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AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
ASPEC TECHNOLOGY, INC.,
ASPEC ACQUISITION CORPORATION,
CHIP & CHIP, INC.
AND CERTAIN SHAREHOLDERS OF
CHIP & CHIP, INC.
JULY 30, 1999
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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...........................................................4
2.5 Chip & Chip Stock Options and Convertible Securities..............................4
3. Effect of Merger on the Capital Stock of Chip & Chip; Exchange of Certificates ..........4
3.1 Exchange of Stock.................................................................4
3.2 Fractional Shares.................................................................5
3.3 Exchange of Certificates..........................................................5
3.4 Taking of Necessary Action; Further Action........................................6
4. Securities Act Compliance................................................................6
4.1 Securities Act Exemption..........................................................6
4.2 Stock Restrictions................................................................6
5. Representations and Warranties of Chip & Chip and the Majority Shareholders..............7
5.1 Organization, Qualification, and Corporate Power..................................7
5.2 Authorization.....................................................................7
5.3 Capitalization....................................................................7
5.4 Noncontravention..................................................................8
5.5 Broker's Fees.....................................................................8
5.6 Financial Statements..............................................................8
5.7 Subsidiaries......................................................................9
5.8 Title to Assets...................................................................9
5.9 Events Subsequent to Most Recent Fiscal Period End................................9
5.10 Undisclosed Liabilities..........................................................11
5.11 Legal Compliance.................................................................12
5.12 Tax Matters......................................................................12
5.13 Properties.......................................................................13
5.14 Intellectual Property............................................................14
5.15 Tangible Assets..................................................................15
5.16 Inventory........................................................................15
5.17 Contracts........................................................................15
5.18 Notes and Accounts Receivable....................................................17
5.19 Power of Attorney................................................................17
5.20 Insurance........................................................................17
5.21 Litigation.......................................................................17
5.22 Product Warranty.................................................................17
5.23 Product Liability................................................................18
5.24 Employees........................................................................18
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5.25 Employee Benefits................................................................18
5.26 Guaranties.......................................................................20
5.27 Environment, Health, and Safety..................................................20
5.28 Certain Business Relationships With Chip & Chip .................................21
5.29 No Adverse Developments..........................................................22
5.30 Full Disclosure..................................................................22
6. Representations and Warranties of Aspec.................................................22
6.1 Organization, Qualification, and Corporate Power.................................22
6.2 Authorization....................................................................22
6.3 Capitalization...................................................................23
6.4 Noncontravention.................................................................23
6.5 Brokers' Fees....................................................................23
6.6 SEC Filings......................................................................23
6.7 Financial Statements.............................................................24
6.8 Litigation.......................................................................24
6.9 No Adverse Developments..........................................................24
7. Pre-Closing Covenants...................................................................24
7.1 General..........................................................................24
7.2 Notices and Consents.............................................................25
7.3 Conduct of Business..............................................................25
7.4 Preservation of Business.........................................................25
7.5 Access to Information............................................................25
7.6 Notice of Developments...........................................................25
7.7 Exclusivity......................................................................26
8. Post-Closing Covenants..................................................................27
8.1 General..........................................................................27
8.2 Litigation Support...............................................................27
8.3 Transition.......................................................................27
8.4 Confidentiality..................................................................27
8.5 Chip & Chip Employees; Employee Stock Options....................................28
9. Conditions to Obligations to Close......................................................28
9.1 Conditions to Aspec's Obligation to Close........................................28
9.2 Conditions to Chip & Chip's Obligation .........................................29
10. Survival of Representations, Indemnification............................................30
10.1 Limited Survival of Representations and Warranties...............................30
10.2 Indemnification by Aspec.........................................................30
10.3 Indemnification by Majority Shareholders.........................................31
10.4 Notice of Claims.................................................................31
10.5 Third Party Claims...............................................................32
10.6 Limitation of Claims.............................................................32
11. Termination.............................................................................32
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11.1 Termination of the Agreement.....................................................32
11.2 Effect of Termination............................................................33
12. Miscellaneous...........................................................................33
12.1 Publicity........................................................................33
12.2 No Third-Party Beneficiaries.....................................................33
12.3 Entire Agreement.................................................................34
12.4 Succession and Assignment........................................................34
12.5 Counterparts.....................................................................34
12.6 Headings.........................................................................34
12.7 Notices..........................................................................34
12.8 Governing Law; Dispute Resolution................................................35
12.9 Amendments and Waivers...........................................................36
12.10 Severability.....................................................................36
12.11 Expenses.........................................................................36
12.12 Construction.....................................................................36
12.13 Incorporation of Exhibits and Schedules..........................................37
EXHIBITS
Exhibit A Certificate of Merger
Exhibit B List of Chip & Chip shareholders
Exhibit C Chip & Chip Disclosure Schedule
Exhibit D Aspec Disclosure Schedule
Exhibit E Opinion of Counsel for Chip & Chip and Majority Shareholders
Exhibit F Opinion of Counsel for Aspec
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "AGREEMENT") is entered
into as of July 30, 1999, by and among Aspec Technology, Inc., a Delaware
corporation ("ASPEC"), Aspec Acquisition Corporation, a California corporation
and a wholly-owned subsidiary of Aspec ("MERGER SUB"), Chip & Chip , Inc., a
California corporation ("CHIP & CHIP"), and Xxx-Xxx Xx and Xxxxx-Xxxx Xxx
(collectively, the "MAJORITY SHAREHOLDERS"). Aspec, Merger Sub, Chip & Chip and
the Majority Shareholders are sometimes referred to herein individually as a
"PARTY" and collectively as the "PARTIES."
RECITALS
A. Pursuant to a Certificate of Merger (together with any Articles of
Merger required by the CBCA) providing for the merger of Merger Sub with and
into Chip & Chip pursuant to the California Business Corporation Act (the
"CBCA") and the Delaware General Corporation Law (the "DGCL"), the shares of
Common Stock of Chip & Chip, no par value, issued and outstanding immediately
prior to the effective time of the Merger will be converted into an aggregate of
2,000,000 shares of Common Stock of Aspec and $800,000 cash, and Chip & Chip
will become a wholly-owned subsidiary of Aspec.
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 Merger Sub
with and into Chip & Chip.
C. The respective Boards of Directors of Aspec and Chip & Chip 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.
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.
"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.
"BUSINESS CONDITION" means the business, financial condition,
results of operations and assets of such corporate entity.
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"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; and (d)
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(1).
"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, (d) 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), (e) all computer software (including data and related
documentation), (f) all other proprietary rights, and (g) all copies and
tangible embodiments thereof (in whatever form or medium).
"LOSSES" shall mean any and all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
reasonable amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding to the extent of
the amount of such actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in
settlement, liabilities, obligations, taxes, liens, losses, expenses or fees.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the Business Condition of the corporate entity and its subsidiaries.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec.
3(37) and Code Sec. 414(f).
"CHIP & CHIP SHAREHOLDERS" shall mean the shareholders of record
of Chip & Chip immediately prior to the Effective Time of the Merger.
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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, Merger Sub will be merged with and into Chip &
Chip (the "MERGER") in accordance with the CBCA and the DGCL, and, as a result,
Chip & Chip will become a wholly-owned subsidiary of Aspec. In accordance with
the provisions of this Agreement, a Certificate of Merger in the form attached
hereto as Exhibit A shall be filed with the Delaware Secretary of State in
accordance with the DGCL and such Certificate of Merger (or, to the extent
required by the CBCA, Articles of Merger in form and substance mutually
acceptable to counsel for Chip & Chip and counsel for Aspec) shall be filed with
the California Secretary of State in accordance with the CBCA on the Closing
Date (as defined in Section 2.2) and each issued and outstanding share of Common
Stock, no par value, of Chip & Chip ("CHIP & CHIP COMMON STOCK") shall be
converted into a fraction of a share of Common Stock, $0.001 par value, of Aspec
("ASPEC COMMON STOCK") in the manner contemplated by Section 3. The Merger shall
become effective at the time of the filing of the Merger Agreement with the
California Secretary of State and the Delaware 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 after satisfaction or waiver of the latest to occur
of the conditions set forth in Section 9 (the "CLOSING DATE"), at the offices of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx Xxxx,
Xxxx Xxxx, Xxxxxxxxxx 00000-0000, or such other place as determined by the
parties.
