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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
OBLIQUE, INC.
and
ASANTE TECHNOLOGIES, INC.
Dated as of June 13, 2003
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.................................................................................1
SECTION 1.1. The Merger........................................................................1
SECTION 1.2. Effective Time....................................................................2
SECTION 1.3. Effect of the Merger..............................................................2
SECTION 1.4. Certificate of Incorporation, Bylaws..............................................2
SECTION 1.5. Directors and Officers............................................................2
SECTION 1.6. Effect on Capital Stock...........................................................2
SECTION 1.7. Exchange of Certificates; Payment of Merger Consideration; Escrow
Agreement.........................................................................3
SECTION 1.8. Stock Transfer Books..............................................................5
SECTION 1.9. No Further Ownership Rights in Company Common Shares..............................5
SECTION 1.10. Lost, Stolen or Destroyed Certificates............................................5
SECTION 1.11. Taking of Necessary Action; Further Action........................................6
SECTION 1.12. Company Stockholders' Meeting.....................................................6
SECTION 1.13. Acquiror Shareholders' Written Consent............................................6
SECTION 1.14. Introduction to Disclosure Schedule...............................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................7
SECTION 2.1. Organization and Qualification; Subsidiaries......................................7
SECTION 2.2. Certificate of Incorporation and Bylaws...........................................7
SECTION 2.3. Capitalization....................................................................8
SECTION 2.4. Authority Relative to this Agreement..............................................8
SECTION 2.5. No Conflict; Required Filings and Consents........................................8
SECTION 2.6. Compliance........................................................................9
SECTION 2.7. SEC Filings; Financial Statements; Books and Records.............................10
SECTION 2.8. Absence of Certain Changes or Events.............................................10
SECTION 2.9. No Undisclosed Liabilities.......................................................11
SECTION 2.10. Absence of Litigation............................................................11
SECTION 2.11. Employee Benefit Plans, Employment Agreements....................................11
SECTION 2.12. Labor Matters....................................................................13
SECTION 2.13. Restrictions on Business Activities..............................................13
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TABLE OF CONTENTS
(continued)
SECTION 2.14. Taxes............................................................................13
SECTION 2.15. Intellectual Property and Website Materials......................................15
SECTION 2.16. RESERVED.........................................................................16
SECTION 2.17. Brokers..........................................................................16
SECTION 2.18. Takeover Statutes................................................................17
SECTION 2.19. Real Property....................................................................17
SECTION 2.20. Insurance........................................................................17
SECTION 2.21. Licenses and Permits.............................................................17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR............................................17
SECTION 3.1. Organization, Power and Authority................................................17
SECTION 3.2. Authority Relative to this Agreement.............................................18
SECTION 3.3. Conflicts and Defaults...........................................................18
SECTION 3.4. Brokers..........................................................................18
SECTION 3.5. Financing........................................................................18
ARTICLE IV ADDITIONAL AGREEMENTS.....................................................................18
SECTION 4.1. Preparation of Proxy Statement...................................................18
SECTION 4.2. Company Information..............................................................19
SECTION 4.3. Acquiror Information.............................................................19
SECTION 4.4. Company Stockholders' Meeting....................................................19
SECTION 4.5. Acquiror Shareholders' Written Consent...........................................19
SECTION 4.6. Commercially Reasonable Efforts..................................................19
SECTION 4.7. Access to Information; Confidentiality...........................................20
SECTION 4.8. Consents; Approvals..............................................................20
SECTION 4.9. Notification of Certain Matters..................................................20
SECTION 4.10. Further Action...................................................................21
SECTION 4.11. Public Announcements.............................................................21
SECTION 4.12. Minimum Level of Current Assets..................................................21
SECTION 4.13. Non-Competition Agreement........................................................21
SECTION 4.14. Employees........................................................................21
SECTION 4.15. On-Site Management Participation.................................................21
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TABLE OF CONTENTS
(continued)
SECTION 4.16. Takeover Statute.................................................................22
SECTION 4.17. Tax Clearance Certificates.......................................................22
SECTION 4.18. Directors' and Officers' Indemnification and Insurance...........................22
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER....................................................23
SECTION 5.1. Conduct of Business by the Company Pending the Merger............................23
SECTION 5.2. No Solicitation..................................................................25
ARTICLE VI CONDITIONS TO THE MERGER..................................................................25
SECTION 6.1. Conditions to Obligation of Each Party to Effect the Merger......................25
SECTION 6.2. Conditions to Obligations of the Acquiror........................................26
SECTION 6.3. Conditions to Obligation of the Company..........................................27
ARTICLE VII TERMINATION...............................................................................27
SECTION 7.1. Termination......................................................................27
SECTION 7.2. Effect of Termination............................................................28
SECTION 7.3. Fees and Expenses................................................................29
ARTICLE VIII INDEMNIFICATION...........................................................................29
SECTION 8.1. Indemnification by the Company...................................................29
SECTION 8.2. Indemnification by the Acquiror..................................................30
SECTION 8.3. Stockholder Representative.......................................................30
SECTION 8.4. Time Limit.......................................................................30
SECTION 8.5. Indemnification Procedure........................................................30
ARTICLE IX GENERAL PROVISIONS........................................................................32
SECTION 9.1. Effectiveness of Representations, Warranties and Agreements; Knowledge,
Etc..............................................................................32
SECTION 9.2. Notices..........................................................................33
SECTION 9.3. Certain Definitions..............................................................34
SECTION 9.4. Amendment........................................................................35
SECTION 9.5. Waiver...........................................................................35
SECTION 9.6. Headings.........................................................................35
SECTION 9.7. Severability.....................................................................36
SECTION 9.8. Entire Agreement.................................................................36
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TABLE OF CONTENTS
(continued)
SECTION 9.9. Assignment; Guarantee of Acquisition Obligations.................................36
SECTION 9.10. Parties in Interest..............................................................36
SECTION 9.11. Failure or Indulgence Not Waiver; Remedies Cumulative............................36
SECTION 9.12. Governing Law; Venue.............................................................36
SECTION 9.13. Counterparts.....................................................................37
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Exhibits
Page
Exhibit A Escrow Agreement
Exhibit B Opinion of Xxxx, Xxxx, Xxxx & Freidenrich, L.L.P.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June
13, 2003, is between Asante Technologies, Inc., a Delaware corporation (the
"Company") and Oblique, Inc., a Texas corporation (the "Acquiror").
WHEREAS, the Board of Directors of the Acquiror has approved the merger
of the Company with and into the Acquiror (the "Merger") upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company (the "Board") (i)
determined that the Merger and the transactions contemplated thereby are fair to
and in the best interests of the Company and its stockholders and (ii) on the
terms and subject to the provisions hereinafter set forth, approved this
Agreement and the transactions contemplated hereby and resolved to recommend the
adoption of this Agreement by the stockholders of the Company.
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company has delivered to the Acquiror a Disclosure Schedule (the
"Company Disclosure Schedule").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company and the Acquiror hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger.
(a) Effective Time. At the Effective Time (as defined below), and
subject to and upon the terms and conditions of this Agreement, the Delaware
General Corporation Law (the "DGCL") and the Texas Business Corporation Act (the
"TBCA"), the Company shall be merged with and into the Acquiror, the separate
corporate existence of the Company shall cease, and the Acquiror shall continue
as the surviving corporation. The Acquiror, as the surviving corporation after
the Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger will take place at the offices of
Xxxxx Day, 0000 Xxxxx Xxxxxxx, Xxxxxx, Xxxxx within 15 calendar days after the
satisfaction or waiver of the conditions set forth in Article VI have occurred
(the "Closing Date"); provided, however, the Closing Date shall be the later of
(i) a date which is on or before 60 calendar days from the date hereof or (ii)
the date which is immediately following the Special Meeting, unless (i) extended
by the Acquiror, at its option, for up to 30 days or (ii) another date, time or
place is mutually agreed to in writing by the parties hereto.
SECTION 1.2. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing (i) a certificate of
merger as contemplated by the DGCL (the "Certificate of Merger"), together with
any required related certificates, with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL and (ii) articles of merger as contemplated by
the TBCA (the "Articles of Merger"), together with any required related
certificates, with the Secretary of State of the State of Texas, in such form as
required by, and executed in accordance with the relevant provisions of, the
TBCA, whereupon the Merger will become effective in accordance with the
applicable provisions of the DGCL and the TBCA (the "Effective Time").
SECTION 1.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger,
the applicable provisions of the DGCL, the Articles of Merger and the applicable
provisions of the TBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges and
powers of the Company and the Acquiror shall vest in the Surviving Corporation,
and all debts, liabilities, obligations and duties of the Company and the
Acquiror shall become the debts, liabilities, obligations and duties of the
Surviving Corporation.
SECTION 1.4.Certificate of Incorporation, Bylaws.
(a) Articles of Incorporation. The Articles of Incorporation of the
Acquiror, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation.
(b) Bylaws. The Bylaws of the Acquiror, as in effect immediately prior
to the Effective Time, shall be the Bylaws of the Surviving Corporation.
SECTION 1.5. Directors and Officers. The directors and officers of the
Acquiror immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until earlier death, resignation or
removal in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation.
SECTION 1.6. Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the Acquiror, the Company or
the stockholders of the Company:
(a) Conversion of Securities. Each share of common stock, par value
$0.001 per share of the Company (each a "Company Common Share" and collectively,
the "Company Common Shares") issued and outstanding immediately prior to the
Effective Time (excluding any Company Common Shares to be canceled pursuant to
Section 1.6(b)) shall be converted into the right to receive a pro rata share of
$5,120,000 less the amount of any adjustment, if any, required by Section 4.12
(Minimum Level of Current Assets) in cash (the "Merger Consideration"). The
aggregate amount of the Merger Consideration shall not exceed $5,120,000 and
shall be subject to the holdback of the Escrow Cash as set forth in Section 1.7.
For purposes of determining the number of issued and outstanding Company Common
Shares
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immediately prior to the Effective Time and each Holder's pro rata share of the
aggregate Merger Consideration, each Option Share (as defined below) subject to
a Stock Option (as defined below) with an exercise price less than an amount
equal to the Merger Consideration divided by the number of issued and
outstanding shares of Company Common Stock immediately prior to the Effective
Time without regard to any Option Shares (the "In the Money Options") shall be
deemed to be issued and outstanding. The per share Merger Consideration (the
"Pro Rata Merger Consideration") shall be determined by dividing the sum of the
aggregate Merger Consideration and the aggregate exercise price of the In the
Money Options by the total number of issued and outstanding Company Common
Shares including the Option Shares deemed to be issued and outstanding as set
forth herein. The holder of any such Option Shares shall be entitled to an
amount in cash equal to the difference between the Pro Rata Merger Consideration
and the exercise price set forth in the applicable Stock Option multiplied by
the number of Option Shares of such holder deemed to be issued and outstanding.
