AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Agreement") is made and entered into
September 30, 1998, by and among TeraGlobal Communications Corp., a Wyoming
corporation ("TeraGlobal"); TeraGlobal's wholly owned subsidiary, TGC
Acquisition, Inc., a California corporation ("TGC Acquisition"); Design Analysis
Associates, Inc., a Utah corporation ("Design Analysis"); and Xxxxxxx X.
Xxxxxxxx and Xxxxx Xxxxxxxx, as Trustees of the Xxxxxxx X. Xxxxxxxx Family Trust
dated October 12, 1983, sole shareholder of Design Analysis (the "Shareholder");
with respect to the following facts:
A. Design Analysis is engaged in the business of providing design,
engineering and manufacturing services to the computer electronics industry (the
"Business").
B. TeraGlobal is engaged in the business of computer hardware and
software development for multi-media communications and desires to acquire
Design Analysis through a tax-free merger of Design Analysis into TGC
Acquisition, its wholly-owned subsidiary, pursuant to Sections 354(a)(1),
361(a), 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code").
C. The parties intend that this Agreement constitute a "plan of
reorganization" within the meaning of Section 1.368-2(g) of the Income Tax
Regulations on the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants contained herein, the parties hereto agree as follows:
1. THE MERGER AND RELATED TRANSACTIONS
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
Design Analysis will merge with and into TGC Acquisition at the Effective Time
(as defined below). TGC Acquisition shall be the corporation surviving the
Merger (the "Surviving Corporation"). The terms of the Merger will be as set
forth herein and in the Merger Agreement in the form attached hereto as EXHIBIT
1.1. (the "Merger Agreement").
1.2 THE CLOSING. A Closing of the Merger and related transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxx, Forward, Xxxxxxxx & Scripps LLP, 000 Xxxx Xxxxxxxx, Xxxxx 0000, Xxx
Xxxxx, Xxxxxxxxxx 00000, on or about September 30, 1998 or such earlier time and
other place as is mutually agreeable to the parties and following the
satisfaction or waiver of all other conditions to the obligations of the parties
to consummate the Merger and related transactions contemplated hereby (the
"Closing Date").
1.3 ACTIONS AT THE CLOSING. At the Closing, (i) Design Analysis will
deliver to TeraGlobal the various certificates, instruments, and documents
referred to in Section 7 below; (ii) TeraGlobal and TGC Acquisition will deliver
to Design Analysis the various certificates,
instruments and documents referred to in Section 6 below; and (iii) TGC
Acquisition and TeraGlobal will file the Merger Agreement, together with the
Officers' Certificates required pursuant to Section 1103 of the California
Corporations Code in the form of EXHIBIT 1.3, with the California Secretary of
State. At the Closing, upon surrender of certificates properly endorsed for
transfer for each outstanding share of common stock of Design Analysis ("Design
Analysis Share"), TeraGlobal shall issue to the Shareholder the number of shares
of common stock of TeraGlobal ("TeraGlobal Shares") issuable in connection with
the Merger.
1.4 EFFECT OF MERGER.
1.4.1 GENERAL. The Merger shall become effective at the time the
Merger Agreement is filed with the California Secretary of State or at such
later time stated in the Merger Agreement (the "Effective Time"). The Merger
shall have the effect set forth in Section 1107 of the California Corporations
Code. The Surviving Corporation may, at any time after the Effective Time, take
any action (including executing and delivering any document) in the name and on
behalf of such entity or the entity with which it merged in order to carry out
and effectuate the transactions contemplated by this Agreement.
1.4.2 CONVERSION OF DESIGN ANALYSIS SHARES. At the Effective
Time, each Design Analysis Share then issued and outstanding shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into and represent the right to receive 5,500 TeraGlobal Shares (the
"Merger Consideration"). The Merger Consideration will be proportionately
adjusted in the event of any stock split or combination of the outstanding
shares of common stock of TeraGlobal ("TeraGlobal Shares") or of the Design
Analysis Shares occurring, or any stock dividend payable to holders of
TeraGlobal Shares or Design Analysis Shares the record date of which is, prior
to the Effective Time.
1.4.3 OTHER SHARES. Each share of TGC Acquisition common stock,
whether or not issued and outstanding, shall continue unchanged as shares of
common stock of the Surviving Corporation.
1.5 THE SURVIVING CORPORATION.
1.5.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
TGC Acquisition as in effect immediately prior to the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation until thereafter
amended in accordance with applicable law and such Articles of Incorporation,
provided that such Articles shall be amended at the Effective Time to change the
name of TGC Acquisition to "Design Analysis Associates, Inc."
1.5.2 BYLAWS. The bylaws of TGC Acquisition as in effect
immediately prior to the Effective Time shall be the bylaws of the Surviving
Corporation until thereafter amended in accordance with applicable law, the
Articles of Incorporation of such Surviving Corporation and such bylaws.
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1.5.3 BOARD OF DIRECTORS. The directors of TGC Acquisition
immediately prior to the Effective Time, currently Xxxxx Xxxx, shall be the
initial board of directors of the Surviving Corporation, each of such persons to
serve until his or her successor is duly elected and qualified.
1.5.4 OFFICERS. The officers of TGC Acquisition immediately prior
the Effective Time, currently Xxxxx Xxxx, shall be the initial officers of the
Surviving Corporation, each of such officers to serve until his or her successor
is duly qualified.
1.6 EARN-OUT.
1.6.1 CALCULATION OF EARN-OUT. The Shareholder shall be entitled
to earn additional TeraGlobal Shares ("Earn-Out Shares") based on Surviving
Corporation's gross sales during the period from January 1 to December 31, 1998
(such period to be referred to as "Fiscal 1998" and such gross sales as "Fiscal
1998 Sales"). If Fiscal 1998 Sales are equal to or greater than $3.1 Million,
TeraGlobal shall issue in the name of and deliver to the Shareholder 200,000
Earn-Out Shares on April 15, 1999. In addition, on April 1, 1999, TeraGlobal
shall issue in the name of and deliver to the Shareholder that number of
Earn-Out Shares equal to two (2) times the amount by which Fiscal 1998 Sales
exceed $3.1 Million divided by the market closing price of TeraGlobal shares on
December 15, 1998; provided, however, that in no event shall the total amount of
Earn-Out Shares exceed 400,000.
1.6.2 CALCULATION OF FISCAL 1998 SALES. On or before April 1,
1999, TeraGlobal shall provide to the Shareholder the financial statements of
the Surviving Corporation for Fiscal 1998, as audited by an independent
certified public accountant in accordance with generally accepted accounting
principles, which statements shall include a calculation of Fiscal 1998 Sales,
which calculation shall be final and binding on the parties hereto.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DESIGN ANALYSIS AND THE
SHAREHOLDER
Design Analysis and the Shareholder jointly and severally represent and
warrant to TeraGlobal and TGC Acquisition and agree as follows:
2.1 EXISTENCE: GOOD STANDING: CORPORATE AUTHORITY AND AUTHORIZATION.
Design Analysis is a corporation duly organized, validly existing and in good
standing under the laws of the State of Utah. Design Analysis is qualified to
do business and is in good standing in all other jurisdictions in which the
character or location of the properties owned or leased by it or the nature of
the business conducted by it makes such qualification necessary and where the
failure to so qualify would have a material adverse effect upon Design Analysis.
Design Analysis has the power to own its property and to carry on its business
as now being conducted. Design Analysis has the full power and authority to
enter into and perform its obligations under this Agreement and under each other
instrument and document executed and delivered by Design Analysis in connection
with this Agreement, and to take all actions required of it to consummate the
Merger.