2.3 Effect of the Merger. At the Effective Time of the Merger,
(i) the separate existence of Merger Sub shall cease and Merger Sub shall be
merged with and into Chip & Chip (Merger Sub and Chip & Chip are sometimes
referred to herein as the "CONSTITUENT CORPORATIONS" and Chip & Chip after the
Merger is sometimes referred to herein as the "SURVIVING CORPORATION"), (ii) the
Articles of Incorporation of Merger Sub shall be the Certificate of
Incorporation of the Surviving Corporation, (iii) the Bylaws of Merger Sub shall
be the Bylaws of the Surviving Corporation, (iv) the directors of Merger Sub
shall be the directors of the Surviving Corporation and
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(v) the Merger shall, from and after the Effective Time of the Merger, have all
the effects provided by applicable law.
2.4 Tax-Free Reorganization. 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").
2.5 Chip & Chip Stock Options and Convertible Securities. On or
prior to the Effective Time of the Merger, all outstanding options, warrants and
convertible securities of Chip & Chip shall terminate unless otherwise exercised
prior to such time. All current outstanding options, warrants and convertible
securities of Chip & Chip are listed in the Chip & Chip Disclosure schedule.
3. Effect of Merger on the Capital Stock of Chip & Chip; Exchange of
Certificates
3.1 Exchange of Stock and Cash Consideration. As of the Effective
Time of the Merger, each share of Chip & Chip Common Stock that is issued and
outstanding immediately prior to the Effective Time of the Merger as provided
for in Section 3.2 below), shall, by virtue of the Merger and without any action
on the part of Chip & Chip Shareholders, be converted into (i) shares of Aspec
Common Stock, and (ii) cash payment determined by dividing 2,800,000 by the
aggregate number of shares of Chip & Chip Common Stock (the "EXCHANGE RATIO")
issued and outstanding immediately prior to the Effective Time of the Merger
(including any shares issued upon the exercise of outstanding Chip & Chip
options or Chip & Chip convertible securities and any Dissenting Shares).
Attached as Exhibit B is a Chip & Chip shareholder list showing the shares of
Aspec Common Stock and cash to be exchanged for the shares of Chip & Chip Common
Stock held by each Chip & Chip Shareholder.
3.2 Fractional Shares. No fractional shares of Aspec Common Stock
shall be issued in the Merger. In lieu thereof, each holder of shares of Chip &
Chip Common Stock who would otherwise be entitled to receive a fraction of a
share of Aspec Common Stock shall receive from Aspec an amount of cash (rounded
to the nearest whole cent) equal to the product of the fraction of a share of
Aspec Common Stock to which such holder would otherwise be entitled, multiplied
by $1.00. For the purpose of determining fractional shares, all shares of Aspec
Common Stock to be issued to any Chip & Chip shareholder shall be aggregated.
3.3 Exchange of Certificates.
(a) Exchange Agent. Prior to the Closing Date, Aspec shall
appoint itself or ChaseMellon Shareholder Services, L.L.C. to act as the
exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) Aspec to Provide Aspec Common Stock. Promptly after the
Effective Date of the Merger, Aspec shall make available for exchange in
accordance with this Section 3, through such reasonable procedures as Aspec may
adopt, the shares of Aspec Common Stock issuable pursuant to Section 3.1 in
exchange for outstanding shares of Chip & Chip Common Stock.
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(c) Exchange Procedures. Within ten (10) 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 Chip & Chip Common Stock
(the "CERTIFICATES") whose shares are being converted into shares of Aspec
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 Aspec
may reasonably specify, including appropriate investment representations to be
made by each such shareholder) (the "LETTER OF TRANSMITTAL") and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for shares of Aspec 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 Aspec, 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 Aspec Common Stock to which the holder of Chip & Chip Common
Stock is entitled pursuant to Section 3.1 hereof. The Certificate so surrendered
shall forthwith be canceled. No interest will accrue or be paid to the holder of
any outstanding Chip & Chip Common Stock. 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 Aspec Common Stock into which the shares of Chip & Chip Common Stock
represented by such Certificate have been converted. Notwithstanding the
foregoing procedures, Aspec shall use its reasonable efforts to provide the form
of Letter of Transmittal to Chip & Chip as soon as practical after the date
hereof, and Chip & Chip shall provide such Letter of Transmittal to each Chip &
Chip shareholder. The parties agree that in the event Aspec makes such Letter of
Transmittal available to Chip & Chip, any Exchange Agent shall not be obligated
to mail such Letter of Transmittal to the Chip & Chip shareholders.
(d) No Further Ownership Rights in Capital Stock of Chip &
Chip . The shares of Aspec Common Stock delivered upon the surrender for
exchange of shares of Chip & Chip Common Stock in accordance with the terms
hereof shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such Chip & Chip Common Stock. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of Chip & Chip 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 and exchanged as provided in this Section 3.3, provided that
the presenting holder is listed on Chip & Chip's shareholder list as a holder
of Chip & Chip Common Stock.
3.4 Taking of Necessary Action; Further Action. Aspec, Merger
Sub, Chip & Chip and the Majority Shareholders shall take all such actions as
may be necessary or appropriate in order to effect the Merger as promptly as
possible. 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 Chip & Chip, the
officers and directors of the Surviving
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Corporation are fully authorized in the name of the corporation or otherwise to
take, and shall take, all such action.
4. Securities Act Compliance.
4.1 Securities Act Exemption. The issuance of the Aspec Common
Stock in the Merger shall not be registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), in reliance upon Section 4(2) and/or Regulation
D of the Securities Act.
4.2 Stock Restrictions. The certificates representing the shares
of Aspec Common Stock issued pursuant to this Agreement shall bear a restrictive
legend (and stop transfer orders shall be placed against the transfer thereof
with Aspec's transfer agent), stating substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT (I)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (II) IN COMPLIANCE WITH RULE 144 OR (III)
PURSUANT TO AN OPINION OF COUNSEL FOR ASPEC THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933."
5. Representations and Warranties of Chip & Chip and the Majority
Shareholders. Chip & Chip and, to their respective knowledge, each of the
Majority Shareholders severally and not jointly represents and warrants to Aspec
and Merger Sub that the statements contained in this Section 5 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 5), except as
set forth in the disclosure schedule delivered by Chip & Chip to Aspec on the
date hereof (and initialed by Aspec), a copy of which is attached hereto as
Exhibit C (referred to herein as the "CHIP & CHIP DISCLOSURE SCHEDULE"). The
Chip & Chip Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 5.
5.1 Organization, Qualification, and Corporate Power. Chip & Chip
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of California. Chip & Chip is duly authorized to conduct
business and is in good standing under the laws of each other jurisdiction where
such qualification is required. There is no state, other than California, in
which Chip & Chip owns any property or in which it has any employees, offices or
operations. Chip & Chip has full corporate power and authority, and has all
necessary and material 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 5
of the Chip & Chip Disclosure Schedule lists the
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directors and officers of Chip & Chip. The operations now being conducted by
Chip & Chip have not been conducted under any other name during the past five
(5) years.
5.2 Authorization. Chip & Chip has full power and authority to
execute and deliver this Agreement and the Merger Agreement, and, subject to
receipt of the requisite approval of its shareholders, to consummate the
transactions contemplated hereunder and to perform its obligations hereunder and
no other proceedings on the part of Chip & Chip are necessary to authorize the
execution, delivery and performance of this Agreement and the Merger Agreement.
This Agreement and the Merger Agreement and the transactions contemplated
thereby have been approved by the Chip & Chip's Board of Directors and
Shareholders. This Agreement and the Merger Agreement constitute the valid and
legally binding obligations of Chip & Chip, enforceable against Chip & Chip in
accordance with their respective terms and conditions. Chip & Chip need not 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.
5.3 Capitalization.
(a) Capital Stock. As of the date of this Agreement, the
entire authorized capital stock of Chip & Chip consists of 5,000,000 shares of
Common Stock, 4,978,857 of which are issued and outstanding. In addition no
stock options are currently outstanding and all options have been exercised or
terminated. 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 5.3(a) of
the Chip & Chip Disclosure Schedule. All of the outstanding shares of capital
stock have been offered, issued and sold by Chip & Chip in compliance with
applicable Federal and state securities laws. As of the Closing Date, the entire
authorized capital stock of Chip & Chip shall consist of 5,000,000 shares of
Common Stock, 4,978,857 of which shall be issued and outstanding. As of the
Closing Date, all of the then issued and outstanding shares of capital stock
shall have been duly authorized, shall be validly issued, fully paid, and
non-assessable, and shall be held of record by the respective shareholders as
set forth in Section 5.3(a) of the Chip & Chip Disclosure Schedule. As of the
Closing Date, all of the then outstanding shares of capital stock shall have
been offered, issued and sold by Chip & Chip in compliance with applicable
Federal and state securities laws.
