1
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXX.XXX, INC.,
AJ ACQUISITION, INC.,
AND
JUNGLEE CORP.
DATED AS OF AUGUST 3, 1998
2
CONTENTS
ARTICLE I - THE MERGER ................................................................ 1
1.1 The Merger ............................................................. 1
1.2 The Closing ............................................................ 2
1.3 Effective Date and Time ................................................ 2
1.4 Certificate of Incorporation of the Surviving Corporation .............. 2
1.5 Bylaws of the Surviving Corporation .................................... 2
1.6 Directors and Officers ................................................. 3
1.7 Conversion of Shares ................................................... 3
1.7.1 Exchange Ratio .................................................. 3
1.7.2 Exchange of Certificates ........................................ 5
1.7.3 No Fractional Shares ............................................ 6
1.7.4 No Further Transfers ............................................ 7
1.8 Stockholder Representative ............................................. 7
1.9 Tax Free Reorganization ................................................ 7
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............................ 8
2.1 Organization ........................................................... 8
2.2 Enforceability ......................................................... 8
2.3 Capitalization ......................................................... 9
2.4 Subsidiaries and Affiliates ............................................ 10
2.5 No Approvals; No Conflicts ............................................. 10
2.6 Financial Statements ................................................... 11
-i-
3
2.7 Absence of Certain Changes or Events ................................... 12
2.8 Taxes .................................................................. 13
2.9 Property ............................................................... 16
2.10 Contracts .............................................................. 17
2.11 Claims and Legal Proceedings ........................................... 19
2.12 Labor and Employment Matters ........................................... 19
2.13 Employee Benefit Plans ................................................. 20
2.13.1 Employee Benefit Plan Listing ................................... 20
2.13.2 Documents Provided .............................................. 21
2.13.3 Compliance ...................................................... 21
2.13.4 Contributions and Premium Payments .............................. 22
2.13.5 Related Employers ............................................... 22
2.13.6 Multiemployer and Title IV Plans ................................ 23
2.13.7 Post-Termination Welfare Benefits ............................... 23
2.13.8 Suits, Claims and Investigations ................................ 23
2.13.9 Payments Resulting From Transactions ............................ 23
2.14 Intellectual Property .................................................. 24
2.14.1 General ........................................................ 24
2.14.2 Technology ..................................................... 24
2.14.3 Third Party Technology ......................................... 25
2.14.4 Trademarks ..................................................... 25
2.14.5 Intellectual Property Rights ................................... 26
2.14.6 Maintenance of Rights .......................................... 26
-ii-
4
2.14.7 Third Party Infringement ....................................... 26
2.14.8 Infringement by the Company .................................... 27
2.14.9 Confidentiality ................................................ 27
2.14.10 Warranty Against Defects ....................................... 27
2.14.11 Domain Names ................................................... 28
2.14.12 Year 2000 ...................................................... 28
2.15 Corporate Books and Records ............................................ 28
2.16 Licenses, Permits, Authorizations, etc. ................................ 29
2.17 Compliance With Laws ................................................... 29
2.18 Insurance .............................................................. 29
2.19 Brokers or Finders ..................................................... 30
2.20 Absence of Questionable Payments ....................................... 30
2.21 Bank Accounts .......................................................... 30
2.22 Insider Interests ...................................................... 31
2.23 Compliance With Environmental Laws ..................................... 31
2.24 Information Supplied by the Company .................................... 32
2.25 Full Disclosure ........................................................ 32
2.26 Xxxx-Xxxxx-Xxxxxx ...................................................... 32
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF XXXXXX.XXX AND THE
PURCHASER ..................................................................... 32
3.1 Organization ........................................................... 33
3.2 Enforceability ......................................................... 33
3.3 Securities ............................................................. 34
-iii-
5
3.4 No Approvals or Notices Required; No Conflicts With
Instruments ............................................................ 34
3.5 Capitalization ......................................................... 35
3.6 SEC Documents .......................................................... 35
3.7 Absence of Certain Changes ............................................. 35
3.8 Information Supplied by Xxxxxx.xxx ..................................... 35
3.9 Full Disclosure ........................................................ 36
ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX.XXX AND THE
PURCHASER ..................................................................... 36
4.1 Accuracy of Representations and Warranties ............................. 36
4.2 Performance of Agreements .............................................. 36
4.3 Opinion of Counsel for the Company ..................................... 36
4.4 Opinion of Patent Counsel for the Company .............................. 36
4.5 Compliance Certificate ................................................. 37
4.6 Material Adverse Change ................................................ 37
4.7 Approvals and Consents ................................................. 37
4.8 Proceedings and Documents; Secretary's Certificate ..................... 37
4.9 Nonforeign Affidavit ................................................... 38
4.10 Compliance With Laws ................................................... 38
4.11 Stockholder Approval ................................................... 38
4.12 Legal Proceedings ...................................................... 38
4.13 Escrow Agreement ....................................................... 38
4.14 Employment and Noncompetition Arrangements ............................. 38
4.15 Investor Rights Agreement .............................................. 38
-iv-
6
4.16 Affiliate Letters ...................................................... 39
4.17 Termination of Certain Agreements ...................................... 39
4.18 Exercise of Warrants ................................................... 39
4.19 Repurchase Agreements .................................................. 39
4.20 Other Approvals ........................................................ 39
ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ........................ 39
5.1 Accuracy of Representations and Warranties ............................. 40
5.2 Performance of Agreements .............................................. 40
5.3 Opinion of Counsel ..................................................... 40
5.4 Compliance Certificate ................................................. 40
5.5 Legal Proceedings ...................................................... 40
5.6 Material Adverse Change ................................................ 40
5.7 Approvals and Consents ................................................. 41
5.8 Compliance With Laws ................................................... 41
5.9 Stockholder Approvals .................................................. 41
5.10 Escrow Agreement ....................................................... 41
5.11 Investor Rights Agreement .............................................. 41
5.12 Option Letters ......................................................... 41
ARTICLE VI - COVENANTS ................................................................ 41
6.1 Conduct of Business by the Company Pending the Merger .................. 42
6.2 Access to Information; Confidentiality ................................. 44
6.3 No Alternative Transactions ............................................ 44
-v-
7
6.4 Notification of Certain Matters ........................................ 44
6.5 Further Action; Reasonable Best Efforts ................................ 45
6.6 Stockholder Approval ................................................... 45
6.7 Proxy Statement ........................................................ 45
6.8 Listing Application .................................................... 46
6.9 Dissenting Shares ...................................................... 46
6.10 Publicity .............................................................. 46
6.11 Conversion of Standardized Employee Benefit Plans ...................... 46
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER ....................................... 47
7.1 Termination ............................................................ 47
7.2 Effect of Termination .................................................. 47
7.3 Amendment .............................................................. 47
7.4 Waiver ................................................................. 48
ARTICLE VIII - SURVIVAL AND INDEMNIFICATION ........................................... 48
8.1 Survival ............................................................... 48
8.2 Indemnification by the Company and Holders of Company
Capital Stock .......................................................... 48
8.3 Indemnification by Xxxxxx.xxx .......................................... 49
8.4 Threshold and Limitations .............................................. 49
8.5 Procedure for Indemnification .......................................... 50
8.6 Remedies ............................................................... 52
ARTICLE IX - GENERAL .................................................................. 52
9.1 Tax Matters ............................................................ 52
-vi-
8
9.2 Expenses ............................................................... 53
9.3 Notices ................................................................ 53
9.4 Severability ........................................................... 54
9.5 Entire Agreement ....................................................... 54
9.6 Assignment ............................................................. 54
9.7 Parties in Interest .................................................... 55
9.8 Governing Law .......................................................... 55
9.9 Headings ............................................................... 55
9.10 Counterparts ........................................................... 55
9.11 Waiver of Jury Trial ................................................... 55
EXHIBITS
1.3 - Certificate of Merger
1.7.1 - Form of Escrow Agreement
1.9(A) - Xxxxxx.xxx and Purchaser Tax Certificate
1.9(B) - Company Tax Certificate
2 - Disclosure Memorandum
2(A) - Form of Investor Rights Agreement
4.3 - Form of Opinion of Counsel for the Company
4.4 Form of Opinion of Patent Counsel for the Company
4.9 - Foreign Investment in Real Property Tax Act Affidavit
4.14 - Form of Confidentiality, Noncompetition and Invention
Assignment Agreement
4.16 - Form of Affiliate Letter
5.3 - Form of Opinion of Counsel for Xxxxxx.xxx and the
Purchaser
5.12 - Form of Option Letter
-vii-
9
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of August 3, 1998, by and among Xxxxxx.xxx, Inc., a Delaware corporation
("Xxxxxx.xxx"), AJ Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of Xxxxxx.xxx (the "Purchaser"), and Junglee Corp., a Delaware
corporation (the "Company").
RECITALS
A. The Company, Xxxxxx.xxx and the Purchaser believe it advisable and in
their respective best interests to effect a merger of the Company and the
Purchaser pursuant to this Agreement (the "Merger").
B. The Board of Directors of the Company has approved this Agreement and
the Merger as required by applicable law.
C. The Boards of Directors of the Purchaser and the sole stockholder of
the Purchaser have approved this Agreement and the Merger as required by
applicable law.
D. It is intended that the Merger will qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
In consideration of the terms hereof, the parties hereto agree as
follows:
ARTICLE I - THE MERGER
1.1 THE MERGER
Upon the terms and subject to the conditions hereof, (a) at the
Effective Time (as defined in Section 1.3 hereof) the separate existence of the
Purchaser shall cease and the Purchaser shall be merged with and into the
Company (the Company is sometimes referred to herein as the "Surviving
Corporation"), and (b) from and after the Effective Time, the Merger shall have
all the effects of a merger under the laws of the State of Delaware and other
applicable law.
-1-
10
1.2 THE CLOSING
Subject to the satisfaction or waiver of the conditions set forth in
Articles IV and V, the closing of the Merger pursuant to this Agreement (the
"Closing") shall take place on the earliest practicable business day (the
"Closing Date") at 10:00 a.m. local time at the offices of Xxxxxxx Coie LLP,
1201 Third Avenue, 46th Floor, Seattle, Washington, or such other date, time or
location as Xxxxxx.xxx and the Company shall agree.
1.3 EFFECTIVE DATE AND TIME
On the Closing Date and subject to the terms and conditions hereof, a
certificate of merger (the "Certificate of Merger") complying with the
applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
substantially in the form attached hereto as Exhibit 1.3, and in such form and
executed in such manner as required by Delaware Law, shall be delivered for
filing to the Secretary of State of the State of Delaware (the "Delaware
Secretary of State"). The Merger shall become effective on the date (the
"Effective Date") and at the time (the "Effective Time") of filing of the
Certificate of Merger or at such other time as may be specified in the
Certificate of Merger as filed. If the Delaware Secretary of State requires any
changes in the Certificate of Merger as a condition to filing or to issuing its
certificate to the effect that the Merger is effective, Xxxxxx.xxx, the
Purchaser and the Company will execute any necessary revisions incorporating
such changes, provided such changes are not inconsistent with and do not result
in any material change in the terms of this Agreement.
1.4 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION
At the Effective Time, the Certificate of Incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation. Thereafter, the
Certificate of Incorporation of the Surviving Corporation may be amended in
accordance with its terms and as provided by law; provided, however, that
Article I thereof shall be amended to read as follows: "The name of this
corporation is Junglee Corp.."
1.5 BYLAWS OF THE SURVIVING CORPORATION
At the Effective Time, the Bylaws of the Purchaser as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation. Thereafter, the Bylaws may be amended or repealed in accordance
with their terms and the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
-2-
11
1.6 DIRECTORS AND OFFICERS
At the Effective Time, the directors of the Purchaser shall continue in
office as the directors of the Surviving Corporation and the officers of the
Purchaser shall continue in office as the officers of the Surviving Corporation,
and such directors and officers shall hold office in accordance with and subject
to the Certificate of Incorporation and Bylaws of the Surviving Corporation.
1.7 CONVERSION OF SHARES
1.7.1 EXCHANGE RATIO
As of the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof:
(a) All shares of any class of capital stock of the Company held
by the Company as treasury shares shall be canceled.
(b) Each issued and outstanding share of common stock of the
Company, par value $0.001 per share (the "Company Common Stock"), including each
share of Company Common Stock issued upon conversion of each issued and
outstanding share of the Company's Series A Preferred Stock, par value $0.001
per share (the "Company Series A Stock"), Series B Preferred Stock, $0.001 par
value per share (the "Company Series B Stock"), and Series C Preferred Stock,
par value $0.001 per share (the "Company Series C Stock" and, together with the
Company Common Stock, Company Series A Stock and Company Series B Stock, the
"Company Capital Stock"), other than shares of Company Capital Stock, if any,
for which dissenters' rights have been or will be perfected in compliance with
applicable law, shall be converted into the right to receive from Xxxxxx.xxx a
number of shares of Xxxxxx.xxx common stock, par value $.01 per share
("Xxxxxx.xxx Common Stock"), determined by dividing (i) 1,891,568 by (ii) the
total number of shares of Company Capital Stock outstanding immediately prior to
the Effective Time on a fully diluted basis, assuming for this purpose that all
outstanding options ("Options") to purchase shares of Company Capital Stock have
been validly exercised prior to the Effective Time, regardless of any vesting
limitations, other restrictions on exercisability or repurchase rights, and
issuable upon such exercise have been validly issued (such shares of Xxxxxx.xxx
Common Stock being referred to herein as the "Merger Consideration" or the
"Securities" and the quotient so derived being referred to herein as the
"Exchange Ratio"). The number of Securities to be issued to each stockholder of
the Company under this Section 1.7(b) shall be calculated by aggregating all
shares of Company Capital Stock held by each such stockholder, so that such
number of Securities to be issued shall be equal to the number of shares of
-3-
12
Company Capital Stock held by such stockholder multiplied by the Exchange Ratio,
with cash paid in lieu of any fractional share of Xxxxxx.xxx Common Stock
pursuant to Section 1.7.3 hereof.
(c) Notwithstanding the foregoing, 190,000 shares of Xxxxxx.xxx
Common Stock issued as part of the Merger Consideration (the "Escrow Shares")
shall be deposited in escrow with ChaseMellon Shareholder Services L.L.C.