Each Option Share with an exercise price equal to or greater than the Pro Rata
Merger Consideration shall be deemed to be cancelled and of no further force or
effect.
(b) Cancellation. Each Company Common Share, if any, held in the
treasury of the Company immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, cease to
be outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist.
(c) Capital Stock of Acquiror. Each share of common stock, $0.01 par
value, of the Acquiror issued and outstanding immediately prior to the Effective
Time shall remain issued, outstanding and unchanged as one validly issued, fully
paid and nonassessable share of common stock, $0.01 par value, of the Surviving
Corporation.
SECTION 1.7. Exchange of Certificates; Payment of Merger Consideration;
Escrow Agreement.
(a) Paying Agent and Procedures. Prior to the Effective Time, a bank or
trust company shall be designated by the Acquiror and the Company (the "Paying
Agent") to act as agent in connection with the Merger to receive the Merger
Consideration to which holders of Company Common Shares shall become entitled
pursuant to Section 1.6 hereof. Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each record holder (each a "Holder" and
collectively, the "Holders"), as of the Effective Time, of a certificate or
certificates that, prior to the Effective Time, represented Company Common
Shares (the "Certificates"), a customary form of letter of transmittal and
instructions for use in effecting the surrender of the Certificates for payment
of the Merger Consideration in exchange therefor. Upon the surrender of each
such Certificate which represented Company Common Shares, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the Paying Agent shall deliver to the Holder of such
Certificate in exchange therefor the Holder's pro rata share of the Initial
Payment (defined herein) exclusive of the Escrow Cash (defined herein) to be
held by the Escrow Agent (defined herein) to be released, if at all, as set
forth in Section 1.7(b)(ii). Until so surrendered and exchanged, each such
Certificate (other than Certificates representing Company Common Shares canceled
pursuant to Section 1.6(b)) shall represent solely the right to receive the
Merger Consideration. No interest shall be paid or accrue on the Initial Payment
for the benefit of the Holders. If the Merger
3
Consideration (or any portion thereof) is to be delivered to any person other
than the person in whose name the Certificate surrendered in exchange therefor
is registered, it shall be a condition to such exchange that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such exchange shall pay to the Paying
Agent 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 surrendered, or shall establish to the satisfaction of the Paying
Agent that such tax has been paid or is not applicable.
(b) Consideration. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Acquiror shall pay the Merger
Consideration as follows:
(i) $4,608,000 (the "Initial Payment") shall be deposited in
trust with the Paying Agent for the benefit of the holders of Company
Common Shares to which such holders shall be entitled to at the
Effective Time pursuant to Section 1.6 hereof; and
(ii) $512,000 (the "Escrow Cash") shall be deposited in trust
with the Paying Agent, acting as an escrow agent (the "Escrow Agent")
pursuant to the terms of an escrow agreement (the "Escrow Agreement")
in the form attached hereto as Exhibit A, to be held in escrow for the
payment of the Company's indemnification obligations, if any, pursuant
to Article VIII hereof. Provided there are no claims for
indemnification outstanding under Section 8.1 hereof on (i) December
31, 2003 if the Effective Time is on or before September 30, 2003; or
(ii) March 31, 2004 if the Effective Time is after September 30, 2003
(the "Escrow Termination Date"), the remaining Escrow Cash, if any,
including any interest thereon shall be delivered to the Holders pro
rata in accordance with the terms of the Escrow Agreement. If there are
outstanding indemnification claims under Section 8.1 hereof on the
Escrow Termination Date, an amount of cash sufficient to satisfy such
outstanding indemnification claims will continue to be held by the
Escrow Agent until the Escrow Agreement terminates according to the
terms thereof, at which time the Escrow Cash will be distributed to the
Holders on a pro rata basis.
(c) Investment of Initial Payment and Escrow Cash. The Initial Payment
and the Escrow Cash and any portion of the Initial Payment that is not paid
within 30 days of the Closing shall be invested by the Paying Agent or the
Escrow Agent, as applicable, as directed by the Acquiror, provided such
investments shall be limited to direct obligations of the United States of
America, obligations for which the full faith and credit of the United States of
America is pledged to provide for the payment of principal and interest,
commercial paper rated of the highest quality by Xxxxx'x Investors Service, Inc.
or Standard & Poor's Corporation, or certificates of deposit issued by a
commercial bank having at least $25,000,000,000 in assets. Any income derived
from the investment of the Initial Payment shall be payable to the Acquiror. Any
income derived from the Escrow Cash shall be payable to the Holders on a pro
rata basis pursuant to the terms of the Escrow Agreement.
(d) Termination of Paying Agent/Escrow Agent Duties. Promptly following
the date which is the later of termination of the Escrow Agreement or the Escrow
Termination Date, the Acquiror will cause the Paying Agent or the Escrow Agent,
as applicable, to deliver to the Surviving Corporation all cash and documents
still in its possession, if any, relating to
4
the transactions described in this Agreement, and the duties of the Paying Agent
or the Escrow Agent, as applicable, shall terminate. Thereafter, any remaining
holders of Certificates shall surrender such Certificates to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the applicable Merger Consideration.
(e) No Liability. None of the Acquiror, the Surviving Corporation nor
the Company shall be liable to any holder of Company Common Shares for any
Merger Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Withholding Rights. The Surviving Corporation or the Paying Agent
shall be entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of Company Common Shares such
amounts as the Surviving Corporation or the Paying Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state, local
or foreign tax law. Any such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Company Common
Shares, as the case may be, in respect of which such deduction and withholding
was made by the Surviving Corporation or the Paying Agent.
SECTION 1.8. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of the Company Common Shares thereafter on the records
of the Company or the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
SECTION 1.9. No Further Ownership Rights in Company Common Shares. The
Merger Consideration delivered upon the surrender for exchange of Certificates
in accordance with the terms hereof shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Company Common Shares formerly
represented by such Certificates.
SECTION 1.10. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
deliver in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration as may be required pursuant to Section 1.6 hereof; provided,
however, that the Surviving Corporation may, in its discretion and as a
condition precedent to the payment of the Merger Consideration, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against the Surviving Corporation or the Paying Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 1.11. Taking of Necessary Action; Further Action. Subject to
Sections 1.12 and 5.2 and Article VII hereof, each of the Acquiror and the
Company will take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger in accordance with this Agreement
as promptly as possible. If, at any time after the Effective Time, any such
further action is necessary or desirable to carry out the purposes of this
5
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company, the officers and directors of the Company immediately prior to the
Effective Time are fully authorized in the name of the Company or otherwise to
take, and will take, all such lawful and necessary action.
SECTION 1.12. Company Stockholders' Meeting. The Company, acting
through the Board, shall in accordance with applicable law and subject to the
fiduciary duties of the Board (as determined by the Board after consultation
with counsel), as soon as practicable following the date of this Agreement:
(a) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") on a date to be determined by the Board
and reasonably satisfactory to the Acquiror, but in no event shall such meeting
occur on a date more than 25 calendar days after the Proof of Financing Date
unless the Securities and Exchange Commission (the "SEC") reviews the Proxy
Statement in which case the time period for the Special Meeting shall be
extended by the number of days necessary for the SEC to complete its review and
the Company to respond to all SEC comments for the purpose of considering and
taking action upon this Agreement;
(b) include in the Proxy Statement (as defined in Section 4.1) the
recommendation of the Board that stockholders of the Company vote in favor of
the adoption of this Agreement; and
(c) (i) obtain and furnish the information required to be included by
it in the Proxy Statement and, after consultation with the Acquiror, respond
promptly to any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof and cause the Proxy Statement to be mailed to
its stockholders at the earliest practicable time and (ii) take steps to obtain
the necessary approvals by its stockholders of this Agreement.
SECTION 1.13. Acquiror Shareholders' Written Consent. The Acquiror,
acting through its Board of Directors, shall in accordance with applicable law
and subject to the fiduciary duties of the Acquiror (as determined by the Board
of Directors of the Acquiror after consultation with counsel), as soon as
practicable following the date of this agreement, take all necessary steps to
obtain shareholder votes for the purpose of considering and taking action upon
this Agreement by written consent (the "Acquiror Written Consent").
SECTION 1.14. Introduction to Disclosure Schedule. Pursuant to the
terms of this Agreement, the Company shall deliver the Company Disclosure
Schedule in connection with the Company's representations and warranties given
in Article II of the Agreement. The section numbers in the Company Disclosure
Schedule correspond to the section numbers in the Agreement. Any information
disclosed in the Company Disclosure Schedule under any section, however, shall
be deemed to be disclosed and incorporated in any other section of the Agreement
where such disclosure would be appropriate if such disclosure on its face
specifies the relevant facts necessary for a determination that the exceptions
expressed may also apply to other sections or provisions, whether or not
repeated or cross-referenced under any section number where such disclosure
might be deemed appropriate.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company SEC Reports (as defined herein) or
as set forth in the Company Disclosure Schedule (as defined herein), the Company
hereby represents and warrants to the Acquiror that:
SECTION 2.1. Organization and Qualification; Subsidiaries. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority
necessary to own, lease and operate the properties it purports to own, lease or
operate and to carry on its business or activities as now conducted. The Company
is duly qualified or licensed to do business and is in good standing (with
respect to jurisdictions that recognize such concept) in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its business or activities as now conducted makes such qualification or
licensing necessary. A true and complete list of all of the Company's
subsidiaries, together with the jurisdiction of organization of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by the
Company or another subsidiary, is set forth in Section 2.1 of the Company
Disclosure Schedule. Except as set forth in Section 2.1 of the Company
Disclosure Schedule, the Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or legal entity.
SECTION 2.2. Certificate of Incorporation and Bylaws. The Company has
heretofore furnished to the Acquiror a complete and correct copy of its
Certificate of Incorporation and Bylaws, and has furnished or made available to
the Acquiror the Certificate of Incorporation and Bylaws (or equivalent
organizational documents) of each of its subsidiaries (the "Subsidiary
Documents"), in each case as amended to the date of this Agreement. Such
Certificate of Incorporation, Bylaws and Subsidiary Documents are in full force
and effect. Neither the Company nor any of its subsidiaries is in violation of
any of the provisions of such documents.