(b) No Other Rights or Agreements. As of the date of this
Agreement, Section 5.3(b) of the Chip & Chip Disclosure Schedule lists all of
the holders of options, warrants, purchase rights, subscription rights,
conversion rights, convertible debentures or other securities, exchange rights
and other rights that could require Chip & Chip to issue, sell or otherwise
cause to become outstanding any of its capital stock (the "STOCK RIGHTS"), and
the number of shares of Chip & Chip Common Stock subject to such Stock Rights.
Except as set forth in Section 5.3(b) of the Chip & Chip Disclosure Schedule,
there are no other outstanding or authorized Stock Rights. Except as set forth
in Section 5.3(b) of the Chip & Chip Disclosure Schedule, there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Chip & Chip. Other than as
contemplated by Section 7.9 hereof, there are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the capital
stock
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of Chip & Chip. All of the Chip & Chip Stock Rights will be fully exercised or
canceled prior to the Effective Time of the Merger. As of the Effective Time of
the Merger, there will be (i) no outstanding or authorized Stock Rights, (ii) no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Chip & Chip and (iii) no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of Chip & Chip (other than as contemplated by
Section 7.9 hereof).
5.4 Noncontravention. Neither the execution and the delivery of
this Agreement by Chip & Chip nor the consummation by Chip & Chip 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 Chip &
Chip is subject or any provision of its Articles of Incorporation 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) except as set forth in Section
5.4 of the Chip & Chip Disclosure Schedule, require any notice under, any
agreement, contract, lease, license, instrument, franchise permit or other
arrangement to which Chip & Chip 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).
5.5 Broker's Fees. Neither Chip & Chip nor any of the Majority
Shareholders 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.
5.6 Financial Statements. Section 5.6 of the Chip & Chip
Disclosure Schedule contains the following financial statements (collectively
the "FINANCIAL Statements"): (i) unaudited balance sheets and statements of
income and cash flows as of and for the fiscal year ended December 31, 1998 (the
"MOST RECENT FISCAL YEAR END") for Chip & Chip; and (ii) an unaudited balance
sheet and statements of income and cash flows (the "MOST RECENT FINANCIAL
STATEMENTS") as of and for the fiscal period ended March 31, 1999 and June 30,
1999 (the "MOST RECENT FISCAL PERIOD ENDS") for Chip & Chip. The Financial
Statements (including the notes thereto) have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods covered thereby and present fairly the financial
condition of Chip & Chip as of such dates and the results of operations of Chip
& Chip for such periods; provided, however, that the Most Recent Financial
Statements lack footnotes and certain other presentation items and are subject
to normal year end adjustments. Except as set forth in Section 5.6 of the Chip &
Chip Disclosure Schedule, the books of account of Chip & Chip reflect as of the
dates shown thereon all items of income and expenses, and all assets,
liabilities and accruals of Chip & Chip required to be reflected therein, in
accordance with generally accepted accounting principles consistently applied.
Aspec shall assume $350,000 of Chip & Chip liabilities and all other
liabilities, debts and expenses of Chip & Chip shall be paid in full on or prior
to Closing.
5.7 Subsidiaries. Chip & Chip has no subsidiaries and has not
been a subsidiary of another company.
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5.8 Title to Assets. Chip & Chip 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 contained within the Most Recent
Financial Statements (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 and except as set forth in Section 5.8 of the Chip &
Chip Disclosure Schedule. No Person other than Chip & Chip will own at the time
of the Closing any assets or properties currently utilized in or necessary to
the operations or business of Chip & Chip or situated on any of the premises of
Chip & Chip. There are no existing contracts, agreements, commitments or
arrangements with any Person to acquire any of the assets or properties of Chip
& Chip (or any interest therein) except for this Agreement.
5.9 Events Subsequent to Most Recent Fiscal Period End. Since the
Most Recent Fiscal Period End, there has not been any material adverse change in
the Business Condition of Chip & Chip. Without limiting the generality of the
foregoing, since that date:
(a) Chip & Chip 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 5.17 of the Chip & Chip Disclosure Schedule,
Chip & Chip has not entered into, assumed or become bound under or obligated by
any agreement, contract, lease or commitment (collectively a "CHIP & CHIP
AGREEMENT") or extended or modified the terms of any Chip & Chip Agreement which
(i) involves the payment of greater than $10,000 per annum or which extends for
more than one (1) year, (ii) involves any payment or obligation to any Affiliate
of Chip & Chip other than in the Ordinary Course of Business, (iii) involves the
sale of any material assets, (iv) involves any OEM relationship, or (v) involves
any license of Chip & Chip's technology;
(c) to the knowledge of Chip & Chip, no party (including
Chip & Chip) has accelerated, terminated, made modifications to, or canceled any
agreement, contract, lease, or license to which Chip & Chip is a party or by
which it is bound and Chip & Chip 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 Chip & Chip, tangible or
intangible, has become subject to any Security Interest, except as set forth on
Section 5.8 of the Chip & Chip Disclosure Schedule;
(e) Chip & Chip has not made any capital expenditures except
in the Ordinary Course of Business and not exceeding $10,000 in the aggregate of
all such capital expenditures;
(f) Chip & Chip has not made any capital investment in, or
any loan to, any other Person;
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(g) Chip & Chip has not created, incurred, assumed, prepaid
or guaranteed any indebtedness for borrowed money and capitalized lease
obligations, or extended or modified any existing indebtedness, except as
provided in Section 9.1(i) hereof; except that Aspec shall assume $350,000 of
Chip & Chip liabilities and all other liabilities, debts and expenses of Chip &
Chip shall be paid in full on or prior to Closing;
(h) Chip & Chip 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 Chip & Chip;
(j) Chip & Chip 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 (except upon the conversion, exchange or exercise of any
such securities which are described on Section 5.3 of the Chip & Chip Disclosure
Schedule) any of its capital stock;
(k) Chip & Chip 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 (other than with respect to any Dissenting Shares (as defined
herein));
(l) Chip & Chip has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property in excess of
$10,000 in the aggregate of all such damage, destruction and losses;
(m) Chip & Chip has not suffered any repeated, recurring or
prolonged shortage, cessation or interruption of inventory shipments, supplies
or utility services;
(n) Chip & Chip has not made any loan to, or 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 or their
Affiliates, and, in any event, any such transaction was on fair and reasonable
terms no less favorable to Chip & Chip than would be obtained in a comparable
arm's length transaction with a Person which is not such a director, officer or
employee or Affiliate thereof;
(o) Chip & Chip 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) Chip & Chip 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;
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(q) Chip & Chip 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) Chip & Chip has not made any other change in employment
terms for any of its directors or officers, and Chip & Chip has not made any
other change in employment terms for any other employees outside the Ordinary
Course of Business;
(s) Chip & Chip has not suffered any material adverse change
or any threat of any material adverse change in its relations with, or any loss
or threat of loss of, any of its major customers, distributors or dealers;
(t) Chip & Chip has not suffered any material adverse change
or any threat of any material adverse change in its relations with, or any loss
or threat of loss of, any of it major suppliers;
(u) Chip & Chip 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) Chip & Chip has not changed any of the accounting
principles followed by it or the method of applying such principles, except as
described on Schedule 5.6 of the Chip & Chip Disclosure Schedule;
(w) Chip & Chip has not made a change in any of its banking
or safe deposit arrangements;
(x) Chip & Chip has not entered into any transaction other
than in the Ordinary Course of Business; and
(y) Chip & Chip has not committed to any of the foregoing.
5.10 Undisclosed Liabilities. Chip & Chip has no material
liability (whether known or unknown, 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 Chip & Chip, except for (i) liabilities set forth on the
Most Recent Balance Sheet and (ii) liabilities which have arisen after the Most
Recent Fiscal Period End in the Ordinary Course of Business.
5.11 Legal Compliance. Chip & Chip has complied in all material
respects 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). To
the knowledge of Chip & Chip, no action, suit, proceeding, hearing,
investigation,
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charge, complaint, claim, demand, notice or inquiry has been filed or commenced
by or against, or received by, any governmental body alleging any failure to so
comply. Chip & Chip has all licenses, permits, approvals, registrations,
qualifications, certificates and other governmental authorizations that are
necessary for the operations of Chip & Chip as they are presently conducted,
except for any such licenses, permits, approvals, registrations, qualifications,
certificates and other governmental authorizations which, if not obtained, would
not individually or in the aggregate be likely to result Material Adverse Effect
on Chip & Chip.
