is a party or by which it is bound
or to which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets).
4.5 Fees. Except for the fee to be paid to Broadview Associates L.P.,
Cogent has no liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement.
4.6 Financial Statements. Section 4.6 of the Cogent Disclosure Schedule
contains an audited balance sheet and statement of operations as of and for the
fiscal year ended March 31, 1995 and an unaudited balance sheet and statement of
operations as of and for the fiscal year ended March 31, 1996 (the "Most Recent
Fiscal Year End") for Cogent (collectively the "Financial Statements"). The
Financial Statements (including the notes thereto) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (except that the unaudited Financial Statements lack footnotes and certain
other presentation items) throughout the periods covered thereby and present
fairly the financial condition of Cogent as of such dates and the consolidated
results of operations of Cogent as for such periods. The books of account of
Cogent reflect as of the dates shown thereon substantially all items of income
and expenses, and all assets, liabilities and accruals of Cogent required to be
reflected therein, in accordance with generally accepted accounting principles
consistently applied.
4.7 Subsidiaries. Cogent has no subsidiaries.
4.8 Title to Assets. Except as set forth in Section 4.8 of the Cogent
Disclosure Schedule, Cogent has good and marketable title to, or a valid
leasehold interest in, the properties and assets (including, without limitation,
all Intellectual Property) used by it, located on its premises, or shown on the
balance sheet of Cogent as of March 31, 1996 (the "Most Recent Balance Sheet")
or acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet. No Person other than Cogent
will own at the time of the Closing any assets or properties currently utilized
in or reasonably necessary to the operations or business of Cogent or situated
on any of the premises of Cogent. There are no existing contracts, agreements,
commitments or arrangements with any Person to acquire any of the assets or
properties of Cogent (or any interest therein) except for this Agreement and
those contracts entered into during the Ordinary Course of Business for the sale
of products and services to customers of Cogent.
4.9 Events Subsequent to Most Recent Financial Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
Business Condition of Cogent. Without limiting the generality or the foregoing,
since that date:
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15
(a) Cogent has not sold, leased, transferred, or assigned any
assets or properties, tangible or intangible, outside the Ordinary Course of
Business;
(b) except for those agreements, contracts, leases and
commitments identified in Section 4.17 of the Cogent Disclosure Schedule, Cogent
has not entered into, assumed or become bound under or obligated by any
agreement, contract, lease or commitment (collectively a "Cogent Agreement") or
extended or modified the terms of any Cogent Agreement which (i) involves the
payment of greater than $50,000 per annum or which extends for more than one (1)
year, (ii) involves any payment or obligation to any Affilliate of Cogent other
than in the Ordinary Course of Business, (iii) involves the sale of any assets
material to the business and operations of Cogent, (iv) involves any OEM
relationship, or (v) involves any exclusive or extraordinary license of Cogent's
technology;
(c) Except as set forth on Section 4.9(e) of the Cogent
Disclosure Schedule, no party (including Cogent) has accelerated, terminated,
made modifications to, or canceled any agreement, contract, lease, or license to
which Cogent is a party or by which it is bound and Cogent has not modified,
canceled or waived or settled any debts or claims held by it, outside the
Ordinary Course of Business, or waived or settled any rights or claims of a
substantial value, whether or not in the Ordinary Course of Business;
(d) none of the assets of Cogent, tangible or intangible, has
become subject to any Security Interest;
(e) Cogent has not made any capital expenditures except in the
Ordinary Course of Business and not exceeding $50,000 in the aggregate of all
such capital expenditures;
(f) Except as set forth on Section 4.9(f) of the Cogent
Disclosure Schedule, Cogent has not made any capital investment in, or any loan
to, any other Person in excess of $10,000;
(g) Except as set forth on Section 4.9(g) of the Cogent
Disclosure Schedule, Cogent has not created, incurred, assumed, prepaid or
guaranteed any indebtedness for borrowed money and capitalized lease
obligations, or extended or modified any existing indebtedness;
(h) Except in the Ordinary Course of Business, Cogent has not
granted any license or sublicense of any rights under or with respect to any
Intellectual Property;
(i) there has been no change made or authorized in the
articles of incorporation or bylaws of Cogent;
(j) Except as set forth on Section 4.9(j) of the Cogent
Disclosure Schedule, Cogent has not issued, sold, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including, upon conversion, exchange, or exercise) any of
its capital stock;
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(k) Cogent has not declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;
(1) Cogent has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property in excess of $50,000
in the aggregate of all such damage, destruction and losses;
(m) Except as set forth on Section 4.9(m) of the Cogent
Disclosure Schedule, Cogent has not suffered any repeated, recurring or
prolonged shortage, cessation or interruption of inventory shipments, supplies
or utility services;
(n) Except as set forth on Section 4.9(n) of the Cogent
Disclosure Schedule, Cogent has not entered into any other transaction with, or
paid any bonuses in excess of an aggregate of $10,000 to, any of its
Affiliates, directors, officers, or employees, and, in any event, any such
transaction was on fair and reasonable terms no less favorable to Cogent than
would be obtained in a comparable arm's length transaction with a Person which
is not such an Affiliate, director, officer or employee thereof;
(o) Except as set forth on Section 4.9(o) of the Cogent
Disclosure Schedule, Cogent has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(p) Except as set forth on Section 4.9(p) of the Cogent
Disclosure Schedule, Cogent has not granted any increase in the base
compensation of any of its directors or officers, or, except in the Ordinary
Course of Business, any of its employees;
(q) Except as set forth on Section 4.9(q) of the Cogent
Disclosure Schedule, Cogent has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, or employees (or
taken any such action with respect to any other Employee Benefit Plan);
(r) Cogent has not made any other change in employment terms
for any of its directors, officers, or employees outside the Ordinary Course of
Business;
(s) Except as set forth on Section 4.9(s) of the Cogent
Disclosure Schedule, Cogent has not suffered any adverse change or any threat of
any adverse change in its relations with, or any loss or threat of loss of, any
of its major customers, distributors or dealers;
(t) Except as set forth on Section 4.9(t) of the Cogent
Disclosure Schedule, Cogent has not suffered any adverse change or any threat of
any adverse change in its relations with, or any loss or threat of loss of, any
of it major suppliers;
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17
(u) Cogent has not received notice or had knowledge of any
actual or threatened labor trouble or strike, or any other occurrence, event or
condition of a similar character;
(v) Cogent has not changed any of the accounting principles
followed by it or the method of applying such principles;
(w) Cogent has not made a change in any of its banking or safe
deposit arrangements;
(x) Except for the execution of this Agreement, Cogent has not
entered into any transaction other than in the Ordinary Course of Business; and
(y) Cogent has not committed to any of the foregoing.
4.10 Undisclosed Liabilities. Cogent has no liability (whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due, including
any liability for taxes) of a character which, under GAAP, should be accrued,
shown or disclosed on a balance sheet of Cogent, except for (i) liabilities set
forth on the Most Recent Balance Sheet, (ii) liabilities which have arisen after
the Most Recent Fiscal Year End in the Ordinary Course of Business, and (iii)
liabilities arising out of the transactions contemplated by this Agreement.
4.11 Legal Compliance. Cogent has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof). No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, notice or inquiry has been
filed or commenced against, or received by, any governmental body alleging any
failure to so comply. The licenses, permits, approvals, registrations,
qualifications, certificates and other governmental authorizations that are
listed on Section 4.11 of the Cogent Disclosure Schedule are the only
governmental authorizations that are necessary for the operations of Cogent as
they are presently conducted.
4.12 Tax Matters
(a) For purposes of this Agreement, "Taxes" means all federal,
state, municipal, local or foreign income, gross receipts, windfall profits,
severance, property, production, sales, use, value added, license, excise,
franchise, employment, withholding, capital stock, levies, imposts, duties,
transfer and registration fees or similar taxes or charges imposed on the
income, payroll, properties or operations of Cogent, together with any interest,
additions or penalties, deficiencies or assessments with respect thereto and any
interest in respect of such additions or penalties.