SECTION 2.3. Capitalization. The authorized capital stock of the
Company consists of (a) 25,000,000 Company Common Shares and (b) 2,000,000
shares of preferred stock, $0.001 par value per share ("Company Preferred
Shares"). As of May 31, 2003: (i) 10,049,400 Company Common Shares were issued
and outstanding, all of which are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, (ii) 150 Company Common Shares were
held in treasury, (iii) no Company Preferred Shares were issued and outstanding
and (iv) 4,049,764 Company Common Shares (the "Option Shares") were reserved for
future issuance pursuant to outstanding options to purchase Company Common
Shares (each a "Stock Option") granted under the Company's stock option plans
set forth in Section 2.3 of the Company's Disclosure Schedule (the "Company
Stock Option Plans"). No change in such capitalization has occurred between May
31, 2003 and the date hereof. Except as set forth in this Section 2.3 or Section
2.11 or in the related sections of the Company Disclosure Schedule and pursuant
to the terms of the Company Stock Option Plans, there are no options, warrants
or other similar rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
of its subsidiaries or obligating the Company or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in,
7
the Company or any of its subsidiaries. The Option Shares will be duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights when and if issued pursuant to the terms and conditions specified in the
applicable Company Stock Option Plan. Except as disclosed in Section 2.3 of the
Company Disclosure Schedule, there are no obligations, contingent or otherwise,
of the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Company Common Shares or Company Preferred Shares or the capital
stock of any subsidiary or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any such subsidiary or any
other entity. Except as set forth in Sections 2.1 and 2.3 of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each of
the Company's subsidiaries are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, and all such shares are owned by
the Company or another subsidiary of the Company free and clear of all security
interests, liens, pledges, agreements, limitations in the Company's voting
rights, charges or other encumbrances of any nature whatsoever.
SECTION 2.4. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority, subject to the adoption of this
Agreement by the holders of at least a majority of the outstanding Company
Common Shares (voting together as one class) entitled to vote in accordance with
the DGCL and the Company's Certificate of Incorporation and Bylaws, to execute
and deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and, no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated, other than the adoption of this Agreement by the
holders of at least a majority of the outstanding Company Common Shares (voting
together as one class) entitled to vote in accordance with the DGCL and the
Company's Certificate of Incorporation and Bylaws. As of the date of this
Agreement, the Board has determined that the Merger and the transactions
contemplated thereby, upon the terms and subject to the conditions of this
Agreement, are fair to and in the best interests of the Company and its
stockholders. This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by the
Acquiror, and adoption of the Agreement by the requisite vote of the
stockholders of the Company, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
SECTION 2.5. No Conflict; Required Filings and Consents.
(a) Section 2.5(a) of the Company Disclosure Schedule includes a list
of all agreements to which the Company or any of its subsidiaries is a party or
by which any of them is bound, which, as of the date of this Agreement: (i) are
required to be filed as "material contracts" with the SEC pursuant to the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); (ii) under which the consequences of a default, nonrenewal or termination
would have a Material Adverse Effect (as defined below) (it being agreed that
the default, nonrenewal or termination of a contract with expected receipts or
expenditures of less than $50,000 shall not in and of itself be deemed to have a
Material Adverse Effect; or (iii) pursuant
8
to which payments might be required or acceleration of benefits may be required
upon a "change of control" of the Company (collectively, the "Material
Contracts").
(b) Except as set forth in Section 2.5(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of the obligations of the Company contemplated hereby will
not, (i) conflict with or violate the Certificate of Incorporation or Bylaws of
the Company, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree in effect as of the date of this Agreement applicable to the
Company or any of its subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or impair the Company's or any of its subsidiaries' rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any Material
Contract, or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of its subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected.
(c) The Company has made available to the Acquiror a correct and
complete copy of each Material Contract and to the knowledge of the Company,
each Material Contract is in full force and affect and is valid, binding and
enforceable, subject to the effect of bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
except as the availability or equitable remedies may be limited by general
principles of equity.
(d) Except as set forth in Section 2.5(d) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i) require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except for
(x) applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act and state securities laws, and (y) the
filing and recordation of appropriate merger or other documents as required by
the DGCL and the TBCA or (ii) require any consent, approval or authorization of,
or notification to, any party to any Material Contract, which shall not have
been obtained or given as of the Effective Time.
SECTION 2.6. Compliance.
(a) Except as disclosed in Section 2.6(a) of the Company Disclosure
Schedule, to the Company's knowledge, neither the Company nor any of its
subsidiaries is in conflict with, or in material default or violation of, (i)
any law (including, without limitation, environmental laws), rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which its or any of their respective properties is bound or affected, the
default or violation of which would be reasonably likely to have a Material
Adverse Effect or (ii) any Material Contract to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected.
9
SECTION 2.7. SEC Filings; Financial Statements; Books and Records.
(a) Except as set forth in Section 2.7 of the Company Disclosure
Schedule, the Company has filed all forms, reports and documents required to be
filed with the SEC and has made available to the Acquiror (i) its Annual Reports
on Form 10-K for the fiscal years ended September 28, 2001 and 2002, (ii) its
Quarterly Reports on Form 10-Q for the periods ended December 28, 2002 and Xxxxx
00, 0000, (xxx) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since September 28, 2002, (iv) all
other reports or registration statements filed by the Company with the SEC since
September 28, 2002, and (v) all amendments and supplements to all such reports
and registration statements filed by the Company with the SEC since September
28, 2002 (collectively, the "Company SEC Reports"). Except as disclosed in
Section 2.7 of the Company Disclosure Schedule, the Company SEC Reports (i) were
prepared in all material respects in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, as in effect on the date
such Company SEC Reports were filed, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto), and each fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
as at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
(c) All applicable corporate and other laws relating to the maintenance
of the Company's or any of its subsidiaries' books and records have been
complied with by the Company in all material respects.
SECTION 2.8. Absence of Certain Changes or Events. Except as set forth
in Section 2.8 of the Company Disclosure Schedule or the Company SEC Reports,
since September 28, 2002, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any amendments or changes in the
Certificate of Incorporation or Bylaws of the Company; (ii) any material damage
to, destruction or loss of any asset (whether owned or leased) of the Company
(whether or not covered by insurance); (iii) any material change by the Company
in its accounting methods, principles or practices; (iv) any material
revaluation by the Company of any of its assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business; (v) any other action or event
that would have required the consent of the Acquiror pursuant to Section 5.1 had
such action or event occurred after the date of this Agreement; or (vi) any sale
of a material amount of property of the Company or any of its subsidiaries,
except in the ordinary course of business.
10
SECTION 2.9. No Undisclosed Liabilities. Except as is disclosed in
Section 2.9 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise, including, without limitation, environmental liabilities arising
under environmental laws), except liabilities (i) in the aggregate adequately
provided for in the Company's unaudited balance sheet (including any related
notes thereto) as of March 28, 2003 (the "2003 Company Balance Sheet"), (ii)
incurred in the ordinary course of business and not required under GAAP to be
reflected on the 2003 Company Balance Sheet, or (iii) incurred since March 28,
2003 in the ordinary course of business consistent with past practice.
SECTION 2.10. Absence of Litigation. Except as set forth in Section
2.10 of the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
overtly threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign.
SECTION 2.11. Employee Benefit Plans, Employment Agreements.
(a) Section 2.11 (a) of the Company Disclosure Schedule lists (i) all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and all other employee
benefit, bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement and severance plans, programs or arrangements, and any
employment, executive compensation, consulting or severance agreements, written
or otherwise, statutory or contractual, with respect to which the Company or any
person that, together with the Company, would be considered a single employer
within the meaning of Section 4001 of ERISA or Section 414 of the Code ("ERISA
Affiliate"), has or has had in the six years preceding the date of this
Agreement any obligation or liability or which are or were in the six years
preceding the date of this Agreement maintained, contributed to or sponsored by
the Company or any ERISA Affiliate for the benefit of, or relating to, any
current or former employee, officer or director of or consultant to the Company
or any ERISA Affiliate (collectively the "Company Employee Plans"). The Company
has provided to the Acquiror copies of (A) each Company Employee Plan, (B) the
three most recent annual reports on Form 5500 series, with accompanying
schedules and attachments, filed with respect to each Company Employee Plan
required to make such a filing, (C) the most recent actuarial valuation for each
Company Employee Plan that is an employee pension benefit plan (as defined in
Section 3(2) of ERISA), (D) each summary plan description and summary of
material modifications with respect to each Company Employee Plan, and (E) the
most recent determination opinion, advisory or notification letter(s) referred
to in Section 2.11(b)(iv).
(b) (i) Except as set forth in Section 2.11(b) of the Company
Disclosure Schedule, none of the Company Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person, except to the
extent required by law; (ii) neither the Company, nor to the knowledge of the
Company, any other party in interest (within the meaning of Section 3(14) of
ERISA) has engaged in a non-exempt "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Company Employee Plan, (iii) each Company Employee Plan is in compliance in
all material respects with, and has
11
always been operated in all material respects in accordance with, its terms and
the requirements prescribed by any and all statutes (including ERISA and the
Code), orders, or governmental rules and regulations currently in effect with
respect thereto and the Company and the ERISA Affiliates have performed all
material obligations required to be performed by them under, are not in any
material respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, each of the Company Employee Plans
and each of the Company and the ERISA Affiliates has satisfied in all material
respects all of its statutory, regulatory and contractual obligations with
respect to each Company Employee Plan; (iv) each Company Employee Plan intended
to qualify under Section 401(a) of the Code and each trust established under
such a Company Employee Plan intended to be exempt from tax under Section 501(a)
of the Code is either the subject of a favorable determination, opinion,
advisory or notification letter from the Internal Revenue Service ("IRS") or has
time remaining to apply under applicable Treasury Regulations or IRS
pronouncements for such a determination letter and to make any amendments
necessary to obtain a favorable determination, and nothing has occurred which
may reasonably be expected to impair such determination; (v) all contributions,
premiums or payments required to be made with respect to any Company Employee
Plan have been made on or before their due dates and all such contributions have
been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any governmental authority and, to the knowledge of
the Company, no fact or event exists which could give rise to any such challenge
or disallowance; (vi) with respect to each Company Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the 30 day notice requirement has been waived under the regulations to
Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 of
ERISA has occurred; (vii) neither the Company nor any ERISA Affiliate has
incurred, nor reasonably expects to incur, any liability under Title IV of ERISA
(other than liability for premium payments to the Pension Benefit Guaranty
Corporation ("PBGC") arising in the ordinary course) and to the knowledge of the
Company, no fact or event exists which could give rise to such liability; (viii)
neither the Company nor any ERISA Affiliate has incurred any material liability
for any excise tax arising under the Code with respect to a Company Employee
Plan; (ix) neither the Company nor any ERISA Affiliate has made any express or
implied commitment, whether legally enforceable or not, to create, incur
liability with respect to or cause to exist any employee benefit plan, program,
arrangement, contract or scheme or to modify any Company Employee Plan, other
than as required by law; (x) no legal action, suit or claim is pending or, to
the knowledge of the Company, threatened with respect to any Company Employee
Plan (other than claims for benefits in the ordinary course) and, to the
knowledge of the Company, no fact or event exists that could give rise to any
such action, suit or claim; (xi) there has been no amendment to, written
interpretation of or announcement (whether or not written) by the Company or any
ERISA Affiliate relating to, or change in employee participation or coverage
under, any Company Employee Plan that would increase materially the expense of
maintaining such Company Employee Plan above the level of the expense incurred
in respect thereto for the most recent fiscal year ended prior to the date of
this Agreement; and (xii) none of the Company Employee Plans is a "multiemployer
plan" (as defined in Section 3(37) of ERISA).