5.12 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 Chip & Chip, together with any
interest, additions or penalties, deficiencies or assessments with respect
thereto and any interest in respect of such additions or penalties.
(b) Chip & Chip 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 material respects, and no such Tax
Returns are currently the subject of audit. All Taxes owed by Chip & Chip
(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, except any state Taxes (other than California
related Taxes) which are not individually or in the aggregate material to Chip &
Chip. Chip & Chip has provided adequate reserves on its Financial Statements
for the payment of any taxes accrued but not yet due and payable. Chip & Chip is
not currently the beneficiary of any extension of time within which to file any
Tax Return, and Chip & Chip 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 Chip & Chip either (A) claimed or 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 Chip & Chip,
except for inchoate liens for taxes not yet due and payable.
(d) Chip & Chip has not filed a consent under Sec. 341(f) of
the Internal Revenue Code of 1986, as amended (the "CODE") concerning
collapsible corporations. Chip & Chip 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.
Chip & Chip 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). Chip & Chip is not a party to any tax allocation
or sharing agreement. Chip & Chip (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
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Income Tax Return and (B) has no any liability for the taxes of any Person 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 Chip & Chip (A) did not, as of the
Most Recent Fiscal Period End, exceed by any amount the reserve for Tax
liability (other 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 that reserve as adjusted for operations and transactions through the
Closing Date in accordance with the past custom and practice of Chip & Chip in
filing its Tax Returns.
5.13 Properties.
(a) Chip & Chip does not currently own and has never
previously owned any real property.
(b) Section 5.13 of the Chip & Chip Disclosure Schedule
lists and describes briefly all real property leased or subleased to Chip &
Chip. Chip & Chip has delivered to Aspec correct and complete copies of the
leases and subleases listed in Section 5.13 of the Chip & Chip Disclosure
Schedule (as amended to date). With respect to each lease and sublease listed in
Section 5.13 of the Chip & Chip Disclosure Schedule to the knowledge of Chip &
Chip:
(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) Chip & Chip has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; and
(vi) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof, and have been
operated and maintained in accordance with applicable laws, rules, and
regulations in all material respects.
5.14 Intellectual Property.
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(a) To the knowledge of Chip & Chip, Chip & Chip has not
interfered with, infringed upon, misappropriated or violated any Intellectual
Property rights of third parties. Chip & Chip 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 Chip & Chip must license or refrain from using any Intellectual Property
rights of any third party), except as disclosed in Section 5.14 of the Chip &
Chip Disclosure Schedule. To the knowledge of Chip & Chip, no third party has
interfered with, infringed upon, misappropriated, or violated any Intellectual
Property rights of Chip & Chip. Each employee of Chip & Chip has signed an
invention assignment and/or confidentiality agreement with Chip & Chip that
provides that any Intellectual Property developed by such employee while
employed by Chip & Chip is the sole property of Chip & Chip.
(b) Section 5.14(b) of the Chip & Chip Disclosure Schedule
identifies (i) all Intellectual Property owned by Chip & Chip and (ii) each
patent or registration which has been issued to Chip & Chip or any Affiliate of
Chip & Chip with respect to any of the Intellectual Property used in Chip &
Chip's business, (iii) each pending patent application or application for
registration which Chip & Chip or any Affiliate of Chip & Chip has made with
respect to any of the Intellectual Property used in Chip & Chip's business, and
(iv) each material license, agreement, or other permission which Chip & Chip or
any Affiliate of Chip & Chip has granted to any third party with respect to any
of the Intellectual Property used in Chip & Chip's business (together with any
exceptions). Chip & Chip has delivered to Aspec correct and complete copies of
all such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date). Section 5.14(b) of the Chip & Chip Disclosure
Schedule also identifies (i) each trade name or unregistered trademark used by
Chip & Chip or any Affiliate of Chip & Chip which is material to the business of
Chip & Chip and (ii) each unregistered copyright or trade secret owned by Chip &
Chip or any Affiliate of Chip & Chip with respect to Intellectual Property which
is material to the business of Chip & Chip . With respect to each item of
Intellectual Property required to be identified in Section 5.14(b) of the Chip &
Chip Disclosure Schedule, to the knowledge of Chip & Chip:
(i) Chip & Chip possesses all right, title, and
interest in and to the item, free and clear of any Security Interest (except as
disclosed in Section 5.8 of the Chip & Chip Disclosure Schedule), license or
other restriction;
(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, to the
knowledge of Chip & Chip, threatened which challenges the legality, validity,
enforceability, use or ownership of the item; and
(iv) Chip & Chip has never agreed to indemnify any
Person for or against any interference, infringement, misappropriation, or other
conflict with respect to the item, except pursuant to the contracts set forth in
Section 5.17 of the Chip & Chip Disclosure Schedule.
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(c) Section 5.14(c) of the Chip & Chip Disclosure Schedule
identifies each material item of Intellectual Property that any third party owns
and that Chip & Chip uses pursuant to license, sublicense, agreement, or
permission. Chip & Chip has delivered to Aspec 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 5.14(c) of the Chip & Chip Disclosure Schedule, to the
knowledge of Chip & Chip:
(i) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable, and in full force and
effect in all material respects;
(ii) no party to the license, sublicense, agreement, or
permission is in breach or default, and, to the knowledge of Chip & Chip, 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) Chip & Chip has not granted any sublicense or
similar right with respect to the license, sublicense, agreement, or permission.
5.15 Tangible Assets. The buildings, machinery, equipment, and
other tangible assets that Chip & Chip owns and leases are free from material
defects (patent and latent) and are in good operating condition and repair
(subject to normal wear and tear) and are usable in the Ordinary Course of
Business.
5.16 Inventory. In all material respects, all of the inventory of
Chip & Chip and any supplies, manufactured and processed parts, work in process
or finished goods, is usable, merchantable and fit for the purpose for which it
was procured or manufactured, and none of such inventory is slow-moving,
obsolete, damaged, or defective, subject to adjustments for operations and
transactions through the Closing Date in accordance with the past custom and
practice of Chip & Chip.
5.17 Contracts. Section 5.17 of the Chip & Chip Disclosure
Schedule lists the following contracts, agreements, commitments and other
arrangements to which Chip & Chip is a party or by which Chip & Chip 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 or license of any software or
Intellectual Property which involves the payment by or to Chip & Chip of more
than $10,000 per year;
(b) 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 involve
consideration in excess of $10,000;
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(c) any agreement for the purchase of supplies, components,
products or services from single source suppliers, custom manufacturers or
subcontractors which involves the payment by Chip & Chip of more than $10,000
per year;
(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 $10,000 or under
which a Security Interest has been imposed on any of its assets, tangible or
intangible;
(f) any agreement concerning noncompetition or restraint of
trade or any agreement on currently active projects which involves
confidentiality;
(g) any agreement with any Chip & Chip shareholder or any of
such shareholder's Affiliates (other than Chip & Chip) or with any Affiliate of
Chip & Chip;
(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 or employees;
(i) any collective bargaining agreement;
(j) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis;
(k) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees;
(l) any agreement pursuant to which Chip & Chip is obligated
to provide services, maintenance, support or training which involves payments to
Chip & Chip of more than $50,000 per year;
(m) any standard form agreement used by Chip & Chip,
including, but not limited to, any purchase order, statement of standard terms
and conditions of sale, or employment offer letter; and
(n) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000 or which is
expected to continue for more than six (6) months from the date hereof.
Chip & Chip has delivered to Aspec a correct and complete copy of each written
agreement listed in Section 5.17 of the Chip & Chip Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions of
each oral agreement referred to in Section 5.17 of the Chip
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& Chip 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 against Chip & Chip and, to the knowledge of Chip & Chip, the
other parties thereto; (B) Chip & Chip is not and, to the knowledge of Chip &
Chip, no other 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; (C) Chip & Chip
has not and, to the knowledge of Chip & Chip, no other party has repudiated any
provision of the agreement; and (D) Chip & Chip does not have any reason to
believe that the service called for thereunder cannot be supplied in accordance
with its terms and without resulting in a loss to any of Chip & Chip.