(b) Cogent has filed all reports and returns with respect to
any Taxes ("Tax Returns") that it was required to file. All such Tax Returns
were correct and complete in all respects and no such Tax Returns are currently
the subject of audit. Except as set forth in Section 4.12 (b)
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of the Cogent Disclosure Schedule. All Taxes owed by Cogent (whether or not
shown on any Tax Return) were paid in full when due or are being contested in
good faith and are supported by adequate reserves on the Most Recent Financial
Statements. Cogent has provided adequate reserves on its Financial Statements
for the payment of any taxes accrued but not yet due and payable. Cogent is not
currently the beneficiary of any extension of time within which to file any Tax
Return, and Cogent has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to any Tax assessment or
deficiency.
(c) There is no dispute or claim concerning any Tax liability
of Cogent either (A) claimed of raised by any authority in writing or (B) based
upon personal contact with any agent of such authority. There are no tax liens
of any kind upon any property or assets of Cogent, except for inchoate liens for
taxes not yet due and payable.
(d) Cogent has not filed a consent under Sec. 341(f) of the
Internal Revenue Code of 1986, as amended (the "Code") concerning collapsible
corporations. Cogent has not made any payments, is not obligated to make any
payments, and is not a party to any agreement that under any circumstances
could obligate it to make any payments as a result of the consummation of the
Merger that will not be deductible under Code Sec. 280G. Cogent has not been a
United States real property holding corporation within the meaning of Code Sec.
897(c)(2) during the applicable period specified in Code Sec. 897(c)(1)(A)(ii).
Cogent is not a party to any tax allocation or sharing agreement. Cogent (A) has
not been a member of any affiliated group within the meaning of Code Sec. 1504
or any similar group defined under a similar provision of state, local, or
foreign law (an "Affiliated Group") filing a consolidated federal Income Tax
Return (other than a group the common parent of which was Cogent) and (B) has no
any liability for the taxes of any Person (other than any of Cogent and its
Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.
(e) The unpaid Taxes of Cogent (A) did not, as of the Most
Recent Fiscal Period End, exceed by any amount the reserve for Tax liability
(rather than any reserve for deferred taxes established to reflect timing
differences between book and tax income) set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) and (B) will not exceed
by any material amount that reserve as adjusted for operations and transactions
through the Closing Date in accordance with the past custom and practice of
Cogent in filing its Tax Returns.
4.13 Properties.
(a) Cogent owns no real property.
(b) Section 4.13 of the Cogent Disclosure Schedule lists and
describes briefly all real property leased or subleased to Cogent. Cogent has
delivered to Adaptec correct and complete copies of the leases and subleases
listed in Section 4.13 of The Cogent Disclosure Schedule (as amended to date),
and with respect to each lease and sublease listed in Section 4.13 of the Cogent
Disclosure Schedule to the knowledge of Cogent, except as set forth on Section
4.13 of the Cogent Disclosure Schedule:
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(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect in all respects;
(ii) no party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iii) no party to the lease or sublease has
repudiated any provision thereof,
(iv) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease:
(v) Cogent has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold; and
4.14 Intellectual Property.
(a) Cogent has not interfered with, infringed upon,
misappropriated or violated any Intellectual Property rights of third parties in
any respect, and except as set forth on Section 4.14(a) of the Cogent Disclosure
Schedule. Cogent has not received since its inception any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that any of Cogent must
license or refrain from using any Intellectual Property rights of any third
party). To the best of Cogent's knowledge, no third party has interfered with,
infringed upon, misappropriated, or violated any Intellectual Property rights of
Cogent.
(b) Section 4.14(b) of the Cogent Disclosure Schedule
identifies each patent or registration which has been issued to Cogent with
respect to any of the Intellectual Property used in Cogent's business,
identifies each pending patent application or application for registration which
Cogent has made with respect to any of the Intellectual Property used in
Cogent's business, and identifies each license, agreement, or other permission
which Cogent has granted to any third party with respect to any of the
Intellectual Property used in Cogent's business (together with any exceptions).
Cogent has delivered to Adaptec correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date). Section 4.14(b)of the Cogent Disclosure Schedule also identifies (i)
each trade name or unregistered trademark used by Cogent in connection with any
of its businesses and (ii) each unregistered copyright owned by Cogent with
respect to Intellectual Property used in Cogent's business. With respect to each
item of Intellectual Property required to be identified in Section 4.14(b) of
the Cogent Disclosure Schedule:
(i) Cogent possesses, or will possess prior to the
Closing, all right, title, and interest in and to the item, free and clear of
any Security Interest, license, or other restriction;
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(ii) the item is legal and valid and in full force
and effect and is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or threatened in
writing which challenges the legality, validity, enforceability, use or
ownership of the item; and
(iv) Except as set forth in the Cogent Disclosure
Schedule, Cogent has no obligation to indemnify any Person for or against any
interference, infringement, misappropriation, or other conflict with respect to
the item.
(c) Section 4.14(c) of the Cogent Disclosure Schedule
identifies each item of Intellectual Property that any third party owns and that
Cogent uses pursuant to license, sublicense, agreement, or permission. Cogent
has delivered to Adaptec correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each item of Intellectual Property required to be identified in Section 4.14(c)
of the Cogent Disclosure Schedule:
(i) the license, sublicense, agreement or permission
covering the item is, to the knowledge of Cogent, legal, valid, binding and
enforceable, and in full force and effect in all respects;
(ii) no party to the license, sublicense, agreement,
or permission is, to the knowledge of Cogent, in breach or default, and no event
has occurred which with notice or lapse of time would constitute a breach or
default or permit termination, modification or acceleration thereunder;
(iii) no party to the license, sublicense, agreement,
or permission has repudiated any provision thereof; and
(iv) Cogent has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission.
4.15 Tangible Assets. The buildings, machinery, equipment, and
other tangible assets that Cogent owns and leases are free from material
defects, have been maintained in accordance with normal industry practice, and
are in good operating condition and repair (subject to normal wear and tear) and
are usable in the Ordinary Course of Business,
4.16 Inventory. Except as set forth in Section 4.16 of the
Cogent Disclosure Schedule, all of the inventory of Cogent, which consists of
raw materials and supplies, manufactured and processed parts, work in process,
and finished goods, is usable, merchantable and fit for the purpose for which it
was procured or manufactured, and none of such inventory is obsolete, damaged,
or defective, subject only to the reserve for inventory write down set forth on
the face of the Most Recent Balance Sheet as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of Cogent.
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4.17 Contracts. Section 4.l7 of the Cogent Disclosure Schedule
lists the following contracts, agreements, commitments and other arrangements
currently in effect to which Cogent is a party or by which Cogent or any of its
assets is bound:
(a) any agreement (or group of related agreements)
for the lease of personal property to or from any Person providing for lease
payments in excess of $12,000 per annum;
(b) except for purchase orders issued in the Ordinary
Course of Business, any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year or involves
consideration in excess of $50,000;
(c) any agreement for the purchase of supplies,
components, products or services from single source suppliers, custom
manufacturers or subcontractors the performance of which will extend over a
period of more than one year or involves consideration in excess of $50,000;
(d) any agreement concerning a partnership or joint
venture;
(e) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or any capitalized lease obligation in excess of $50,000 or
under which it has imposed a Security Interest on any of its assets, tangible or
intangible;
(f) any agreement concerning confidentiality,
noncompetition or restraint of trade;
(g) any agreement with any Cogent shareholder or any
of such shareholder's Affiliates (other than Cogent) or with any Affiliate of
Cogent;
(h) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(i) any collective bargaining agreements;
(j) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis;
(k) any agreement under which Cogent has advanced or
loaned any amount to any of its directors, officers, and employees;
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(l) any other agreement under which the consequences
of a default or termination could have a Material Adverse Effect on Cogent;
(m) any agreement with any original equipment
manufacturer involving consideration in excess of $100,000;
(n) any agreement pursuant to which Cogent is
obligated to provide maintenance, support or training for its products;
(o) any standard form agreement used by Cogent,
including, but not limited to, any purchase order, statement of standard terms
and conditions of sale, or employment offer letter;
(p) any agreement pursuant to which any of Cogent's
products is manufactured; and
(q) any other agreement (or group of related
agreements) the performance of which involves consideration in excess of $50,000
or which is expected to continue for more than six months from the date hereof.