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2.2 ACTIONS. Design Analysis and the Shareholder have taken all
corporate or other actions and proceedings necessary to be taken in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement. Design Analysis and the
Shareholder have duly and validly authorized, executed and delivered this
Agreement, which constitutes the legal, valid and binding obligation of Design
Analysis and the Shareholder, and is enforceable against each of them in
accordance with its terms.
2.3 NO BREACH. Design Analysis is not in violation or breach of any of
the terms, conditions or provisions of its Articles of Incorporation, its
Bylaws, or any indenture, mortgage or deed of trust or other contracts, lease,
instrument, court order, judgment, arbitration award, or decree affecting its
business, to which it is a party or by which it is bound, and has received no
notices of any of the foregoing.
2.4 NO DEFAULTS. The execution, delivery or performance of this
Agreement by Design Analysis and the Shareholder and consummation of the
transactions contemplated hereby will not violate or conflict with the
provisions of the Articles of Incorporation or Bylaws of Design Analysis or the
Trust Agreement of the Shareholder; result in any breach of or any default
under, or cause any acceleration of any obligation under, any contract,
mortgage, indenture, agreement, lease or other instrument to which Design
Analysis or the Shareholder is a party or by which it is bound or by which it
may be affected, or result in the creation of any lien or encumbrance upon any
of Design Analysis's assets; or violate any judgment, decree, order, statute,
rule or regulation applicable to Design Analysis or the Shareholder.
2.5 APPROVALS AND CONSENTS. Design Analysis is not legally or
contractually required to obtain any approvals or consents of any persons or
entities not a party to this Agreement in connection with the consummation of
the transactions contemplated by this Agreement. No permit, license, consent,
approval or authorization of, or filing with, any governmental regulatory
authority or agency is required in connection with the execution, delivery and
performance of this Agreement, or the consummation of the transactions
contemplated by this Agreement.
2.6 CAPITAL STOCK AND EXCLUSIVE DEALING. Design Analysis has an
authorized capitalization consisting of two hundred (200) shares of voting
common stock, no par value, of which two hundred (200) shares are issued,
outstanding, and held beneficially and of record only by the Shareholder. All
such outstanding shares have been duly authorized, are validly issued, and are
fully paid and nonassessable. There are no other shares of stock of Design
Analysis issued and outstanding. There are no outstanding options, warrants,
rights, preemptive rights, calls, commitments, conversion rights, rights of
exchange, plans or other agreements of any character providing for the purchase,
issuance or sale of any shares of the capital stock of Design Analysis, except
as contemplated by this Agreement. None of the outstanding Design Analysis
Shares have been issued in violation of any preemptive right or agreement,
commitment or obligation binding on Design Analysis or the Shareholder or any
applicable securities laws.
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2.7 SUBSIDIARIES. Design Analysis has no subsidiaries.
2.8 SHAREHOLDER MATTERS.
2.8.1 OWNERSHIP. The Shareholder has full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
The Shareholder owns its Design Analysis Shares free and clear of any
encumbrance, lien, restriction or other defect in title. The Design Analysis
Shares will be transferred and exchanged in the Merger in the same condition as
represented in this Agreement.
2.8.2 INVESTMENT INTENT. The Shareholder is purchasing the
TeraGlobal Shares for investment for its own account and not with a view to a
sale or distribution thereof. The Shareholder believes that an investment in the
TeraGlobal Shares is suitable for the Shareholder based upon its investment
objectives and financial needs. The Shareholder (i) has adequate means of
providing for his current financial needs; (ii) has no need for liquidity in its
investment; (ii) at the present time, can afford a complete loss of such
investment; and (iv) does not have an overall commitment to investments which
are not readily marketable that is disproportionate to its net worth. The
Shareholder realizes that the purchase of the TeraGlobal Shares is a long-term
investment and that it must bear the economic risk of the investment for an
indefinite period of time. The Shareholder acknowledges that the TeraGlobal
Shares have not been registered under the Securities Act of 1933 or the
securities laws of any state, and may not be transferred in the absence of such
registration or the presence and availability of an exemption from registration.
The Shareholder has, prior to the purchase of the TeraGlobal Shares, had an
opportunity to obtain any information which he deems necessary to evaluate the
purchase of the TeraGlobal Shares and to verify the accuracy of the information
otherwise provided.
2.8.3 NO OBLIGATION TO REGISTER. The Shareholder understands that
TeraGlobal is under no obligation to register the sale, transfer or other
disposition of the TeraGlobal Shares by the Shareholder or on the Shareholder's
behalf under the Securities Act or to take any other action necessary in order
to make compliance with an exemption from such registration available.
2.8.4 LEGEND. The Shareholder understands that unless and until
the transfer by the Shareholder of his TeraGlobal Shares has been registered
under the Securities Act, the certificates issued to the Shareholder shall bear
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR
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IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT."
2.9 FINANCIAL STATEMENTS. Design Analysis has previously delivered to
TeraGlobal a true, accurate and complete copy of the unaudited consolidated
financial statements for the fiscal year ended December 31, 1996 and 1997 and
the period from January 1, 1998 to August 13, 1998, attached hereto as EXHIBIT
2.9 (the "Financial Statements"). The Financial Statements have been prepared
in accordance with generally accepted accounting principles ("GAAP"), are
consistent in all respects with the books and records of Design Analysis and its
subsidiaries, and present fairly the financial position of the Business as of
the date shown thereon.
2.10 ABSENCE OF UNDISCLOSED LIABILITIES. Design Analysis has no
liability or obligation (absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected on a corporate balance sheet or disclosed in
the notes thereto, except for liabilities stated or adequately reserved against
in the Financial Statements, or for liabilities arising in the ordinary course
of business.
2.11 ABSENCE OF CERTAIN CHANGES AND EVENTS. With regard to Design
Analysis, there has not been since the date of the most recent Financial
Statements: (i) any material adverse change in the assets or liabilities of the
Business, other than changes in the ordinary course of business; (ii) any
damage, destruction or loss, whether or not covered by insurance, affecting its
tangible assets; (iii) any amendment, termination or cancellation of any
material contract; (iv) any failure to pay when due any material obligation; (v)
any material transactions entered into or any material liabilities or
obligations incurred; or (vi) any failure to operate the Business in the
ordinary course with an effort to preserve the goodwill of the Business as a
going concern.
2.12 TITLE TO ASSETS AND PROPERTIES; CONDITION.
2.12.1 Design Analysis owns or leases or otherwise has the right to
use all of its assets and properties, which are presently being used in or are
reasonably necessary to carry on its business and operations as presently
conducted, and such assets, properties and agreements are all of the assets,
properties and agreements which are used in or are reasonably necessary to carry
on its business and operations as presently conducted. All assets and
properties leased or owned are located in their offices at 00 Xxxx 000 Xxxxx,
Xxxxx, Xxxx.
2.12.2 Each lease or agreement under which Design Analysis is a
lessee of any property, real or personal, owned by a third party is a valid and
continuing agreement without any default of Design Analysis thereunder or, to
the best knowledge of Design Analysis, of the other party thereto, and this
Agreement and the consummation of the transactions contemplated hereby will not
cause any default under any such lease or agreement.
2.12.3 Design Analysis has good and marketable title to all
property and assets which it owns, free and clear of all mortgages, liens,
pledges, charges, claims, encumbrances or
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restrictions of any kind whatsoever (whether accrued, absolute, contingent, or
otherwise), except liens for liens of record against any real property interests
and current property taxes not yet due and payable and liens that do not
materially interfere with the ability of Design Analysis to conduct its business
or qualify as "material" liens.
2.12.4 Neither Design Analysis nor the Shareholder has received any
notice of violation of any regulation, ordinance, law, order or other
requirement relating to the property, real or personal, or Design Analysis'
Business. Neither Design Analysis nor the Shareholder is aware of any changes
in any such regulation, ordinance, law, order or other requirement affecting any
such property or any condemnation proceeding, pending or threatened, which might
prohibit Design Analysis from continuing its present use of such property or
from using such property for the purpose for which it was acquired, or which
might curtail or interfere with the present or proposed use of such property.