("ChaseMellon" or the "Escrow Agent"), to be held and administered in accordance
with an Escrow Agreement in substantially the form attached hereto as Exhibit
1.7.1 (the "Escrow Agreement"), such Escrow Shares to be withheld and deducted,
pro rata, from the shares of Xxxxxx.xxx Common Stock otherwise issuable to each
holder of Company Capital Stock at the Effective Time. Notwithstanding the
escrow of the Escrow Shares, dividends or other distributions declared and paid
on such shares shall continue to be paid by Xxxxxx.xxx to the stockholders and
all voting rights with respect to such shares shall inure to the benefit of and
be enjoyed by such stockholders. Any securities received by the Escrow Agent in
respect of any Escrow Shares held in escrow as a result of any stock split or
combination of shares of Xxxxxx.xxx Common Stock, payment of a stock dividend or
other stock distribution in or on shares of Xxxxxx.xxx Common Stock, or change
of Xxxxxx.xxx Common Stock into any other securities pursuant to or as a part of
a merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation of Xxxxxx.xxx, or otherwise, shall be held by the
Escrow Agent as, and shall be included within the definition of, Escrow Shares.
(d) Each issued and outstanding share of capital stock of the
Purchaser shall be converted into one share of common stock of the Surviving
Corporation.
(e) Each outstanding Option to purchase shares of Company Common
Stock issued pursuant to the Company's 1996 Stock Plan and 1998 Equity Incentive
Plan (the "Company Option Plans"), whether or not vested or exercisable, shall
be assumed by Xxxxxx.xxx and shall constitute an option to acquire, on the same
terms and conditions as were applicable under such assumed Option, that number
of shares of Xxxxxx.xxx Common Stock equal to the product of the Exchange Ratio
and the number of shares of Company Common Stock subject to such Option, at a
price per share (rounded to the nearest $0.001) equal to the aggregate exercise
price for the shares of Company Common Stock subject to such Option divided by
the number of full shares of Xxxxxx.xxx Common Stock deemed to be purchasable
pursuant to such Option; provided, however, that (i) subject to the provisions
of clause (ii) below, the number of shares of Xxxxxx.xxx Common Stock that may
be purchased upon exercise of such Option shall not include any fractional
shares, and, upon the last such exercise of such Option, Xxxxxx.xxx shall pay to
the holder thereof an amount of
-4-
13
cash equal to such fraction multiplied by the closing price of Xxxxxx.xxx Common
Stock as reported on the Nasdaq National Market on the date of such exercise,
and (ii) in the case of any Option to which Section 421 of the Code applies by
reason of its qualification under Section 422 of the Code, the option price, the
number of shares purchasable pursuant to such Option and the terms and
conditions of exercise of such Option shall be determined in order to comply
with Section 424 of the Code. Xxxxxx.xxx shall assume the obligations of the
Company under the Company Option Plans and shall comply with the terms of the
Company Option Plans as they apply to the Options assumed as set forth above.
Xxxxxx.xxx shall use its best efforts to cause the shares of Xxxxxx.xxx Common
Stock that are issuable upon exercise of the Options assumed in accordance with
this Section 1.7.1 to be registered under the Securities Act of 1933, as amended
(the "Securities Act"), on Form S-8 ("Form S-8") within 30 days following the
Closing Date.
(f) Holders of shares of Company Capital Stock who have complied
with all the requirements for perfecting dissenters' rights, as set forth in the
Delaware Law and in Chapter 13 of the California Corporations Code (the
"California Code") by virtue of Section 2115 of the California Code, shall be
entitled to their rights under the Delaware Law and the California Code with
respect to such shares (the "Dissenting Shares").
(g) If, prior to the Effective Time, Xxxxxx.xxx recapitalizes
through a split-up of its outstanding shares of capital stock into a greater
number, or a combination of its outstanding shares of capital stock into a
lesser number, reorganizes, reclassifies or otherwise changes its outstanding
shares of capital stock into the same or a different number of shares of other
classes of capital stock, or declares a dividend on its outstanding shares of
capital stock payable in shares or securities convertible into shares, the
number of shares of Xxxxxx.xxx Common Stock into which the shares of Company
Capital Stock are to be converted, and the number of shares of Xxxxxx.xxx Common
Stock issuable upon the exercise of each assumed Option, will be adjusted
appropriately so as to maintain the proportionate interests of the holders of
the Company Capital Stock and Options and the holders of shares of capital stock
of Xxxxxx.xxx.
1.7.2 EXCHANGE OF CERTIFICATES
As soon as practicable after the Effective Date, ChaseMellon, as
exchange agent, shall make available, and each stockholder of the Company will
be entitled to receive, upon surrender to ChaseMellon of one or more
certificates representing shares of Company Capital Stock for cancellation and a
letter of transmittal in customary form, certificates representing the number of
shares of Xxxxxx.xxx Common Stock that such stockholder is entitled to receive
pursuant to Section 1.7.1 hereof; provided,
-5-
14
however, that the certificates representing the Escrow Shares shall be retained
by ChaseMellon in accordance with the Escrow Agreement. In the event that any
certificates representing shares of Company Capital Stock shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
stockholder of the Company claiming such certificate to be lost, stolen or
destroyed, Xxxxxx.xxx shall issue in exchange for such lost, stolen or destroyed
certificate the shares of Xxxxxx.xxx Common Stock that such stockholder is
entitled to receive pursuant to Section 1.7.1 hereof; provided, however, that
Xxxxxx.xxx may in its discretion and as a condition precedent to the issuance
thereof, require such stockholder to provide Xxxxxx.xxx with an indemnity
agreement against any claim that may be made against Xxxxxx.xxx with respect to
the certificate alleged to have been lost, stolen or destroyed. The shares of
Xxxxxx.xxx Common Stock that each stockholder of the Company shall be entitled
to receive pursuant to the Merger shall be deemed to have been issued at the
Effective Time. No interest shall accrue on the Merger Consideration. If the
Merger Consideration (or any portion thereof) is to be delivered to any person
other than the person in whose name the certificate or certificates representing
shares of Company Capital Stock surrendered in exchange therefor is registered,
it shall be a condition to such exchange that the person requesting such
exchange shall pay to Xxxxxx.xxx any transfer or other taxes required by reason
of the payment of the Merger Consideration to a person other than the registered
holder of the certificate or certificates so surrendered, or shall establish to
the satisfaction of Xxxxxx.xxx that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither Xxxxxx.xxx nor any other party hereto
shall be liable to a holder of shares of Company Capital Stock for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
1.7.3 NO FRACTIONAL SHARES
No certificates or scrip representing fractional shares of Xxxxxx.xxx
Common Stock shall be issued upon the surrender for exchange of certificates
representing Company Capital Stock pursuant to the Merger, and no dividend,
stock split or other distribution with respect to Xxxxxx.xxx Common Stock shall
relate to any such fractional interest, and any such fractional interests shall
not entitle the owner thereof to vote or to any rights of a security holder. In
lieu of each such fractional share, Xxxxxx.xxx shall pay to the holder thereof,
as soon as practicable after the Effective Date, an amount in cash equal to such
fraction multiplied by the closing price of Xxxxxx.xxx Common Stock as reported
on the Nasdaq National Market on the trading day prior to the Closing Date.
-6-
15
1.7.4 NO FURTHER TRANSFERS
After the Effective Time, there shall be no transfers of any shares of
Company Capital Stock on the stock transfer books of the Surviving Corporation.
If, after the Effective Time, certificates formerly representing shares of
Company Capital Stock are presented to the Surviving Corporation, they shall be
forwarded to Xxxxxx.xxx and be canceled and exchanged in accordance with this
Section 1.7, subject to applicable law in the case of Dissenting Shares.
1.8 STOCKHOLDER REPRESENTATIVE
By approving the Merger at a special meeting of stockholders or by
written consent of the stockholders, each stockholder of the Company shall have
irrevocably authorized and appointed Xxxxxx Xxxxxx (the "Stockholder
Representative"), with full power of substitution and resubstitution, as his,
her or its representative and true and lawful attorney-in-fact and agent to act
with the powers set forth in the Investor Rights Agreement (as defined in the
preamble to Article II hereof) in his, her or its name, place and stead and to
execute in the name and on behalf of such stockholder the Escrow Agreement and
any other agreement, certificate, instrument or document to be delivered by the
stockholders in connection with the Escrow Agreement.
1.9 TAX FREE REORGANIZATION
(a) Except as otherwise required by the Internal Revenue Service (the
"IRS") pursuant to a determination (as defined in Section 1313 of the Code) or
otherwise, or by applicable law, the parties shall not take a position on any
tax returns inconsistent with the treatment of the Merger for tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code by reason
of Section 368(a)(2)(E) of the Code.
(b) In addition, Xxxxxx.xxx represents, solely for tax purposes, now,
and as of the Closing Date, that it presently intends to continue the Company's
historic business or use a significant portion of the Company's business assets
in business in a manner that satisfies the continuity of business enterprise
requirement set forth in Treasury Regulation Section 1.368-1(d). At the Closing,
officers of Xxxxxx.xxx and Purchaser shall execute and deliver an officers'
certificate substantially in the form of Exhibit 1.9(A) (the "Xxxxxx.xxx and
Purchaser Tax Certificate") and officers of Junglee shall execute and deliver an
officer's certificate substantially in the form of Exhibit 1.9(B) (the "Company
Tax Certificate").
-7-
16
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
Except as is otherwise set forth in the Disclosure Memorandum attached
hereto as Exhibit 2 (the "Disclosure Memorandum"), and in order to induce
Xxxxxx.xxx and the Purchaser to enter into and perform this Agreement, the
Escrow Agreement and the Investor Rights Agreements substantially in the form
attached hereto as Exhibit 2(A) (the "Investor Rights Agreement") to be entered
into as of the Closing among Xxxxxx.xxx and each of the stockholders of the
Company, and the other agreements and certificates that are required to be
executed pursuant to this Agreement (collectively, the "Operative Documents"),
the Company represents and warrants to Xxxxxx.xxx and the Purchaser as of the
date of this Agreement and as of the Closing as follows in this Article II:
2.1 ORGANIZATION
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has all
requisite corporate power and authority to own, operate and lease its properties
and assets, to carry on its business as now conducted and as currently proposed
to be conducted, and to enter into and perform its obligations under this
Agreement and the other Operative Documents to which the Company is a party, and
to consummate the transactions contemplated hereby and thereby. The Company is
duly qualified and licensed as a foreign corporation to do business and is in
good standing in each jurisdiction in which the character of the Company's
properties occupied, owned or held under lease or the nature of the business
conducted by the Company makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company's business, properties or prospects (a "Company Material
Adverse Effect").
2.2 ENFORCEABILITY
The Company has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement and each of the other Operative
Documents to which it is a party and each of the certificates, instruments and
documents executed or delivered by it pursuant to the terms of this Agreement.
All corporate action on the part of the Company and its officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other Operative Documents to which the
Company is a party, the consummation of the Merger, and the performance of all
the Company's obligations under this Agreement and the other Operative Documents
to which the Company is a party has been taken or will be taken as of or prior
to the Effective Time. This
-8-
17
Agreement has been, and each of the other Operative Documents to which the
Company is a party at the Closing will have been, duly executed and delivered by
the Company, and this Agreement is, and each of the other Operative Documents to
which the Company is a party will be at the Closing, a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as to the effect, if any, of (a) applicable bankruptcy and
other similar laws affecting the rights of creditors generally, (b) rules of law
governing specific performance, injunctive relief and other equitable remedies,
and (c) the enforceability of provisions requiring indemnification in connection
with the offering, issuance or sale of securities.
2.3 CAPITALIZATION
(a) The authorized capital stock of the Company consists of 15,000,000
shares of Company Common Stock and 5,150,000 shares of preferred stock, par
value $0.001 per share, of which 1,150,000 shares are designated as Company
Series A Stock, 2,000,000 shares are designated as Company Series B Stock and
2,000,000 shares are designated as Company Series C Stock.
(b) As of the date of this Agreement, the issued and outstanding capital
stock of the Company consists solely of 7,511,249 shares of Company Common
Stock, 1,150,000 shares of Company Series A Stock, 1,949,726 shares of Company
Series B Stock and 1,016,787 shares of Company Series C Stock (the "Outstanding
Shares"), which are and as of the Closing will be held of record and, to the
knowledge of the Company, beneficially by the stockholders of the Company as set
forth on Schedule 2.3(b) to the Disclosure Memorandum. The Outstanding Shares
are, and immediately prior to the Closing will be, duly authorized and validly
issued, fully paid and nonassessable, and issued in compliance with all
applicable federal, state and foreign securities laws. To the knowledge of the
Company, no Person (as defined in Section 2.5 hereof) other than the
stockholders of the Company holds any interest in any of the Outstanding Shares.
True and correct copies of the stock records of the Company, showing all
issuances and transfers of shares of capital stock of the Company since
inception, have been provided to Xxxxxx.xxx.
(c) As of the date of this Agreement, other than (i) Options to purchase
up to 2,313,330 shares of Company Common Stock which have been granted under the
Company Option Plans and (ii) warrants to purchase up to 38,676 shares of
Company Series C Stock (the "Warrants"), there are no outstanding rights of
first refusal or offer, preemptive rights, options, warrants, conversion rights
or other agreements, either directly or indirectly, for the purchase or
acquisition from the Company or any stockholder of any shares of Company Capital
Stock or any securities convertible into or exchangeable for shares of Company
Capital Stock. Set forth on Schedule 2.3(c) to
-9-
18
the Disclosure Memorandum is a spreadsheet accurately reflecting the number of
such Options and Warrants outstanding, the grant dates, vesting schedules and
exercise prices thereof, the principal terms of Convertible Notes, and, in each
case, the identities of the holders and an indication of their relationships to
the Company. The Company has delivered to Xxxxxx.xxx true and correct copies of
the Company Option Plans, the form of stock option agreements relating to
Options granted thereunder, all Warrant certificates, all Convertible Notes and
all material deviations therefrom.
(d) The Company is not a party or subject to any agreement or
understanding, and, to the knowledge of the Company, there is no agreement or
understanding between any Persons that affects or relates to the voting or
giving of written consents with respect to any securities of the Company or the
voting by any director of the Company. No stockholder of the Company or any
affiliate thereof is indebted to the Company, and the Company is not indebted to
any stockholder of the Company or any affiliate thereof. The Company is not
under any contractual or other obligation to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.