5.18 Notes and Accounts Receivable. All notes and accounts
receivable of Chip & Chip, all of which are reflected properly on the books and
records of Chip & Chip in all material respects, are, to the knowledge of Chip &
Chip, (i) valid receivables subject to no setoffs, defenses or counterclaims,
and are current and collectible, and (ii) will be collected in accordance with
their terms at their recorded amounts, subject only to adjustments for
operations and transactions through the Closing Date in accordance with the past
custom and practice of Chip & Chip.
5.19 Power of Attorney. There are no outstanding powers of
attorney executed on behalf of Chip & Chip.
5.20 Insurance. Chip & Chip has delivered to Aspec copies of each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) with
respect to which Chip & Chip 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 (and
there has been no notice of cancellation or nonrenewal of the policy received)
with respect to Chip & Chip and, to the knowledge of Chip & Chip, the other
parties thereto; (B) neither Chip & Chip nor, to the knowledge of Chip & Chip,
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) neither Chip & Chip nor, to the knowledge of Chip & Chip, any other party
to the policy has repudiated any provision thereof; and (D) there has been no
failure by Chip & Chip to give any notice or present any claim under the policy
in due and timely fashion. Section 5.20 of the Chip & Chip Disclosure Schedule
describes any self-insurance arrangements presently maintained by Chip & Chip.
5.21 Litigation. Section 5.21 of the Chip & Chip Disclosure
Schedule sets forth each instance in which Chip & Chip (or any of its assets)
(i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party or, to the knowledge of Chip & Chip, 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 Chip & Chip, there are no facts or
circumstances which would form the basis of any claim against Chip & Chip.
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5.22 Product Warranty. All of the services performed and products
licensed, manufactured, sold, leased, and delivered by Chip & Chip have
conformed in all material respects with all applicable contractual commitments
and all express and implied warranties, and, to the knowledge of Chip & Chip,
Chip & Chip 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 $10,000. Section 5.17(o) of the Chip & Chip
Disclosure Schedule includes copies of the standard terms and conditions of
license for Chip & Chip (containing applicable guaranty, warranty, and indemnity
provisions).
5.23 Product Liability. To the knowledge of Chip & Chip, Chip &
Chip has no material 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
licensed, manufactured, sold, leased, or delivered by Chip & Chip.
5.24 Employees. No executive, key employee, or significant group
of employees has advised any executive officer of Chip & Chip that he, she or
they plan to terminate employment with Chip & Chip during the next six (6)
months. Chip & Chip 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. To the knowledge of Chip &
Chip, Chip & Chip has not committed any unfair labor practice. To the knowledge
of Chip & Chip, there is no organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of Chip
& Chip.
5.25 Employee Benefits.
(a) Section 5.25(a) of the Chip & Chip Disclosure Schedule
lists each Employee Benefit Plan that Chip & Chip maintains or to which Chip &
Chip contributes or is obligated to contribute.
(i) Each such Employee Benefit Plan (and each related
trust, or fund established by Chip & Chip) complies in form and in operation in
all material 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, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to each
such Employee Benefit Plan. The requirements of Code Sec. 4980B have been met in
all material respects with respect to each such Employee Benefit Plan which is
an Employee Welfare Benefit Plan. No event has occurred and no condition exists
with respect to any Employee Benefit Plan that would subject Chip & Chip to any
tax under Code Sections 4972, 4976 or 4979 or to a fine under ERISA Sections
502(i) or 502(l).
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(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
Chip & Chip.
(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 Aspec 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
Chip & Chip has been provided to Aspec.
(v) Neither Chip & Chip nor any other Person or entity
under common control with Chip & Chip 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 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) Chip & Chip has delivered to Aspec 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 Aspec from amending or terminating any such
Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that Chip &
Chip, and/or any controlled group of corporations within the meaning of Code
Sec. 1563 (a "CONTROLLED GROUP OF CORPORATIONS") which includes Chip & Chip,
maintains or ever has maintained or to which any of them contributes, ever
contributed, or ever has been required to contribute:
(i) 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
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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 Schedule 5.25(c) of the Chip &
Chip Disclosure Schedule, Chip & Chip 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 Chip & Chip 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.
5.26 Guaranties. Chip & Chip is not a guarantor or otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
5.27 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
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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) To the knowledge of Chip & Chip, each of Chip & Chip
and its predecessors and Affiliates (A) has complied with the Environmental,
Health, and Safety Laws (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 other authorizations which
are required under the Environmental, Health, and Safety Laws, and (C) has
complied in all material 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) To the knowledge of Chip & Chip, Chip & Chip 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), and none of Chip & Chip 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) To the knowledge of Chip & Chip, 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 Chip & Chip and its
predecessors and Affiliates.
(e) To the knowledge of Chip & Chip, no Hazardous Materials
are currently located at, on, in, under or about all properties and equipment
used in the business of Chip & Chip 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.
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5.28 Certain Business Relationships With Chip & Chip. None of
the Majority Shareholders nor Chip & Chip nor any director or officer of Chip &
Chip, nor any member of their immediate families, nor any Affiliate of any of
the foregoing, owns, directly or indirectly, or has an ownership interest in 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
Chip & Chip.
5.29 No Adverse Developments. To the knowledge of Chip & Chip,
there is no development (exclusive of general economic factors affecting
business in general) or threatened development affecting Chip & Chip (or
affecting customers, suppliers, employees, and other Persons which have
relationships with Chip & Chip ) that (i) is having or is reasonably likely to
have a Material Adverse Effect on Chip & Chip, or (ii) would prevent Aspec from
conducting the business of the Surviving Corporation following the Closing in
the manner in which it was conducted or planned to be conducted by Chip & Chip
prior to the Closing.
5.30 Full Disclosure. No representation or warranty in this
Section 5 or in any document delivered by the Majority Shareholders or Chip &
Chip pursuant to the transactions contemplated by this Agreement, and no
statement, list, certificate or instrument furnished to Aspec pursuant hereto or
in connection with this Agreement, when taken as a whole, contains any untrue
statement of a material fact, or omits to state any fact necessary to make any
statement herein or therein not materially misleading. There is no fact,
development or threatened development (excluding general economic factors
affecting business in general) known to Chip & Chip or the Majority Shareholders
which Chip & Chip has not disclosed to Aspec and which is having or may have a
Material Adverse Effect on Chip & Chip. Chip & Chip has delivered to Aspec
true, correct and complete copies of all documents, including all amendments,
supplements and modifications thereof or waivers currently in effect thereunder,
described in the Chip & Chip Disclosure Schedule.
6. Representations and Warranties of Aspec. Aspec represents and
warrants to Chip & Chip 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 Aspec to Chip & Chip
on the date hereof (and initialed by Aspec and Chip & Chip), a copy of which is
attached hereto as Exhibit D (referred to herein as the "ASPEC DISCLOSURE
SCHEDULE"). The Aspec Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Section 6.
6.31 Organization, Qualification, and Corporate Power. Aspec is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Aspec is duly authorized to conduct business and
is in good standing under the laws of each other jurisdiction where such
qualification is required. Aspec has full corporate power and authority, and has
all necessary and material 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.
6.32 Authorization. Aspec has full power and authority to execute
and deliver this Agreement and the Merger Agreement, and to consummate the
transactions contemplated hereunder and to perform its obligations hereunder and
no other proceedings on the part of Aspec is necessary
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to authorize the execution, delivery and performance of this Agreement and the
Merger Agreement. This Agreement and the Merger Agreement and the transactions
contemplated thereby have been approved by the unanimous vote of Aspec's Board
of Directors. This Agreement and the Merger Agreement constitute the valid and
legally binding obligations of Aspec enforceable against Aspec in accordance
with their respective terms and conditions. Aspec need not 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.
6.33 Capitalization.
(a) As of May 31, 1999, the authorized capital stock of
Aspec consisted of (i) 75,000,000 shares of Common Stock, of which 28,066,000
shares were issued and outstanding, (iii) 5,000,000 shares of undesignated
preferred stock, none of which were issued and outstanding, and (iv) an
aggregate of approximately 2,773,150 shares were subject to outstanding options
or reserved for issuance pursuant to Aspec's employee and director stock plans.
All of the outstanding shares of Aspec's capital stock have been duly authorized
and validly issued and are fully paid and nonassessable. Except as set forth in
this Section 6.3, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Aspec or obligating Aspec to issue or sell any shares of
capital stock of, or other equity interests in, Aspec. The authorized capital
stock of Merger Sub consists of 1,000 shares of common stock , all of which are
held of record by Aspec.