2.12.5 The furniture, fixtures, leaseholds, equipment and other
personal property of Design Analysis are in good operating condition and repair.
2.13 MATERIAL CONTRACTS. Design Analysis and the Shareholder have
delivered to TeraGlobal a true, accurate and complete copy of each contract
which is material to the operation of the Business ("Material Contracts").
Design Analysis is not in default under or in breach of any Material Contract.
To the knowledge of the Shareholder, no other party to any Material Contract is
in default thereunder or breach thereof. Neither the Shareholder nor Design
Analysis has received any claim or threat that Design Analysis has breached any
of the terms and conditions of any Material Contract. No person presently a
customer, agent, employee, or independent contractor of Design Analysis has
given notice of any intention to cancel or otherwise terminate its business
relationship with Design Analysis.
2.14 LITIGATION. There is no action, suit or proceeding at law or in
equity by any person or entity, or any arbitration or any administrative or
other proceeding by or before, or to the best knowledge of the Shareholder, any
investigation by, any governmental or other instrumentality or agency, pending,
or to the best knowledge of the Shareholder, threatened, against or affecting
Design Analysis or any of its properties or rights which could materially and
adversely affect the right or ability of Design Analysis to carry on its
business as now conducted, or which could materially and adversely affect its
financial condition or properties.
2.15 TAXES. All tax returns required to be filed by Design Analysis
have been true, accurate and complete in all respects and have been filed as of
the Closing Date and all liabilities thereunder have been paid in full. To the
extent that any returns have been audited by the applicable tax authorities, all
additional taxes claimed or assessed or deficiencies proposed as a result of
such audits have been paid in full or settled. There are no pending or, to the
knowledge of the Shareholder, threatened audits, investigations or claims
against Design Analysis or any of its subsidiaries.
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2.16 PERMITS. Set forth in EXHIBIT 2.16 is a complete and accurate list
of all material permits, licenses, approvals, franchises, notices,
authorizations issued by governmental entities or other regulatory authorities,
federal, state or local (collectively the "Permits"), held by Design Analysis in
connection with the Business. Each Permit is in full force and effect.
2.17 INSURANCE. Set forth in EXHIBIT 2.17 is a complete and accurate
list of insurance policies which Design Analysis maintains with respect to its
business, properties or employees. All such policies are in full force and
effect.
2.18 INTELLECTUAL PROPERTY. For purposes of this Agreement,
"Intellectual Property" shall mean inventions, copyrights, patents,
servicemarks, trademarks, tradenames, registrations and applications for the
registration of any of the foregoing, trade secrets, technical information,
knowhow, computer software programs in source and object code, actual and
prospective client customer lists, and all agreements relating to any of the
foregoing. Design Analysis owns and has the absolute and unrestricted right to
use all of its Intellectual Property fee and clear of the rights and claims of
any person. Set forth in EXHIBIT 2.18 is a complete and accurate list of all
trademarks, service marks, trade names, patents and copyrights used by Design
Analysis, together with all pending applications therefor. To the best
knowledge of the Shareholder, the use of the Intellectual Property of Design
Analysis does not infringe upon or otherwise violate the rights of any third
party.
2.19 COMPLIANCE WITH LAWS. To the best knowledge of the Shareholder,
Design Analysis is in compliance with all applicable laws, regulations, orders,
judgments and decrees of each and every jurisdiction in which it is doing
business, including applicable federal laws and regulations.
2.20 EMPLOYEE BENEFIT PLANS.
2.20.1 LIST OF PLANS. Set forth in EXHIBIT 2.20 is an accurate and
complete list of all employee benefit plans ("Employee Benefit Plans") within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not any such Employee Benefit Plans are
otherwise exempt from the provisions of ERISA, established, maintained or
contributed to by Design Analysis.
2.20.2 STATUS OF PLANS. Design Analysis does not maintain or
contribute to any such Employee Benefit Plan subject to ERISA which is not in
substantial compliance with ERISA. Design Analysis has not incurred any
liability to the Pension Benefit Guaranty Corporation ("PBGC") in connection
with any Employee Benefit Plan.
2.20.3 CONTRIBUTIONS. Full payment has been made of all amounts
which Design Analysis is required, under applicable law or under any Employee
Benefit Plan or any agreement relating to any Employee Benefit Plan to which
Design Analysis is a party, to have paid as contributions.
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2.20.4 TAX QUALIFICATION. To the best knowledge of Shareholders,
each Employee Benefit Plan intended to be qualified under Section 401(a) of the
Code has been determined to be so qualified by the Internal Revenue Service.
2.20.5 TRANSACTIONS. Design Analysis has not engaged in any
transaction with respect to any Employee Benefit Plan which would subject it to
a tax, penalty or liability for prohibited transactions under ERISA or the Code,
nor have any of its directors, officers or employees, to the extent they or any
of them are fiduciaries with respect to such plans, materially breached any of
their responsibilities or obligations imposed upon fiduciaries under Title I of
ERISA or which would result in any claim being made under or by or on behalf of
any such plans by any party with standing to make such claim.
2.20.6 OTHER PLANS. Design Analysis does not presently maintain
any employee benefit plans or any other pension, welfare or retirement benefit
plans other than those listed in EXHIBIT 2.20.
2.21 INTERESTS IN CLIENTS, SUPPLIERS, ETC. Neither Design Analysis nor
any officer or director of Design Analysis owns or possesses, directly or
indirectly, any financial or proprietary interest in, or is a director, officer
or employee of, any corporation, limited liability company, partnership,
association, trust, joint venture or other business entity which is engaged in
the same or similar business as Design Analysis, or is a competitor or potential
competitor of Design Analysis.
2.22 CLIENTS. EXHIBIT 2.22 sets forth the names and addresses of all
currently active clients of Design Analysis. Except as set forth in EXHIBIT
2.22, no such client has given notice to Design Analysis intention to terminate,
cancel or otherwise modify its relationship with Design Analysis.
2.23 BANK ACCOUNTS. Set forth in EXHIBIT 2.23 is a correct and complete
list and description of all bank accounts, the balances thereof as of September
__, 1998, and the persons authorized to access such accounts and to incur
indebtedness on behalf of Design Analysis; and a correct and complete list of
all safe deposit boxes of Design Analysis has previously been provided to
TeraGlobal.
2.24 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf of Design Analysis or the Shareholder is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any person controlling, controlled by or under common control with any of the
parties hereto, in connection with the transaction contemplated herein.
2.25 DISCLOSURE. Neither this Agreement nor any other materials
delivered to TeraGlobal in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading.
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3. REPRESENTATIONS OF TERAGLOBAL
TeraGlobal represents, warrants and agrees as follows:
3.1 EXISTENCE AND GOOD STANDING. TeraGlobal is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wyoming. TeraGlobal is qualified to do business and is in good standing in all
other jurisdictions in which the character or location of the properties owned
or leased by it or the nature of the business conducted by it makes such
qualification necessary and where the failure to so qualify would have a
material adverse effect upon TeraGlobal. TeraGlobal has the power to own its
property and to carry on its business as now being conducted. TGC Acquisition
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California. TeraGlobal and TGC Acquisition have the full
power and authority to enter into and perform their obligations under this
Agreement and under each other instrument and document executed and delivered by
TeraGlobal or TGC Acquisition pursuant hereto or in connection herewith, and to
take all actions required of them to consummate the Merger.