2.4 SUBSIDIARIES AND AFFILIATES
The Company does not own or control, and has not in the past owned or
controlled, directly or indirectly, any corporation, partnership, limited
liability company or other business entity. The Company does not own, directly
or indirectly, any ownership, equity, or voting interest in, or otherwise
control, any corporation, partnership, joint venture or other entity, and has no
agreement or commitment to purchase any such interest.
2.5 NO APPROVALS; NO CONFLICTS
The execution, delivery and performance by the Company of this Agreement
and the other Operative Documents to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby will not (a)
constitute a violation (with or without the giving of notice or lapse of time,
or both) of any provision of law or any judgment, decree, order, regulation or
rule of any court or other governmental authority applicable to the Company, (b)
require any consent, approval or authorization of, or declaration, filing or
registration with, any person, corporation, partnership, joint venture,
association, organization, other entity or governmental or regulatory authority
(a "Person"), except (i) compliance with applicable securities laws, (ii) the
filing of all documents necessary to consummate the Merger with the Delaware
Secretary of State, and (iii) the approval by the stockholders of the Company of
the transactions contemplated hereby, as provided under applicable
-10-
19
law and the Certificate of Incorporation and Bylaws of the Company (all such
consents, approvals and authorizations to be duly obtained by the Company at or
prior to the Closing), (c) result in a default (with or without the giving of
notice or lapse of time, or both) under, or acceleration or termination of, or
the creation in any party of the right to accelerate, terminate, modify or
cancel, any agreement, lease, note or other restriction, encumbrance, obligation
or liability to which the Company is a party or by which it is bound or to which
any assets of the Company are subject, (d) result in the creation of any
Encumbrance (as defined in Section 2.9(d)) upon any material assets of the
Company or, to the knowledge of the Company, upon any Outstanding Shares or
other securities of the Company, (e) conflict with or result in a breach of or
constitute a default under any provision of the Restated Certificate of
Incorporation or Bylaws of the Company, or (f) invalidate or adversely affect
any permit, license or authorization currently required for the conduct of the
business of the Company.
2.6 FINANCIAL STATEMENTS
The Company has delivered to Xxxxxx.xxx (a) audited balance sheets,
statements of income and expense, statements of cash flow and statements of
stockholders' equity of the Company as of or for the fiscal years ended 1996 and
1997 and (b) an unaudited balance sheet, statement of income and expense,
statement of cash flow and statement of stockholders' equity of the Company as
of and for the six-month period ended June 30, 1998. All the foregoing financial
statements are herein referred to as the "Financial Statements." The balance
sheet of the Company as of June 30, 1998 is herein referred to as the "Company
Balance Sheet." The Financial Statements have been prepared in conformity with
generally accepted accounting principles in the United States ("GAAP") on a
basis consistent with prior accounting periods and fairly present the financial
position, results of operations and changes in financial position of the Company
as of the dates and for the periods indicated (except, solely with respect to
the unaudited Financial Statements, as to footnotes and normal period-end
adjustments). The Company has no liabilities or obligations of any nature
(absolute, contingent or otherwise) that are not fully reflected or reserved
against in the Company Balance Sheet and that would be required under GAAP to be
reflected or reserved, except liabilities or obligations incurred since the date
of the Company Balance Sheet in the ordinary course of business and consistent
with past practice that are not in excess of $50,000 in the aggregate or $20,000
individually. The Company maintains standard systems of accounting that are
adequate for its business. The Company is not a guarantor, indemnitor, surety or
other obligor of any indebtedness of any other Person. The Company's practices
with respect to capitalizing software development costs, as reflected in the
Financial Statements, are reasonable, in accordance with industry standards and
consistent with the advice of the Company's independent accountants.
-11-
20
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except for transactions specifically contemplated in this Agreement,
since the date of the Company Balance Sheet, neither the Company nor any of its
officers or directors in their representative capacities on behalf of the
Company have:
(a) taken any action or entered into or agreed to enter into any
transaction, agreement or commitment other than in the ordinary course of
business;
(b) forgiven or canceled any indebtedness or waived any claims or
rights of material value (including, without limitation, any indebtedness owing
by any stockholder, officer, director, employee or affiliate of the Company);
(c) granted, other than in the ordinary course of business and
consistent with past practice, any increase in the compensation of directors,
officers, employees or consultants (including any such increase pursuant to any
employment agreement or bonus, pension, profit-sharing, lease payment or other
plan or commitment) or any increase in the compensation payable or to become
payable to any director, officer, employee or consultant;
(d) suffered any change having a Company Material Adverse Effect;
(e) borrowed or agreed to borrow any funds, incurred or become
subject to, whether directly or by way of assumption or guarantee or otherwise,
any obligations or liabilities (absolute, accrued, contingent or otherwise) in
excess of $25,000, except liabilities and obligations (i) that are incurred in
the ordinary course of business and consistent with past practice or (ii) that
would not be required to be reflected or reserved against in a balance sheet
prepared in accordance with GAAP, or increased, or experienced any change in any
assumptions underlying or methods of calculating, any bad debt, contingency or
other reserves;
(f) paid, discharged or satisfied any material claims,
liabilities or obligations (absolute, accrued, contingent or otherwise) other
than the payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of claims, liabilities and obligations
reflected or reserved against in the Company Balance Sheet or incurred in the
ordinary course of business and consistent with past practice since the date of
the Company Balance Sheet, or prepaid any obligation having a fixed maturity of
more than 90 days from the date such obligation was issued or incurred;
(g) knowingly permitted or allowed any of its property or assets
(real, personal or mixed, tangible or intangible) to be subjected to any
mortgage, pledge,
-12-
21
lien, security interest, encumbrance, restriction or charge, except in the
ordinary course of business and consistent with past practice;
(h) purchased or sold, transferred or otherwise disposed of any
of its material properties or assets (real, personal or mixed, tangible or
intangible);
(i) disposed of or permitted to lapse any rights to the use of
any trademark, trade name, patent or copyright, or disposed of or disclosed to
any Person without obtaining an appropriate confidentiality agreement from any
such Person any trade secret, formula, process or know-how not theretofore a
matter of public knowledge;
(j) made any single capital expenditure or commitment in excess
of $25,000 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures in excess of $25,000 for additions
to property, plant, equipment or intangible capital assets;
(k) made any change in any method of accounting or accounting
practice or internal control procedure;
(l) issued any capital stock or other securities, or declared,
paid or set aside for payment any dividend or other distribution in respect of
its capital stock, or redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of capital stock or other securities of the Company, or
otherwise permitted the withdrawal by any of the holders of Company Capital
Stock of any cash or other assets (real, personal or mixed, tangible or
intangible), in compensation, indebtedness or otherwise, other than payments of
compensation in the ordinary course of business and consistent with past
practice;
(m) paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets (real, personal or mixed, tangible or
intangible) to any of the Company's stockholders, officers, directors or
employees or any affiliate of any of the Company's stockholders, officers,
directors or employees, except compensation paid to officers and employees at
rates not exceeding the rates of compensation paid during the fiscal year last
ended; or
(n) agreed, whether in writing or otherwise, to take any action
described in this Section 2.7.
2.8 TAXES
(a) (i) All Tax Returns (as defined below) required to be filed by or on
behalf of the Company have been filed on a timely basis with the appropriate
-13-
22
governmental authority in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns were (at the time they were
filed) true, correct and complete in all material respects; (ii) all Taxes (as
defined below) of the Company (whether or not reflected on any Tax Return) have
been fully and timely paid; (iii) no waivers of statutes of limitation have been
given or requested with respect to the Company in connection with any Tax
Returns covering the Company with respect to any Taxes payable by it; and (iv)
the Company has duly and timely withheld from employee salaries, wages and other
compensation and paid over to the appropriate governmental authority all amounts
required to be so withheld and paid over for all periods under all applicable
laws. There are no liens with respect to Taxes on any of the Company's property
or assets other than liens for current Taxes not yet payable.
(b) Neither the Company nor any other Person on behalf of the Company
(i) has filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company;
(ii) has executed or entered into a closing agreement pursuant to Section 7121
of the Code or any predecessor provision thereof or any similar provision of
state, local or foreign law; or (iii) has agreed to or is required to make any
adjustments pursuant to Section 481 (a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company or has notice that a governmental authority has proposed any such
adjustment or change in accounting method.
(c) There is no dispute or claim concerning any Tax liability of the
Company either (i) claimed or raised by any authority in writing or (ii) as to
which any of the directors and officers (and employees responsible for Tax
matters) of the Company have knowledge based on personal contact with any agent
of such authority. Schedule 2.8 to the Disclosure Memorandum lists all Tax
Returns filed with respect to the Company for taxable periods ended on or after
the Company's inception that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Company has delivered to Xxxxxx.xxx
correct and complete copies of all Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company since
the Company's inception.
(d) The Company has not made any payments, is not obligated to make any
payments and is not a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under Section
280G of the Code (or any similar provision of state, local or foreign law).
-14-
23
(e) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(2)(i) of the Code.
(f) The Company is not a party to any Tax allocation or sharing
agreement. The Company (i) has not been a member of a Tax Group (as defined
below) filing a consolidated income Tax Return under Section 1501 of the Code
(or any similar provision of state, local or foreign law) and (ii) does not have
any liability for Taxes of any Person under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor by contract or otherwise.
(g) The unpaid Taxes of the Company (i) did not, as of June 30, 1998,
exceed the reserve for Tax liability set forth on the face (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) of the Company Balance Sheet and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing Tax
Returns.
(h) There has been no ownership change, as defined in Section 382(g) of
the Code (or any comparable provision of state, local or foreign law), with
respect to the Company during or after any taxable period in which Company
incurred a net operating loss. The Disclosure Memorandum sets forth the amount
of any net operating loss, net capital loss, net-unrealized built-in loss (as
defined under Section 382 of the Code), unused investment or other credit,
unused foreign tax or excess charitable contribution allocable to the Company.
As used in this Agreement, the following terms shall have the following
meanings:
"Taxes" means all foreign, federal, state, county or local taxes,
charges, fees, levies, imposts, duties, and other assessments, including, but
not limited to, any income, alternative minimum or add-on tax, estimated, gross
income, gross receipts, sales, use, transfer, transactions, intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, real property, recording, personal property, federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Section 59(a) of the Code) or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to tax.
-15-
24
"Tax Group" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Company is now
or was formerly a member.
"Tax Returns" means any return, declaration, report, claim or refund,
information return, statement, or other similar document relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
2.9 PROPERTY
(a) The Company owns no real property other than the leasehold interests
described on Schedule 2.9(a) to the Disclosure Memorandum, which contains a
complete and accurate list of all real property of the Company which is leased,
rented or used by the Company (the "Real Property"). The Company has delivered
to Xxxxxx.xxx true and complete copies of all written leases, subleases, rental
agreements, contracts of sale, tenancies or licenses relating to the Real
Property and written summaries of the terms of any oral leases, subleases,
rental agreements, contracts of sale, tenancies or licenses to which the Real
Property is subject.
(b) Schedule 2.9(b) to the Disclosure Memorandum contains a complete and
accurate list of each item of personal property having a value in excess of
$2,000 which is owned, leased, rented or used by the Company (the "Personal
Property"); provided that such list need not describe the Technology or the IP
Rights (as defined in Sections 2.14.2 and 2.14.5, respectively), listed on
Schedule 2.14 to the Disclosure Memorandum. The Company has delivered to
Xxxxxx.xxx true and complete copies of all leases, subleases, rental agreements,
contracts of sale, tenancies or licenses to which the Personal Property is
subject.
(c) The Real Property and the Personal Property include all the
properties and assets (whether real, personal or mixed, tangible or intangible)
(other than, in the case of the Personal Property, property rights with an
individual value of less than $2,000 and the Technology and IP Rights) reflected
in the Company Balance Sheet (except for such properties or assets sold since
the date of the Company Balance Sheet in the ordinary course of business and
consistent with past practice) and all the properties and assets purchased by
the Company since the date of the Company Balance Sheet (other than, in the case
of the Personal Property, property rights with an individual value of less than
$2,000 and the Technology and the IP Rights). The Real Property and the Personal
Property include all material property used in the business of the Company,
other than the Technology and IP Rights. The Company's offices and other
structures and its Personal Property are of a quality consistent with industry
standards, are in good operating condition and repair, normal wear and tear
excepted,
-16-
25
are adequate for the uses to which they are being put, and comply in all
material respects with applicable safety and other laws and regulations.
(d) The Company's leasehold interest in each parcel of the Real Property
is free and clear of all liens, mortgages, pledges, deeds of trust, security
interests, charges, encumbrances and other adverse claims or interests of any
kind (each, an "Encumbrance"). Each lease of any portion of the Real Property is
valid, binding and enforceable in accordance with its terms against the parties
thereto and, to the Company's knowledge, any other Person with an interest in
such Real Property, the Company has performed in all material respects all
obligations imposed upon it thereunder, and neither the Company nor, to the
Company's knowledge, any other party thereto is in default thereunder, nor is
there any event which with notice or lapse of time, or both, would constitute a
default thereunder. The Company has not granted any lease, sublease, tenancy or
license of, or entered into any rental agreement or contract of sale with
respect to, any portion of the Real Property.
(e) The Personal Property is free and clear of all Encumbrances, and,
other than leased Personal Property which is so noted on the list supplied
pursuant to Section 2.9(b) hereof, the Company owns such Personal Property. Each
lease, license, rental agreement, contract of sale or other agreement to which
the Personal Property is subject is valid, binding and enforceable in accordance
with its terms against the parties thereto, the Company has performed in all
material respects all obligations imposed upon it thereunder, and neither the
Company nor, to the Company's knowledge, any other party thereto is in default
thereunder, nor is there any event which with notice or lapse of time, or both,
would constitute a default by the Company or, to the Company's knowledge, any
other party thereunder. The Company has not granted any lease, sublease, tenancy
or license of any portion of the Personal Property, except in the ordinary
course of business.