Cogent has delivered to Adaptec a correct and complete copy of each written
agreement listed in Section 4.17 of the Cogent Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 4.17 of the Cogent Disclosure Schedule.
Except as set forth on Section 4.17 of the Cogent Disclosure Schedule, with
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect in all respects in accordance with its
terms; (B) no party is in breach or default, and no event has occurred, which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (C) no
party has repudiated any provision of the agreement;
4.18 Notes and Accounts Receivable. Except as set forth on
Section 4.18 of the Cogent Disclosure Schedule all notes and accounts
receivable of Cogent, all of which are reflected properly on the books and
records of Cogent, are valid receivables (less cash discounts) subject to no
setoffs, defenses or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserves for bad debts, warranty, and allowance for distributor returns
set forth on the face of the Most Recent Balance Sheet as adjusted for
operations and transactions through the Closing Date in accordance with the past
custom and practice of Cogent.
4.19 Power of Attorney. Except as set forth on Section 4.19 of
the Cogent Disclosure Schedule, there are no outstanding powers of attorney
executed on behalf of Cogent.
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4.20 Insurance. Cogent has delivered to Adaptec copies of each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) with
respect to which Cogent is a party, a named insured, or otherwise the
beneficiary of coverage. With respect to each such insurance policy: (A) the
policy is legal, valid, binding, enforceable, and in full force and effect in
all respects (and there has been no notice of cancellation or nonrenewal of the
policy received), (B) neither Cogent nor any other party to the policy, is in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; (C) no party to the policy has
repudiated any provision thereof, and (D) there has been no failure to give any
notice or present any claim under the policy in due and timely fashion. Section
4.20 of the Cogent Disclosure Schedule describes any self-insurance arrangements
presently maintained by Cogent.
4.21 Litigation. Section 4.21 of the Cogent Disclosure
Schedule sets forth each instance in which Cogent (or any of its assets) (i) is
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is or has been within the last three years a party, or, to the
knowledge of Cogent, is threatened to be made a party, to any action, suit,
proceeding, hearing, arbitration, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. To the knowledge of Cogent, there
are no facts or circumstances which would form the basis of any claim against
Cogent.
4.22 Product Warranty. Substantially all of the products
manufactured, sold, leased, and delivered by Cogent have conformed in all
respects with all applicable contractual commitments and all express and implied
warranties, and as disclosed in the Cogent Disclosure Schedule, Cogent has no
liability (whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due) for replacement or repair thereof or other damages in
connection therewith, other than in the Ordinary Course of Business in an
aggregate amount not exceeding $50,000. Substantially all of the products
manufactured, sold, leased, and delivered by Cogent are subject to standard
terms and conditions of sale or lease. Section 4.17(o) of the Cogent Disclosure
Schedule includes copies of the standard terms and conditions of sale or lease
for Cogent (containing applicable guaranty, warranty, and indemnity provisions).
4.23 Product Liability. To the best of Cogent's knowledge,
Cogent has no liability (whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by Cogent.
4.24 Employees. Except as set forth on Section 4.24 of the
Cogent Disclosure Schedule, no executive, key employee, or significant group of
employees has advised any executive officer of Cogent that he, she or they plan
to terminate employment with Cogent during the next 12 months. Cogent is not a
party to or bound by any collective bargaining agreement, nor has it experienced
any strike or grievance, claim of unfair labor practices, or other collective
bargaining dispute within the
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past three years. Cogent has not committed any unfair labor practice. There is
no organizational effort presently being made or threatened by or on behalf of
any labor union with respect to employees of Cogent.
4.25 Employee Benefits.
(a) Section 4.25 (a) of the Cogent Disclosure
Schedule lists each Employee Benefit Plan that Cogent maintains or to which
Cogent contributes or is obligated to contribute.
(i) Each such Employee Benefit Plan (and
each related trust, or fund established by Cogent) complies in form and in
operation in all respects with their terms, the applicable requirements of
ERISA, the Code, and other applicable laws.
(ii) All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to each
such Employee Benefit Plan. The requirements of Part 6 of Subtitle B of Title I
of ERISA and of Code Sec. 4980B have been met in all respects with respect to
each such Employee Benefit Plan which is an Employee Welfare Benefit Plan. To
the best of Cogent's knowledge, no event has occurred and no condition exists
with respect to any Employee Benefit Plan that would subject Cogent to any tax
under Code Sections 4972, 4976 or 4979 or to a fine under ERISA Sections 502(i)
or 502(1).
(iii) All contributions, premiums or other
payments (including all employer contributions and employee salary reduction
contributions) which are due have been paid to each Employee Benefit Plan and
all contributions, premiums or other payments for any period ending on or before
the Closing Date which are not yet due shall been paid to each such Employee
Benefit Plan or shall be accrued in accordance with the custom and practice of
Cogent.
(iv) Each such Employee Benefit Plan which
is an Employee Pension Benefit Plan and which is intended to qualify under Code
Sec. 401 (a), has received a favorable determination letter from the Internal
Revenue Service with respect to the qualification of the plan under Code Section
401 (a) and the exemption of any corresponding trust under Code Section 501,
unless the Internal Revenue Service is deemed to have approved the form of such
Plan under applicable IRS Revenue Procedures. A copy of such determination
letters have been provided to Adaptec and nothing has occurred since the date of
each such determination letter that would cause such Employee Pension Benefit
Plan to lose its ability to rely on such letter. Each Employee Pension Benefit
Plan has been restated to comply with the 1986 Tax Reform Act and subsequent
applicable tax legislation to the extent required by governing tax law. A copy
of any determination letters applicable to such restatement which have been
received by Cogent has been provided to Adaptec.
(v) Neither Cogent nor any other Person or
entity under common control with Cogent within the meaning of Section 414(b),
(c) or (m) of the Code and the regulations thereunder has now or at any previous
time, maintained, established, sponsored, participated in, or
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contributed to, any Employee Pension Benefit Plan that is subject to Part 3 of
Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code. No
Employee Welfare Benefit Plan or other Employee Benefit Plan providing welfare
benefits is funded with a trust or other funding vehicle, other than insurance
policies or contracts with a health maintenance organization or similar health
care delivery entity.
(vi) Cogent has delivered to Adaptec
correct and complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal Revenue Service,
if any, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements which implement
each maintained Employee Benefit Plan. The terms of any such documentation or
other communication do not prohibit Adaptec from amending or terminating any
such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that
Cogent, and/or any controlled group of corporations within the meaning of Code
Sec. 1563 (a "Controlled Group of Corporations") which includes Cogent,
maintains or ever has maintained or to which any of them contributes, ever
contributed, or ever has been required to contribute:
(i) To the best of Cogent's knowledge, there
have been no prohibited transactions within the meaning of ERISA Sec. 406 and
Code Sec. 4975 with respect to any such Employee Benefit Plan. No fiduciary
within the meaning of ERISA Sec. 3(21) (a "Fiduciary"), has any liability for
breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or threatened.
(c) Except as disclosed in Section 4.25(c) of the
Cogent Disclosure Schedule, Cogent does not maintain or contribute to, has never
maintained or contributed to, and has never been required to contribute to, any
Employee Welfare Benefit Plan or any other Employee Benefit Plan providing
medical, health, or life insurance or other welfare-type benefits for current
or future retired or terminated employees, their spouses, or their dependents
(other than in accordance with Code Sec. 4980B or Part 6 of Subtitle B of Title
I of ERISA).
(d) There is no liability in connection with any
Employee Benefit Plan that is not fully disclosed or provided for on the Most
Recent Balance Sheet for which disclosure would be required under generally
accepted accounting principles.
(e) No Employee Benefit Plan or Cogent has any
liability to any plan participant, beneficiary or other person by reason of the
payment of benefits or the failure to pay benefits with respect to benefits
under or in connection with any such Employee Benefit Plan, other than claims in
the normal administration of such plans.