(c) Section 2.11(c) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer or director
of the Company or any of its subsidiaries who holds any Stock Option as of the
date of this Agreement, together with the number of shares of Company Common
Shares subject to such Stock Option, the option price of
12
such Stock Option (to the extent determined as of the date hereof), whether such
Stock Option is intended to qualify as an incentive stock option within the
meaning of Section 422(b) of the Code (an "ISO"), and the expiration date of
such Stock Option.
(d) Section 2.11(d) of the Company Disclosure Schedule sets forth a
true and complete list of (i) all written employment agreements with officers of
the Company or any of its subsidiaries; (ii) all agreements with consultants who
are individuals obligating the Company or any of its subsidiaries to make annual
cash payments in an amount exceeding $5,000; (iii) all severance agreements,
programs and policies of the Company or any of its subsidiaries with or relating
to its employees, in each case with outstanding commitments exceeding $5,000 to
any individual, excluding programs and policies required to be maintained by
law; and (iv) all plans, programs, agreements and other arrangements of the
Company or any of its subsidiaries with or relating to its employees which
contain change in control provisions.
SECTION 2.12. Labor Matters. Except as set forth in Section 2.12 of the
Company Disclosure Schedule, (i) neither the Company nor any of its subsidiaries
is a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its subsidiaries, nor does the
Company or any of its subsidiaries know of any activities or proceedings of any
labor union to organize any such employees; and (ii) neither the Company nor any
of its subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts or threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries.
SECTION 2.13. Restrictions on Business Activities. Except for this
Agreement or as set forth in Section 2.13 of the Company Disclosure Schedule,
there is no agreement, judgment, injunction, order or decree binding upon and
specifically applicable to the Company which has or could reasonably be expected
to have the effect of prohibiting or impairing any material business practice of
the Company, any acquisition of property by the Company or the conduct of
business by the Company as currently conducted or as proposed to be conducted by
the Company.
SECTION 2.14. Taxes.
(a) For purposes of this Agreement, (i) "Tax" or "Taxes" shall mean
taxes, fees, levies, duties, tariffs, imposts, and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) income, franchise, profits, gross receipts, ad valorem, net worth,
value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation premiums, windfall profits, transfer and
gains taxes and interest, penalties, additional taxes and additions to tax
imposed with respect thereto and (ii) "Tax Returns" shall mean returns, reports,
estimates and information returns and statements with respect to Taxes required
to be filed with the IRS or any other taxing authority, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns.
(b) Other than as disclosed in Section 2.14(b) of the Company
Disclosure Schedule:
13
(i) The Company and each of its subsidiaries (for such periods as each
subsidiary was owned, directly or indirectly, by the Company), have filed all
federal income Tax Returns and all other Tax Returns required to be filed by it
(taking into account all applicable extensions), and all such Tax Returns are
complete and correct in all material respects, or requests for extensions to
file such Tax Returns have been timely filed, granted and have not expired. The
Company and each of its subsidiaries has paid, or the Company has paid or caused
to be paid on its subsidiaries' behalf, all Taxes shown as due on such Tax
Returns and all material Taxes for which no Tax Return was required to be filed.
The most recent financial statements contained in the Company SEC Reports
reflect an adequate reserve in accordance with GAAP for all Taxes payable by the
Company and its subsidiaries for all taxable periods and portions thereof
through the date of such financial statements.
(ii) No Tax Return of the Company or any of its subsidiaries is under
audit or examination by any taxing authority or the subject of any pending court
proceeding, and no written notice of such an audit or examination has been
received by the Company or any of its subsidiaries. Each deficiency resulting
from any audit or examination relating to Taxes by any taxing authority has been
paid, except for deficiencies being contested in good faith. No material issue
relating to Taxes were raised in writing by the relevant taxing authority. None
of the federal income Tax Returns of the Company or any of its subsidiaries
consolidated in such Tax Returns for any period have been examined by the IRS.
(iii) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any Taxes and no
power of attorney with respect to any Taxes has been executed or filed with any
taxing authority.
(iv) No liens for Taxes exist with respect to any assets or properties
of the Company or any of its subsidiaries, except for statutory liens for Taxes
not yet due.
(v) The accruals and reserves for Taxes (including deferred taxes)
reflected in the 2003 Company Balance Sheet are in all material respects
adequate (and until the Closing Date will continue to be adequate) to cover all
Taxes required to be accrued through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with GAAP.
(vi) The Company and its subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and have timely withheld from employee wages and paid
over to the proper governmental authorities all amounts required to be so
withheld and paid over under all applicable laws.
(vii) Neither the Company nor any of its subsidiaries has engaged in
any inter-company transactions within the meaning of Treasury Regulation Section
1.1502-13 for which any income or gain will be recognized (as a result of the
Merger or otherwise) during any taxable period ending on or before the Closing
Date.
14
SECTION 2.15. Intellectual Property and Website Materials.
(a) Either the Company or its subsidiaries owns, or has valid rights to
use, free and clear of any liens, claims, security interests, pledges,
mortgages, deeds of trust, rights of first refusal, restrictions and other
encumbrances ("Liens"), all Intellectual Property and Website Materials.
(i) The term "Intellectual Property" as used herein shall mean
all right, title and interest of the Company or any of its subsidiaries
in, to and under all computer software, copyrights, patents, trademarks
and know-how, which are owned or used by, or are licensed to, the
Company or any of its subsidiaries and which are material to the
conduct of the Company's business as it is currently conducted, and any
right to recovery for infringement thereof (including past
infringement) and any and all goodwill associated therewith. The
Intellectual Property includes without limitation, all of the items set
forth in Section 2.15(a)(i) of the Company Disclosure Schedule.
(ii) The term "Website Materials" as used herein shall mean
all text, images and design, including without limitation the "look and
feel," and other content (collectively, "Content") contained on any
website maintained by, or for, the Company or any of its subsidiaries
in connection with Company's business as it is currently conducted,
including but not limited to the Content contained on the websites set
forth in Section 2.15(a)(ii) of the Company Disclosure Schedule.
Neither the Company nor any of its subsidiaries have received any written notice
(other than notices that have been resolved, withdrawn or abandoned) that the
Company or any of its subsidiaries are, and, the Company and each of its
subsidiaries is not and are not, knowingly infringing or otherwise acting in
conflict with the rights of any other person in respect of the Intellectual
Property or the Website Materials.
(b) Except as set forth in Schedule 2.15(b) of the Company Disclosure
Schedule, at the Effective Time the Surviving Corporation will own or have valid
rights to use all of the Intellectual Property and the Website Materials free
and clear of any Lien.
(c) Section 2.15 (a)(i) of the Company Disclosure Schedule lists all
patents, registered trademarks and registered copyrights, and applications
therefor included in the Intellectual Property. These lists include the legal
owner, type, jurisdiction and registration or application number (as
applicable), renewal date (for registered trademarks only) and registration or
filing date (except for trademarks).
(d) Except as disclosed in Section 2.15(d) of the Company Disclosure
Schedule, the Company or its subsidiaries is the sole legal owner of all
patents, trademarks and copyrights included in the Intellectual Property.
(e) Except as disclosed in Section 2.15(e) of the Company Disclosure
Schedule, the legal owner is also the record owner of each patent, registered
trademark and registered copyright (and applications therefor) included in the
Intellectual Property such that its legal ownership has been recorded, or a
recordation filing has been made, with the appropriate governmental authority.
15
(f) Section 2.15(f)(i) of the Company Disclosure Schedule sets forth a
list of (i) all licenses and other agreements to which the Company and any of
its subsidiaries are a party and pursuant to which the Company and any of its
subsidiaries have granted to any other person the right to use any Intellectual
Property and (ii) all licenses and other agreements to which the Company and any
of its subsidiaries are a party and pursuant to which the Company and any of its
subsidiaries are authorized to use any Intellectual Property (except "off the
shelf" or other software widely available through regular commercial
distribution channels on standard terms and conditions, as modified for the
Company's operations). To Company's knowledge, there is no unauthorized use,
infringement or misappropriation by any third party of any Intellectual
Property. All registered trademarks, registered copyrights, and patents included
in the Intellectual Property and listed in Section 2.15(a)(i) of the Company
Disclosure Schedule are valid and subsisting. Section 2.15(f)(ii) of the Company
Disclosure Schedule sets forth all material actions which must be taken within
one hundred eighty (180) days following the date hereof that are necessary to
maintain, perfect, preserve or renew the Intellectual Property, including the
payment of any registration, maintenance, renewal fees, annuity fees and taxes
or the filing of any documents, applications or certificates related thereto.
Except as disclosed in Section 2.15(f)(iii) of the Company Disclosure Schedule,
none of the transactions contemplated herein will materially affect the rights
and interests possessed by the Company and any of its subsidiaries in the
Intellectual Property. The Company and its subsidiaries are in compliance with
their respective privacy policy. To the Company's knowledge, any information
used by the Company in connection with the conduct of its business was provided
to the Company or its subsidiary in compliance with applicable law.
(g) The Company and its subsidiaries do not own, use or license any
computer software (except "off the shelf" or other software widely available
through regular commercial distribution channels on standard terms and
conditions, as modified for the Company's operations), patents, trademarks,
copyrights or know-how, which are material to the conduct of the Business as it
is currently conducted, other than the Intellectual Property.
(h) The Company and its subsidiaries do not own, use or license any
Content which is material to the conduct of the Business as it is currently
conducted, other than the Website Materials.