2.10 CONTRACTS
Schedule 2.10 to the Disclosure Memorandum contains a complete and
accurate list (other than the IP Rights listed on Schedule 2.14 to the
Disclosure Memorandum) of all contracts, agreements and understandings, oral or
written, to which the Company is currently a party or by which the Company is
currently bound providing for potential payments by or to the Company in excess
of $25,000, including, without limitation, security agreements, license
agreements, software development agreements, distribution agreements, joint
venture agreements, reseller agreements, credit agreements and instruments
relating to the borrowing of money. All contracts set forth on Schedule 2.10 are
valid, binding and enforceable in accordance with their terms against each party
thereto, except as to the effect, if any, of (a) applicable bankruptcy and other
similar laws affecting the rights of creditors generally, (b) rules of law
-17-
26
governing specific performance, injunctive relief and other equitable remedies,
and (c) the enforceability of provisions requiring indemnification in connection
with the offering, issuance or sale of securities, and are in full force and
effect, the Company has performed in all material respects all obligations
imposed on it thereunder, and neither the Company nor, to the Company's
knowledge, any other party thereto is in default thereunder, nor to the
Company's knowledge is there any event which with notice or lapse of time, or
both, would constitute a default by the Company or, to the Company's knowledge,
any other party thereunder. True and complete copies of each such written
contract (or written summaries of the terms of any such oral contract) have been
heretofore delivered to Xxxxxx.xxx. Except as set forth on Schedule 2.10, the
Company has no
(a) contracts with directors, officers, stockholders, employees,
agents, consultants, advisors, salesmen, sales representatives, distributors or
dealers that are not, except as provided by law to the contrary without regard
to the express terms of such contract, cancelable by it within 30 days' notice
without liability, penalty or premium, any agreement or arrangement providing
for the payment of any bonus or commission based on sales or earnings, or any
compensation agreement or arrangement affecting or relating to former employees
of the Company;
(b) employment agreement, whether express or implied, or any
other agreement for services that contains any severance or termination pay
liabilities or obligations;
(c) noncompetition agreement or other restriction from carrying
on its business anywhere in the world;
(d) notice that any party to a contract listed on Schedule 2.10
intends to cancel, terminate or refuse to renew such contract (if such contract
is renewable);
(e) material dispute with any of its suppliers, customers,
distributors, OEM resellers, licensors or licensees;
(f) product distribution agreement, development agreement, or
license agreement as licensor or licensee (except for standard nonexclusive
software licenses granted to end-user customers in the ordinary course of
business the form of which has been provided to Xxxxxx.xxx or standard licenses
purchased by the Company for off-the-shelf software);
(g) joint venture contract or arrangement or any other agreement
that involves a sharing of profits with other persons; and
-18-
27
(h) instrument evidencing indebtedness for borrowed money by way
of a direct loan, sale of debt securities, purchase money obligation,
conditional sale or guarantee, or otherwise, except for trade indebtedness
incurred in the ordinary course of business, and except as disclosed in the
Financial Statements.
2.11 CLAIMS AND LEGAL PROCEEDINGS
Except as set forth on Schedules 2.11 and 2.14 to the Disclosure
Memorandum, there are no claims, actions, suits, arbitrations, investigations or
proceedings pending or involving or, to the Company's knowledge, threatened
against the Company before or by any court or governmental or nongovernmental
department, commission, board, bureau, agency or instrumentality, or any other
Person. Except as set forth on Schedules 2.11 and 2.14, to the Company's
knowledge, there is no valid basis for any claim, action, suit, arbitration,
proceeding or investigation before or by any Person which could reasonably be
expected to have a Company Material Adverse Effect. There are no outstanding or
unsatisfied judgments, orders, decrees or stipulations to which the Company is a
party. Schedule 2.11 sets forth a description of any material disputes that have
been settled or resolved by litigation or arbitration since the Company's
inception.
2.12 LABOR AND EMPLOYMENT MATTERS
There are no material labor disputes, employee grievances or
disciplinary actions pending or, to the Company's knowledge, threatened against
or involving the Company or any of its present or former employees. The Company
has complied with all provisions of law relating to employment and employment
practices, terms and conditions of employment, wages and hours. The Company is
not engaged in any unfair labor practice and has no liability for any arrears of
wages or Taxes or penalties for failure to comply with any such provisions of
law. There is no labor strike, dispute, slowdown or stoppage pending or, to the
Company's knowledge, threatened against or affecting the Company, and the
Company has not experienced any work stoppage or other labor difficulty since
its incorporation. No collective bargaining agreement is binding on the Company.
The Company has no knowledge of any organizational efforts presently being made
or threatened by or on behalf of any labor union with respect to employees of
the Company. Each employee, officer and consultant of the Company has executed a
nondisclosure agreement in the form provided to Xxxxxx.xxx. To the Company's
knowledge, no employee (or person performing similar functions) of the Company
is in violation of any such agreement or any employment agreement,
noncompetition agreement, patent disclosure agreement, invention assignment
agreement, proprietary information agreement or other contract or agreement
relating to the relationship of such employee with the Company or any other
party. Schedule 2.12 to the Disclosure Memorandum sets forth a true and
-19-
28
complete list of (a) the names and current compensation amounts of all directors
and officers of the Company; (b) the wage rates for nonsalaried and nonofficer
salaried employees of the Company by classification, and all labor union
contracts (if any); (c) all group insurance programs in effect for employees of
the Company; and (d) the names and current compensation packages of all
independent contractors and consultants of the Company. The Company is not in
default with respect to any of its obligations referred to in clause (b) above
and has no material obligation or liability for severance or back pay owed
through or by virtue of the Closing. Except as disclosed on Schedule 2.12, all
employees of the Company are employed on an "at will" basis.
2.13 EMPLOYEE BENEFIT PLANS
2.13.1 EMPLOYEE BENEFIT PLAN LISTING
Schedule 2.13.1 to the Disclosure Memorandum sets forth a true, accurate
and complete list and description of all retirement, pension, profit sharing,
deferred compensation, savings, bonus, incentive, cafeteria, flexible benefits,
medical, dental, vision, hospitalization, life insurance, group insurance,
medical expense reimbursement, dependent care assistance, tuition reimbursement,
disability, accident, sick pay, holiday, vacation, severance, stock purchase,
stock option, stock appreciation rights, fringe benefit and other employee
benefit plans, funds, policies, programs, contracts, arrangements and payroll
practices (including, but not limited to, all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all employment, consulting and personal service
contracts and agreements, whether formal or informal, whether written or
unwritten and whether legally binding or not, (a) sponsored, maintained or
contributed to by the Company, (b) covering or benefiting any current or former
officer, employee, agent, director or independent contractor of the Company (or
any dependent or beneficiary of any such individual), or (c) with respect to
which the Company has (or could have) any actual or potential obligation or
liability (such plans, funds, policies, programs, contracts, arrangements and
payroll practices are hereinafter referred to collectively as "Employee Benefit
Plans" and each individually as an "Employee Benefit Plan"). The Company does
not have any agreement, arrangement, commitment or obligation, whether formal or
informal, whether written or unwritten and whether legally binding or not, to
create (or contribute to) any additional employee benefit plan, fund, policy,
program, contract, arrangement or payroll practice or to modify or amend any
existing Employee Benefit Plan. There has been no amendment, written
interpretation or announcement (whether or not written) by the Company relating
to, or change in participation or coverage under, any Employee Benefit Plan
that, either alone or together with other such items or events, could increase
the expense of maintaining the Employee Benefit Plans above the level of expense
-20-
29
incurred with respect thereto for the most recent fiscal year included in the
Financial Statements.
2.13.2 DOCUMENTS PROVIDED
The Company has delivered to Xxxxxx.xxx true, correct and complete
copies (or, in the case of unwritten Employee Benefit Plans, descriptions) of
all Employee Benefit Plans (and all amendments thereto), along with, to the
extent applicable to the particular Employee Benefit Plan, the following
information: (a) copies of the last three annual reports (Form 5500 series)
filed with respect to such Employee Benefit Plan; (b) copies of the summary plan
descriptions, summaries of material modifications and all material employee
manuals or communications filed or distributed with respect to such Employee
Benefit Plan during the last three years; and (c) copies of all contracts (and
any amendments thereto) relating to such Employee Benefit Plan, including, but
not limited to, service provider agreements, administrative service agreements,
insurance contracts, annuity contracts, investment management agreements and
record-keeping agreements.
2.13.3 COMPLIANCE
With respect to each Employee Benefit Plan, (a) such Employee Benefit
Plan is, and at all times since its inception has been, maintained, administered
and operated in accordance with its terms and in compliance in all material
respects with all applicable laws, statutes, orders, rules and regulations, and
all requirements prescribed thereby, including, but not limited to, ERISA and
the Code; (b) all amendments and actions required to bring such Employee Benefit
Plan into conformity with the applicable provisions of ERISA, the Code and other
applicable laws and regulations have been made or taken within the time
prescribed by law, except to the extent that such amendments or actions are not
required by law to be made or taken until after the Closing Date; (c) the
Company, each fiduciary of such Employee Benefit Plan and all other Persons
have, at all times, properly performed all obligations, whether arising by
operation of law or by contract, required to be performed by each of them in
connection with such Employee Benefit Plan; (d) all returns, reports and other
disclosures relating to such Employee Benefit Plan required to be filed with any
governmental entity or agency or furnished to any participant or beneficiary
have been properly completed or prepared and timely filed or furnished in
accordance with applicable law; (e) neither the Company nor any other fiduciary
of such Employee Benefit Plan has engaged in any transaction or acted or failed
to act in a manner that violates the fiduciary requirements of ERISA or any
other applicable law; and (f) no event has occurred or is threatened or about to
occur that constitutes or could constitute a nonexempt prohibited transaction
under Section 406 or 407 of ERISA or under Section 4975 of the Code. Each
Employee Benefit Plan that constitutes a
-21-
30
"group health plan," as defined in Section 607(1) or 733(a)(1) of ERISA or
Section 4980B(g)(2) of the Code, has been maintained, administered and operated
at all times since its inception in compliance with (and the Company has never
violated any of) the requirements of Parts 6 and 7 of Subtitle B of Title I of
ERISA, Section 4980B(f) of the Code, any regulations under such ERISA and Code
sections and any other applicable federal, state, local or foreign law regarding
the provision or continuation of health insurance coverage or other welfare
benefits (within the meaning of Section 3(1) of ERISA). Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code is, and
at all times since its inception has been, so qualified and its related trust or
annuity contract is, and at all times since its inception has been, exempt from
taxation under Section 501(a) of the Code, and each such Employee Benefit Plan
(and its related trust(s) and/or annuity contract(s)) is the subject of an
unrevoked favorable determination letter from the IRS to that effect. Nothing
has occurred since the most recent favorable determination letter issued with
respect to each such Employee Benefit Plan, and no circumstances exist or are
reasonably expected by the Company to occur, that could cause the Company (or
such Employee Benefit Plan) to lose its ability to rely on such determination
letter or could cause the IRS to revoke such determination letter. No event or
omission has occurred, or is reasonably expected by the Company to occur
(including, but not limited to, any of the transactions contemplated in or by
this Agreement), with respect to any Employee Benefit Plan that has or could
subject, directly or indirectly, the Company or any other Person to a tax under
Chapter 43 of Subtitle D of the Code or a penalty under Part 5 of Subtitle B of
Title I of ERISA.
2.13.4 CONTRIBUTIONS AND PREMIUM PAYMENTS
All contributions, premiums and other payments due or required to be
made to each Employee Benefit Plan under the terms of such Employee Benefit
Plan, ERISA, the Code or other applicable law have been timely paid, or, if not
yet due, have been properly recorded on the books of the Company.
2.13.5 RELATED EMPLOYERS
The Company is not, and has never been, a member of (a) a controlled
group of corporations, within the meaning of Section 414(b) of the Code, (b) a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, (c) an affiliated service group, within the meaning
of Section 414(m) of the Code, or (d) any other group of Persons treated as a
single employer under Section 414(o) of the Code.
-22-
31
2.13.6 MULTIEMPLOYER AND TITLE IV PLANS
The Company does not maintain or contribute to, and has never maintained
or contributed to (or been obligated to contribute to), any multiemployer plan
as defined in Section-3(37) or Section 4001(a)(3) of ERISA or 414(f) of the
Code, any multiple employer plan within the meaning of Section 4063 or 4064 of
ERISA or Section 413(c) of the Code, or any employee benefit plan, fund,
program, contract or arrangement that is subject to Section 412 of the Code,
Section 302 of ERISA or Title IV of ERISA.
2.13.7 POST-TERMINATION WELFARE BENEFITS
Neither the Company nor any Employee Benefit Plan provides or has any
obligation to provide (or contribute toward the cost of) health, severance or
any other welfare benefits (within the meaning of Section 3(1) of ERISA) with
respect to any current or former officer, employee, agent, director or
independent contractor of the Company or any other entity beyond such
individual's retirement or other termination of service, other than continuation
coverage mandated by Sections 601 through 608 of ERISA or Section 4980B(f) of
the Code.
2.13.8 SUITS, CLAIMS AND INVESTIGATIONS
There are no actions, suits or claims (other than routine claims for
benefits) pending or, to the Company's knowledge, threatened with respect to (or
against the assets of) any Employee Benefit Plan, nor is there a basis for any
such action, suit or claim. No Employee Benefit Plan is currently under
investigation, audit or review, directly or indirectly, by the IRS, the
Department of Labor (the "DOL") or any other governmental entity or agency, and,
to the Company's knowledge, no such action is contemplated or under
consideration by the IRS, the DOL or any other governmental entity or agency.
2.13.9 PAYMENTS RESULTING FROM TRANSACTIONS
Neither the execution and delivery of this Agreement or any of the other
Operative Documents nor the consummation of the transactions contemplated in (or
by) this Agreement or any of the other Operative Documents will (a) entitle any
current or former officer, employee, agent, director or independent contractor
of the Company to severance pay, unemployment compensation or any other payment
from the Company or any other Person, or otherwise increase the amount of
compensation due to any such individual, or (b) result in any benefit or right
becoming established or increased, or accelerate the time of payment or vesting
of any benefit, under any
-23-
32
Employee Benefit Plan, whether or not some other subsequent action or event
would be required to trigger any of the items specified in, (a) or (b) above.