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4.26 Guaranties. Cogent is not a guarantor or otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
4.27 Environment, Health, and Safety.
(a) For purposes of this Agreement, the following
terms have the following meanings:
"Environmental, Health, and Safety Laws" means any
and all federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, plans, injunctions, judgments, decrees,
requirements or rulings now or hereafter in effect, imposed by any governmental
authority regulating, relating to, or imposing liability or standards of conduct
relating to pollution or protection of the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), public health and safety, or employee health and safety, concerning any
Hazardous Materials or Extremely Hazardous Substances, as such terms as defined
herein, or otherwise regulated, under any Environmental, Health and Safety Laws.
The term "Environmental, Health and Safety Laws" shall include, without
limitation, the Clean Water Act (also known as the Federal Water Pollution
Control Act), 33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section
136 et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., the Superfund Amendment and Reauthorization Act of 1986,
Public Law 99-4, 99, 100 Stat. 1613, the Emergency Planning and Community Right
to Know Act, 42 U.S.C. Section 11001 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., and the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., all as amended, together with any
amendments thereto, regulations promulgated thereunder and all substitutions
thereof.
"Extremely Hazardous Substance" means a substance on
the list described in Section 302 (42 U.S.C. Section 11002(a)(2)) of the
Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 11001 et
seq., as amended.
"Hazardous Material" means any material or substance
that, whether by its nature or use, is now or hereafter defined as a pollutant,
dangerous substance, toxic substance, hazardous waste, hazardous material,
hazardous substance or contaminant under any Environmental, Health and Safety
Laws, or which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and which is now or
hereafter regulated under any Environmental, Health and Safety Laws, or which is
or contains petroleum, gasoline, diesel fuel or other petroleum hydrocarbon
product.
(b) Each of Cogent and its predecessors and
Affiliates (A) has complied with the Environmental, Health, and Safety Laws in
all respects (and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, directive or notice has been filed or commenced
against any of them alleging any such failure to comply), (B) has obtained and
been in substantial compliance with all of the terms and conditions of all
permits, licenses, certificates and
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other authorizations which are required under the Environmental, Health, and
Safety Laws, and (C) has complied in all respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in the Environmental, Health, and
Safety Laws.
(c) Cogent has no liability (whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) with
respect to, and none of Cogent and its predecessors and Affiliates has handled
or disposed of any Hazardous Materials or extremely Hazardous Substances,
arranged for the disposal of any Hazardous Materials or Extremely Hazardous
Substances, exposed any employee or other individual to any Hazardous Materials
or Extremely Hazardous Substances, or owned or operated any property or facility
in any manner that could give rise to any liability, for damage to any site,
location, surface water, groundwater, land surface or subsurface strata, for any
illness of or personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Law.
(d) No Extremely Hazardous Substances are currently,
or have been, located at, on, in, under or about all properties and equipment
used in the business of Cogent and its predecessors and Affiliates.
(e) No Hazardous Materials are currently located at,
on, in, under or about all properties and equipment used in the business of
Cogent and its predecessors and Affiliates in a manner which violates any
Environmental, Health and Safety Laws or which requires cleanup or corrective
action of any kind under any Environmental, Health and Safety Laws.
4.28 Certain Business Relationships With Cogent. Neither the
shareholders of Cogent nor any director or officer of Cogent, nor any member of
their immediate families, nor any Affliate of any of the foregoing, owns,
directly or indirectly, or has an ownership interest in (a) any business
(corporate or otherwise) which is a party to, or in any property which is the
subject of, any business arrangement or relationship of any kind with Cogent in
excess of $2,000 per annum, or (b) any business (corporate or otherwise) which
conducts the same business as, or a business similar to, that conducted by
Cogent.
4.29 Full Disclosure. No representation or warranty in this
Section 4 or in any document delivered by Cogent pursuant to the transactions
contemplated by this Agreement, and no statement, list, certificate or
instrument furnished to Adaptec pursuant hereto or in connection with this
Agreement contains any untrue statement of a material fact, or omits or shall
omit to state any fact necessary, in light of the circumstances under which it
was made, to make any statement herein or therein not materially misleading.
There is no fact, event or condition which Cogent has not disclosed to Adaptec
in writing and which is having or is reasonably likely to have a Material
Adverse Effect on Cogent. Except as specifically disclosed on the Cogent
Disclosure Schedule, Cogent has delivered to Adaptec true, correct and complete
copies of all documents, including all amendments, supplements and modifications
thereof or waivers currently in effect thereunder, described in the Cogent
Disclosure Schedule.
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4.30 Information Supplied. None of the information supplied or
to be supplied by Cogent for inclusion in the Registration Statement on Form S-4
to be filed with the Securities and Exchange Commission (the "SEC") by Adaptec
in connection with the issuance of the Adaptec Common Stock in or as a result of
the Merger (the "S-4"), including the Proxy Statement included therein, at the
date such information is supplied and at the time of the Shareholders' Meeting,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading or will, in the case of the S-4 at the time
the S-4 becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
4.31 Accounting Matters. Neither Cogent nor any of its
Affiliates, has taken or agreed to take any action that would adversely affect
the ability of Adaptec to account for the business combination to be effected by
the Merger as a pooling of interests.
5. Representation of the Majority Shareholders. Each of the Majority
Shareholders represents and warrants to Adaptec that he or she is not aware, and
has no reason to believe, that any of the representations and warranties of
Cogent set forth in Section 4 is untrue or inaccurate.
6. Representations and Warranties of Adaptec and Acquisition Sub. Adaptec
and Acquisition Sub jointly and severally represent and warrant to Cogent that
the statements contained in this Section 6 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 6), except as set forth in the
disclosure schedule delivered by Adaptec and Acquisition Sub to Cogent on the
date hereof (and initialed by Adaptec, Acquisition Sub and Cogent), a copy of
which is attached hereto as Exhibit 6 (referred to herein as the "Adaptec
Disclosure Schedule") and except for events occurring in the Ordinary Course of
Business of Adaptec and Acquisition Sub between the date of this Agreement and
the Closing Date, which events are not material individually or in the
aggregate, do not violate any of the covenants or agreements of Adaptec or
Acquisition Sub, and are disclosed to Cogent by means of an updated Adaptec
Disclosure Schedule not less than two days prior to the Closing. The Adaptec
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
paragraphs contained in this Section 6.
6.1 Organization of Adaptec. Each of Adaptec and Acquisition Sub is a
corporation duly organized, validity existing, and in good standing under the
laws of the States of California and Delaware, respectively. Each of Adaptec and
Acquisition Sub is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required.
6.2 Capitalization.
(a) As of March 31, 1996, the authorized capital stock of
Adaptec consisted of (i) 1,000,000 shares of Preferred Stock, $.001 par value,
none of which are outstanding
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and (ii) 200,000,000 shares of Common Stock, of which 53,019,777 shares were
issued and outstanding, 10,534,396 shares were reserved for issuance pursuant to
Adaptec's employee and director stock plans, and 120,000,000 shares were
reserved for issuance under Adaptec's Shareholder Rights Plan. The authorized
capital stock of Acquisition Sub consists of 100 shares of Common Stock, $.001
par value, all of which, as of the date hereof, are issued and outstanding and
owned by Adaptec. All of the outstanding shares of Adaptec's and Acquisition
Sub's respective capital stock have been duly authorized and validly issued and
are fully paid and nonassessable. Except as set forth in this Section 6.2, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
Adaptec or any of its subsidiaries or obligating Adaptec or any of its
subsidiaries to issue or sell any shares of capital stock of, or other equity
interests in, Adaptec, or any of its subsidiaries.
(b) The shares of Adaptec Common Stock to be issued
pursuant to Section 3.1 of this Agreement are duly authorized and reserved for
issuance, and the shares of Adaptec Common Stock to be issued pursuant to
Section 3.5 of this Agreement will be duly authorized, and in each case upon
issuance thereof will be validly issued, fully paid and nonassessable and,
subject to notice of issuance, shall be approved for listing on the Nasdaq
National Market.