(b) The shares of Aspec Common Stock to be issued pursuant
to Section 3.1 of this Agreement are duly authorized and reserved for issuance,
and upon issuance thereof will be validly issued, fully paid and nonassessable.
6.34 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 Aspec is subject or any provision of its
Certificate of Incorporation 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 Aspec is a party or by which
it is bound or to which any of its assets is subject.
6.35 Brokers' Fees. Aspec 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.
6.36 SEC Filings. ASPEC has filed all forms, reports and
documents required to be filed with the SEC since April 1, 1998, and has made
available to Chip & Chip such forms, reports and documents in the form filed
with the SEC. All such required forms, reports and documents (including those
that ASPEC may file subsequent to the date hereof) are referred to herein as the
"ASPEC SEC Reports". As of their respective dates, the ASPEC SEC Reports (i)
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were prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such ASPEC SEC Reports, 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 ASPEC's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
6.37 Financial Statements . Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in
ASPEC SEC Reports ( the "ASPEC Financials"), including any ASPEC SEC Reports
filed after the date hereof until the Closing, (i) was compiled as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, (ii) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Exchange Act) and (iii)
fairly presented the consolidated financial position of ASPEC and it's
subsidiaries as at the respective dates thereof and the consolidated results of
ASPEC's 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. The balance sheet of ASPEC contained in ASPEC
SEC Form 10Q Report as of May 31, 1999 is hereinafter referred to as the "ASPEC
Balance Sheet."
6.38 Litigation. Section 6.8 of the Aspec Disclosure Schedule
sets forth each instance in which Aspec (or any of its assets) (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to the knowledge of Aspec, 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.
6.9 No Adverse Developments. To the knowledge of Aspec, there is
no development (exclusive of general economic factors affecting business in
general) or threatened development affecting Aspec (or affecting customers,
suppliers, employees, and other Persons which have relationships with Aspec)
that (i) is having or is reasonably likely to have a Material Adverse Effect on
Aspec, or (ii) would prevent Aspec from conducting its business following the
Closing in the manner in which it was conducted or planned to be conducted by
Aspec prior to the Closing.
7. Pre-Closing Covenants. With respect to the period between the
execution of this Agreement and the earlier of the termination of this Agreement
in accordance with Section 11 hereof and the Effective Time of the Merger:
7.1 General. Each of the Parties will use their reasonable best
efforts to take all actions 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 9 below).
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7.2 Notices and Consents. Except as otherwise agreed to by Aspec,
Chip & Chip will give any notices to third parties and will use its best efforts
to obtain any third party consents that are required in connection with the
matters identified in Section 5.4 of the Chip & Chip Disclosure Schedule. Each
of the Parties will give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters identified in Section 5.4
of the Chip & Chip Disclosure Schedule.
7.3 Conduct of Business. Chip & Chip 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, Chip &
Chip will not (a) issue or sell, or contract to issue or sell, any shares of its
capital stock or that of any of its subsidiaries or any securities convertible
into to exchangeable for shares of capital stock of it or any of its
subsidiaries, or securities, warrants, options or rights to purchase any of the
foregoing (other than shares issued upon exercise of outstanding options or upon
the conversion of outstanding convertible securities described on the Chip &
Chip Disclosure Schedule), (b) purchase or redeem any shares of its capital
stock, (c) declare or pay any dividends or agree to make any other distribution
with respect to any shares of its capital stock, (d) amend its Articles of
Incorporation or Bylaws, or (e) enter into or propose to enter into an agreement
with any other person providing for the possible acquisition by it or any of its
subsidiaries (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise) of any material portion of the capital stock or assets of
another entity. In addition, Chip & Chip will comply with all laws, statutes,
ordinances, rules, regulations and orders applicable to it or to the conduct of
its business, except for violations that could not subject Chip & Chip to a
penalty or loss that could constitute a Material Adverse Effect on Chip & Chip.
7.4 Preservation of Business. Chip & Chip 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. Aspec 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. Chip & Chip will permit Aspec 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 Chip & Chip, to the
business and operations of Chip & Chip. Neither such access, inspection and
furnishing of information to Aspec and its representatives, nor any
investigation by Aspec and its representatives, shall in any way diminish or
otherwise effect Aspec's right to rely on any representation or warranty made by
Chip & Chip or the Majority Shareholders hereunder. Aspec will permit Chip &
Chip 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 Aspec, to
the business and operations of Aspec. Neither such access, inspection and
furnishing of information to Chip & Chip and its representatives, nor any
investigation by Chip & Chip and its representatives, shall in any way diminish
or otherwise effect Chip & Chip 's right to rely on any representation or
warranty made by Aspec hereunder.
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7.6 Notice of Developments. Each Party will give prompt written
notice to the others of any adverse development causing a material breach of any
of its own representations and warranties in 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 Chip & Chip Disclosure Schedule or the Aspec
Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
7.7 Exclusivity. From and after the date hereof through the date
which is thirty (30) days following the termination of this Agreement pursuant
to Section 11 hereof, without the prior written consent of Aspec, neither Chip &
Chip, the Majority Shareholders nor any of Chip & Chip's other officers,
directors, shareholders, agents or Affiliates shall, directly or indirectly, (a)
solicit, conduct discussions with or engage in negotiations with any person,
other than Aspec, relating to the possible acquisition of Chip & Chip or any of
its subsidiaries (whether by way of merger, purchase of capital stock, purchase
of assets or otherwise) or any material portion of its or their capital stock or
assets, (b) provide information with respect to Chip & Chip or any of its
subsidiaries to any person, other than Aspec, relating to the possible
acquisition of Chip & Chip or any of its subsidiaries (whether by way of merger,
purchase of capital stock, purchase of assets or otherwise) or any material
portion of its or their capital stock or assets, (c) enter into an agreement
with any person, other than Aspec, providing for the acquisition of Chip & Chip
or any of its subsidiaries (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise) or any material portion of its or their capital
stock or assets, (d) make or authorize any statement, recommendation or
solicitation in support of any possible acquisition of Chip & Chip or any of it
subsidiaries (whether by way of merger, purchase of capital stock, purchase of
assets or otherwise) or any material portion of its or their capital stock or
assets by any person, other than by Aspec, (e) enter into any agreement with any
person, other than Aspec, providing for any extension of credit (other than
trade credit in the ordinary course of business) or other debt investment in
Chip & Chip, or (f) enter into any additional agreement for the licensing or
distribution of products, technology, or intellectual property of Chip & Chip,
whether now existing or hereafter created. In addition to the foregoing, if Chip
& Chip or any of its subsidiaries receives any unsolicited offer or proposal to
enter negotiations relating to any of the above, Chip & Chip shall immediately
notify Aspec thereof, including information as to the identity of the offeror or
the party making any such offer or proposal and the specific terms of such offer
or proposal, as the case may be. From and after the date hereof until the first
to occur of the Closing of the Merger or the termination of this Agreement
pursuant to Section 11 hereof, none of the Majority Shareholders will transfer
or offer to transfer any of their Chip & Chip Common Stock except to Aspec
pursuant to the Merger.
8. Post-Closing Covenants. With respect to the period following the
Effective Time of the Merger:
8.1 General. 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)
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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 10 below).
8.2 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 Chip & Chip or the Majority
Shareholders or (B) arising out of Aspec'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 the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 10 below).
8.3 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 Chip & Chip
from maintaining the same business relationships with the Surviving Corporation
after the Effective Time of the Merger as it maintained with Chip & Chip prior
to the Effective Time of the Merger.
8.4 Confidentiality. Each of the parties hereto hereby agrees to
keep such information or knowledge obtained in any due diligence or other
investigation pursuant to the negotiation and execution of this Agreement or the
effectuation of the transactions contemplated hereby, confidential in accordance
with the terms of that certain Nondisclosure and Nonsolicitation Agreement
between Aspec and Chip & Chip dated June 7, 1999 (the "NONDISCLOSURE
AGREEMENT").
8.5 C&C Employees; Employee Stock Options. Upon the Effective
Date of the Merger, all employees of Chip&Chip shall be offered employment with
the Surviving Corporation. In addition, upon the Effective Date of the Merger,
Chip&Chip employees and certain future employees shall be granted an option to
purchase an aggregate of 1,300,000 shares of Aspec Common Stock (in such amounts
to be mutually determined by the Chief Executive Officer of Chip&Chip and
Aspec). Stock options for a maximum of 25,000 shares shall be issued for each
employee as determined by Xxxxxxx. Ho; except for Xxx-Xxx Xx and Xxxxx-Xxxx Xxx,
who will be granted options for 700,000 shares and 300,000 shares, respectively.