2.14 INTELLECTUAL PROPERTY
2.14.1 GENERAL
The Company owns or is licensed and has all rights in and to the
following as required to conduct its business as now conducted and as proposed
to be conducted in any written materials furnished by the Company to Xxxxxx.xxx:
(a) all products, tools, computer programs, specifications, source code, object
code, graphics, devices, techniques, algorithms, methods, processes, procedures,
packaging, trade dress, formulae, drawings, designs, improvements, discoveries,
concepts, user interfaces, "look and feel," software, development and other
tools, content, inventions (whether or not patentable or copyrightable and
whether or not reduced to practice), designs, logos, themes, know-how, concepts
and other technology that are now, during the two years prior to the date of
this Agreement have been or are currently proposed in written materials
furnished by the Company to Xxxxxx.xxx to be developed, produced, used, marketed
or sold by the Company (collectively, the "Technology-Related Assets"); and (b)
all intellectual property and other proprietary rights in the Technology-Related
Assets, including, without limitation, all trade names, trademarks, domain
names, service marks, logos, brand names and other identifiers, trade secrets,
copyrights, and domestic and foreign letters patent, and the registrations,
applications, renewals, extensions and continuations (in whole or in part)
thereof, all goodwill associated therewith, and all rights and causes of action
for infringement, misappropriation, misuse, dilution or unfair trade practices
associated therewith.
2.14.2 TECHNOLOGY
Schedule 2.14.2 to the Disclosure Memorandum sets forth a list of all
products and tools developed, produced, used, marketed or sold by the Company
during the two years prior to the date of this Agreement, together with all
prior versions, predecessors or precursors to such products or tools
(collectively, the "Products"). Except for the Third Party Technologies (as
defined in Section 2.14.3), the Company owns all right, title and interest in
and to the following (collectively, the "Technology"), free and clear of all
Encumbrances: (a) the Products, together with any and all codes, techniques,
software tools, formats, designs, user interfaces, content and "look and feel"
related thereto; (b) any and all updates, enhancements, corrections,
modifications, improvements and new releases related to the items set forth in
clause (a) above; (c) any and all technology and work in progress related to the
items set forth in clauses (a) and (b) above; and (d) all inventions,
discoveries, processes, designs, trade secrets, know-how and other confidential
or proprietary information related to the
-24-
33
items set forth in clauses (a), (b) and (c) above. The Technology, excluding the
Third Party Technologies, is sometimes referred to herein as the "Company
Technology."
2.14.3 THIRD PARTY TECHNOLOGY
Schedule 2.14.3 to the Disclosure Memorandum sets forth a list of all
Technology used in the Company's business for which the Company does not own all
right, title and interest (collectively, the "Third Party Technologies"), and
all license agreements or other contracts pursuant to which the Company has the
right to use (in the manner used by the Company, or intended or necessary for
use with the Company Technology) the Third Party Technologies (the "Third Party
Licenses"), indicating, with respect to each of the Third Party Technologies
listed therein, the owner thereof and the Third Party License applicable
thereto. The Company has the lawful right to use (free of any material
restriction not expressly set forth in the Third Party Licenses) (a) all Third
Party Technology that is incorporated in or used in the development or
production of the Company Technology, and (b) all other Third Party Technology
necessary for the conduct of the Company's business as now conducted and as
proposed to be conducted in any written materials furnished by the Company to
Xxxxxx.xxx. All Third Party Licenses are valid, binding and in full force and
effect, the Company and, to the Company's knowledge, each other party thereto
have performed in all material respects their obligations thereunder, and
neither the Company nor, to the Company's knowledge, any other party thereto is
in default thereunder, nor to the Company's knowledge has there occurred any
event or circumstance which with notice or lapse of time or both would
constitute a default or event of default on the part of the Company or, to the
Company's knowledge, any other party thereto or give to any other party thereto
the right to terminate or modify any Third Party License. The Company has not
received notice that any party to any Third Party License intends to cancel,
terminate or refuse to renew (if renewable) such Third Party License or to
exercise or decline to exercise any option or right thereunder.
2.14.4 TRADEMARKS
Schedule 2.14.4 to the Disclosure Memorandum sets forth a list of all
trademarks, trade names, brand names, service marks, logos or other identifiers
for the Products or otherwise used by the Company in its business (the "Marks").
The Company has full legal and beneficial ownership, free and clear of any
Encumbrances, of all rights conferred by use of the Marks in connection with the
Products or otherwise in the Company's business and, as to those Marks that have
been registered in the United States Patent and Trademark Office, by federal
registration of the Marks.
-25-
34
2.14.5 INTELLECTUAL PROPERTY RIGHTS
Schedule 2.14.5 to the Disclosure Memorandum sets forth all patents,
patent applications, copyright registrations (and applications therefor) and
trademark registrations (and applications therefor) (collectively, the "IP
Registrations") associated with the Company Technology and the Marks. The
Company owns all right, title and interest, free and clear of any Encumbrances,
in and to the IP Registrations, together with any other rights in or to any
copyrights (registered or unregistered), rights in the Marks (registered or
unregistered), trade secret rights and other intellectual property rights
(including, without limitation, rights of enforcement) contained or embodied in
the Company Technology and the Marks (collectively, the "IP Rights").
2.14.6 MAINTENANCE OF RIGHTS
Except as set forth on Schedule 2.14.6 to the Disclosure Memorandum, the
Company has not conducted its business, and has not used or enforced (or, to its
knowledge, failed to use or enforce) the IP Rights, in a manner that would
result in the abandonment, cancellation or unenforceability of any item of the
IP Rights or the IP Registrations, and the Company has not taken (or, to its
knowledge, failed to take) any action that would result in the forfeiture or
relinquishment of any IP Rights or IP Registrations, in each case where such
abandonment, cancellation, unenforceability, forfeiture or relinquishment would
have a Company Material Adverse Effect. Except as set forth in Schedule 2.14.6,
the Company has not granted to any third party any rights or permissions to use
any of the Technology or the IP Rights. To the best of the Company's knowledge,
except pursuant to reasonably prudent safeguards, (a) no third party has
received any confidential information relating to the Technology or the IP
Rights, and (b) the Company is not under any contractual or other obligation to
disclose to any third party any Company Technology.
2.14.7 THIRD PARTY INFRINGEMENT
Except as set forth on Schedule 2.14.7 to the Disclosure Memorandum, (a)
the Company has not received any notice or claim (whether written, oral or
otherwise) challenging the Company's ownership or rights in the Company
Technology or the IP Rights or claiming that any other person or entity has any
legal or beneficial ownership with respect thereto; (b) all the IP Rights are
legally valid and enforceable without any material qualification, limitation or
restriction on their use, and the Company has not received any notice or claim
(whether written, oral or otherwise) challenging the validity or enforceability
of any of the IP Rights; and (c) to the Company's knowledge, no other person or
entity is infringing or misappropriating any part of the IP Rights or otherwise
making any unauthorized use of the Company Technology.
-26-
35
2.14.8 INFRINGEMENT BY THE COMPANY
Except as set forth on Schedule 2.14.8 to the Disclosure Memorandum, (a)
the use of any of the Technology in the Company's business does not and will not
infringe, violate or interfere with or constitute an appropriation of any right,
title or interest (including, without limitation, any patent, copyright or trade
secret right) held by any other person or entity, and there have been no claims
made with respect thereto; (b) the use of any of the Marks and other IP Rights
in the Company's business will not infringe, violate or interfere with or
constitute an appropriation of any right, title or interest (including, without
limitation, any patent, copyright, trademark or trade secret right) held by any
other person or entity, and there have been no claims made with respect thereto;
and (c) the Company has not received any notice or claim (whether written, oral
or otherwise) regarding any infringement, misappropriation, misuse, abuse or
other interference with any third party intellectual property or proprietary
rights (including, without limitation, infringement of any patent, copyright,
trademark or trade secret right of any third party) by the Company, the
Technology or the Marks or other IP Rights or claiming that any other entity has
any claim of infringement with respect thereto.
2.14.9 CONFIDENTIALITY
Except as set forth on Schedule 2.14.9 to the Disclosure Memorandum, (a)
the Company has not disclosed any source code regarding the Technology to any
person or entity other than an employee of the Company and under a written
nondisclosure agreement; (b) the Company has at all times maintained and
diligently enforced commercially reasonable procedures to protect all
confidential information relating to the Technology; (c) neither the Company nor
any escrow agent is under any contractual or other obligation to disclose the
source code or any other proprietary information included in or relating to the
Technology; and (d) the Company has not deposited any source code relating to
the Technology into any source code escrows or similar arrangements. If, as
disclosed on Schedule 2.14.9, the Company has deposited any source code to the
Technology into source code escrows or similar arrangements, no event has
occurred that has or could reasonably form the basis for a release of such
source code from such escrows or arrangements.
2.14.10 WARRANTY AGAINST DEFECTS
Except as set forth in Schedule 2.14.10 to the Disclosure Memorandum,
the Technology is free from known material defects and substantially conforms to
the applicable specifications, documentation and samples of such Technology.
-27-
36
2.14.11 DOMAIN NAMES
Schedule 2.14.11 sets forth a list of all Internet domain names used by
the Company in its business (collectively, the "Domain Names"). The Company has,
and after the Closing the Surviving Corporation will have, a valid registration
and all material rights (free of any material restriction) in and to the Domain
Names, including, without limitation, all rights necessary to continue to
conduct the Company's business as it is currently conducted.
2.14.12 YEAR 2000
Each hardware, software and firmware product used by the Company in its
business (collectively, the "Software") will accurately process date data
(including, but not limited to, calculating, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries, including, without
limitation, leap year calculations, without a decrease in the functionality of
the Software. The Software is designed to be used prior to, during and after the
calendar year 2000 A.D. and will operate during each such time period without
error relating to date data, specifically including any error relating to, or
the product of, date data which represents or references different centuries or
more than one century. Without limiting the generality of the foregoing, the
Software (a) will not abnormally end or provide invalid or incorrect results as
a result of date data, specifically including date data which represents or
references different centuries or more than one century; (b) has been designed
to ensure year 2000 compatibility, including, but not limited to, date data
century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values that
reflect the century; and (c) includes "Year 2000 Capabilities," meaning that the
Software (i) will manage and manipulate data involving dates, including single
century formulas and multicentury formulas, and will not cause an abnormally
ending scenario within the application or generate incorrect values or invalid
results involving such dates; (ii) provides that all date-related user interface
functionalities and data fields include the indication of century; and (iii)
provides that all date-related data interface functionalities include the
indication of century.
2.15 CORPORATE BOOKS AND RECORDS
The Company has furnished to Xxxxxx.xxx or its representatives for their
examination true and complete copies of (a) the Restated Certificate of
Incorporation and Bylaws of the Company as currently in effect, including all
amendments thereto, (b) the minute books of the Company, and (c) the stock
transfer books of the Company. Such minutes reflect all meetings of the
Company's stockholders, Board of Directors and any committees thereof since the
Company's inception, and such minutes
-28-
37
accurately reflect in all material respects the events of and actions taken at
such meetings. Such stock transfer books accurately reflect all issuances and
transfers of shares of capital stock of the Company since its inception.
2.16 LICENSES, PERMITS, AUTHORIZATIONS, ETC.
Except as identified on Schedules 2.1 and 2.5 to the Disclosure
Memorandum, the Company has received all currently required governmental
approvals, authorizations, consents, licenses, orders, registrations and permits
of all agencies, whether federal, state, local or foreign, the failure to obtain
of which would have a Company Material Adverse Effect. The Company has not
received any notifications of any asserted present failure by it to have
obtained any such governmental approval, authorization, consent, license, order,
registration or permit, or past and unremedied failure to obtain such items.
2.17 COMPLIANCE WITH LAWS
Except as described on Schedule 2.17 to the Disclosure Memorandum, the
Company is in compliance with all federal, state, local and foreign laws, rules,
regulations, ordinances, decrees and orders applicable to it, to its employees
or to the Real Property and the Personal Property, including, without
limitation, all such laws, rules, regulations, ordinances, decrees and orders
relating to intellectual property protection, antitrust matters, consumer
protection, currency exchange, environmental protection, equal employment
opportunity, health and occupational safety, pension and employee benefit
matters, securities and investor protection matters, labor and employment
matters and trading-with-the-enemy matters, except where the failure of the
Company to so comply would not have a Company Material Adverse Effect. The
Company has not received any notification of any asserted present or past
unremedied failure by the Company to comply with any of such laws, rules,
ordinances, decrees or orders.
2.18 INSURANCE
The Company maintains commercially reasonable levels of (a) insurance on
its property (including leased premises) that insures against loss or damage by
fire or other casualty and (b) insurance against liabilities, claims and risks
of a nature and in such amounts as are normal and customary in the Company's
industry for companies of similar size and financial condition. All insurance
policies of the Company are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date this representation is
made have been paid, and no notice of cancellation or termination has been
received with respect to any such policy or binder. Such policies or binders are
sufficient for compliance with all requirements of
-29-
38
law currently applicable to the Company and of all agreements to which the
Company is a party, will remain in full force and effect through the respective
expiration dates of such policies or binders without the payment of additional
premiums, and will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement. The Company has not
been refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance.
2.19 BROKERS OR FINDERS
Except as set forth on Schedule 2.19 to the Disclosure Memorandum, the
Company has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by or on behalf of the Company, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Merger, this Agreement or any transaction contemplated
hereby.
2.20 ABSENCE OF QUESTIONABLE PAYMENTS
Neither the Company nor any director, officer, agent, employee or other
Person acting on behalf of the Company has used any Company funds for improper
or unlawful contributions, payments, gifts or entertainment, or made any
improper or unlawful expenditures relating to political activity to domestic or
foreign government officials or others. The Company has reasonable financial
controls to prevent such improper or unlawful contributions, payments, gifts,
entertainment or expenditures. Neither the Company nor any current director,
officer, agent, employee or other Person acting on behalf of the Company has
accepted or received any improper or unlawful contributions, payments, gifts or
expenditures. The Company has at all times complied, and is in compliance, in
all respects with the Foreign Corrupt Practices Act and all foreign laws and
regulations relating to prevention of corrupt practices and similar matters.
2.21 BANK ACCOUNTS
Schedule 2.21 to the Disclosure Memorandum sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains safe deposit boxes or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.