6.3 Authorization. Adaptec and Acquisition Sub each has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement, to consummate the transactions contemplated
hereunder and to perform its obligations hereunder and no other proceedings are
necessary to authorize the execution, delivery and performance of this
Agreement. This Agreement constitutes the valid and legally binding obligation
of Adaptec and Acquisition Sub, enforceable against Adaptec and Acquisition Sub
in accordance with its terms and conditions. Adaptec has full corporate power
and authority to execute and deliver the Escrow Agreement. The Escrow Agreement
constitutes the valid and binding obligation of Adaptec, enforceable against
Adaptec in accordance with its terms and conditions. Except for the filing of
(i) the S-4, (ii) a premerger notification report by Adaptec under the HSR Act,
and (iii) the Articles of Merger with the Secretary of States of Washington and
Delaware, neither Adaptec nor Acquisition Sub need give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated by
this Agreement.
6.4 Noncontravention. Neither the execution and the delivery
of this Agreement and, to the extent applicable, the Shareholders Agreement, nor
the consummation of the transactions contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Adaptec or Acquisition Sub is subject or any provision of their
respective charters or bylaws, or (B) (i) conflict with, (ii) result in a breach
of, (iii) constitute a default under, (iv) result in the acceleration of, (v)
create in any party the right to accelerate, terminate, modify, or cancel, or
(vi) require any notice under, any agreement, contract, lease, license,
instrument, or other arrangement to which Adaptec or any of its subsidiaries or
Acquisition Sub is a party or by which any of them is bound or to which any of
their assets is subject.
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6.5 SEC Filings; Financial Statements.
(a) Adaptec, has filed all forms, reports and
documents required to be filed with the SEC since March 31, 1995, and has
heretofore delivered to Cogent, in the form filed with the SEC, (i) its Annual
Reports an Form 10-K for the fiscal years ended March 31, 1995 and Xxxxx 00,
0000, (xx) its Quarterly Reports on Form 10-Q for the periods ended June 30,
1995, September 30, 1995, December 31, 1995, (iii) all proxy statements relating
to Adaptec's meetings of shareholders (whether annual or special) held since
March 31, 1995, (iv) all other reports filed by Adaptec with the SEC since March
31, 1995 and (v) all amendments and supplements to all such reports and
registration statements, including Adaptec's Annual Report filed pursuant to
Rule 14a-3 promulgated under the Exchange Act, filed by Adaptec with the SEC
(collectively, the "Adaptec SEC Reports"). The Adaptec SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of Adaptec's subsidiaries is required
to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Adaptec
SEC Reports has been prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presents the consolidated financial position of Adaptec
and its subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount.
(c) Adaptec has heretofore furnished to Cogent a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Adaptec with
the SEC pursuant to the Securities Act or the Exchange Act.
6.6 No Undisclosed Liabilities. Neither Adaptec nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise)
which are in the aggregate material to the business, operations or financial
condition of Adaptec and its subsidiaries taken as a whole, except liabilities
adequately reserved for in the balance sheet as of March 31, 1996 provided to
Cogent (the "Adaptec Balance Sheet") or incurred since March 31, 1996 in the
ordinary course of business and consistent with past practice and liabilities
incurred in connection with this Agreement.
6.7 Absence of Certain Changes or Events. Since March 31,
1996, Adaptec and its subsidiaries have conducted their respective businesses in
the Ordinary Course of Business, and since such date, there has not occurred any
change in the financial condition, results of operations,
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business or prospects of Adaptec, or any development that would reasonably be
expected to have a Material Adverse Effect on Adaptec.
6.8 Absence of Litigation. Other than as disclosed in the
Adaptec SEC Reports, there are no claims, actions, suits, proceedings or
investigations pending or, to the best knowledge of Adaptec, threatened against
Adaptec or any of its subsidiaries, or any properties or rights of Adaptec or
any of its subsidiaries, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, that,
individually or in the aggregate, could have a Material Adverse Effect on
Adaptec.
6.9 Information Supplied. None of the information supplied by
Adaptec or Acquisition Sub for inclusion in the Proxy Statement or the S-4 at
the time such information is supplied and at the time of the Shareholders'
Meeting, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading or will, in the case of the S-4, at
the time the S-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
6.10 Brokers' Fees. Except as contained in Section 11.12,
neither Adaptec nor Acquisition Sub has any liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Cogent could become liable
or obligated.
6.11 Full Disclosure. No representation or warranty in this
Section 6 or in any document delivered by Adaptec or Acquisition Sub pursuant to
the transactions contemplated by this Agreement, and no statement, certificate
or schedule furnished or to be furnished by Adaptec or Acquisition Sub to Cogent
in, or pursuant to the provisions of, this Agreement contains or shall contain
any untrue statement of a material fact or omits or shall omit to state any
material fact necessary, in the light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading. There
is no event, fact or condition that materially and adversely affects the
business, assets (including intangible assets), financial condition, results of
operations or prospects of Adaptec and its subsidiaries taken as a whole, or
that reasonably could be expected to do so, that has not been set forth in this
Agreement or in the Adaptec Disclosure Schedule.
7. Conduct and Transactions Prior to Effective Time; Additional Agreements.
7.1 General. Each of Adaptec, Cogent and Acquisition Sub will use its
reasonable best efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 8 below).
7.2 Notices and Comments. Cogent will give any notices to third parties
and will use its reasonable best efforts to obtain any third party consents
that Adaptec reasonably may request
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in connection with the matters identified in Section 4.4 of the Cogent
Disclosure Schedule and as may be necessary for Adaptec to operate the business
of Cogent as an ongoing concern following the Closing Date. Notwithstanding the
foregoing, nothing in this Section 7.2 shall be construed to require any Party
to transfer or assign rights or other assets to a Person who is not a Party.
7.3 Operation of Business. Cogent will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing, Cogent
will not (i) cause or permit any amendment to its Articles of Incorporation or
Bylaws, (ii) issue any capital stock or issue or grant any options, warrants or
rights to acquire any capital stock (other than in connection with the exercise
of stock options outstanding on the date of this Agreement) or (iii) declare,
set aside, or pay any dividend or make any distribution with respect to its
capital stock or redeem, purchase, or otherwise acquire any of its capital
stock, or (iv) otherwise engage in any practice, take any action, or enter into
any transaction of the sort described in Section 4.9 above. In addition, Cogent
will comply with all laws, statutes, ordinances, rules, regulations and orders
applicable to its or to the conduct of its business, except for violations that
would not subject Cogent to a penalty or loss that would constitute a Material
Adverse Effect on Cogent.
7.4 Preservation of Business. Cogent will use its best efforts
to keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
7.5 Access to Information. Cogent will permit Adaptec and its
representatives to have access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of Cogent, to the business
and operations of Cogent. Neither such access, inspection and furnishing of
information to Adaptec and its representatives, nor any investigation by Adaptec
and its representatives, shall in any way diminish or otherwise effect Adaptec's
right to rely on any representation or warranty made by Cogent hereunder. All
information received or made available to Adaptec and its representatives
pursuant to this Section 7.5 shall be subject to and deemed covered by the terms
of the Master Mutual Nondisclosure Agreement, NDA #3813 dated April 1, 1996
between Adaptec and Cogent.
7.6 Notice of Developments. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of its own representations and warranties in Section 4, Section 5
or Section 6 above. No disclosure by any Party pursuant to this Section 7,6,
however, shall be deemed to amend or supplement the Cogent Disclosure Schedule
or the Adaptec Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
7.7 Best Efforts. Adaptec, Cogent and Acquisition Sub will
each use its best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to closing under this
Agreement.
7.8 Employment Agreements. Prior to the Effective Time of the
Merger, Cogent will use its best efforts to obtain an employment agreement and
covenant not to compete (the
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"Employment Agreement") in the form attached hereto as Exhibit 7.8(a) with the
persons listed on Exhibit 7.8(b) attached hereto and with those other key
employees designated by Adaptec following the date hereof.