(i) Except as disclosed in Section 2.15(i) of the Company Disclosure
Schedule, the Company and each of its subsidiaries has taken commercially
reasonable steps to protect the secrecy and confidentiality of all know-how
included in the Intellectual Property.
SECTION 2.16. RESERVED
SECTION 2.17. Brokers. No broker, finder or investment banker (other
than Neveric Capital) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company; all fees and
expenses of which will be paid by the Company.
SECTION 2.18. Takeover Statutes. None of the Company, the Company
Common Shares, the Merger or the transactions contemplated by this Agreement
are, or at the Effective Time will be, subject to any applicable "fair price,"
"moratorium," "control share acquisition" or
16
other similar antitakeover statute or regulation (including, without limitation,
Section 203 of the DGCL) (each a "Takeover Statute").
SECTION 2.19. Real Property. Except as set forth in Section 2.19 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
own, lease, occupy or use, or have any interests in, any real property of any
kind.
SECTION 2.20. Insurance. Section 2.20 of the Company Disclosure
Schedule contains a description (identifying insurer, coverage, premiums, named
insured, deductibles and expiration date) of all policies of fire, liability and
other forms of insurance that currently are, or at any time within the past two
years have been, maintained in force by or for the account of the Company or any
of its subsidiaries with respect to their respective business and assets (such
polices are hereinafter referred to as the "Company Policies"). The Company and
its subsidiaries have been continuously, and are presently, insured by insurers
unaffiliated with the Company and its subsidiaries with respect to their
respective property and the conduct of their respective businesses in such
amounts and against such risks as are adequate to protect their respective
businesses and assets, including, without limitation, liability insurance.
Except as disclosed in Section 2.20 of the Company Disclosure Schedule, the
insurance coverage provided by the Company Policies presently in force will not
in any material respect be affected by, and will not terminate or lapse by
reason of, the transactions contemplated hereby. At no time subsequent to
January 1, 2000 has the Company or any of its subsidiaries been denied insurance
or indemnity bond coverage. At no time subsequent to January 1, 2000 has any
insurance carrier canceled or reduced any insurance coverage for the Company or
any of its subsidiaries or given any notice or other indication of its intention
to cancel or reduce any such coverage.
SECTION 2.21. Licenses and Permits. Each of the Company and its
subsidiaries has all licenses, permits, franchises, certificates, consents,
approvals and authorizations necessary for the conduct of its business and the
ownership and use of its assets, properties and premises occupied by it, except
where the failure to possess such licenses would not have a Material Adverse
Effect on the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
The Acquiror hereby represents and warrants to the Company that:
SECTION 3.1. Organization, Power and Authority. The Acquiror is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas and has the corporate power and authority necessary to
enter into and to complete the transactions contemplated by this Agreement.
SECTION 3.2. Authority Relative to this Agreement. The Acquiror has all
requisite corporate power and authority, subject to the adoption of this
Agreement by the holders of at least a majority of the outstanding capital stock
(voting together as one class) entitled to vote in accordance with the TBCA and
the Acquiror's Articles of Incorporation and Bylaws, to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Acquiror
17
and the consummation by the Acquiror of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of the Acquiror, and no other corporate proceedings on the part of the
Acquiror are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby other than the adoption of this Agreement by
the holders of at least a majority of the outstanding capital stock of the
Acquiror (voting together as one class entitled to vote) in accordance with the
TBCA and the Acquiror's Articles of Incorporation and Bylaws. As of the date of
this Agreement, the Board of Directors of the Acquiror has determined that the
Merger, upon the terms and subject to the conditions of this Agreement, is
advisable and in the best interest of the Acquiror's shareholders. This
Agreement has been duly and validly executed and delivered by the Acquiror and,
assuming the due authorization, execution and delivery by the Company and
adoption of the Agreement by the requisite vote of the stockholders of the
Company, constitutes a valid and binding obligation of the Acquiror enforceable
against it in accordance with its terms.
SECTION 3.3. Conflicts and Defaults. Neither the execution and delivery
of this Agreement by the Acquiror nor the performance by the Acquiror of the
transactions contemplated hereby will violate or conflict with any of the terms
of the Articles of Incorporation or Bylaws of the Acquiror.
SECTION 3.4. Brokers. No broker, finder or investment banker (other
than Zebulon Group LLC and Source Capital Group, Inc.) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Acquiror, all fees and expenses of which will be paid by the
Acquiror.
SECTION 3.5. Financing. Acquiror will have at the Effective Time
sufficient cash or cash-equivalent funds available to consummate the Merger,
including, without limitation, payment of the Merger Consideration.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1. Preparation of Proxy Statement. As soon as practicable
following the date of this Agreement, the Company shall prepare and file with
the SEC a preliminary proxy statement relating to the Special Meeting (the
"Proxy Statement"). The Company will use commercially reasonable efforts to
cause the Proxy Statement to be mailed to the Company's stockholders as promptly
as practicable after the execution of this Agreement, but in no event later than
July 15, 2003 unless the SEC reviews the Proxy Statement in which case the time
period for the mailing of the Proxy Statement shall be extended by the number of
days necessary for the SEC to complete its review and the Company to respond to
all SEC comments.
SECTION 4.2. Company Information. The Company agrees that none of the
information supplied or to be supplied by the Company specifically for inclusion
or incorporation by reference in the Proxy Statement will, at the date it is
first mailed to the Company's stockholders or at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
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to make the statements therein, in the light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
SECTION 4.3. Acquiror Information. The Acquiror agrees that none of the
information supplied or to be supplied by the Acquiror specifically for
inclusion or incorporation by reference in the Proxy Statement will, at the date
the Proxy Statement is first mailed to the Company's stockholders or at the time
of the Special Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading.
SECTION 4.4. Company Stockholders' Meeting. The Company will take all
action necessary in accordance with applicable law and its Certificate of
Incorporation and Bylaws to convene the Special Meeting to consider and vote
upon the adoption of this Agreement and approval of the Merger. Subject to
Section 1.12, the Company will, through the Board, recommend to its stockholders
adoption of this Agreement and approval of the Merger. Without limiting the
generality of the foregoing, the Company agrees that, subject to its right to
terminate this Agreement pursuant to Section 7.1, its obligations pursuant to
the first sentence of this Section 4.4 shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the Company
of any Acquisition Proposal (as defined in Section 5.2(a)) or (ii) the
withdrawal or modification by the Board of its approval or recommendation of
this Agreement or the Merger. Subject to Section 1.12 hereof, the Company will
use commercially reasonable efforts to obtain the favorable vote of its
stockholders as soon as practicable after the date hereof.
SECTION 4.5. Acquiror Shareholders' Written Consent. The Acquiror will
take all action necessary in accordance with applicable law and its Articles of
Incorporation and Bylaws to obtain the Acquiror Written Consent to consider and
vote upon the adoption of the Agreement and approval of the Merger.
SECTION 4.6. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions and other agreements set forth in this Agreement, each
of the parties agrees to use its commercially reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, appropriate
or advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement. Notwithstanding any other provision hereof, the Company's obligations
under this Section 4.6 and any other provision hereof will in all events be
subject to its right to terminate this Agreement in accordance with Section 7.1,
whereupon the Company will have no further obligations hereunder or otherwise,
including, without limitation, under Sections 1.11 (Further Action), 4.1
(Preparation of Proxy Statement), 4.4 (Company Stockholders' Meeting), 4.7
(Access to Information; Confidentiality), 4.8 (Consents; Approvals), 4.9
(Notification of Certain Matters), 4.10 (Further Action), 4.15 (On-Site
Management Participation) and this Section 4.6.
SECTION 4.7. Access to Information; Confidentiality. So long as this
Agreement remains in effect, upon reasonable notice and subject to restrictions
contained in any applicable
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confidentiality agreements to which the Company or any of its subsidiaries are
bound, the Company shall (and shall cause each of its subsidiaries to) afford to
the officers, employees, accountants, counsel and other representatives of the
Acquiror reasonable access, during normal business hours, to all its properties,
books, contracts, commitments and records and, the Company shall (and shall
cause each of its subsidiaries to) furnish as promptly as practicable to the
Acquiror all information concerning its business, properties and personnel as
the Acquiror may reasonably request, and shall make available to the Acquiror or
its representatives the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the its business,
properties and personnel as the Acquiror may reasonably request. The parties
acknowledge that the Acquiror is obligated to keep such information confidential
in accordance with the terms of the Letter of Intent, dated April 3, 2003 (the
"Letter of Intent"), between the Acquiror and the Company. All information
furnished to Acquiror and its officers, employees, accountants and counsel by or
on behalf of the Company shall be covered by the Letter of Intent in accordance
with its terms until the Effective Time, and all information furnished to the
Acquiror and its officers, directors, employees, accountants and counsel by or
on behalf of Company, shall be covered by the Letter of Intent in accordance
with its terms, and Acquiror shall be fully liable and responsible under the
Letter of Intent for any breach of the terms and conditions thereof by their
respective subsidiaries, officers, employees, accountants, counsel and other
representatives.
SECTION 4.8. Consents; Approvals. The Company shall use commercially
reasonable efforts to obtain all consents, waivers, approvals, authorizations or
orders, and the Company and the Acquiror shall make all filings required in
connection with the authorization, execution and delivery of this Agreement by
the Company and the Acquiror and the consummation by them of the transactions
contemplated hereby. The Company and the Acquiror shall furnish all information
required to be included in any application or other filing to be made pursuant
to the rules and regulations of any United States or foreign governmental body
in connection with the transactions contemplated by this Agreement.
SECTION 4.9. Notification of Certain Matters. The Company shall give
prompt notice to the Acquiror, and the Acquiror shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would reasonably be expected to cause any representation
or warranty contained in this Agreement to be materially untrue or inaccurate,
or (ii) any failure of the Company, or the Acquiror, as the case may be,
materially 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 4.9 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 4.10. Further Action. Upon the terms and subject to the
provisions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
other things necessary, appropriate or advisable to consummate and make
effective as promptly as practicable the Merger and the other transactions
contemplated by this Agreement, including (i) obtaining in a timely manner all
necessary waivers, consents and approvals from all federal, state and foreign
courts and other governmental entities ("Governmental Entities") and to effect
all necessary registrations and filings, and the taking of all reasonable steps
as may be necessary, appropriate or advisable to obtain an approval
20
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated by this Agreement, including seeking to have any
stay or temporary restraining order entered by any Governmental Entity vacated
or reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement.