3.2 CORPORATE ACTIONS. TeraGlobal has taken all corporate actions and
proceedings necessary in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement. TeraGlobal has duly and validly authorized, executed and delivered
this Agreement, which constitutes the legal, valid and binding obligation of
TeraGlobal, and is enforceable against TeraGlobal in accordance with its terms.
3.3 NO BREACH. TeraGlobal is not in violation or breach of any of the
terms, conditions or provisions of its Article of Incorporation, its Bylaws, or
any indenture, mortgage or deed of trust or other contracts, lease, instrument,
court order, judgment, arbitration award, or decree affecting its business, to
which TeraGlobal is a party or by which it is bound, and has received no notices
of any of the foregoing.
3.4 NO DEFAULTS. TeraGlobal's execution, delivery or performance of
this Agreement and consummation of the transactions contemplated by this
Agreement will not violate or conflict with the provisions of the Articles of
Incorporation or Bylaws of TeraGlobal; result in any breach or in any default
under or cause any acceleration of any obligation under any contract, mortgage,
indenture, agreement, lease or other instrument to which TeraGlobal is a party
or by which it is bound, or result in the creation of any encumbrance upon any
of the assets or properties of TeraGlobal or violate any judgment, decree,
order, statute, law, rule or regulation applicable to TeraGlobal.
3.5 APPROVALS AND CONSENTS. TeraGlobal is not legally or contractually
required to obtain any approvals or consents of any persons or entities not a
party to this Agreement in connection with the consummation of the transactions
contemplated by this Agreement. No permit, license, consent, approval or
authorization of, or filing with, any governmental regulatory authority
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or agency is required in connection with the execution, delivery and performance
of this Agreement, or the consummation of the transactions contemplated by this
Agreement.
3.6 CAPITAL STOCK. TeraGlobal has an authorized capitalization
consisting of Fifty Million (50,000,000) shares of voting common stock, without
par value. As of August 8, 1998, Fourteen million Nine Hundred Forty nine
Thousand Eight Hundred Thirty-Six (14,949,830) shares were issued and
outstanding. All such outstanding shares have been duly authorized, are validly
issued, and are fully paid and nonassessable. The TeraGlobal Shares to be
issued pursuant to the Agreement are duly authorized and, when issued pursuant
to the Agreement, will be validly issued, fully paid and nonassessable. There
are no other shares of stock of TeraGlobal issued and outstanding. Other than
options issuable in connection with TeraGlobal's Employee Stock Option Plan, and
those issued as options or warrants in connection with financing of TeraGlobal,
there are no outstanding options, warrants, rights, preemptive rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements of
any character providing for the purchase, issuance or sale of any shares of the
capital stock of TeraGlobal, except as contemplated by this Agreement. None of
the outstanding TeraGlobal Shares have been issued in violation of any
preemptive right or agreement, commitment or obligation binding on TeraGlobal or
any applicable securities laws.
3.7 COMPLIANCE WITH LAWS. TeraGlobal is in compliance with all
applicable laws, regulations, orders, judgments and decrees of each and every
jurisdiction in which it is doing business, including applicable federal laws
and regulations, the violation of which would have a material adverse effect on
its operations.
3.8 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting
on behalf of TeraGlobal or TGC Acquisition is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any person controlling, controlled by or under common control with any of the
parties hereto, in connection with any of the transactions contemplated herein.
Any such broker's or finder's fees will be paid by TeraGlobal.
3.9 FINANCIAL STATEMENTS. TeraGlobal has previously delivered to
Design Analysis a true, accurate and complete copy of the unaudited consolidated
financial statements for the period from February 7, 1997 (inception) to
December 31, 1997 and the period from January 1, 1998 to June 30, 1998 (the
"TeraGlobal Financial Statements"). The TeraGlobal Financial Statements have
been prepared in accordance with GAAP, are consistent in all respects with the
books and records of TeraGlobal and its subsidiaries, and present fairly the
financial position of TeraGlobal as of the date shown thereon.
3.10 ABSENCE OF UNDISCLOSED LIABILITIES. TeraGlobal does not have any
liability or obligation (absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected on a corporate balance sheet or disclosed in
the notes thereto, which has not been disclosed to Design Analysis in writing.
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3.11 LITIGATION. Except for the suit by Xxxxxx Xxxxxxxx against
TechnoVision Communications, inc. and the suit by Messrs. Xxx and Kees against
Videostream International, inc., there is no action, suit or proceeding at law
or in equity by any person or entity, or any arbitration or any administrative
or other proceeding by or before, or to the best knowledge of TeraGlobal, any
investigation by, any governmental or other instrumentality or agency, pending,
or to the best knowledge of TeraGlobal, threatened, against or affecting
TeraGlobal or any of its properties or rights which could materially and
adversely affect the right or ability of TeraGlobal to carry on its business as
now conducted, or which could materially and adversely affect the financial
condition, or properties of such companies.
3.12 DISCLOSURE. Neither this Agreement nor any other materials
delivered to Design Analysis in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
4. PRE-CLOSING COVENANTS OF DESIGN ANALYSIS
4.1 OPERATIONS. Design Analysis and the Shareholder agree, through the
Closing Date, to cause Design Analysis to: (i) preserve intact the business
organization and the goodwill of its customers, suppliers and others having a
relationship with it, (ii) protect its properties in good repair and condition,
normal wear and tear excepted, (iii) maintain its books of account and records
in the usual and ordinary manner, (iv) pay all accounts, taxes and other
obligations when they become due and payable in the ordinary course of business,
and (v) conduct the Business in the ordinary course consistent with prior
practices, or as required by this Agreement.
4.2 ACCESS TO PROPERTIES AND INFORMATION. TeraGlobal may, prior to the
Effective Time, through its employees, agents and representatives, make or cause
to be made a detailed review of the business and financial condition of Design
Analysis, and make or cause to be made such investigation as it deems necessary
or advisable of the properties, assets, businesses, books and records of Design
Analysis. Design Analysis agrees to furnish such assistance as TeraGlobal may
reasonably request in conducting such review and investigation and will provide,
and will cause its independent public accountants to provide, TeraGlobal and its
employees, agents and representatives full access to all books, records
(including tax returns filed or in preparation), personnel and premises of
Design Analysis and the audit work papers and other records of its independent
public accountants and shall provide to TeraGlobal such other information
concerning the business of Design Analysis and its subsidiary as TeraGlobal may
reasonably request.
4.3 RETIREMENT BENEFIT PLAN. Prior to the Closing Date, Design
Analysis shall transfer the sponsorship of, and otherwise convey and externalize
to an unrelated party, that certain ______________________________________Plan
dated ________________________ and listed on EXHIBIT 2.20, including all rights,
obligations and liabilities of Design Analysis thereunder, so that Design
Analysis bears no obligations or liability with respect to such plan as of the
Effective Time. Prior to the Closing Date, any other Employee Benefit Plan must
be fully funded or similarly
12
transfered, conveyed and externalized by Design Analysis. TeraGlobal will not
assume responsibility for any liability under any of Design Analysis' existing
or prior Employee Retirement Benefit Plans, and Shareholder shall indemnify,
defend and hold TeraGlobal harmless for, from and against any liability, damage,
claim or loss arising out of any Employee Benefit Plan.
4.4 TRANSFER OF ASSETS. Prior to the Closing Date, the Shareholder
shall transfer to Design Analysis good and marketable title to all the assets
currently used in the Business including all equipment, furniture fixtures in
the land or building located in Logan, Utah, free and clear of all mortgages,
liens, encumbrances or other restrictions of any kind. The Shareholder shall
retain, and not transfer, any interest in the partnership which owns the land
Design Analysis currently occupies, but will cooperate with TCG Acquisition in
good faith to establish a mutually acceptable lease arrangement for the
facilities in Logan, Utah.