-30-
39
2.22 INSIDER INTERESTS
Except as set forth on Schedule 2.22 to the Disclosure Memorandum, no
stockholder or officer or director of the Company has any interest (other than
as a stockholder of the Company) (a) in any Real Property, Personal Property,
Technology or IP Rights used in or directly pertaining to the business of the
Company, including, without limitation, inventions, patents, trademarks or trade
names, or (b) in any agreement, contract, arrangement or obligation relating to
the Company, its present or prospective business or its operations. Except as
set forth on Schedule 2.22, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors,
stockholders, affiliates or any affiliate thereof. The Company and its officers
and directors have no interest, either directly or indirectly, in any entity,
including, without limitation, any corporation, partnership, joint venture,
proprietorship, firm, licensee, business or association (whether as an employee,
officer, director, stockholder, agent, independent contractor, security holder,
creditor, consultant or otherwise) that presently (i) provides any services,
produces and/or sells any products or product lines, or engages in any activity
that is the same, similar to or competitive with any activity or business in
which the Company is now engaged or proposes to engage; (ii) is a supplier,
customer or creditor; or (iii) has any direct or indirect interest in any asset
or property, real or personal, tangible or intangible, of the Company or any
property, real or personal, tangible or intangible, that is necessary or
desirable for the present or currently anticipated future conduct of the
Company's business.
2.23 COMPLIANCE WITH ENVIRONMENTAL LAWS
Neither the Company nor, to the Company's knowledge, any other Person
(including, without limitation, any previous owner, lessee or sublessee) has
treated, stored or disposed of any material amounts of petroleum products,
hazardous waste, hazardous substances, pollutants or contaminants on the Real
Property, or any real property previously owned, leased, subleased or used by
the Company in the operation of its business, in violation of any applicable
foreign, federal, state or local statutes, regulations or ordinances, or common
law, in each case as in existence at or prior to the Closing. To the Company's
knowledge, there have been no releases of any material amounts of petroleum,
petroleum products, hazardous waste, hazardous substances, pollutants or
contaminants on, at or from any assets or properties, including, without
limitation, the Real Property, owned, leased, subleased or used by the Company
in the operation of its business during the time such assets or properties were
owned, leased, subleased or used by the Company (or, to the Company's knowledge,
prior to such time), including, without limitation, any releases of any material
amounts of petroleum, petroleum products, hazardous waste, hazardous substances,
pollutants or contaminants in violation of any law.
-31-
40
2.24 INFORMATION SUPPLIED BY THE COMPANY
None of the information supplied or to be supplied by the Company for
inclusion in the information statement to be delivered to its stockholders in
connection with any written consent by or meeting of such stockholders
(collectively, "Stockholder Materials"), at the date such information was
supplied prior to the time the Company's stockholders were requested to approve
the Merger, contained or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not materially misleading; provided, however, that
the Company makes no representations or warranties regarding information
furnished by or related to Xxxxxx.xxx or the Purchaser.
2.25 FULL DISCLOSURE
No information furnished by the Company to Xxxxxx.xxx or its
representatives in connection with this Agreement (including, but not limited
to, the Financial Statements and all information in the Disclosure Memorandum
and the other Exhibits hereto) or the other Operative Documents contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements so made or information so delivered not
misleading.
2.26 XXXX-XXXXX-XXXXXX
Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxxxx Xxxxxxxxxxx and Xxxxxx Xxxxx
(the "Founders") and the Company, respectively, are each their own ultimate
parent entity as defined under the rules and regulations promulgated under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"Xxxx-Xxxxx-Xxxxxx Act"). Neither the Company nor any Founder is a $10 million
person as defined thereunder. The Washington Post Company is the only
stockholder of the Company whose acquisition of Xxxxxx.xxx Common Stock would
trigger the jurisdictional tests of the Xxxx-Xxxxx-Xxxxxx Act. The Washington
Post Company has advised the Company that they lack the necessary investment
intent and that their purchase of Xxxxxx.xxx Common Stock as part of the Merger
is exempt under 16 C.F.R. 802.9.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
XXXXXX.XXX AND THE PURCHASER
In order to induce the Company to enter into and perform this Agreement
and the other Operative Documents, Xxxxxx.xxx and the Purchaser jointly and
severally represent and warrant to the Company as follows in this Article III:
-32-
41
3.1 ORGANIZATION
Each of Xxxxxx.xxx and the Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of Xxxxxx.xxx and the Purchaser has all requisite corporate power and
authority to own, operate and lease its respective properties and assets, to
carry on its respective business as now conducted and as proposed to be
conducted and to enter into and perform its obligations under this Agreement and
the other applicable Operative Documents to which Xxxxxx.xxx or the Purchaser is
a party, and to consummate the transactions contemplated hereby and thereby.
Each of Xxxxxx.xxx and the Purchaser is duly qualified and licensed as a foreign
corporation to do business and is in good standing in each jurisdiction in which
the character of properties occupied, owned or held under lease by Xxxxxx.xxx or
Purchaser, as applicable, or the nature of the business conducted by Xxxxxx.xxx
or Purchaser, as applicable, makes such qualification necessary, except where
the failure to be so qualified or in good standing would not have a material
adverse effect on the business, properties or prospects of Xxxxxx.xxx (an
"Xxxxxx.xxx Material Adverse Effect"). Each of Xxxxxx.xxx and the Purchaser has
full corporate power and authority to execute, deliver and perform this
Agreement and the other Operative Documents to which it is a party, and to carry
out the transactions contemplated hereby and thereby. All the issued and
outstanding shares of capital stock of the Purchaser are held of record by
Xxxxxx.xxx.
3.2 ENFORCEABILITY
Xxxxxx.xxx and the Purchaser each have full corporate power and
authority to execute, deliver and perform their obligations under this Agreement
and each of the other Operative Documents to which they are a party and each of
the certificates, instruments and documents executed or delivered by them
pursuant to the terms of this Agreement. All corporate action on the part of
Xxxxxx.xxx and the Purchaser and their respective officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other applicable Operative Documents to
which Xxxxxx.xxx or the Purchaser is a party, the consummation of the Merger and
the performance of all of their respective obligations under this Agreement and
the other applicable Operative Documents to which Xxxxxx.xxx or the Purchaser is
a party has been taken or will be taken prior to the Effective Time. This
Agreement has been, and each of the other Operative Documents to which
Xxxxxx.xxx is a party will have been at the Closing, duly executed and delivered
by Xxxxxx.xxx, and this Agreement is, and each of the other Operative Documents
to which Xxxxxx.xxx is a party will be at the Closing, a legal, valid and
binding obligation of Xxxxxx.xxx, enforceable against Xxxxxx.xxx in accordance
with its terms, except as to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of creditors generally, (b) rules of
law governing
-33-
42
specific performance, injunctive relief and other equitable remedies, and (c)
the enforceability of provisions requiring indemnification in connection with
the offering, issuance or sale of securities. This Agreement has been, and each
of the other Operative Documents to which the Purchaser is a party will have
been at the Closing, duly executed and delivered by the Purchaser, and this
Agreement is, and each of the other Operative Documents to which the Purchaser
is a party will be at the Closing, a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except as to the effect, if any, of (i) applicable bankruptcy and other similar
laws affecting the rights of creditors generally, (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies, and (iii)
the enforceability of provisions requiring indemnification in connection with
the offering issuance or sale of securities.
3.3 SECURITIES
The Securities to be issued pursuant to this Agreement have been duly
authorized for issuance, and such Securities, when issued and delivered to the
Company's stockholders pursuant to this Agreement, shall be validly issued,
fully paid and nonassessable.
3.4 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS
The execution, delivery and performance of this Agreement and the other
Operative Documents by the Purchaser and Xxxxxx.xxx, as applicable, and the
consummation by them of the transactions contemplated hereby and thereby will
not (a) constitute a violation (with or without the giving of notice or lapse of
time, or both) of any provision of law applicable to Xxxxxx.xxx or the
Purchaser; (b) require any consent, approval or authorization of any Person,
except compliance with applicable securities laws, the filing of all documents
necessary to consummate the Merger with the Delaware Secretary of State (all
such consents, approvals or authorizations to be duly obtained at or prior to
the Closing); (c) result in a default (with or without the giving of notice or
lapse of time, or both) under, or acceleration or termination of, or the
creation in any party of the right to accelerate, terminate, modify or cancel,
any agreement, lease, note or other restriction, encumbrance, obligation or
liability to which Xxxxxx.xxx or the Purchaser is a party or by which it is
bound or to which any assets of Xxxxxx.xxx or the Purchaser are subject, or (d)
conflict with or result in a breach of or constitute a default under any
provision of the Certificate of Incorporation or Bylaws of Xxxxxx.xxx or the
Purchaser.
-34-
43
3.5 CAPITALIZATION
The authorized capital stock of Xxxxxx.xxx consists of 300,000,000
shares of Xxxxxx.xxx Common Stock of which 49,756,203 shares were issued and
outstanding as of July 24, 1998 and 10,000,000 shares of preferred stock, par
value $0.01 per share, none of which are issued and outstanding. Such issued and
outstanding shares of Xxxxxx.xxx Common Stock are validly issued, fully paid and
nonassessable.
3.6 SEC DOCUMENTS
Xxxxxx.xxx has furnished the stockholders with true and complete copies
of its Annual Report on Form 10-K for the fiscal year ending December 31, 1997
(the "Form 10-K"), its Quarterly Report on Form 10-Q for the fiscal quarter
ending March 31, 1998, all Form 8-Ks filed after the date of the Form 10-K, and
its Proxy Statement relating to its 1998 Annual Meeting of Stockholders on May
28, 1998 (collectively, the "SEC Documents"). As of their respective filing
dates, each of the SEC Documents complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
3.7 ABSENCE OF CERTAIN CHANGES
Since the March 31, 1998 financial statements included in the SEC
Documents, there has not been any change which by itself or in conjunction with
all other such changes, has had or could reasonably be expected to have an
Xxxxxx.xxx Material Adverse Effect, except as disclosed in the SEC Documents to
the date of this Agreement.
3.8 INFORMATION SUPPLIED BY XXXXXX.XXX
None of the information supplied or to be supplied by Xxxxxx.xxx for
inclusion in the Stockholder Materials, including the SEC Documents, at the date
such information was supplied prior to the time the stockholders of the Company
were requested to approve the Merger at either a special meeting of stockholders
or by executing a written consent, contained or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not materially
misleading; provided, however, that Xxxxxx.xxx makes no representations or
warranties regarding information furnished by or related to the Company.
-35-
44
3.9 FULL DISCLOSURE
No information furnished by Xxxxxx.xxx or the Purchaser to the Company
or its representatives in connection with this Agreement or the other Operative
Documents contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements so made or information
so delivered not misleading.
ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX.XXX AND THE
PURCHASER
The obligations of Xxxxxx.xxx and the Purchaser to perform and observe
the covenants, agreements and conditions hereof to be performed and observed by
them at or before the Closing shall be subject to the satisfaction of the
following conditions, which may be expressly waived only in writing signed by
Xxxxxx.xxx:
4.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained herein
(including applicable Exhibits or Schedules to the Disclosure Memorandum) and in
the other Operative Documents shall have been true and correct in all material
respects when made and, except (a) for changes contemplated by this Agreement
and the other Operative Documents and (b) to the extent that such
representations and warranties speak as of an earlier date, shall be true and
correct in all material respects as of the Closing Date as though made on that
date.
4.2 PERFORMANCE OF AGREEMENTS
The Company shall have performed in all material respects all
obligations and agreements and complied with all covenants contained in this
Agreement or any other Operative Document to be performed and complied with by
them at or prior to the Closing.
4.3 OPINION OF COUNSEL FOR THE COMPANY
Xxxxxx.xxx shall have received the opinion letter of Fenwick & West LLP,
counsel for the Company, dated the Closing Date, substantially in the form
attached hereto as Exhibit 4.3.
4.4 OPINION OF PATENT COUNSEL FOR THE COMPANY
Xxxxxx.xxx shall have received the opinion letter, dated the Closing
Date, of Xxxxxxxx and Xxxxxxxx and Crew LLP, patent counsel for the Company, in
form
-36-
45
reasonably satisfactory to Xxxxxx.xxx, with respect to those matters identified
and set forth on Exhibit 4.4 hereto. In addition, copies of all assignments of
patents necessary to vest in the Company the rights described in the patents
shall have been delivered to Xxxxxx.xxx.
4.5 COMPLIANCE CERTIFICATE
Xxxxxx.xxx shall have received a certificate of the President and the
Chief Financial Officer of the Company, dated the Closing Date, in form and
substance satisfactory to Xxxxxx.xxx, certifying that the conditions to the
obligations of Xxxxxx.xxx and the Purchaser in Sections 4.1, 4.2 and 4.6 thereof
have been fulfilled.
4.6 MATERIAL ADVERSE CHANGE
Since the date of this Agreement and through the Closing, there shall
not have occurred any change in the business, properties or prospects of the
Company that would have a Company Material Adverse Effect, except for such
changes occurring as a result of the execution or announcement of this
Agreement.
4.7 APPROVALS AND CONSENTS
All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby,
or for the continued operation of the Company, shall have been obtained, and all
waiting periods specified by law shall have passed. All other consents,
approvals and notices referred to in this Agreement shall have been obtained or
delivered.
4.8 PROCEEDINGS AND DOCUMENTS; SECRETARY'S CERTIFICATE
All corporate and other proceedings in connection with the transactions
contemplated hereby and by the other Operative Documents, and all documents and
instruments incident to such transactions, shall have been approved by
Xxxxxx.xxx's counsel, and Xxxxxx.xxx shall have received a certificate of the
Secretary of the Company, in form and substance satisfactory to Xxxxxx.xxx, as
to the authenticity and effectiveness of the actions of the Board of Directors
and stockholders of the Company authorizing the Merger and the transactions
contemplated by this Agreement and the other Operative Documents.
-37-
46
4.9 NONFOREIGN AFFIDAVIT
Xxxxxx.xxx shall have received from the Company, pursuant to Section
1445 of the Code, a Foreign Investment in Real Property Tax Act Affidavit
substantially in the form attached hereto as Exhibit 4.9.
4.10 COMPLIANCE WITH LAWS
The consummation of the transactions contemplated by this Agreement and
the other Operative Documents shall be legally permitted by all laws and
regulations to which Xxxxxx.xxx or the Company is subject.
4.11 STOCKHOLDER APPROVAL
The principal terms of this Agreement shall have been approved by the
holders of not less than 90% of each class of Company Capital Stock.
4.12 LEGAL PROCEEDINGS
No order of any court or administrative agency shall be in effect which
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened which would enjoin, restrain,
condition or prevent consummation of this Agreement or any other Operative
Document.