SECTION 4.11. Public Announcements. The Acquiror and the Company shall
consult with each other before issuing any press release with respect to the
Merger or this Agreement and shall not issue any such press release or make any
similar public statement without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that the Company may,
without the prior consent of the Acquiror, issue such press release or make such
public statement as may, upon the advice of counsel, be required by law or the
rules and regulations promulgated by the Nasdaq Stock Market, Inc., if it has
used all reasonable efforts to consult with the other party.
SECTION 4.12. Minimum Level of Current Assets. As of the Closing Date,
the accounts receivable, after adequate accruals for write-offs of uncollectable
accounts receivable, and cash, as set forth in the Company's financial
statements, shall reflect a minimum aggregate amount of $3,000,000; provided,
however, a variance of up to 10% shall be permitted (the "Minimum Current
Assets"). However, if the Acquiror shall have exercised its option to extend the
Closing Date as provided in Section 1.1(b) because it does not have sufficient
funds to consummate the Merger, the Minimum Current Assets shall be determined
based on the Company's financial statements as of the date which is sixty (60)
days from the date hereof. The aggregate amount of the Merger Consideration
shall be reduced dollar for dollar in the event the Company's financial
statements do not reflect the Minimum Current Assets ($2,700,000) as of the
applicable determination date.
SECTION 4.13. Non-Competition Agreement. The Acquiror and Xxxxxx Xxxx
shall have entered into a non-competition agreement with terms that are mutually
acceptable to the parties (the "Non-Competition Agreement").
SECTION 4.14. Employees. The Acquiror shall offer a severance package
to each individual who is an employee of the Company immediately prior to the
Effective Time and whose employment is terminated at the Effective Time that is
substantially identical to the benefits under the severance program provided by
the Company and covering such employee immediately prior to the Effective Time.
After the Effective Time, the Acquiror shall provide to employees of the Company
who remain employed by the Surviving Corporation with employee benefits and
severance benefits that are substantially identical to those provided to such
employees by the Company immediately prior to the Effective Time.
SECTION 4.15. On-Site Management Participation. Between the date hereof
and the Closing Date, the Company shall permit the Acquiror the right to
participate in the daily operations and management decisions of the Company.
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SECTION 4.16. Takeover Statute. If the Merger or the transactions
contemplated by this Agreement is or may become subject to any Takeover Statute,
the Company and the Board shall grant such approvals and take such actions as
are necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise act to eliminate or minimize the effects of such statute
or regulation on such transactions.
SECTION 4.17. Tax Clearance Certificates. The Company shall use
reasonable commercial efforts to obtain prior to Closing, from every
jurisdiction in which the Company conducts its business and is, or has been in
the prior five years, required to pay taxes, and deliver to the Acquiror a tax
clearance certificate or other similar document indicating that the Company has
paid all taxes due to the respective jurisdiction's taxing authority.
SECTION 4.18. Directors' and Officers' Indemnification and Insurance.
Following the Effective Time, the Acquiror shall (a) indemnify and hold
harmless, and provide advancement of expenses to, all past and present
directors, officers and employees of the Company (in all of their capacities)
(i) to the same extent such persons are indemnified or have the right to
advancement of expenses as of the date of this Agreement by Company pursuant to
Company's certificate of incorporation, by-laws and indemnification agreements,
if any, in existence on the date hereof with, or for the benefit of, any
directors, officers and employees of Company and (ii) without limitation to
clause (i), to the fullest extent permitted by law, in each case for acts or
omissions occurring at or prior to the Effective Time (including for acts or
omissions occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby), (b) include and cause to
be maintained in effect in the Acquiror's (or any successor's) certificate of
incorporation and by-laws for a period of six years after the Effective Time,
provisions regarding elimination of liability of directors, indemnification of
officers, directors and employees and advancement of expenses which are, in the
aggregate, no less advantageous to the intended beneficiaries than the
corresponding provisions contained in the current certificate of incorporation
and by-laws of Company and (c) cause to be maintained for a period of six years
after the Effective Time the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by Company
(provided that Acquiror (or any successor) may substitute therefor one or more
policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured)
with respect to claims arising from facts or events that occurred on or before
the Effective Time; provided, however, that in no event shall Acquiror be
required to expend in any one year an amount in excess of 100% of the annual
premiums currently paid by Company for such insurance; and, provided further,
that if the annual premiums of such insurance coverage exceed such amount,
Acquiror shall obtain a policy with the greatest coverage available for a cost
not exceeding such amount. The obligations of Acquiror under this Section 4.18
shall not be terminated or modified in such a manner as to adversely affect any
indemnitee to whom this Section 4.18 applies without the consent of such
affected indemnitee.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless the Acquiror shall otherwise agree in writing,
which agreement shall not be unreasonably withheld or delayed, the Company shall
conduct its business and shall cause the businesses of its subsidiaries to be
conducted only in, and the Company and its subsidiaries shall not take any
action except in, the ordinary course of business and in the manner
substantially consistent with past practice; and the Company shall use
reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers of the Company and to preserve the present material
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. Except as set forth in Section 5.1 of the Company Disclosure
Schedule or as otherwise contemplated by this Agreement, neither the Company nor
any of its subsidiaries shall, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, any of the following without the
prior written consent of the Acquiror, which consent shall not be unreasonably
withheld or delayed:
(a) amend or otherwise change the Certificate of Incorporation or
Bylaws of the Company;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company, any of its subsidiaries or affiliates (except for the issuance of
Company Common Shares issuable pursuant to Stock Options listed in Section
2.11(c) of the Company Disclosure Schedule);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary course
of business and in a manner substantially consistent with past practice,
including sale and leaseback transactions and the disposal of surplus real
property, (ii) disposition of obsolete or worthless assets, and (iii) sales of
immaterial assets not in excess of $10,000;
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
the Company may declare and pay a dividend or make advances to its parent or the
Company, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iii) amend the terms
or change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
including, without limitation, Company Common Shares or any option, warrant or
right, directly or indirectly, to acquire Company Common Shares, or propose to
do any of the
23
foregoing; except for the acceleration of options pursuant to the terms of the
Company Stock Option Plans and the exercise of such options;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof, (ii) incur any indebtedness for borrowed money or debt securities or
assume, guarantee or endorse or otherwise as an accommodation become responsible
for, the obligations of any person or, except in the ordinary course of business
consistent with past practice, make any loans or advances (other than loans or
advances to or from direct or indirect wholly owned subsidiaries), (iii) enter
into or amend any material contract other than in the ordinary course of
business; (iv) authorize any capital expenditures or purchases of fixed assets;
or (v) enter into or amend any contract, agreement, commitment or arrangement to
effect any of the matters prohibited by this Section 5.1(e);
(f) increase the compensation payable or to become payable to any of
its officers or its general pay scale for other employees, except for increases
in salary or wages of employees of the Company or its subsidiaries in accordance
with past practice or, except in the ordinary course of business or pursuant to
agreements, plans or policies in effect prior to the date of this Agreement,
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director or officer of the Company, or establish,
adopt, enter into or amend in any material respect any bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any current or
former directors or officers of the Company, except, in each case, as may be
required by law;
(g) except to conform to GAAP, take any action to change accounting
policies or procedures (including, without limitation, procedures with respect
to revenue recognition, payments of accounts payable and collection of accounts
receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax
liability, except to the extent the amount of any such settlement has been
reserved for in the financial statements contained in the Company SEC Reports;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(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 of liabilities reflected or reserved against in
the financial statements contained in the Company SEC Reports or incurred in the
ordinary course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in this Section 5.1, or any action which would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect in any material respects or prevent the Company from performing in
all material respects or cause the Company not to perform its covenants
hereunder.
24
SECTION 5.2. No Solicitation.
(a) Commencing on the date that the Acquiror provides the Company with
bona fide proof of sufficient funds available to consummate the Merger,
including without limitation payment of the Merger Consideration (the "Proof of
Financing Date") the Company shall not, directly or indirectly through any
officer, director, employee, representative or agent of the Company or any of
its subsidiaries, (i) solicit or initiate any inquiries or proposals regarding
any merger, sale of substantial assets, sale of shares of capital stock or
similar transactions involving the Company or any subsidiaries of the Company
other than the Merger (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any nonpublic information to any person
relating to, any Acquisition Proposal, or (iii) agree to approve or recommend
any Acquisition Proposal. Nothing contained in this Section 5.2(a) shall prevent
the Company or any representative thereof from furnishing or causing to be
furnished, information and directing the Company, its directors, officers,
employees, representatives or agents to furnish information, in each case
pursuant to confidentiality agreements similar to the one then in effect between
the Company and the Acquiror, and participating in discussions or negotiations
with any person concerning any Acquisition Proposal if the Board shall conclude
after consultation with its financial advisor, that such person has made or is
reasonably likely to make a bona fide Acquisition Proposal for a transaction
which it believes will result in the receipt of consideration that is at least
five percent (5%) greater than the aggregate amount of the Merger Consideration
(any such Acquisition Proposal being referred to herein as a "Superior
Proposal").
(b) The Company shall promptly notify the Acquiror after receipt of any
written Acquisition Proposal, or any modification of or amendment to any written
Acquisition Proposal, or any request for nonpublic information relating to the
Company or any of its subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company or any subsidiary
by any person that informs the Board that it is considering making, or has made,
an Acquisition Proposal. Such notice to the Acquiror shall be made orally and in
writing, and shall indicate, if known, whether the Company is providing or
intends to provide the person making the Acquisition Proposal with access to
information concerning the Company as provided in Section 5.2(c).
(c) On the Proof of Financing Date the Company shall immediately cease
and, subject to the terms hereof, cause to be terminated any existing
discussions or negotiations with any person (other than the Acquiror) conducted
theretofore with respect to any Acquisition Proposal in effect as of the Proof
of Financing Date. The Company agrees not to release any third party from the
confidentiality provisions of any confidentiality agreement to which the Company
is a party.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1. Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
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(a) Company Stockholder Approval. This Agreement shall have been
adopted by an affirmative vote of the holders of a majority of the outstanding
Company Common Shares (voting together as one class) in accordance with the
Certificate of Incorporation and Bylaws of the Company and the rules and
regulations promulgated by the SEC and the Nasdaq Stock Exchange, Inc.;
(b) Acquiror Shareholder Approval. This Agreement shall have been
adopted by an affirmative vote of the holders of a majority of the outstanding
capital stock of the Acquiror (voting together as one class) in accordance with
its Articles of Incorporation and Bylaws.