4.5 INSURANCE. Design Analysis shall maintain insurance with good and
responsible companies, including, but not limited to, general liability, product
liability, workers compensation, directors and officers liability, and property
damage insurance, to the extent as is customarily retained by it with respect to
its assets prior to the date of this Agreement, until the Merger has been fully
consummated.
4.6 RESTRICTIONS. Prior to the Closing Date, Design Analysis shall not
without the prior written consent of TeraGlobal: (i) issue any options, warrants
or other rights to subscribe for or purchase any capital stock or any securities
convertible or exchangeable into capital stock; (ii) directly or indirectly
redeem, purchase, acquire or pay a dividend or make a distribution on any
capital stock; (iii) borrow any funds or incur any indebtedness or encumber or
grant any security interest in any of its assets, (iv) enter into any agreement,
lease or commitment other than in the ordinary course of business, (v) cancel,
compromise or discount any indebtedness owed to it, (vi) purchase any assets
other than in the ordinary course of business, (vii) reclassify any of its
outstanding capital stock, (viii) merge or consolidate with, or agree to merge
or consolidate with, or purchase substantially all of the assets of, or
otherwise acquire any business or other entity or division thereof, (ix) make
any change in key management or employees, or (x) do, or commit to do, any act
which will cause a breach of this Agreement.
4.7 CONSENTS. To the extent that the consent or approval of any third
person is required under any contract in order to assign any such contract from
Design Analysis to TeraGlobal or otherwise by reason of the transactions
provided for in this Agreement, Design Analysis shall obtain such consents and
approvals on or before the Closing Date.
4.8 NOTIFICATION OF CERTAIN MATTERS. Design Analysis and the
Shareholder shall give prompt notice to TeraGlobal of (i) any material
inaccuracy in any representation or warranty made by either of them herein, or
(ii) any material failure to comply with or satisfy any covenant, condition or
agreement to be complied with by Design Analysis or the Shareholder under this
Agreement.
13
4.9 BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms and
conditions herein provided, Design Analysis shall cooperate and use its best
efforts to take, or cause to be taken, all appropriate action, and to make, or
cause to be made, all filings necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. Design Analysis shall deliver or cause to be
delivered on the Closing Date, and thereafter at such other times and places as
shall be reasonably agreed upon, such additional instruments as TeraGlobal may
reasonably request for the purpose of consummating and carrying out this
Agreement and its terms, conditions and requirements.
5. PRE-CLOSING COVENANTS OF TERAGLOBAL
5.1 ACCESS TO PROPERTIES AND INFORMATION. TeraGlobal shall furnish
Design Analysis and its representatives with information concerning its business
affairs and copies of such documents, contacts, agreements and records as Design
Analysis may reasonably request. All such information provided to Design
Analysis in written form by TeraGlobal shall be true, complete and correct and
shall be deemed represented as such by TeraGlobal. The Shareholder shall be
responsible for ensuring that Design Analysis, its employees or representatives
maintain the confidentiality of any information learned during the investigation
subject to the terms of this Agreement.
5.2 NOTIFICATION OF CERTAIN MATTERS. TeraGlobal shall give prompt
notice to the Shareholder of (i) any material inaccuracy in any representation
or warranty made by it herein, or (ii) any material failure to comply with or
satisfy any covenant, condition or agreement to be complied with by TeraGlobal
under this Agreement.
5.3 BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms and
conditions herein provided, TeraGlobal shall cooperate and use its best efforts
to take, or cause to be taken, all appropriate action, and to make, or cause to
be made, all filings necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. TeraGlobal shall deliver or cause to be delivered on the
Closing Date, and thereafter at such other times and places as shall be
reasonably agreed upon, such additional instruments as Design Analysis or the
Shareholder may reasonably request for the purpose of consummating and carrying
out this Agreement and its terms, conditions and requirements.
6. CONDITIONS TO OBLIGATIONS OF DESIGN ANALYSIS
The obligations of Design Analysis to consummate the Merger and other
transactions described herein on the Closing Date are subject to satisfaction of
the following conditions.
6.1 GOOD STANDING CERTIFICATE. TeraGlobal shall have delivered to
Design Analysis (a) copies of TeraGlobal's articles of incorporation, including
all amendments thereto, certified by the corporate Secretary of TeraGlobal, (b)
certificates from the Secretary of State or other appropriate official of the
State of Wyoming to the effect that TeraGlobal is in good standing or
14
existing in such jurisdiction and listing all charter documents of TeraGlobal on
file, (c) a certificate from the Secretary of State or other appropriate
official in each state in which TeraGlobal is qualified to do business to the
effect that TeraGlobal is in good standing in such state and (d) certificates as
to the tax status of TeraGlobal in the State of Wyoming and each state in which
TeraGlobal is qualified to do business.
6.2 NO MATERIAL ADVERSE CHANGE. Since June 30, 1998 there shall have
been no material adverse change in the assets or liabilities, the business or
financial condition, the results of operations, or prospects of TeraGlobal,
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or act of God or other public
force or otherwise, other than any such change caused by the effect of
transactions contemplated by this Agreement, and TeraGlobal shall have delivered
to Design Analysis a certificate, dated the Closing Date, to such effect.
6.3 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of TeraGlobal contained in this Agreement or in any Exhibit delivered
pursuant thereto shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date (as though made on and as of
the Closing Date) except (i) to the extent such representations and warranties
are by their express provisions made as of a specified date and (ii) for the
effect of transactions contemplated by this Agreement; and TeraGlobal shall have
delivered to Design Analysis on the Closing Date a certificate, dated the
Closing Date, to such effect.
6.4 PERFORMANCE OF AGREEMENTS. Each and all of the agreements of
TeraGlobal and TGC Acquisition to be performed on or before the Closing Date
pursuant to the terms hereof shall have been duly performed in all material
respects, and TeraGlobal shall have delivered to the Shareholder a certificate,
dated the Closing Date, to such effect.
6.5 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Shareholder and
his counsel.
6.6 NO LITIGATION THREATENED. No action or proceeding shall have been
instituted or, to the best knowledge of TeraGlobal and TGC Acquisition, shall
have been threatened before a court or other government body or by any public
authority to restrain or prohibit any of the transactions contemplated hereby.
TGC Acquisition shall have delivered to DAA a certificate, dated the Closing
Date, to such effect.
6.7 EMPLOYMENT AGREEMENTS. Xxxxxxx X. Xxxxxxxx shall have entered into
a mutually acceptable employment agreement with TGC Acquisition (the "Employment
Agreement"), which among other things shall provide in the event of termination
by TGC Acquisition, either with cause or without, a severance payment will be
payable monthly to Xxxxxxx X. Xxxxxxxx in an amount equal to his base salary for
a period of one year from the date of execution of the Employment Agreement.
15
7. CONDITIONS TO OBLIGATIONS OF TERAGLOBAL
The obligations of TeraGlobal and TGC Acquisition to consummate the Merger
and other transactions described herein on the Closing Date are subject to
satisfaction of the following conditions.
7.1 GOOD STANDING AND TAX CERTIFICATES. Design Analysis shall have
delivered to TeraGlobal (a) copies of Design Analysis's articles of
incorporation, including all amendments thereto, certified by the corporate
Secretary of Design Analysis, (b) certificates from the Secretary of State or
other appropriate official of the State of Utah to the effect that Design
Analysis is in good standing or existing in such jurisdiction and listing all
charter documents of Design Analysis on file, (c) a certificate from the
Secretary of State or other appropriate official in each state in which Design
Analysis is qualified to do business to the effect that Design Analysis is in
good standing in such state and (d) certificates as to the tax status of Design
Analysis in the State of Utah and each state in which Design Analysis is
qualified to do business.