4.13 ESCROW AGREEMENT
A representative of the Company's stockholders, on behalf of the
Company's stockholders, shall have executed and delivered the Escrow Agreement.
4.14 EMPLOYMENT AND NONCOMPETITION ARRANGEMENTS
Each of the Founders shall have accepted an oral offer of employment
with Xxxxxx.xxx and the Founders shall have executed the Xxxxxx.xxx standard
form of Confidentiality, Noncompetition and Invention Assignment Agreement
substantially in the form attached hereto as Exhibit 4.14.
4.15 INVESTOR RIGHTS AGREEMENT
The holders of not less than 90% of each class of Company Capital Stock
shall have executed the Investor Rights Agreement.
-38-
47
4.16 AFFILIATE LETTERS
The Company shall have delivered or caused to be delivered to Xxxxxx.xxx
an Affiliate Letter substantially in the form attached hereto as Exhibit 4.16
from each of those Persons who were, on the date on which the requisite number
of consents has been obtained to approve the Merger, "affiliates" of the Company
within the meaning of Rule 145 of the rules and regulations promulgated under
the Securities Act.
4.17 TERMINATION OF CERTAIN AGREEMENTS
Any and all rights of refusal, co-sale rights and registration rights
(other than pursuant hereto) for the benefit of the holders of Company Capital
Stock, if any, set forth in the Disclosure Memorandum shall have been
terminated.
4.18 EXERCISE OF WARRANTS
Any and all Warrants shall have been exercised or converted, as the case
may be, for shares of Company Capital Stock immediately prior to the Effective
Time.
4.19 REPURCHASE AGREEMENTS
Each of the Founders shall have amended the vesting provisions of their
respective repurchase agreements with the Company with respect to such person's
shares of Company Common Stock to (a) eliminate accelerated vesting in the event
of a move more than 30 miles from the Company's headquarters, (b) extend vesting
for an additional one-year period and (c) provide for accelerated vesting in the
event of termination without cause.
4.20 OTHER APPROVALS
The Company shall have delivered or caused to be delivered to Xxxxxx.xxx
appropriate confidentiality, nondisclosure, and assignment of inventions
agreements, in form reasonably satisfactory to Xxxxxx.xxx from (a) Microland
Limited and (b) Xxxxxx Xxxxx. In addition, the Company shall have repaid in full
any amounts owing to Silicon Valley Bank and terminated any and all agreements
with same.
ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by them at or
before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by the Company.
-39-
48
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Xxxxxx.xxx and the Purchaser
contained herein and in the other Operative Documents shall have been true and
correct when made and, except for (a) changes contemplated by this Agreement and
the other Operative Documents and (b) to the extent that such representations
and warranties speak as of an earlier date, shall be true and correct as of the
Closing Date as though made on that date.
5.2 PERFORMANCE OF AGREEMENTS
Xxxxxx.xxx and the Purchaser shall have performed all obligations and
agreements and complied with all covenants contained in this Agreement or any
other Operative Document to be performed and complied with by them at or prior
to the Closing.
5.3 OPINION OF COUNSEL
The Company shall have received the opinion letter of Xxxxxxx Coie LLP,
counsel for Xxxxxx.xxx and the Purchaser, dated the Closing Date, substantially
in the form attached hereto as Exhibit 5.3.
5.4 COMPLIANCE CERTIFICATE
The Company shall have received a certificate of an officer of
Xxxxxx.xxx, dated the Closing Date, substantially in form and substance
satisfactory to the Company, certifying that the conditions to the obligations
of the Company have been fulfilled.
5.5 LEGAL PROCEEDINGS
No order of any court or administrative agency shall be in effect which
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened which would enjoin, restrain,
condition or prevent consummation of this Agreement or any other Operative
Document.
5.6 MATERIAL ADVERSE CHANGE
Since the date of this Agreement and through the Closing, there shall
not have occurred any change in the business, properties or prospects of
Xxxxxx.xxx that would have an Xxxxxx.xxx Material Adverse Effect, except for
such changes occurring as a direct result of the execution or announcement of
this Agreement.
-40-
49
Changes in the trading prices of Xxxxxx.xxx Common Stock shall not be deemed to
have an Xxxxxx.xxx Material Adverse Effect under this Agreement.
5.7 APPROVALS AND CONSENTS
All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby
or for the continued operation of the Company, shall have been obtained, and all
waiting periods specified by law shall have passed. All other consents,
approvals and notices referred to in this Agreement shall have been obtained or
delivered.
5.8 COMPLIANCE WITH LAWS
The consummation of the transactions contemplated by this Agreement and
the other Operative Documents shall be legally permitted by all laws and
regulations to which Xxxxxx.xxx or the Company is subject.
5.9 STOCKHOLDER APPROVALS
The principal terms of this Agreement shall have been approved by the
holders of not less than 90% of each class of Company Capital Stock.
5.10 ESCROW AGREEMENT
Xxxxxx.xxx and the Escrow Agent shall have executed the Escrow
Agreement.
5.11 INVESTOR RIGHTS AGREEMENT
Xxxxxx.xxx shall have executed the Investor Rights Agreement.
5.12 OPTION LETTERS
Xxxxxx.xxx shall have executed an option letter with each of the
Founders substantially in the form attached hereto as Exhibits 5.12.
ARTICLE VI - COVENANTS
Between the date of this Agreement and the Effective Time, the parties
covenant and agree as set forth in this Article VI.
-41-
50
6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER
Unless Xxxxxx.xxx shall otherwise agree in writing, the business of the
Company shall be conducted in and only in, and the Company shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice and in accordance with applicable law; and the Company shall
use its best efforts to preserve intact the business organization of the
Company, to keep available the services of the current officers, employees and
consultants of the Company and to preserve the current relationships of the
Company with, and the goodwill of, customers, suppliers and other Persons with
which the Company has significant business relations. By way of amplification
and not limitation, except as otherwise contemplated by this Agreement, the
Company shall not, between the date of this Agreement and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Xxxxxx.xxx:
(a) amend or otherwise change its Restated Certificate of
Incorporation or Bylaws;
(b) except for the issuance of shares of Company Capital Stock
upon the exercise or conversion of currently outstanding Options, Warrants,
Company Series A Stock, Company Series B Stock, Company Series C Stock or
Convertible Notes, issue, sell, contract to issue or sell, pledge, dispose of,
grant, encumber or authorize the issuance, sale, pledge, disposition, grant or
Encumbrance of (i) any shares of capital stock of any class of the Company, or
any options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest) of the Company, or (ii)
any assets of the Company, except in the ordinary course of business and in a
manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock or other securities, property or otherwise,
with respect to any of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary
-42-
51
course of business and consistent with past practice; (iii) enter into any
contract or agreement other than in the ordinary course of business, consistent
with past practice; (iv) authorize any single capital expenditure which is in
excess of $25,000 or capital expenditures which are, in the aggregate, in excess
of $100,000 for the Company taken as a whole; (v) enter into any agreement in
which the obligation of the Company exceeds $25,000 or which shall not terminate
or be subject to termination for convenience within 180 days following
execution; (vi) license any Technology or IP Rights other than in the ordinary
course of business, consistent with past practice; or (vii) enter into or amend
any contract, agreement, commitment or arrangement with respect to any matter
set forth in this subsection (e);
(f) enter into or amend any employment, consulting or agency
agreement, or increase the compensation payable or to become payable to its
officers, employees, agents or consultants, or grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director, officer or other employee of the Company, or establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance, benefit or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee;
(g) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with respect
to accounting methods, policies or procedures (including, without limitation,
procedures with respect to the payment of accounts payable and collection of
accounts receivable);
(h) make any tax election or settle or compromise any federal,
state, local or foreign income tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice;
(j) take any action that would or is reasonably likely to result
in any of the representations and warranties of the Company set forth in this
Agreement being untrue in any material respect, or in any covenant of the
Company set forth in this Agreement being breached, or in any of the conditions
to the Merger specified in Article IV hereof not being satisfied; or
(k) agree to do any of the foregoing.
-43-
52
6.2 ACCESS TO INFORMATION; CONFIDENTIALITY
From the date hereof to the Effective Time, the Company shall, and shall
cause the officers, directors, employees and agents of the Company to, afford
the officers, employees and agents of Xxxxxx.xxx access at all reasonable times
to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and shall furnish Xxxxxx.xxx with
all financial, operating and other data and information as Xxxxxx.xxx, through
its officers, employees or agents, may reasonably request. From the date hereof
until the Effective Time, the Company shall provide Xxxxxx.xxx with monthly and
other financial statements of the Company as they become available internally at
the Company, all of which financial statements shall fairly present the
financial position and results of operations of the Company as of the dates and
for the periods therein specified. No investigation pursuant to this Section 6.2
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto. The parties
shall continue to comply with and to perform their respective obligations under
the Mutual Nondisclosure Agreement between Xxxxxx.xxx and the Company entered
into as of July 16, 1998, other than with respect to Section 9 thereof.
6.3 NO ALTERNATIVE TRANSACTIONS
Unless this Agreement shall have been terminated in accordance with its
terms, the Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any Person relating to any acquisition or purchase of
all or (other than in the ordinary course of business) any material portion of
the assets of, or any equity interest in, the Company or any business
combination with the Company or participate in any negotiations regarding, or
furnish to any other Person any information with respect to, or otherwise
cooperate or negotiate in any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any other Person to do or seek any of the
foregoing. The Company shall notify Xxxxxx.xxx promptly if any such proposal or
offer, or any inquiry or contact with any Person with respect thereto, is made
and shall, in any such notice to Xxxxxx.xxx, indicate in reasonable detail the
identity of the Person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact. The Company
agrees not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party.
6.4 NOTIFICATION OF CERTAIN MATTERS
Each party shall give prompt notice to the other parties of (a) the
occurrence or nonoccurrence of any event which would be likely to cause any
representation or
-44-
53
warranty made by such party contained in this Agreement to be untrue or
inaccurate in any material respect and (b) any material failure by such party to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.4 shall not limit or otherwise affect the remedies
available to the parties hereunder.
6.5 FURTHER ACTION; REASONABLE BEST EFFORTS
Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use its best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated hereby, including, without limitation, using its
best efforts to obtain all waivers, licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company as are necessary for the consummation of
the transactions contemplated hereby and to fulfill the conditions to the
Merger. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, each party
to this Agreement shall use its best efforts to take all such action. After the
Closing Date, each party hereto, at the request of and without any further cost
or expense to the other parties, will take any further actions necessary or
desirable to carry out the purposes of this Agreement or any other Operative
Document, to vest in the Surviving Corporation full title to all properties,
assets and rights of the Company and to effect the issuance of the Xxxxxx.xxx
Common Stock to the stockholders of the Company pursuant to the terms and
conditions hereof.
6.6 STOCKHOLDER APPROVAL
The Company will seek the approval at a special meeting of stockholders
or the written consent of the stockholders of the Company at the earliest
practicable date approving this Agreement, the other Operative Documents, the
Merger and related matters, which approval will be recommended by the Board of
Directors and management of the Company.
6.7 PROXY STATEMENT
The Company will send the Stockholder Materials to the stockholders of
the Company, in a timely manner, for the purposes of considering approval of the
Merger, either at a special meeting of stockholders or by their executing a
written consent. The Company and Xxxxxx.xxx each will promptly provide all
information relating to its respective business or operations necessary for
inclusion in the Stockholder Materials
-45-
54
to satisfy all requirements of applicable state and federal securities laws. The
Company and Xxxxxx.xxx each shall be solely responsible for any statement,
information or omission in the Stockholder Materials relating to it or its
affiliates based on written information furnished by it. The Company and
Xxxxxx.xxx will not provide or publish to the stockholders of the Company any
material concerning them or their affiliates that violates the Securities Act or
the Exchange Act with respect to the transactions contemplated hereby.
6.8 LISTING APPLICATION
Xxxxxx.xxx shall promptly prepare and submit to the Nasdaq National
Market a listing application covering the shares of Xxxxxx.xxx Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to the
Effective Time, approval for the listing of such shares of Xxxxxx.xxx Common
Stock, subject to official notice of issuance.
6.9 DISSENTING SHARES
Prior to the Closing Date, the Company shall furnish Xxxxxx.xxx with the
name and address of each stockholder of the Company who, prior to the Closing,
has requested appraisal rights pursuant to Delaware Law or the California Code
(the "Dissenting Stockholder") and the number of Dissenting Shares owned by such
Dissenting Stockholder.
6.10 PUBLICITY
No party hereto shall issue any press release or otherwise make any
statements to any third party with respect to this Agreement or the transactions
contemplated hereby until the issuance by Xxxxxx.xxx and the Company of a joint
press release announcing the transactions contemplated hereby which shall be
prepared by them cooperatively.
6.11 CONVERSION OF STANDARDIZED EMPLOYEE BENEFIT PLANS
The Company shall convert any "standardized" prototype Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code to a
"non-standardized" prototype plan, with terms that are substantially similar to
those of the predecessor "standardized" prototype Employee Benefit Plan,
effective as of the date prior to Closing.
-46-
55
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any approval of this Agreement
by the stockholders of the Company):
(a) by written consent of both Xxxxxx.xxx and the Company;
(b) by either the Company or Xxxxxx.xxx, if the Merger has not
been consummated by September 30, 1998; provided, however, that the right to
terminate this Agreement under this subsection (b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date;
(c) by either the Company or Xxxxxx.xxx, if there shall be any
law or regulation that makes consummation of the Merger illegal or if any
judgment, injunction, order or decree enjoining Xxxxxx.xxx, the Purchaser or the
Company from consummating the Merger is entered and such judgment, injunction,
order or decree shall become final and nonappealable; provided, however, that
the party seeking to terminate this Agreement pursuant to this subsection (c)
shall have used all reasonable efforts to remove such judgment, injunction,
order or decree;
(d) by the Company, in the event of a material breach by
Xxxxxx.xxx of any representation, warranty or agreement contained herein which
has not been cured or is not curable by September 30, 1998; or
(e) by Xxxxxx.xxx, in the event of a material breach by the
Company of any representation, warranty or agreement contained herein which has
not been cured or is not curable by September 30, 1998.
7.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement pursuant to Section
7.1 hereof, there shall be no further obligation on the part of any party
hereto, except that nothing herein shall relieve any party from liability for
any willful breach hereof.