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; and there shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal;
(d) Fairness Opinion. The Board shall have received the opinion of a
financial advisor reasonably acceptable to the Acquiror to the effect that, as
of the Proof of Financing Date, the Merger Consideration to be received by the
Holders pursuant to the Merger is fair, from a financial point of view, to such
Holders, and such opinion shall not have been modified in any materially adverse
respect or withdrawn prior to the Closing.
SECTION 6.2. Conditions to Obligations of the Acquiror. The obligations
of the Acquiror to effect the Merger are further subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects on the date hereof and (except to the extent specifically
given as of an earlier date) on and as of the Closing Date as though made at the
Closing Date, except where the failure to be true and correct would not be
reasonably likely to have a Material Adverse Effect. The Company shall have
delivered to the Acquiror a certificate dated as of the Closing Date signed by
an executive officer to the effect set forth in this Section 6.2(a).
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Company shall
have delivered to the Acquiror a certificate dated as of the Closing Date signed
by an executive officer to the effect set forth in this Section 6.2(b) (the
"Closing Certificate"). The Closing Certificate shall also certify that the
Company's obligations set forth in Section 4.12 hereof with respect to the
Minimum Current Assets have been satisfied.
(c) Non-Competition Agreement. The individual identified in Section
4.13 hereof shall have delivered his Non-Competition Agreement to the Acquiror
on or prior to the Closing Date.
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(d) Legal Opinion. An opinion of Xxxx, Xxxx, Xxxx & Freidenrich,
L.L.P., counsel to the Company, dated as of the Closing Date, substantially in
the form attached hereto as Exhibit B, shall have been delivered to the Acquiror
on the Closing Date.
(e) Dissenting Stockholders. The total number of Company Common Shares,
if any, as to which the right to dissent has been asserted under Section 262 of
the DGCL, shall not exceed ten percent (10%) of the total number of outstanding
shares of Company Common Stock.
SECTION 6.3. Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Acquiror contained in this Agreement shall be true and correct in all
material respects on the date hereof and (except to the extent specifically
given as of an earlier date) on and as of the Closing Date as though made on the
Closing Date, except where the failure to be true and correct would not be
reasonably likely to have a Material Adverse Effect. The Acquiror shall have
delivered to the Company a certificate dated as of the Closing Date, signed by
an executive officer of each of them and to the effect set forth in this Section
6.3(a).
(b) Performance of Obligations of the Acquiror. The Acquiror shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Acquiror shall
have delivered to the Company a certificate dated as of the Closing Date, signed
by an executive officer of each of them and to the effect set forth in this
Section 6.3(b).
ARTICLE VII
TERMINATION
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding adoption by the stockholders of the
Company or the Acquiror:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Acquiror and the Company; or
(b) by either the Acquiror or the Company, if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger (provided that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party who has
not complied with its obligations under Section 4.6 (Commercially Reasonable
Efforts) and such noncompliance materially contributed to the issuance of any
such order, decree or ruling or the taking of such action);
(c) by the Acquiror, prior to the Effective Time, if the Board shall
withdraw, modify or change its approval or recommendation of this Agreement or
the Merger in a manner adverse to the Acquiror or the Company has not delivered
the Fairness Opinion referenced in Section 6.1(d) at the Proof of Financing Date
or prior to Closing;
27
(d) by the Acquiror or the Company, prior to the Effective Time
(provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained in this
Agreement), (i) if any representation or warranty of the Company or the
Acquiror, respectively, set forth in this Agreement shall be untrue when made,
except where the failure to be true and correct would not be reasonably likely
to have a Material Adverse Effect, or (ii) upon a breach in any material respect
of any covenant or agreement on the part of the Company or the Acquiror,
respectively, set forth in this Agreement, in each case where such untruth or
breach would have a material effect on the Company or the Acquiror, as the case
may be (either (i) or (ii) above being a "Terminating Breach"), provided, that,
if such Terminating Breach is curable by the Company or the Acquiror, as the
case may be, through the exercise of commercially reasonable efforts, then for
so long as the Company or the Acquiror, as the case may be, continues to
exercise such commercially reasonable efforts, or if the Terminating Breach is
cured, neither the Company nor the Acquiror, respectively, may terminate this
Agreement under this Section 7.1(d);
(e) by the Company, following the Proof of Financing Date and prior to
the Effective Time, if the Company enters into a written agreement providing for
the consummation of a transaction that constitutes a Superior Proposal;
(f) by the Acquiror or the Company, if the Special Meeting shall have
been held and this Agreement shall not have been adopted by the affirmative vote
of the holders of the requisite number of outstanding Company Common Shares;
(g) by the Acquiror or the Company, if the Effective Time shall have
not occurred on or before October 31, 2003; provided, however, that neither the
Acquiror nor the Company may terminate this Agreement pursuant to this Section
7.1(g) if such party's failure to fulfill any of its obligations under this
Agreement shall be a reason that the Effective Time shall not have occurred on
or before such date;
(h) by the Company, following the date 90 days after the date hereof
and prior to the Effective Time, if the Acquiror has not received adequate
financing to consummate the Merger, including, without limitation, payment of
the Merger Consideration; or
(i) by the Company, prior to the Proof of Financing Date, if it enters
into a written agreement providing for the consummation of a transaction that
arose out of an Acquisition Proposal and that has bona fide proof of sufficient
funds available to consummate such transaction at the time of signing such
agreement.
SECTION 7.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 7.3 and Section 8.1 hereof, and (ii) except as otherwise provided in
Section 7.3, nothing herein shall relieve any party from liability for any
Terminating Breach hereof by such party.
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SECTION 7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated.
(b) The Company shall pay the Acquiror an amount equal to five percent
(5%) of the aggregate amount of the Merger Consideration plus all actual
reasonable out-of-pocket expenses of the Acquiror incurred in connection with
the transactions contemplated pursuant to the terms of this Agreement, including
reasonable attorneys' fees, accountants' fees, appraiser's fees, financing
commitment fees and other similar expenses; provided, however, such amounts
shall not exceed $350,000 (the "Company Fee"), upon the first to occur of the
following events:
(i) the termination of this Agreement pursuant to Section 7.1(c);
(ii) the termination of this Agreement pursuant to Section
7.1(e); or
(iii) the termination of this Agreement pursuant to Section
7.1(f)
(c) Upon the termination of this Agreement pursuant to Section 7.1(h)
the Acquiror shall pay the Company the actual reasonable expenses incurred by
the Company in connection with the transactions contemplated herein (including,
without limitation, legal, accounting and investment banking fees), up to a
maximum of $100,000.
(d) Upon the termination of this Agreement pursuant to Section 7.1(i),
the Company shall pay the Acquiror the actual reasonable expenses incurred by
the Acquiror in connection with the transactions contemplated herein (including,
without limitation, legal, accounting and investment banking fees), up to a
maximum of $100,000.
(e) Fees payable pursuant to Section 7.3(b), (c) or (d) above shall be
paid within five (5) business days after the first to occur of any of the events
described in Section 7.3(b), (c) or (d).
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Indemnification by the Company. Subject to the other
provisions of this Article VIII, from and after the Effective Time, the Company
shall indemnify and hold the Acquiror and its directors, officers, employees,
agents and representatives (the "Acquiror Indemnitees") harmless from and
against any and all losses, claims, liabilities, costs and expenses (including
without limitation reasonable expenses of investigation and reasonable
attorneys' fees and disbursements) (collectively, "Losses") arising out of or
relating to:
(a) any breach of any representation or warranty of the Company
contained in Article II of this Agreement or in any certificate or other
document delivered pursuant hereto;
(b) any breach of any covenant of the Company contained in this
Agreement.
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SECTION 8.2. Indemnification by the Acquiror. Subject to the other
provisions of this Article VIII, from and after the Effective Time, the Acquiror
shall indemnify and hold the Company and its directors, officers, employees,
agents and representatives (the "Company Indemnitees") harmless from and against
any and all Losses arising out of or related to:
(a) any breach of any representation or warranty of the Acquiror
contained in Article III of this Agreement or in any certificate or other
document delivered pursuant hereto;
(b) any breach of any covenant of the Acquiror contained in this
Agreement.
SECTION 8.3. Stockholder Representative.
(a) Xxxxxx Xxxx, an individual residing in the State of California,
shall be constituted and appointed as agent ("Stockholder Representative") for
and on behalf of the Holders to give and receive notices and communications, to
authorize delivery to the Acquiror of cash from the Escrow Cash in satisfaction
of claims by the Acquiror, to object to such deliveries to make claims on behalf
of the Holders pursuant to Section 8.5 hereof, to agree to, negotiate, enter
into settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to such claims, and to
take all actions necessary or appropriate in the judgment of the Stockholder
Representative for the accomplishment of the foregoing. Such agency may be
changed by the holders of a majority in interest of the Escrow Fund from time to
time upon not less than 10 days' prior written notice to the Acquiror. No bond
shall be required of the Stockholder Representative, and the Stockholder
Representative shall receive no compensation for his services. Notices or
communications to or from the Stockholder Representative shall constitute notice
to or from each of the Holders.
(b) The Stockholder Representative shall not be liable for any act done
or omitted hereunder as Stockholder Representative while acting in good faith
and in the exercise of reasonable judgment and any act done or omitted pursuant
to the advice of counsel shall be conclusive evidence of such good faith. The
Holders shall severally indemnify and hold the Stockholder Representative
harmless against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Stockholder Representative and
arising out of or in connection with the acceptance or administration of his
duties hereunder.
(c) A decision, act, consent or instruction of the Stockholder
Representative shall constitute a decision of all of the Holders for whom cash
otherwise payable to them is deposited in the Escrow Cash and shall be final,
binding and conclusive upon each such Holder, and the Escrow Agent and the
Acquiror may rely upon any decision, act, consent or instruction of the
Stockholder Representative as being the decision, act, consent or instruction of
each and every such Holder. The Escrow Agent and the Acquiror are hereby
relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Stockholder
Representative.
SECTION 8.4. Time Limit. No party shall be entitled to indemnification
under Section 8.1 or 8.2, as the case may be, unless written notice is given to
the party (or parties) from whom indemnification is sought by the Escrow
Termination Date.
SECTION 8.5. Indemnification Procedure.
30
(a) Notice by Indemnitee. In the event that an Acquiror Indemnitee or a
Company Indemnitee seeks indemnification (the "Indemnitee") from the other party
to this Agreement (the "Indemnitor"), the Indemnitee shall promptly notify the
Indemnitor in writing of such claim or demand, specifying the nature of such
claim or demand and the amount or the estimated amount thereof to the extent
then feasible, which estimate shall not be conclusive of the final amount of
such claim or demand (the "Claim Notice"). The Indemnitor shall have twenty days
from the date of delivery of the Claim Notice (the "Notice Period") to notify
the Indemnitee whether or not the Indemnitor disputes its liability to the
Indemnitee hereunder with respect to such claim or demand and, notwithstanding
any such dispute, whether or not it desires, at its sole cost and expense, to
defend the Indemnitee against any such claim or demand.