7.2 NO MATERIAL ADVERSE CHANGE. Since June 30, 1998 there shall have
been no material adverse change in the assets or liabilities, the business or
financial condition, the results of operations, or prospects of Design Analysis,
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or act of God or other public
force or otherwise, other than any such change caused by the effect of
transactions contemplated by this Agreement, and Design Analysis shall have
delivered to TeraGlobal a certificate, dated the Closing Date, to such effect.
7.3 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Design Analysis and the Shareholder contained in this Agreement or
in any Exhibit delivered pursuant thereto shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date
(as though made on and as of the Closing Date) except (i) to the extent such
representations and warranties are by their express provisions made as of a
specified date and (ii) for the effect of transactions contemplated by this
Agreement; and Design Analysis shall have delivered to TeraGlobal on the Closing
Date a certificate, dated the Closing Date, to such effect.
7.4 PERFORMANCE OF AGREEMENTS. Each and all of the agreements of
Design Analysis and the Shareholder to be performed on or before the Closing
Date pursuant to the terms hereof shall have been duly performed in all material
respects, and Design Analysis shall have delivered to TeraGlobal a certificate,
dated the Closing Date, to such effect.
7.5 NO LITIGATION THREATENED. No action or proceeding shall have been
instituted or, to the best knowledge of Design Analysis and the Shareholder,
shall have been threatened before a court or other government body or by any
public authority to restrain or prohibit any of the
16
transactions contemplated hereby. Design Analysis shall have delivered to
TeraGlobal a certificate, dated the Closing Date, to such effect.
7.6 EMPLOYMENT AGREEMENTS. Xxxxxxx X. Xxxxxxxx and Xxxxx Xxxxxxxx
shall have entered into the Employment Agreements.
7.7 NONCOMPETITION AGREEMENTS. Xxxxxxx X. Xxxxxxxx shall have entered
into a noncompetition agreement with TeraGlobal in substantially the form of
EXHIBIT 7.7 (the "Noncompetition Agreement").
7.8 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, including TeraGlobal's review of
Design Analysis as provided in Section 4.2, and all documents incident thereto,
shall be reasonably satisfactory in form and substance to TeraGlobal and its
counsel.
7.9 COMPLETION OF DUE DILIGENCE REVIEW. TeraGlobal shall be satisfied,
in its sole discrection with the results of its due diligence review of Design
Analysis, its business and propects.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES. The
representations, warranties and indemnities included or provided herein or any
exhibit or certificate or other document delivered pursuant hereto, shall
survive the Closing Date.
8.2 INDEMNIFICATION OF TERAGLOBAL. The Shareholder shall indemnify,
defend and hold harmless TeraGlobal, Surviving Corporation and their directors
and officers (collectively, the "TeraGlobal Parties") against and from any and
all damages, losses, claims, liabilities, charges, suits, penalties, costs and
expenses, including court costs, attorneys' fees and expenses and other costs of
collection (collectively "Loss" or "Losses"), which the TeraGlobal Parties may
sustain, or to which the TeraGlobal Parties may be subjected, arising out of or
attributable to any misrepresentation or breach of warranty by Design Analysis
in, or any breach or default by Design Analysis of or under any of the
covenants, agreements or other provisions of, the Agreement, including any
documents, instruments, exhibits or certificates delivered by or on behalf of
Design Analysis pursuant to the Agreement.
8.3 INDEMNIFICATION OF THE SHAREHOLDER. TeraGlobal shall indemnify,
defend and hold harmless the Shareholder against and from any and all damages,
losses, claims, liabilities, charges, suits, penalties, costs and expenses,
including court costs, attorneys' fees and expenses and other costs of
collection (collectively "Loss" or "Losses"), which the Shareholder may sustain,
or to which the Shareholder may be subjected, arising out of or attributable to
any misrepresentation or breach of warranty by TeraGlobal in, or any breach or
default by TeraGlobal of or under any of the covenants, agreements or other
provisions of, the Agreement, including any documents, instruments, exhibits or
certificates delivered by or on behalf of TeraGlobal pursuant to the Agreement.
17
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated:
9.1.1 by either TeraGlobal or Design Analysis if a material breach
of any provision of this Agreement has been committed by the other party and
such breach has not been waived or cured within 5 days after the breaching party
has been notified thereof:
9.1.2 by Design Analysis if any of the conditions in Section 6
have not been satisfied as of October 31, 1998 or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Design
Analysis to comply with its obligations under this Agreement) and Design
Analysis has not waived such condition on or before October 31, 1998; or
9.1.3 by TeraGlobal, if any of the conditions in Section 7 not
been satisfied as of October 31, 1998 or if satisfaction of such a condition is
or becomes impossible (other than through the failure of TeraGlobal to comply
with their obligations under this Agreement) and TeraGlobal has not waived such
condition on or before October 31, 1998;
9.1.4 by mutual consent of TeraGlobal and Design Analysis; or
9.1.5 by either TeraGlobal or Design Analysis if the Closing has
not occurred (other than through the failure of any party seeking to terminate
this Agreement to comply fully with its obligations under this Agreement) on or
before October 31, 1998, or such later date as the parties may agree upon.
9.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of such right of termination will not be an
election of remedies. If this Agreement is terminated pursuant to Section 9.1,
all further obligations of the parties under this Agreement will terminate,
except that the obligations in Sections 9.3, 11.1, 11.2, 11.3, 11.4 and 11.5
will survive; provided, however, that if this Agreement is terminated by a party
because of a breach of the Agreement by the other party or because one or more
of the conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
9.3 RETURN OF DOCUMENTS IN EVENT OF TERMINATION; CONFIDENTIALITY. In
the event of the termination of this Agreement for any reason, TeraGlobal, on
one hand, and Design Analysis and the Shareholder, on the other, each will
deliver to the other all documents, work papers and other material obtained from
it relating to the transactions contemplated hereby, whether so obtained before
or after execution hereof, and will take all practicable steps to have any
information so
18
obtained kept confidential. Unless and until the transactions contemplated
hereby are consummated, the parties shall hold confidential all information and
copies of documents and records obtained in the course of their investigations
or otherwise in connection with the transactions contemplated hereby and shall
not disclose such information to any person, except as may be required by
applicable law or stock exchange rules, and except to their respective
professional advisors, provided that such advisors are bound to keep such
information confidential.
10. POST CLOSING COVENANTS.
10.1 RIGHT OF FIRST REFUSAL ON WATER MONITORING BUSINESS. As described
in this Section 10.1, TeraGlobal and TGC Acquisition hereby grant to the
Shareholder a right of first negotiation on any sale of all or substantially all
of the assets used in connection with the water monitoring portion of the
Business (the "Water Monitoring Assets") for a period of three (3) years
following the date of this Agreement. This right of first negotiation shall be
extended to the Shareholder and may be assigned without consent to Xx. Xxxxx
Xxxxxxxx. Any other assignment is expressly prohibited. In the event that
TeraGlobal or TGC Acquisition desires to sell all or substantially all of the
Water Monitoring Assets, it shall promptly provide written notice of such desire
to the Shareholder. For a period of forty-five (45) days from the date of such
notice, Shareholder shall have the right to negotiate for the purchase of the
Water Monitoring Assets to be sold, and TeraGlobal and TGC Acquisition shall
negotiate in good faith with the Shareholder for such purchase and sale. In the
event that Shareholder and TeraGlobal fails to reach a mutually acceptable
agreement for the sale and purchase of such Water Monitoring Assets within such
forty-five (45) day period, TeraGlobal or TGC Acquisition shall be free to sell
such assets to a third party on whatever terms TeraGlobal in its discretion
deems appropriate.
11. MISCELLANEOUS
11.1 PROFESSIONAL EXPENSES. Design Analysis, the Shareholder and
TeraGlobal (on behalf of it and TGC Acquisition) shall each pay all of its own
professional expenses relating to negotiating, drafting and closing the
transactions contemplated by this Agreement, including, without limitation, the
fees and expenses of its counsel, financial advisers and accountants.