7.9 Preparation of S-4 and the Proxy Statement; Other
Filings. As promptly as practicable after the date of this Agreement, Cogent
shall provide to Adaptec and its counsel for inclusion in the Prospectus/Proxy
Statement on the S-4 in form and substance satisfactory to Adaptec and its
counsel, such information concerning Cogent, its operations, capitalization,
technology, share ownership and other material as Adaptec or its counsel may
reasonably request. As promptly as practicable after the date of this Agreement,
Adaptec shall prepare and file with the SEC the S-4, in which the Proxy
Statement will be included as a prospectus. Each of Adaptec and Cogent shall use
its reasonable efforts to respond to any comments of the SEC, to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing and to cause the Proxy Statement to be mailed to Cogent's
shareholders at the earliest practicable time. As promptly as practicable after
the date of this Agreement, Adaptec and Cogent shall prepare and file any other
filings required under the Exchange Act, the Securities Act or any other Federal
or state securities or "blue sky" laws relating to the Merger and the
transactions contemplated by this Agreement and the Articles of Merger,
including, without limitation, under the HSR Act (the "Other Filings"). Each
company will notify the other company promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff or any
other governmental officials for amendments or supplements to the S-4, the Proxy
Statement or any Other Filing or for additional information and will supply the
other company with copies of all correspondence between such company or any of
its representatives, on the one hand, and the SEC, or its staff or any other
governmental officials, on the other hand, with respect to the S-4, the Proxy
Statement, the Merger or any Other Filing. The Proxy Statement, the S-4 and the
Other Filings shall comply in all material respects with all applicable
requirements of law. Whenever any event occurs which should be set forth in an
amendment or supplement to the Proxy Statement, the S-4 or any Other Filing,
Adaptec or Cogent, as the case may be, shall promptly inform the other company
of such occurrence and cooperate in filing with the SEC or its staff or any
other government officials, and/or mailing to shareholders of Cogent, such
amendment or supplement. The Proxy Statement shall include the unanimous
recommendation of the Board of Directors of Cogent that the shareholders of
Cogent approve the Merger.
7.10 Shareholder Approval. Cogent will call a meeting of its
shareholders (the "Shareholders' Meeting") to be hold as promptly as practicable
for the purpose of obtaining the shareholder approval required in connection
with the transactions contemplated hereby and by the Articles of Merger and
shall use all reasonable efforts to obtain such approval. Cogent shall
coordinate and cooperate with Adaptec with respect to the timing of the
Shareholders Meeting. Cogent shall not change the date of the Shareholders
Meeting without the prior written consent of Adaptec, nor shall Cogent adjourn
the Shareholders Meeting without the prior written consent of Adaptec, unless
such adjournment is due to the lack of a quorum, in which case the Chairman of
the Shareholders Meeting shall announce at such meeting the time and place of
the adjourned meeting.
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7.11 Nasdaq National Market. Adaptec shall use its best
efforts to cause the shares of Adaptec Common Stock issuable to the shareholders
of Cogent in the Merger to be authorized for quotation on the Nasdaq National
Market, upon official notice of issuance.
7.12 Affiliates. Cogent shall use its best efforts to deliver
or cause to be delivered to Adaptec, from each "affiliate" of Cogent within the
meaning of Accounting Series Releases 130 and 135 of the SEC, an agreement in
the form attached as Exhibit 7.12 (the "Affiliate Agreement"). Adaptec and
Acquisition Sub shall be entitled to place appropriate legends on the
certificates evidencing any Adaptec Common Stock to be received by such
"affiliates" pursuant to the terms of this Agreement and the Articles of Merger,
and to issue appropriate stop transfer instructions to the transfer agent for
Adaptec Common Stock, consistent with the terms of such Affiliates Agreements.
7.13 Pooling Accounting. Each Party agrees not to take any
action that would adversely affect the ability of Adaptec to treat the Merger as
a pooling of interests, and each party agrees to take such action as may be
reasonably required to negate the impact of any past actions which would
adversely impact the ability of Adaptec to treat the Merger as pooling of
interests.
7.14 Exclusivity. None of the Majority Shareholders nor Cogent
will (i) solicit, initiate, or encourage the submission of any proposal or offer
from any Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets, of Cogent (including any
acquisition structured as a merger, consolidation, or share exchange) (each
an "Other Proposal") or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any Other Proposal, Except to immediate family members or trust created in their
behalf, none of the Majority Shareholders will transfer or offer to transfer any
of their Cogent Common Stock. None of the Majority Shareholders will vote their
Cogent Common Stock in favor of any Other Proposal.
7.15 Post-Closing Cooperation. In case at any time after the
Effective Time of the Merger any further action is necessary to carry out the
purposes of this Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments and documents)
as any other Party reasonably may request, all at the sole cost and expense of
the requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 9 below),
7.16 Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction (A) on or
prior to the Effective Time of the Merger involving Cogent or (B) arising out of
Adaptec's operation of the business of the Surviving Corporation following the
Effective Time of the Merger in the manner in which it is presently conducted
and planned to be conducted, each of the other Parties will cooperate with the
party, its counsel in the contest or defense, make available their personnel,
and provide such testimony and access to their books and records as shall be
reasonably necessary in connection with the contest or defense, all at
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the reasonable cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 9 below),
7.17 Transition. None of the Majority Shareholders will take
any action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of Cogent from
maintaining the same business relationships with the Surviving Corporation after
the Effective Time of the Merger as it maintained with Cogent prior to the
Effective Time of the Merger.
7.18 Confidentiality. Each of the Majority Shareholders will
treat and hold as such all of the Confidential Information, refrain from using
any of the Confidential Information except in connection with this Agreement. In
the event that any of the Majority Shareholders is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process or by
law or regulation pursuant to the advice of counsel) to disclose any
Confidential Information, that Person will notify Adaptec promptly of the
request or requirement so that Adaptec may seek an appropriate protective order.
If, in the absence of a protective order, any of the Majority Shareholders and
directors and officers of Cogent is, on the advice of counsel, compelled to
disclose any Confidential Information, that Person may disclose the Confidential
Information; provided, however, that such disclosing Person shall use its
reasonable efforts to obtain, at the reasonable request of Adaptec, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as Adaptec shall
designate. In the event that anything in this Section 7.18 is inconsistent with
any provision of an Employment Agreement, the terms of such Employment Agreement
shall prevail.
7.19 Cogent Employees. Except for the Cogent employees who
will be executing Employment Agreements, all employees of Cogent following the
Closing will be subject to Adaptec's standard employment terms and practices.
Except as otherwise prohibited, these employees will be eligible to participate
in all standard Adaptec benefit plans. Employees of Cogent as of the Effective
Time shall be permitted to participate in the Adaptec Employee Stock Purchase
Plan commencing on the first enrollment date following the Effective Time,
subject to compliance with the eligibility provisions of such plan.
8. Conditions to Obligation to Close.
8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction prior to the Closing Date of the following conditions:
(a) the S-4 shall have been declared effective by the
SEC under the Securities Act, no stop order suspending the effectiveness of the
S-4 shall have been issued by the SEC and no proceeding for that purpose (or any
similar proceeding with respect to the Proxy Statement) shall have been
initiated or threatened by the SEC,
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36
(b) this Agreement and the Articles of Merger shall
have been approved and adopted by the affirmative vote or consent of the holders
of at least 90% of the issued and outstanding shares of Cogent Common Stock
present, in person or by proxy, at the meeting of Cogent's shareholders
Contemplated by Section 7.10;
(c) the applicable waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated; and
(d) all material authorizations, consents, orders or
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, any governmental entity necessary for the consummation of the
transactions contemplated by this Agreement and the Articles of Merger shall
have been filed, expired or been obtained.