(b) Response by Indemnitor. In the event that Indemnitor notifies the
Indemnitee within the Notice Period that it desires to defend the Indemnitee
against such claim or demand then, except as hereinafter provided, the
Indemnitor shall have the right to defend the Indemnitee by appropriate
proceedings, which proceedings shall be promptly settled or prosecuted by it to
a final conclusion in such a manner as to avoid any risk of Indemnitee becoming
subject to further liability in respect of such matter; provided, however,
Indemnitor shall not, without the prior written consent of the Indemnitee,
consent to the entry of any judgment against the Indemnitee or enter into any
settlement or compromise which does not include, as an unconditional term
thereof, the giving by the claimant or plaintiff to the Indemnitee of a release,
in form and substance satisfactory to the Indemnitee, as the case may be, from
all liability in respect of such claim or litigation. If any Indemnitee desires
to participate in, but not control, any such defense or settlement, it may do so
at its sole cost and expense. If, in the reasonable opinion of the Indemnitee,
any such claim or demand or the litigation or resolution of any such claim or
demand involves an issue or matter which would reasonably be expected to have a
materially adverse effect on the business, operations, assets, properties or
prospects of the Indemnitee, then the Indemnitee shall have the right to control
the defense or settlement of any such claim or demand and its reasonable costs
and expenses shall be included as part of the indemnification obligation of
Indemnitor hereunder; provided, however, that the Indemnitee shall not settle
any such claim or demand without the prior written consent of the Indemnitor,
which consent shall not be unreasonably withheld, conditioned or delayed. If the
Indemnitee elects to exercise such right, the Indemnitor shall have the right to
participate in, but not control, the defense or settlement of such claim or
demand at its sole cost and expense.
(c) Presumptions.
(i) If the Indemnitor elects not to defend the Indemnitee
against a claim or demand, by not giving the Indemnitee timely notice
as provided above or otherwise, then the amount of any such claim or
demand, or if the same be defended by the Indemnitor or the Indemnitee
(but no Indemnitee shall have any obligation to defend any such claim
or demand), then that portion thereof as to which such defense is
unsuccessful, in each case, shall be conclusively deemed to be a
liability of the Indemnitor hereunder.
(ii) In the event an Indemnitee has a claim against the
Indemnitor hereunder that does not involve a claim or demand being
asserted against or sought to be collected from the Indemnitee by a
third party, the Indemnitee shall promptly send a Claim Notice with
respect to such claim to the Indemnitor. If the Indemnitor does not
notify the
31
Indemnitee within the Notice Period that it disputes such claim, the
amount of such claim shall be conclusively deemed a liability of the
Indemnitor hereunder. If the Indemnitor disputes such claim, the right
to indemnification of the Indemnitee shall be determined by a court of
competent jurisdiction.
(d) Payment. Upon the determination of liability under this Article
VIII, the Indemnitor shall pay to the Indemnitee, within ten days after such
determination, the amount of the claim for indemnification made hereunder, after
giving effect to the receipt of any insurance proceeds with respect thereto. All
payments made by the Stockholder Representative on behalf of the Company
pursuant to this Article VIII shall be payable out of the Escrow Cash pursuant
to the terms hereof and the Escrow Agreement.
(e) Limit of Liability and Threshold Amount. The aggregate liability of
the Company, on the one hand, and the Acquiror, on the other hand, under Section
8.1 or Section 8.2, respectively, shall not exceed the amount of the Escrow
Cash. Additionally, neither the Company, on the one hand, nor the Acquiror, on
the other hand, shall have any liability to the other party for any Losses
sustained by the other party unless and until the amount of such party's claims
for indemnification are equal to or greater than $100,000 (the "Threshold
Amount"). The obligated party shall only be liable for the claims which in the
aggregate exceed the Threshold Amount (i.e., not first dollar). However, the
Acquiror shall be permitted to seek "first dollar" indemnification for any
Losses arising out of the Company's failure to pay taxes in jurisdictions in
which the Company has been required to pay taxes prior to the date hereof (i.e.,
the Threshold Amount shall not apply to such claims).
(f) Exclusive Remedy. After the Effective Time, except for any
nonmonetary, equitable relief to which any Indemnitee may be entitled, the
rights and remedies set forth in this Article VIII shall constitute the sole and
exclusive rights and remedies of the parties hereto. Each of the parties hereto
hereby waives any and all claims and any cause of action for monetary damages
under or with respect to the subject matter of this Agreement (other than any
claims or causes of action arising out of the express provisions of this Article
VIII) that it might otherwise be entitled to assert against the other party
hereto.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc. Except as otherwise provided in this Section 9.1,
the representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate on the Escrow Termination Date or upon the termination of this
Agreement pursuant to Section 7.1, as the case may be, except that (i) if the
Merger is consummated the agreements set forth in Article I shall survive the
Effective Time indefinitely, and (ii) the agreements set forth in Section 7.3
shall survive termination indefinitely. The Letter of Intent shall survive
termination of this Agreement as provided therein.
32
SECTION 9.2. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):
(a) If to the Acquiror: Oblique, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx, President
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to: Xxxxx Day
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) If to the Company: Asante Technologies, Inc.
000 Xxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx and
Xxxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(c) If to the Stockholder
Representative: Mr. Xxxxxx Xxxx
000 Xxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
SECTION 9.3. Certain Definitions. For purposes of this Agreement, the
term:
(a) "$" or "dollars" means the lawful currency of the United States of
America.
33
(b) "affiliates" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(c) "business day" means any day other than a day on which banks in New
York City are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "copyrights" means all copyrights (including copyrights in computer
software) and database rights (whether registered or unregistered) and including
applications for the registration of any such thing and unregistered design
rights and all forms of protection of a similar nature or having equivalent or
similar effect to any of these which may exist anywhere in the world.
(f) "know-how" means all proprietary know-how and trade secrets held in
any form, including all product specifications, processes, formulas, product
designs, plans, ideas, concepts, inventions, manufacturing, technical
information, data, research records, customer and supplier lists and similar
data and information, and all other confidential or proprietary technical and
business information.
(g) "Material Adverse Effect" means any change, effect, event,
occurrence, state of facts or developments that materially adversely affects any
one or a combination of the assets, liabilities, business, results of
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries, taken as a whole, provided, however, that none of the
following shall be deemed in themselves, either alone or in combination, to
constitute, a Material Adverse Effect (i) any change in the market price or
trading volume of the Company's stock after the date hereof; (ii) any failure by
the Company to meet internal revenue or earnings projections or forecasts or
published revenue or earnings projections for any period ending (or for which
revenues or earnings are released) on or after the date of this Agreement and
prior to the Effective Time; (iii) decreases in working capital substantially
consistent with the Company's internal projections supplied to the Acquiror;
(iv) any adverse change, effect, event, occurrence, state of facts or
development directly caused by the announcement or pendency of the Merger
(including any cancellations of or delays in customer orders, any reduction in
sales, any disruption in supplier, distributor, partner or similar relationships
or any loss of employees); (v) any adverse change, effect, event, occurrence,
state of facts or developments directly caused by resulting from or attributable
to conditions affecting the networking industry or the U.S. or world economies
as a whole (unless such conditions adversely affect the Company in a materially
disproportionate manner); (vi) any adverse change, effect, event, occurrence,
state of facts or development directly resulting from or attributable or
relating to reasonable out-of-pocket fees and expenses (including legal,
accounting, investment banking and other fees and expenses) incurred in
connection with the transactions contemplated by this Agreement; or (vii) any
adverse change, effect, event, occurrence, state of facts or development
directly caused by compliance with the terms of, or the taking of any action
required by, this Agreement.
34
(h) "patents" means all patents, industrial and utility models and
registered designs, including applications, provisional applications, reissues,
divisions, continuations, continuations-in-part, renewals, re-examinations and
extensions of the foregoing, and all forms of protection of a similar nature or
having equivalent or similar effect to any of these that may exist anywhere in
the world.
(i) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(j) "subsidiary" or "subsidiaries" of the Company or any other person
means any corporation, partnership, joint venture or other legal entity of which
the Company or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, more than 50%
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
(k) "trademarks" means trademarks, service marks, proprietary rights
and trade names, trade dress, domain names, labels, logos, slogans and all other
devices used to identify any product, service, business or company whether
registered, unregistered or common law, and any applications for registration or
registrations thereof and all forms of protection of a similar nature or having
equivalent or similar affect to any of these that may exist anywhere in the
world.
SECTION 9.4. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after adoption
of this Agreement by the stockholders of the Company, no amendment may be made
which by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 9.5. Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (i) extend the time for the
performance of any of the obligations or other acts; (ii) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto; or (iii) waive compliance with any of the agreements
or conditions contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or parties to be bound
thereby.
SECTION 9.6. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.7. 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
materially 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
35
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the fullest extent possible.
SECTION 9.8. Entire Agreement. This Agreement and the Escrow Agreement
constitute the entire agreement between the parties hereto and thereto 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, except
for Sections 3 (Broker), 4 (Expenses) and 6 (Confidentiality) of the Letter of
Intent, which shall continue in full force and effect, and shall survive any
termination of this Agreement or the Closing Date, in accordance with its terms
or as otherwise expressly provided herein.
SECTION 9.9. Assignment; Guarantee of Acquisition Obligations. This
Agreement shall not be assigned or delegated by operation of law or otherwise.
SECTION 9.10. 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, including, without limitation, by way of subrogation.
SECTION 9.11. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.12. Governing Law; Venue. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. Each of the parties hereto (i) hereby submits
itself to the personal jurisdiction of any appropriate state or federal court in
the State of Delaware in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, and (iii) shall not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any other court.
SECTION 9.13. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Acquiror and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
OBLIQUE INC.
By: /s/ XXXXX X. XXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxx
President
ASANTE TECHNOLOGIES, INC.
By: /s/ XXXXXX XXXX
-------------------------------------
Xxxxxx Xxxx
President and Chief Executive Officer
The undersigned hereby accepts, and agrees to, the obligations related
to the Stockholder Representative set forth in Section 8.3 hereof.
STOCKHOLDER REPRESENTATIVE
/s/ XXXXXX XXXX
-----------------------------------------
Xxxxxx Xxxx
37