11.2 CHOICE OF LAW AND VENUE. This Agreement is made and entered into
in the State of California. It is the intention of the parties that this
Agreement shall be subject to and shall be governed by and construed in
accordance with the internal laws of the State of California without reference
to its choice of law provisions. Any legal proceeding arising out of this
Agreement shall be brought only in a state or federal court of competent
jurisdiction sitting in the County of San Diego, State of California, and all
parties hereto agree that venue shall lie therein and agree to submit themselves
to the personal jurisdiction of such court.
11.3 PUBLICITY. Except as otherwise required by law, or as may be
mutually consented and agreed to, none of the parties hereto shall issue any
press release or make any other public statement, in each case relating to or in
connection with or arising out of this Agreement or the
19
matters contained herein, without obtaining the prior approval of both
TeraGlobal and Design Analysis to the contents and the manner of presentation
and publication thereof.
11.4 NOTICES. Any notice or other communications required or permitted
hereunder shall be sufficiently given if delivered in person or sent by express
mail or by registered or certified mail, postage prepaid, or by facsimile
transmission, receipt confirmed, addressed as follows:
If to TeraGlobal, TGC Acquisition or, If to Design Analysis or, after the
following the Merger, Design Analysis: Merger, the Shareholder:
TeraGlobal Communications Corp. Xx. Xxxxxxx X. Xxxxxxxx
000 Xxxxxxxx, Xxxxx 0000 00 Xxxx 000 Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000 Xxxxx, Xxxx 00000
Attention: Mr. Xxxx Xxx Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
or such other address as shall be furnished in writing by any such party, and
such notice or communication shall be deemed to have been given as of the date
so delivered, sent or mailed.
11.5 BINDING EFFECT. This Agreement and any amendment hereto, shall be
binding upon the parties hereto, their successors, heirs, next of kin,
executors, administrators, personal representatives, legal representatives,
assignees, creditors, including receivers, and all other persons with notice or
knowledge of the provisions hereof.
11.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party hereto whose signature appears hereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall bear
the signatures of all of the parties reflected hereon as the signatories.
11.7 ENTIRE AGREEMENT. This Agreement, and any related agreement
referred to herein, constitutes the entire agreement between the parties with
respect to its subject matter and there are no representations, warranties or
agreements between the parties which are not expressed herein. This Agreement
supersedes and replaces all prior understandings and agreements between the
parties hereto, whether written or oral, express or implied, with respect to its
subject matter.
11.8 AMENDMENTS. This Agreement may be amended or modified at any time
or times only by unanimous written agreement of the parties.
11.9 SEVERABILITY. The provisions of this Agreement are independent of
and severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole
20
or in part. Further, if a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable as written, such court
may interpret, construe, rewrite or revise such provision, to the fullest extent
allowed by law, so as to make it valid and enforceable consistent with the
intent of the parties hereto.
11.10 THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
11.11 ATTORNEYS' FEES. In any legal proceeding arising out of this
Agreement, including with respect to any instrument, document or agreement made
under or in connection with this Agreement, the prevailing party shall be
entitled to recover its costs and actual attorneys' fees. As used in this
Agreement, "actual attorneys' fees" shall mean the full and actual cost of any
legal services actually performed in connection with the matters involved,
calculated on the basis of the usual hourly fees charged by the attorneys
performing such services.
[The remainder of this page intentionally left blank.]
21
11.12 CONSTRUCTION. The captions contained in this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement. The language of this Agreement shall be construed as to its fair
meaning and not strictly for or against any party.
IN WITNESS WHEREOF, each of the parties herein below stated has executed
this Agreement as of the date and year first above written.
TERAGLOBAL: DESIGN ANALYSIS:
TERAGLOBAL COMMUNICATIONS CORP., DESIGN ANALYSIS ASSOCIATES,
A WYOMING CORPORATION INC., A UTAH CORPORATION
By: /s/ Xxxx Xxx By: /s/ Xxxxxxx Xxxxxxxx
------------------------------- --------------------------------
Xxxx Xxx, President Xxxxxxx X. Xxxxxxxx, President
By: /s/ Xxxxx Xxxxxxx By: /s/
------------------------------- --------------------------------
Xxxxx X. Xxxxxxx, Secretary
__________, Secretary
TGC ACQUISITION: SHAREHOLDER:
TGC ACQUISITION, INC.,
A CALIFORNIA CORPORATION /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx, and
By: /s/ Xxxxx Xxxx
-------------------------------
Xxxxx Xxxx, President and Secretary /s/ Xxxxx Xxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxx, as Trustees of the
Xxxxxxx X. Xxxxxxxx Family Trust
U/T/D ___________
22
EXHIBIT 1.1
AGREEMENT OF MERGER
This Agreement of Merger is entered into between TGC Acquisition, Inc., a
California corporation (herein "Surviving Corporation") and Design Analysis
Associates, Inc., a Utah corporation (herein "Merging Corporation").
1. Merging Corporation shall be merged into Surviving Corporation.
2. Each outstanding share of Merging Corporation shall be converted
into 5,500 shares of TeraGlobal Communications Corp., parent of
Surviving Corporation.
3. The outstanding shares of Surviving Corporation shall remain
outstanding and are not affected by the merger.
4. Merging Corporation shall from time to time, as and when requested
by Surviving Corporation, execute and deliver all such documents
and instruments and take all such action necessary or desirable to
evidence or carry out this merger.
5. The effect of the merger and the effective date of the merger are
prescribed by law.
6. Article I of the Articles of Incorporation of Surviving Corporation
is amended to read as follows:
I.
The name of the corporation is:
Design Analysis Associates, Inc.
IN WITNESS WHEREOF the parties have executed this Agreement.
TGC ACQUISITION, INC., a California DESIGN ANALYSIS ASSOCIATES, INC.,
corporation a Utah corporation
By: By:
-------------------------------- --------------------------------
Xxxxx Xxxx, President Xxxxxxx X. Xxxxxxxx, President
By: By:
-------------------------------- --------------------------------
Xxxxx Xxxx, Secretary , Secretary
--------------------
EXHIBIT 1.3
OFFICERS CERTIFICATES
CERTIFICATE OF APPROVAL
OF
ARTICLES OF MERGER
Xxxxxxx X. Xxxxxxxx and ____________, certify that:
1. They are the President and the Secretary, respectively, of Design
Analysis Associates, Inc., a Utah corporation.
2. The Articles of Merger in the form attached was duly approved by
the Board of Directors and shareholders of the corporation.
3. The shareholder approval was by the holders of 100% of the
outstanding shares of the corporation.
4. There is only one class of shares and the number of shares
outstanding is 200.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.
Date: September ___, 1998
----------------------------------
Xxxxxxx X. Xxxxxxxx, President
----------------------------------
, Secretary
----------------
CERTIFICATE OF APPROVAL
OF
ARTICLES OF MERGER
Xxxxx Xxxx certifies that:
1. He is the President and the Secretary, respectively, of TGC
Acquisition, Inc., a California corporation.
2. The Articles of Merger in the form attached was duly approved by
the Board of Directors and shareholders of the corporation.
3. The shareholder approval was by the holders of 100% of the
outstanding shares of the corporation.
4. There is only one class of shares and the number of shares
outstanding is one.
5. No vote of the shareholders of TeraGlobal Communications Corp.,
parent of the corporation, was required.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.
Date: September ___, 1998
----------------------------------
Xxxxx Xxxx, President
----------------------------------
Xxxxx Xxxx, Secretary
EXHIBIT 2.9
DESIGN ANALYSIS FINANCIAL STATEMENTS
(See attached.)