8.2 Conditions to Adaptec's Obligation to Close. The
obligation of Adaptec and Acquisition Sub to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:
(a) the representations and warranties set forth in
Section 4 and Section 5 above (supplemented by the updated Cogent Disclosure
Schedule permitted under Section 4) shall be true and correct in all material
respects at and as of the Closing Date;
(b) Cogent shall have performed and complied with all
of its covenants hereunder in all respects through the Closing;
(c) all Stock Rights shall have been terminated or
shall have been exercised for, or converted into, shares of Cogent Common Stock;
(d) Cogent shall have procured all of the third party
consents specified in Section 7.2 above;
(e) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect materially and adversely the right of Adaptec
to control the Surviving Corporation following the Effective Time of the Merger,
or (D) affect adversely the right of Cogent or the Surviving Corporation to own
its assets (including without limitation its intellectual property assets) and
to operate its businesses (and no such injunction, judgment, order, decree,
ruling or charge shall be in effect) and no law, statute, ordinance, rule,
regulation or order shall have been enacted, enforced or entered which has
caused or will likely cause any of the effects under clause (A), (B), (C), or
(D) of this Section 8.2(f) to occur.
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(f) the Chief Executive Officer of Cogent shall have
delivered to Adaptec a certificate to the effect that each of the conditions
specified above in Sections 8.2(a) to 8.2(e) (inclusive) is satisfied in all
respects;
(g) each of the employees of Cogent listed on
Exhibit 7.8(b) attached hereto shall have executed and delivered an Employment
Agreement and such agreement shall be in full force and effect;
(h) Adaptec shall have received from counsel to
Cogent an opinion in form and substance mutually satisfactory to Adaptec and
Cogent, addressed to Adaptec, and dated as of the Closing Date;
(i) Adaptec shall have received a letter from Price
Waterhouse in form and substance satisfactory to Adaptec to the effect that the
Merger will be accounted for as a pooling of interests.
(j) Adaptec shall have received the executed Cogent
Affiliate Agreements contemplated by Section 7.12.
(k) Adaptec, as agent for the shareholders of Cogent
shall have received a properly executed FIRPTA Notification Letter, in form and
substance satisfactory to Adaptec, which states that shares of capital stock of
Cogent do not constitute "United States real property interests" under Section
897(c) of the Code, for purposes of satisfying Adaptec's obligations under
Treasury Regulation Section 1.1445-2(c)(3).
(l) all actions to be taken by the Majority
Shareholders and Cogent in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Adaptec and its counsel;
(m) each officer and director of Cogent shall have
executed and delivered a general release of any claims against Cogent and its
successors in the form attached hereto as Exhibit 7.2(m);
(n) there shall have been no Material Adverse Effect
on Cogent on or before the Closing Date;
(o) all disputes between Cogent and third parties
shall have been resolved to the satisfaction of Adaptec;
(p) Deloitte & Touche LLP shall have completed its
audit of Cogent's financial statements for the fiscal year ended March 31, 1996
and such audit shall be satisfactory to Adaptec; and
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(q) Adaptec shall have received a letter from
Deloitte & Touche LLP to the effect that it is not aware of any actions taken by
Cogent or its Affiliates that would adversely affect the ability of Adaptec to
account for the merger as a pooling of interests.
Adaptec may waive any condition (in whole or in part)
specified in this Section 8.2 if it executes a writing so stating at or prior to
the Closing.
8.3 Conditions to Cogent's Obligation. The obligation of
Cogent to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties of Adaptec
and Acquisition Sub set forth in Section 6 above shall be true and correct in
all respects at and as of the Closing Date;
(b) Adaptec shall have performed and complied with
all of its covenants hereunder in all respects through the Closing;
(c) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect) and no law, statute, ordinance,
rule, regulation or order shall have been enacted, enforced or entered which has
caused or will likely cause any of the effects under clause (A) or (B) of this
Section 8.3(c) to occur;
(d) the Chief Financial Officer or other duly
authorized officer of Adaptec shall have delivered to Cogent a certificate to
the effect that each of the conditions specified above in Sections 8.3(a) to
8.3(c) (inclusive) is satisfied in all respects;
(e) Adaptec and the employees of Cogent listed on
Exhibit 6.8(b) hereto shall each have executed and delivered an Employment
Agreement and such agreement shall be in full force and effect;
(f) Cogent shall have received from counsel to
Adaptec an opinion in form and substance mutually satisfactory to Adaptec and
Cogent, addressed to Cogent, and dated as of the Closing Date;
(g) Cogent shall have received an opinion from its
counsel to the effect that the Merger will constitute a reorganization within
the meaning of Section 368 of the Code.
(h) all actions to be taken by Adaptec in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents
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required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Cogent and its counsel.
Cogent may waive any condition (in whole or in part) specified
in this Section 8.3 if it executes a writing so stating at or prior to the
Closing.
9. Survival of Representations, Warranties and Covenants;
Indemnification.
9.1 Survival. All of the representations and warranties of the
Parties contained in Sections 4, 5 and 6 shall survive the Closing (even if the
damaged Party knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect for a
period of one year following the Closing. The covenants and agreements in this
Agreement shall survive except to the extent they are specifically limited by
their terms.
9.2 Indemnification Provisions for Benefit of Adaptec. The
Majority Shareholders agree, jointly and severally, to indemnify and hold
harmless Adaptec from and against the entirety of any and all claims, actions,
proceedings, or direct or indirect losses, including court costs and reasonable
attorneys' fees and expenses ("Losses") resulting from (i) any breach of any of
the representations, warranties, agreements or covenants of Cogent or the
Majority Shareholders contained herein; (ii) any failure of Cogent prior to the
Closing to comply with applicable federal and state securities laws; and (iii)
any failure of Cogent to comply with applicable German tax laws with respect
to Cogent's German operations. Notwithstanding the foregoing, the Majority
Shareholders shall not be required to indemnify Adaptec under this Section 9
except to the extent that the cumulative amount of the Losses incurred by
Adaptec exceeds $ 150,000, in which case the Majority Shareholders shall be
obligated to indemnify Adaptec only for the amount of such Losses that exceed
$150,000.
9.3 Procedure for Indemnification Claims.
(a) In the event that Adaptec makes a claim against
any Majority Shareholder for indemnification under Section 9.2 (a "Claim"), it
shall notify the Shareholders' Representative in writing as to the existence and
amount of the Claim (the "Claim Notice"). If the Majority Shareholder with
respect to such Claim disputes the existence or the amount of such Claim, the
Majority Shareholder shall notify Adaptec in writing (with reasonable
specificity) within thirty (30) days following the Adaptec's receipt of the
Claim Notice (the "Response Notice"). Upon such an exchange of written
notification, the parties will negotiate in good faith for up to thirty
(30) days or such other period of time as the parties mutually agree in an
effort to resolve their differences with respect to such Claim. If no Response
Notice is received by Adaptec within thirty (30) days of the Shareholders'
Representative's receipt of the Claim Notice or if the parties have not
resolved their differences with the aforementioned thirty (30) day negotiation
period, then Adaptec shall be entitled to recover the amount of the Claim from
the Escrow Fund pursuant to the Escrow Agreement.
(b) Adaptec, may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, any third
party claim which may give rise to a Claim
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under this Section 9 in any manner Adaptec may deem appropriate (and Adaptec
need not consult with, or obtain any consent from, any Majority Shareholder in
connection therewith), and the Majority Shareholders will remain responsible for
any Losses Adaptec may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the third party claim to the fullest extent
provided in this Section 9.
9.4 Exclusivity of Remedy. Notwithstanding any other provision
of this Agreement, in the absence of fraud, Adaptec's sole recourse following
the Closing for any breach by Cogent or any Majority Shareholder of any
representation, warranty, agreement or covenant contained herein shall be the
recovery of the Escrow Amount Common Stock pursuant to the Escrow Agreement.