All stock option grants are subject to ASPEC board approval. All such options
shall have an exercise price equal to the fair market value of the ASPEC Common
Stock on the date of grant and shall be time based and shall vest over a four
(4) year period with twenty-five percent (25%) vesting after each full year of
employment by Chip & Chip or ASPEC after the date of grant. Stock options for
five hundred thousand (500,000) shares of Xx. Xx'x stock options are subject to
accelerated vesting over a two (2) year or greater period of time based upon
three (3) months after the start of a beta site evaluation of each of the Chip &
Chip software products in amounts to be determined by ASPEC and in accordance
with a product introduction schedule to be agreed upon between Chip & Chip and
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ASPEC. The stock options for Messrs. Ho and Lin shall be granted on the date of
Closing. The options shall also be subject to the other terms and conditions of
Aspec's 1996 Stock Option Plan (the "STOCK PLAN"). All employees of Chip & Chip
that are employees of the Surviving Corporation following the Closing shall
execute Aspec's standard form of employee confidentiality and inventions
assignment agreement.
9. Conditions to Obligations to Close.
9.1 Conditions to Aspec's Obligation to Close. The obligations of
Aspec 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 Chip & Chip and
the Majority Shareholders set forth in Section 5 above shall be true and correct
in all material respects at and as of the Closing Date;
(b) Chip & Chip and the Majority Shareholders shall have
performed and complied with all of their respective covenants hereunder in all
material respects through the Closing;
(c) Chip & Chip shall have obtained such of the third party
consents listed on Section 5.4 of the Chip & Chip Disclosure Schedule as may be
mutually agreed to by Aspec and Chip & Chip; -
(d) 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 (other than such an
action initiated by Aspec or Merger Sub) 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, or (C) affect materially and adversely the right of Aspec or
Merger Sub to control Chip & Chip following the Effective Time of the Merger,
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) or (C) of this Section 9.1(d) to occur.
(e) the President and the Chief Financial Officer of Chip &
Chip and the Majority Shareholders shall have delivered to Aspec a certificate
to the effect that each of the conditions specified above in Section 9.1(a) to
9.1(d) (inclusive) is satisfied in all material respects;
(f) No Material Adverse Effect shall have occurred with
respect to Chip & Chip;
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(g) Aspec shall have received from counsel to Chip & Chip
and the Majority Shareholders an opinion in form and substance as set forth in
Exhibit E attached hereto, addressed to Aspec, and dated as of the Closing Date;
(h) this Agreement and the Merger shall have been approved
by the vote of the holders of 100% of the outstanding shares of Common Stock of
Chip & Chip;
(i) all outstanding options, convertible securities and
other Stock Rights to purchase securities of Chip & Chip shall have been
exercised or canceled; and
(j) Xxx-Xxx Xx, Xxxxx-Xxxx Xxx, Xxxx Xxxx, X.X. Xxx, and
X.X. Xxxx Xxx shall have accepted employment with the Surviving Corporation; and
(k) Aspec's Board of Directors shall have approved this
Agreement.
(l) The OEM Agreement with Redac Systems Ltd. shall have
been finalized and approved by both parties' attorneys.
Aspec may waive any condition (in whole or in part) specified in
this Section 9.1 if it executes a writing so stating at or prior to the Closing.
9.2 Conditions to Chip & Chip 's Obligation. The obligation of
Chip & Chip and the Majority Shareholders to consummate the transactions to be
performed by each of them in connection with the Closing is subject to
satisfaction of the following conditions:
(a) the representations and warranties of Aspec set forth in
Section 6 above shall be true and correct in all material respects at and as of
the Closing Date;
(b) Aspec shall have performed and complied with all of its
covenants hereunder in all material 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 (other than such an
action initiated by Chip & Chip or any of the Majority Shareholders) 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);
(d) the Chief Executive Officer or other duly authorized
officer of Aspec shall have delivered to Chip & Chip a certificate to the effect
that each of the conditions specified above in Section 9.2(a) to 9.2(c)
(inclusive) is satisfied in all material respects;
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(e) Chip & Chip shall have received from counsel to Aspec an
opinion in form and substance as set forth in Exhibit F attached hereto,
addressed to Chip & Chip , and dated as of the Closing Date;
(f) No Material Adverse Change shall have occurred with
respect to Aspec.
Chip & Chip and the Majority Shareholders may waive any condition
(in whole or in part) specified in this Section 9.2 if Chip & Chip executes a
writing so stating at or prior to the Closing.
10. Survival of Representations, Indemnification.
10.1 Limited Survival of Representations and Warranties. All
covenants of Aspec, Merger Sub, Chip & Chip and the Majority Shareholders to be
performed prior to the Effective Time of the Merger, and all representations and
warranties of Aspec, Chip & Chip and the Majority Shareholders in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Merger for a period of twelve (12) months from the Effective Time of the Merger
(the "EXPIRATION DATE"), and, notwithstanding anything to the contrary in this
Agreement, no claim for breach of any representation, warranty or covenant by
any Party and no claim for indemnification by Aspec or the Majority Shareholders
hereunder shall be brought at any time after the Expiration Date.
10.2 Indemnification by Aspec.
(a) From and after the Effective Time of the Merger, Aspec
shall indemnify and hold harmless each of the Majority Shareholders, and each of
the heirs, executors, successors and assigns of any of the foregoing, from and
against any and all Losses arising out of, or in connection with, any breach of
any representation or warranty or of any covenant, agreement, or undertaking
made by Aspec in this Agreement.
(b) Notwithstanding any provision to the contrary in this
Agreement, the maximum obligation and liability of Aspec and Merger Sub to any
Chip & Chip shareholder (including the Majority Shareholders) shall be
determined by multiplying the number of shares of Aspec Common Stock received by
each such Chip & Chip shareholder in the Merger by $1.00.
10.3 Indemnification by Majority Shareholders.
(a) From and after the Effective Time of the Merger, each of
Chip & Chip and the Majority Shareholders shall indemnify and hold harmless
Aspec, Merger Sub and each of their respective Affiliates, and each of their
respective directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing, from and against any
and all Losses arising out of, or in connection with, any breach of any
representation or warranty or of any covenant, agreement, or undertaking made by
Chip & Chip or the Majority Shareholders in this Agreement. The liability of the
Majority Shareholders hereunder shall be several in proportion
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to number of shares of Aspec Common Stock received by each such Majority
Shareholder and his Affiliates as a result of the Merger, and not joint.
(b) The Majority Shareholders may agree, as among themselves
and without limiting the rights of Aspec or Merger Sub hereunder, as to the
respective amounts of any liability for which they each shall be responsible.
(c) Any payment made pursuant to this Section 10.3 or
Section 10.2 hereof shall be treated by the Parties as an adjustment to the
purchase price provided for herein, and the Parties agree not to take any
position inconsistent therewith for any purpose.
10.4 Notice of Claims. No action or proceeding may be brought by
a party seeking indemnification hereunder (the "INDEMNIFIED PARTY") with respect
to any breach of the representations, warranties, covenants or agreements made
hereunder unless written notice thereof, setting forth in reasonable detail (to
the extent then known) the amount of the claim and the claimed misrepresentation
or breach of warranty or breach of covenant or agreement, or the reasons for
which such Indemnified Party believes there has been or may have been a breach
of representation, warranty, covenant or agreement, shall have been delivered to
the party alleged to have breached such representation, warranty, covenant or
agreement (the "INDEMNIFYING PARTY") on or prior to the Expiration Date. If the
Indemnifying Party contests the assertion of the claim, then the parties shall
act in good faith to reach agreement regarding such claim.