EXHIBIT 2.16
LIST OF PERMITS
(See attached.)
EXHIBIT 2.17
LIST OF INSURANCE POLICIES
1. Property, General Liability and Inland Marine insurance with General
Insurance Company of America.
2. Service and Technical Professional Liability Insurance with Evanston
Insurance Company.
EXHIBIT 2.18
LIST OF INTELLECTUAL PROPERTY
(See attached.)
EXHIBIT 2.20
EMPLOYEE BENEFIT PLANS
EXHIBIT 2.22
LIST OF CLIENTS
EXHIBIT 2.23
LIST OF BANK ACCOUNTS
EXHIBIT 7.7
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (the "Agreement") is made and effective as of
September ___, 1998, by and between TeraGlobal Communication Corporation, a
Wyoming corporation (the "Company") and Xxxxxxx X. Xxxxxxxx ("Xx. Xxxxxxxx") and
is made with reference to the following facts:
A. The Company and Xx. Xxxxxxxx, as one of the Trustees of the Xxxxxxx
X. Xxxxxxxx Family Trust UTD October 12, 1998, together with Design Analysis
Associates, Inc., a Utah corporation ("Design Analysis"), and TGC Acquisition,
Inc., a California corporation and wholly-owned subsidiary of the Company, have
entered into an Agreement of Merger dated September ____, 1998 (the "Merger
Agreement"), pursuant to which Design Analysis will merge into the Company.
B. The Xxxxxxx X. Xxxxxxxx Family Trust UTD October 12, 1983, of which
Xx. Xxxxxxxx is a Trustee, is the sole shareholder of Design Analysis.
C. The Company is unwilling to enter into the Merger Agreement unless
Xx. Xxxxxxxx agrees to enter into this Agreement and Xx. Xxxxxxxx will
personally receive a benefit from the sale of Design Analysis.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
representations and warranties contained herein and in the Merger Agreement, the
parties agree as follows:
1. NON-COMPETITION. Except as an employee, consultant or shareholder
of the Company or any subsidiary, affiliate or parent entity of the Company
(collectively, the "Company Entities"), Xx. Xxxxxxxx agrees that he will not at
any time within the five (5) year period immediately following the date of this
Agreement (the "Restricted Period"), directly or indirectly, in any territory in
the United States or any foreign country in which any of the Company Entities is
doing business or has actually investigated doing business or where the products
of any of the Company Entities are sold:
1.1 engage in, or have any interest in any person, firm,
corporation, or business (whether individually or as an employee, officer,
director, agent, shareholder, creditor, partner, consultant, holder of any
beneficial interest or otherwise other than as a beneficial holder of not more
than five percent (5%) of the outstanding voting stock of a company having at
least 500 holders of voting stock) that engages in, the business of electrical
or computer design, engineering or manufacturing or any other activity which is
the same as, similar to, or competitive with any activity now engaged in by any
of the Company Entities, as long as any of the Company Entities, or any
transferee of all or substantially all of the assets or stock of any of the
Company Entities ("Transferee") shall engage in this or similar activity;
1.2 reveal any information regarding any of the Company Entities
or their products or services which the Company Entities deem to be
confidential;
1.3 attempt to hire any person who is employed by any of the
Company Entities, assist in the hiring by any other entity or person of any
person who is at the time employed by any of the Company Entities or encourage
any such employee to terminate his or her relationship with any of the Company
Entities; or
1.4 solicit or encourage any customer of any of the Company
Entities to terminate its relationship with any of the Company Entities or to
conduct with any other person any business that such customer conducts with any
of the Company Entities.
2. RIGHTS AND REMEDIES UPON BREACH. Xx. Xxxxxxxx recognizes and
agrees that any violation of Section 1 may not be reasonably or adequately
compensated in damages and that, if Xx. Xxxxxxxx commits a breach of, or
threatens to commit a breach of, Section 1 above, the Company shall have the
following rights and remedies, each of which shall be independent of the other
and severally enforceable, and all of which shall be in addition to, and not in
lieu of, any other rights and remedies available to the Company in law or
equity:
2.1 INJUNCTION. The Company shall be entitled to permanent and
temporary injunctive and equitable relief and, pending determination of any
dispute with respect to such violation, no bond or security shall be required in
connection therewith. Without limiting the generality of the foregoing, Xx.
Xxxxxxxx specifically acknowledges that a showing by the Company of any breach
of any provision of Section 1 shall constitute, for the purposes of all judicial
determinations of the issue of injunctive relief, conclusive proof of all of the
elements necessary to entitle the Company to interim and permanent injunctive
relief against Xx. Xxxxxxxx with respect to such breach.
2.2 SPECIFIC PERFORMANCE. The Company shall be entitled to, and
Section 1 shall be enforceable by, a decree of specific performance. Without
limiting the generality of the foregoing, Xx. Xxxxxxxx specifically acknowledges
that a showing by the Company of any breach of any provision of Section 1 shall
constitute, for the purposes of all judicial determinations of the issue of
injunctive relief, conclusive proof of all of the elements necessary to entitle
the Company to specific performance against Xx. Xxxxxxxx with respect to such
breach.
3. TERM. The term of this Agreement shall be equivalent to the
Restricted Period as defined in Section 1.
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4. GENERAL PROVISIONS.
4.1 ASSIGNMENT. No rights under this Agreement shall be
assignable nor duties delegable by either party, except that the Company may
assign and delegate any of its rights and duties hereunder to a Transferee.
Nothing contained in this Agreement is intended to confer upon any person or
entity, other than the parties hereto, their successors in interest and
Transferees, any rights or remedies under or by reason of this Agreement unless
expressly so stated to the contrary.
4.2 CONSTRUCTION. This Agreement shall be construed and
enforced in accordance with the laws of the State of California, excluding such
jurisdiction's principles of conflict of law.
4.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be held to be
invalid, illegal or unenforceable in any respect, such provision shall be
curtailed, limited or eliminated only to the extent necessary to avoid or remove
such invalidity, illegality or unenforceability, and as so modified shall be
interpreted to achieve to the extent possible, the economic, business and other
purposes of such provision, and as so modified, this Agreement shall remain in
full force and effect.
4.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
4.5 ATTORNEYS' FEES. If an action is instituted to enforce any
of the provisions of this Agreement, the prevailing party in such action shall
be entitled to recover from the losing party its or his reasonable attorneys'
fees and costs as set by the court.
4.6 NOTICES. Any notice required or permitted to be given under
this Agreement shall be sufficient if such notice is in writing, delivered
personally or sent by registered or certified mail, return receipt requested,
addressed as follows:
To Xx. Xxxxxxxx: To the Company:
Xxxxxxx X. Xxxxxxxx TeraGlobal Communications Corp.
75 West 100 South 000 Xxxxxxxx, Xxxxx 0000
Xxxxx, Xxxx 00000 Xxx Xxxxx, XX 00000
Attention: President
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Notice shall be deemed given on the date of personal delivery or the date
it is placed, postage prepaid, in a depository for United States Mail.
4.7 ENTIRE AGREEMENT. This Agreement contains the entire
agreement of the parties with respect to the non-competition of Xx. Xxxxxxxx.
This Agreement supersedes all other agreements whether oral or in writing,
hereto before made or existing between the Company and Xx. Xxxxxxxx relating to
the non-competition of Xx. Xxxxxxxx. This Agreement may only be changed by an
agreement in writing signed by the party against whom enforcement of any change,
modification, extension, waiver or discharge is sought.
4.8 WAIVER. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
THE COMPANY XX. XXXXXXXX
TeraGlobal Communications Corp.,
a Wyoming corporation
-------------------------------
Xxxxxxx X. Xxxxxxxx
By:
---------------------------------
Xxxx Xxx, President
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