10. Termination.
10.1 Termination of the Agreement. Certain of the Parties may
terminate this Agreement as provided below:
(a) Adaptec and Cogent may terminate this Agreement
as to all Parties by mutual written consent at any time prior to the Closing;
(b) Adaptec may terminate this Agreement by giving
written notice to Cogent and the Majority Shareholders at any time prior to the
Closing (A) in the event either of Cogent or the Majority Shareholders has
breached any representation, warranty, or covenant contained in this Agreement
in any respect, Adaptec, has notified Cogent and the Majority Shareholders of
the breach, and the breach has continued without cure for a period of thirty
(30) days after the notice of breach or (B) if the Closing shall not have
occurred on or before October 31, 1996, by reason of the failure of any
condition precedent under Section 8.1 or 8.2 hereof (unless the failure
results primarily from Adaptec itself breaching any representation, warranty,
or covenants contained in this Agreement); and
(c) Cogent may terminate this Agreement by giving
written notice to Adaptec and the Majority Shareholders at any time prior to the
Closing (A) in the event Adaptec has breached any representation, warranty, or
covenant contained in this Agreement in any respect, Cogent has notified Adaptec
of the breach, and the breach has continued without cure for a period of thirty
(30) days after the notice of breach or (B) if the Closing shall not have
occurred on or before October 31, 1996, by reason of the failure of any
condition precedent under Section 8.1 or 8.3 hereof (unless the failure results
primarily from Cogent itself breaching any representation, warranty, or
covenants contained in this Agreement).
10.2 Effect of Termination. If any Party terminates this
Agreement pursuant to Section 10.1. above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in Section 7.18 above
shall survive termination.
11. Miscellaneous.
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11.1 Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of Adaptec and Cogent; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
11.2 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties, the
shareholders and option holders of Cogent and their respective successors and
permitted assigns.
11.3 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
11.4 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Parties; provided, however, that Adaptec may
(i) assign any or all of its rights and interests hereunder to one or more of
its subsidiaries and (ii) designate one or more of its subsidiaries to perform
its obligations hereunder (in any or all of which cases Adaptec nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
11.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.7 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given or received
if (and then two business days after) it is sent by registered or certified
mail, return receipt requested, postage prepaid and addressed to the intended
recipient as set forth below:
If to Adaptec:
Adaptec, Inc.
000 X. Xxxxxxxx Xxxx.
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. O'Xxxxx
Xxxxxx Xxxxx Xxxxx, Esq.
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Copy to:
Xxxxxx, Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Xx., Esq.
If to Cogent:
Cogent Data Technologies, Inc.
000 Xxxxxx Xx.
Xxxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Copy to:
Xxxxx Xxxxxx Xxxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: A. Xxxxx Xxxxxxx, Esq.
If to the Majority Shareholders:
Xxxxxx Xxxxxxxx
c/o Cogent Data Technologies, Inc.
000 Xxxxxx Xx.
Xxxxxx Xxxxxx, XX 00000
Copy to:
Xxxxx Xxxxxx Xxxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: A. Xxxxx Xxxxxxx, Esq.
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
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11.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic 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.
11.9 Forum Selection; Consent to Jurisdiction. All disputes
arising out of or in connection with this Agreement shall be solely and
exclusively resolved by a court of competent jurisdiction in the State of
California. The Parties hereby consent to the jurisdiction of the Superior Court
of the State of California and the United States District Courts of California
and waive any objections or rights as to forum nonconveniens, lack of personal
jurisdiction or similar grounds with respect to any dispute relating to this
Agreement.
11.10 Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Adaptec, Cogent and the Majority Shareholders. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior to subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
occurrence.
11.11 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
11.12 Expenses. Each of Adaptec and Cogent will bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby; provided, however,
that the shareholders of Cogent will be responsible for (i) any brokers',
finders' or advisory fees payable on behalf of Cogent in connection with the
Agreement and the transactions contemplated hereby in excess of $700,000, and
(ii) any legal or accounting fees in excess of $100,000 undertaken on behalf of
Cogent or its principals in connection with the Agreement and the transactions
contemplated hereby.
11.13 Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
11.14 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
11.15 Shareholders' Representative. The Majority Shareholders
hereby appoint Xxxxxx Xxxxxxxx as their agent and representative (the
"Shareholders' Representative") for the purposes of: (i) representing, acting
for and binding each of them for all purposes of this Agreement,
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including without limitation, authorizing delivery to Adaptec of the Adaptec
Shares in the Escrow Fund in satisfaction of claims by Adaptec, the settlement
of any controversies or disagreements between Adaptec and the Majority
Shareholders of Cogent hereunder; (ii) receiving or giving any notices to or
from the Majority Shareholders hereunder; and (iii) communicating with Adaptec
or Cogent as to any matters relating to this Agreement. In the event Xxxxxx
Xxxxxxxx is unable, unwilling or unavailable to serve as the Shareholders'
Representative, the Majority Shareholders hereby appoint Xxxxxxx Xxxxxxxx to
serve in such capacity; provided that any such agency may be changed by the
holders of a majority in interest in the Escrow Amount upon not less than 10
days written notice to Adaptec. Adaptec shall be entitled to presumptively rely
without further inquiry upon all acts of, and communications from, the
Shareholders' Representative as being the authorized actions and communications
of the Shareholders' Representative as approved by the Majority Shareholders.
The Shareholders' Representative shall be entitled to take binding action on
behalf of the Majority Shareholders upon obtaining the approval of such Majority
Shareholders who immediately prior to the Closing owned at least 51% of the
aggregate voting power of all of the Majority Shareholders. The Shareholders'
Representative shall not be liable for any act done or omitted while acting in
good faith and the exercise of reasonable judgment. Each Majority Shareholder
hereby further agrees that he will indemnify and hold harmless the Shareholders'
Representative against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Shareholders' Representative in
connection with any and all actions taken by the Shareholders' Representative
under the provisions of this Section 11.15 and under Article 8 hereunder.
11.16 Attorneys' Fees. If any legal proceeding or other action
relating to this Agreement is brought or otherwise initiated, the prevailing
party shall be entitled to recover reasonable attorneys fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled).
12. Location of Definitions. The following table sets forth the
Sections of this Agreement in which certain terms are defined:
Term Section
----------------- -----------------
Acquisition Sub Introduction
Affiliate 1
Affiliated Group 4.12(d)
Adaptec 2.1
Adaptec Common Stock Introduction
Adaptec Disclosure Schedule 6
Adaptec SEC Reports 6.5(a)
Certificates 3.4(c)
Closing 2.2
Closing Date 2.2
Code 2.4
Cogent Introduction
Cogent Common Stock 2.1
Cogent Disclosure Schedule 4
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Term Section
---- -------
Cogent Shareholders' Meeting 7.10
Confidential Information 1
Controlled Group of Corporations 4.2(b)
Dissenting Shareholder 3.2
Dissenting Shares 3.2
Exchange Agent 3.4(a)
Exchange Ratio 3.1
Effective Date of the Merger 2.1
Effective Time of the Merger 2.1
Employee Benefit Plan 1
Employee Pension Benefit Plan 1
Employee Welfare Benefit Plan 1
Employment Agreement 7.8
Environmental, Health and Safety Laws 4.27(a)
ERISA 1
Fiduciary 4.25
Financial Statements 4.6
Intellectual Property 1
Majority Shareholders Introduction
Merger 2.1
Merger Agreement 2.1
Most Recent Balance Sheet 4.8
Most Recent Fiscal Year End 4.6
Ordinary Course of Business 1
Party Introduction
Person 1
Registration Statement/Proxy Statement 4.2
Security Interest 1
Shareholders' Meeting Date 7.10
Surviving Corporation 2.3
Taxes 4.12(a)
Tax Returns 4.12(b)
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
COGENT DATA TECHNOLOGIES, INC,
Company: By: /s/
-----------------------------
Title: President
--------------------------
Adaptec: ADAPTEC, INC.
By:
-----------------------------
Title:
--------------------------
Acquisition Sub: CDT ACQUISITION CORP.
By: /s/
-----------------------------
Title:
--------------------------
Majority Shareholders: By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Xxxxxxx Xxxxxxxx
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxx
By: /s/ Xxxx Xxxxxxxx
-----------------------------
Xxxx Xxxxxxxx
By: /s/ Xxxxxxx Rome 5/31/96
-----------------------------
Xxxxxxx Rome
By: /s/ Xxxx Xxxxxxxx
-----------------------------
Xxxx Gubelman
By: /s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
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