7.3 AMENDMENT
This Agreement may be amended by the parties hereto at any time before
or after approval of the Company's stockholders; but after such approval,
however, no
-47-
56
amendment will be made which by applicable law requires the further approval of
the Company's stockholders without obtaining such further approval.
7.4 WAIVER
At any time prior to the Effective Time, any party hereto may (a) extend
the time for the performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
or parties to be bound thereby.
ARTICLE VIII - SURVIVAL AND INDEMNIFICATION
8.1 SURVIVAL
All representations and warranties contained in this Agreement or in the
other Operative Documents or in any certificate delivered pursuant hereto or
thereto shall survive the Closing for a period of one year, and shall not be
deemed waived or otherwise affected by any investigation made or any knowledge
acquired with respect thereto, or by any notice delivered pursuant to Section
6.4 hereof; provided, however, that any claim based on fraud shall survive the
Closing indefinitely. The covenants and agreements contained in this Agreement
or in the other Operative Documents shall survive the Closing and shall continue
until all obligations with respect thereto shall have been performed or
satisfied or shall have been terminated in accordance with their terms.
8.2 INDEMNIFICATION BY THE COMPANY AND HOLDERS OF COMPANY CAPITAL STOCK
(a) Subject to the limitations set forth in this Article VIII, up to and
until the Closing, the Company shall indemnify and hold Xxxxxx.xxx and its
officers, directors and affiliates (the "Xxxxxx.xxx Indemnified Parties")
harmless from and against, and shall reimburse the Xxxxxx.xxx Indemnified
Parties for, any and all losses, damages, debts, liabilities, obligations,
judgments, orders, awards, writs, injunctions, decrees, fines, penalties, taxes,
costs or expenses (including, but not limited to, any reasonable legal or
accounting fees or expenses and any Taxes or other costs or damages arising
under, caused by or related to Section 280G of the Code or any comparable
provision of state, local or foreign law) ("Losses") arising out of (i) any
inaccuracy in, or misrepresentation or breach of, any representation or warranty
made by the Company in this Agreement or in any other Operative Document or in
any certificate delivered pursuant hereto or thereto and (ii) any failure by the
Company to
-48-
57
perform or comply, in whole or in part, with any covenant or agreement in this
Agreement or in any other Operative Document.
(b) Subject to the limitations set forth in this Article VIII, from and
after the Closing, the holders of Company Capital Stock immediately prior to the
Effective Time shall indemnify and hold the Xxxxxx.xxx Indemnified Parties
harmless from and against, and shall reimburse the Xxxxxx.xxx Indemnified
Parties for, any and all Losses arising out of (i) any inaccuracy in, or
misrepresentation or breach of, any representation or warranty made by the
Company in this Agreement or in any other Operative Document or in any
certificate delivered pursuant hereto or thereto and (ii) any failure by the
Company to perform or comply, in whole or in part, with any covenant or
agreement in this Agreement or in any other Operative Document.
8.3 INDEMNIFICATION BY XXXXXX.XXX
Xxxxxx.xxx shall indemnify and hold the Company and its officers,
directors and affiliates and the holders of Company Capital Stock (the "Company
Indemnified Parties" and, together with the Xxxxxx.xxx Indemnified Parties, the
"Indemnified Parties") harmless from and against, and shall reimburse the
Company Indemnified Parties for, any and all Losses arising out of or in
connection with (a) any inaccuracy in, or misrepresentation or breach of any
representation or warranty made by Xxxxxx.xxx or the Purchaser in this Agreement
or in any other Operative Document or in any certificate delivered pursuant
hereto or thereto and (b) any failure by Xxxxxx.xxx or the Purchaser to perform
or comply, in whole or in part, with any covenant or agreement in this Agreement
or in any other Operative Document.
8.4 THRESHOLD AND LIMITATIONS
(a) No Indemnified Party shall be entitled to receive any
indemnification payment with respect to any claims for indemnification under
this Article VIII ("Claims") until the aggregate Losses for which such
Indemnified Parties would be otherwise entitled to receive indemnification
exceed $100,000 (the "Threshold"); provided, however, that once such aggregate
Losses exceed the Threshold, such Indemnified Parties shall be entitled to
indemnification for the aggregate amount of all Losses without regard to the
Threshold.
(b) Except for liability based on a claim of fraud, the aggregate
liability for Losses incurred by any and all indemnified parties (i) for any
holders of Company Capital Stock immediately prior to the Effective Time shall
be limited to such holder's Escrow Shares and (ii) for any other Indemnified
Party shall be limited to a dollar amount equal to the product obtained by
multiplying the Escrow Shares by the average of the closing prices of Xxxxxx.xxx
Common Stock as reported on the Nasdaq
-49-
58
National Market for the three consecutive trading days immediately preceding the
Closing Date.
(c) In seeking indemnification for Losses under Section 8.2 hereof, the
Xxxxxx.xxx Indemnified Parties shall first exercise their remedies with respect
to the Escrow Shares. Except for liability based on a claim of fraud; (i) no
holder of Company Capital Stock immediately prior to the Effective Time shall
have any liability to an Xxxxxx.xxx Indemnified Party under this Agreement,
except to the extent of such holder's Escrow Shares deposited under the Escrow
Agreement, and (ii) the remedies set forth in this Article VIII shall be the
exclusive remedies of Xxxxxx.xxx and the other Xxxxxx.xxx Indemnified Parties
against any such holder.
(d) An indemnifying party shall not be obligated to defend and hold
harmless an Indemnified Party, or otherwise be liable to such party, with
respect to any claims made by the Indemnified Party after the expiration of the
applicable time period as set forth in Section 8.1 hereof.
(e) The amount of any payment pursuant to a Claim under this Article
VIII shall be adjusted to reflect the net tax effect of such Claim and any
resulting payments received under this Article VIII (including payments under
this Section 8.4(e)) by the Indemnified Party, and shall further be reduced to
reflect any net insurance proceeds received by the Indemnified Party that arise
out of the Claim for which indemnification is sought.
8.5 PROCEDURE FOR INDEMNIFICATION
(a) An Indemnified Party shall notify the indemnifying party in writing
reasonably promptly after the assertion against the Indemnified Party of any
claim by a third party (a "Third Party Claim") in respect of which the
Indemnified Party intends to base a Claim for indemnification hereunder, but the
failure or delay to so notify the indemnifying party shall not relieve it of any
obligation or liability that it may have to the Indemnified Party except to the
extent that the indemnifying party demonstrates that its ability to defend or
resolve such Third Party Claim is adversely affected thereby.
(b) (i) Subject to the rights of or duties to any insurer or other third
party having potential liability therefor, the indemnifying party shall have the
right, upon written notice given to the Indemnified Party within 30 days after
receipt of the notice from the Indemnified Party of any Third Party Claim, to
assume the defense or handling of such Third Party Claim, at the indemnifying
party's sole expense, in which case the provisions of Section 8.5(b)(ii) hereof
shall govern.
-50-
59
(ii) The indemnifying party shall select counsel reasonably
acceptable to the Indemnified Party in connection with conducting the defense or
handling of such Third Party Claim, and the indemnifying party shall defend or
handle the same in consultation with the Indemnified Party and shall keep the
Indemnified Party timely apprised of the status of such Third Party Claim. The
indemnifying party shall not, without the prior written consent of the
Indemnified Party, agree to a settlement of any Third Party Claim, unless (A)
the settlement provides an unconditional release and discharge of the
Indemnified Party and the Indemnified Party is reasonably satisfied with such
discharge and release and (B) the Indemnified Party shall not have reasonably
objected to any such settlement on the ground that the circumstances surrounding
the settlement could result in an adverse impact on the business, properties or
prospects of the Indemnified Party. The Indemnified Party shall cooperate with
the indemnifying party and shall be entitled to participate in the defense or
handling of such Third Party Claim with its own counsel and at its own expense.
(c) (i) If the indemnifying party does not give written notice to the
Indemnified Party within 30 days after receipt of the notice from the
Indemnified Party of any Third Party Claim of the indemnifying party's election
to assume the defense or handling of such Third Party Claim, the provisions of
Section 8.5(c)(ii) hereof shall govern.
(ii) The Indemnified Party may, at the indemnifying party's
expense (which shall be paid from time to time by the indemnifying party as such
expenses are incurred by the Indemnified Party), select counsel in connection
with conducting the defense or handling of such Third Party Claim and defend or
handle such Third Party Claim in such manner as it may deem appropriate;
provided, however, that the Indemnified Party shall keep the indemnifying party
timely apprised of the status of such Third Party Claim and shall not settle
such Third Party Claim without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld. If the Indemnified
Party defends or handles such Third Party Claim, the indemnifying party shall
cooperate with the Indemnified Party and shall be entitled to participate in the
defense or handling of such Third Party Claim with its own counsel and at its
own expense.
(d) If the Indemnified Party intends to seek indemnification hereunder,
other than for a Third Party Claim, then it shall notify the indemnifying party
in writing 90 days after its discovery of facts upon which it intends to base
its Claim for indemnification hereunder, but the failure or delay to so notify
the indemnifying party shall not relieve the indemnifying party of any
obligation or liability that the indemnifying party may have to the Indemnified
Party except to the extent that the indemnifying party demonstrates that the
indemnifying party's ability to defend or resolve such Claim is adversely
affected thereby.
-51-
60
(e) The Indemnified Party may notify the indemnifying party of a Claim
even though the amount thereof plus the amount of other Claims previously
notified by the Indemnified Party aggregate less than the Threshold.
(f) At the Closing, the Escrow Shares shall be deposited in the escrow
account to satisfy potential claims by the Xxxxxx.xxx Indemnified Parties under
this Article VIII.
8.6 REMEDIES
Except as otherwise provided, the indemnification provisions of this
Article VIII are the sole and exclusive remedy of any party to this Agreement
for a breach of any representation, warranty or covenant contained herein.
Notwithstanding the preceding sentence, each of the parties acknowledges and
agrees that the other parties hereto would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the parties
hereto agrees that the other parties hereto shall be entitled to an injunction
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof (including the
indemnification provisions hereof) in any competent court having jurisdiction
over the parties, in addition to any other remedy to which they may be entitled
at law or in equity.
ARTICLE IX - GENERAL
9.1 TAX MATTERS
(a) Xxxxxx.xxx, the Purchaser and the Company shall cooperate, as and to
the extent reasonably requested, in connection with the preparation and filing
of Tax Returns pursuant to this Section 9.1 and any audit, investigation,
litigation or other action with respect to Taxes that may be instituted after
the Closing. Xxxxxx.xxx, the Purchaser and the Company shall use commercially
reasonable efforts to retain all books and records with respect to Tax matters
pertinent to the Company relating to any Tax period beginning before the Closing
Date until the expiration of the applicable statute of limitations (and, to the
extent notified by Xxxxxx.xxx, the Purchaser or the Company, any extensions
thereof) and shall provide any such records to the other party as may be
reasonably requested.
(b) Except as otherwise contained in Section 1.9(b) or the Xxxxxx.xxx
and Purchaser Tax Certificates, neither Xxxxxx.xxx nor the Purchaser makes any
representation or warranty with respect to, and expressly disclaims any
responsibility for, any Tax consequences to the Company or its stockholders
arising out of the
-52-
61
structure or terms of this Agreement (including, without limitation, the
qualification or failure of the purchase and sale of the shares to qualify as a
reorganization under Section 368 of the Code), or the negotiation or
consummation hereof. The Company and its stockholders have consulted with its,
his or her own tax advisor in such matters and is solely responsible for any
such Tax consequences.
9.2 EXPENSES
Regardless of whether the transactions contemplated by this Agreement
are consummated, each party shall pay its own fees and expenses incident to the
negotiation, preparation and execution of this Agreement and the other Operative
Documents (including legal and accounting fees and expenses); provided, however,
that, should any action be brought hereunder, the attorneys' fees and expenses
of the prevailing party shall be paid by the other party to such action; and
provided, further, that the professional fees incurred by the Company in excess
of $250,000 of legal and accounting fees shall be paid by the stockholders of
the Company.
9.3 NOTICES
Any notice or demand desired or required to be given hereunder shall be
in writing given by personal delivery, certified or registered mail, confirmed
facsimile transmission, or overnight courier service, in each case addressed as
respectively set forth below or to such other address as any party shall have
previously designated by such a notice. The effective date of any notice or
request shall be the date of personal delivery, four days after the date of
mailing by certified or registered mail, the date on which successful facsimile
transmission is confirmed or the date undertaken for delivery by a reputable
overnight courier service, as the case may be, in each case properly addressed
as provided herein and with all charges prepaid.
TO XXXXXX.XXX OR THE PURCHASER:
Xxxxxx.xxx, Inc.
Fourth Floor, 0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Treasurer
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
-53-
62
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
TO THE COMPANY:
Junglee Corp.
0000 X. Xxxx Xxx.
Xxxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
9.4 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
9.5 ENTIRE AGREEMENT
This Agreement, the Mutual Nondisclosure Agreement and the other
Operative Documents constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and thereof.
9.6 ASSIGNMENT
This Agreement shall not be assigned by operation of law or otherwise.
-54-
63
9.7 PARTIES IN INTEREST
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
9.8 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed in that state. All actions and proceedings arising out of or relating
to this Agreement shall be heard and determined in any Delaware state or federal
court thereof.
9.9 HEADINGS
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.10 COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. To expedite the process of entering into this Agreement,
the parties acknowledge that Transmitted Copies of this Agreement will be
equivalent to original documents until such time as original documents are
completely executed and delivered. "Transmitted Copies" will mean copies that
are reproduced or transmitted via photocopy, facsimile or other process of
complete and accurate reproduction and transmission.
9.11 WAIVER OF JURY TRIAL
Xxxxxx.xxx, the Company and the Purchaser hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Agreement or
the actions of such parties in the negotiation, administration, performance and
enforcement thereof.
-55-
64
IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
XXXXXX.XXX, INC.
By Xxxxxxx X. Xxxxx
__________________________________
Its Chief Executive Officer
_________________________________
AJ ACQUISITION, INC.
By Xxxxx Xxxxxxx
__________________________________
Its Treasurer
_________________________________
JUNGLEE CORP.
Kavitark R. Shriram
By__________________________________
President
Its_________________________________