10.5 Third Party Claims. If a claim by a third party is made
against an Indemnified Party, and if such Indemnified Party intends to seek
indemnity with respect thereto under this Section 10, such Indemnified Party
shall promptly notify the Indemnifying Party in writing of such claims setting
forth such claims in reasonable detail; provided, however, that failure of such
Indemnified Party to give such notice shall not result in a waiver of its
indemnity rights except to the extent that such failure prejudices the
Indemnifying Party's ability to respond to or defend the claim. The Indemnifying
Party shall have thirty (30) days after receipt of such notice to undertake,
through counsel of its own choosing and at its own expense, the settlement or
defense thereof, and the Indemnified Party shall cooperate with it in connection
therewith; provided, however, that the Indemnified Party may participate in such
settlement or defense through counsel chosen by such Indemnified Party, provided
that the fees and expenses of such counsel shall be borne by such Indemnified
Party. The Indemnified Party shall not pay or settle any claim without the
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. The Indemnifying Party will not pay or settle any claim
unless it contains an unconditional release of the Indemnified Party. If the
Indemnifying Party does not within thirty (30) days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder undertake the
defense thereof or if the Indemnified Party must obtain separate legal counsel
due to an actual or potential conflict arising from such claim (as determined in
good faith by the Indemnified Party's legal counsel), the Indemnified Party
shall have the right to contest, settle or compromise the claim but shall not
thereby waive any right to indemnity therefor (and for all associated reasonable
costs and attorney's fees which, in the case of such costs and fees, shall be
reimbursed by the Indemnifying Party as incurred) pursuant to this Agreement.
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10.6 Limitation of Claims. The Majority Shareholders shall not be
liable for any claims by Aspec made hereunder unless and until the aggregate
amount of all such claims against one or more of the Majority Shareholders
exceeds $10,000, provided that in the event such claims exceed $10,000, Aspec
shall be entitled to recover for the full amount of such claims (including the
$10,000 limitation). Aspec and Merger Sub shall not be liable for any claims by
the Majority Shareholders made hereunder unless and until the aggregate amount
of all such claims against Aspec and Merger Sub exceeds $10,000, provided that
in the event such claims exceed $10,000, the Majority Shareholders shall be
entitled to recover for the full amount of such claims (including the $10,000
limitation).
11. Termination.
11.1 Termination of the Agreement. This Agreement may be
terminated at any time prior to the Closing as follows:
(a) Aspec and Chip & Chip may terminate this Agreement as to
all Parties by mutual written consent at any time prior to the Closing.
(b) Aspec may terminate this Agreement by giving written
notice to Chip & Chip and the Majority Shareholders at any time prior to the
Closing (A) in the event either of Chip & Chip or the Majority Shareholders has
materially breached any representation, warranty, or covenant contained in this
Agreement and Aspec has notified Chip & Chip and the Majority Shareholders of
the breach or (B) if the Closing shall not have occurred on or before August 6,
1999, by reason of the failure of any condition precedent under Section 9.1
hereof (unless the failure results primarily from Aspec itself materially
breaching any representation, warranty, or covenants contained in this
Agreement).
(c) Aspec may terminate this Agreement by giving written
notice to Chip & Chip and the Majority Shareholders at any time prior to 5:00
p.m. (California time) on August 2, 1999 in the event that Aspec is not
satisfied in its sole discretion with the results of its due diligence
investigation regarding the business and financial and corporate records of Chip
& Chip.
(d) Chip & Chip may terminate this Agreement by giving
written notice to Aspec at any time prior to the Closing (A) in the event Aspec
has materially breached any representation, warranty, or covenant contained in
this Agreement and Chip & Chip has notified Aspec of the breach, or (B) if the
Closing shall not have occurred on or before August 6, 1999, by reason of the
failure of any condition precedent under Section 9.2 hereof (unless the failure
results primarily from Chip & Chip or the Majority Shareholders materially
breaching any representation, warranty, or covenants contained in this
Agreement).
11.2 Effect of Termination.
(a) If any Party terminates this Agreement pursuant to Section 11 above,
all rights and obligations of the Parties hereunder shall terminate without any
liability of any Party to any other
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Party (except for any liability of any Party then in breach); provided, however,
that the Confidentiality Agreement shall survive in accordance with its terms.
12. Miscellaneous.
12.1 Publicity. 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 Aspec and Chip & Chip.
Notwithstanding the foregoing, Aspec may disclose the Merger in its filings with
the Securities and Exchange Commission to the extent required by applicable
securities laws.
12.2 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties, the
shareholders of Chip & Chip and their respective successors and permitted
assigns.
12.3 Entire Agreement. This Agreement (including the exhibits and
schedules hereto) 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 (including that certain letter agreement between Aspec and
Chip & Chip dated June 10, 1999). Notwithstanding the foregoing, Chip & Chip and
Aspec agree that the terms of the Confidentiality Agreement shall remain in
effect.
12.4 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.
12.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
12.6 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.
12.7 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one (1) business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
(1) business day after the business day of facsimile transmission, if delivered
by facsimile transmission with copy by first class mail, postage prepaid, and
shall be addressed to the intended recipient as set forth below:
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If to Aspec or Merger Sub:
Aspec Technology, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx,
President and Chief Executive Officer
Copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: J. Xxxxxx Xxxxxxxxxx, Esq.
If to Chip & Chip or the Majority Shareholders:
Chip & Chip, Inc.
0000 Xxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx-Xxx Xx, Chief Executive Officer
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 written notice of such change in accordance with the above provisions.
12.8 Governing Law; Dispute Resolution.
(a) 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.
(b) It is the express intention of the Parties to this
Agreement to make a good faith effort to resolve, without resort to arbitration,
any dispute arising under or related to this Agreement. In the event of a
dispute relating to any provision of this Agreement which cannot be resolved
promptly by negotiations between the Parties involved directly in the dispute,
any Party to the dispute may give the other Party written notice of its intent
to arbitrate, as provided in this Section 12.8. No arbitration may commence
earlier than thirty (30) days after the delivery of the notice of intent to
arbitrate, unless the failure to commence arbitration is reasonably likely to
result in some demonstrable harm.
(c) The Parties hereto agree that the appropriate and
exclusive forum for any disputes among any of the Parties hereto arising out of
this Agreement or the transactions contemplated hereby, shall be settled by
arbitration in Santa Xxxxx County, California, in accordance
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with the rules of the American Arbitration Association, and judgment upon any
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. The arbitration panel will consist of three (3)
people to be mutually selected by the Parties to the dispute. In the event that
the Parties to the dispute cannot agree upon the arbitrators within ten (10)
days after the commencement of the arbitration procedures, one (1) arbitrator
shall be selected by Aspec, one (1) arbitrator shall be selected by the Majority
Shareholders involved in the dispute and one (1) arbitrator shall be selected by
the two (2) other arbitrators so designated. The parties further agree, to the
extent permitted by law, that final and non-appealable judgment against any of
them in any action or proceeding contemplated above shall be conclusive and may
be enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and amount of such judgment. 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 nonconvenience, lack of personal jurisdiction or similar
grounds with respect to the enforcement of any such judgment.
(d) In the event of any arbitration proceeding hereunder,
the arbitrator(s) shall have the discretion to award the prevailing party
reimbursement of all costs and expenses incurred in connection with said action,
including reasonable attorney's fees.
(e) To the extent that Aspec or the Majority Shareholders
have or hereafter may acquire any immunity from jurisdiction of any court or
from any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, Aspec and the Majority Shareholders (as the case may
be) hereby irrevocably waive such immunity in respect of its obligations with
respect to this Agreement.
12.9 Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Aspec, Merger Sub, Chip & Chip 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 or
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.
12.10 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.
12.11 Expenses. Each of Aspec, Chip & Chip and the Majority
Shareholders will bear its or their own costs and expenses (including legal and
accounting fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby; provided, however, that the Majority
Shareholders will be responsible for (i) any brokers', finders' or advisory fees
payable on behalf of Chip & Chip in connection with the Agreement and the
transactions contemplated hereby, and (ii) any legal or accounting fees
undertaken on behalf of Chip & Chip or
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the Majority Shareholders in connection with the Agreement and the transactions
contemplated hereby in excess of $50,000 which may be paid by Chip & Chip.
12.12 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.
12.13 Incorporation of Exhibits and Schedules. The Exhibits
identified in this Agreement are incorporated herein by reference and made a
part hereof.
THIS SPACE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
Aspec: ASPEC TECHNOLOGY, INC.
By:_______________________________________
Xxxxxx X. Dell'Oca
Chairman of the Board of Directors
Merger Sub: ASPEC ACQUISITION CORPORATION
By:_______________________________________
Xxxxxxx X. Xxxxx
President
Chip & Chip: CHIP & Chip, INC.
By:_______________________________________
Xxx-Xxx Xx
Chairman and Chief Executive Officer
Majority Shareholders: __________________________________________
Xxx-Xxx Xx
__________________________________________
Xxxxx-Xxxx Xxx
[AGREEMENT AND PLAN OF REORGANIZATION SIGNATURE PAGE]
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