1
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
ASYST TECHNOLOGIES, INC.,
RADIANCE ACQUISITION, INC.,
RADIANCE SYSTEMS INCORPORATED,
AND
XXXXXXX XXXXXX, XXXXXX XXXXX, XXXX XXXXX AND XXXXXX XXXXXXXX
AS OF SEPTEMBER 20, 1996
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TABLE OF CONTENTS
PAGE
----
ARTICLE 1 - DESCRIPTION OF TRANSACTION............................... 1.
1.1 Merger of Merger Sub into the Company.................... 1.
1.2 Effect of the Merger..................................... 2.
1.3 Closing.................................................. 2.
1.4 Conversion of Company Stock.............................. 2.
1.5 Company Options.......................................... 5.
1.6 Delivery of Documents.................................... 5.
1.7 Conversion of Merger Sub Common Stock.................... 6.
1.8 Closing of Company Transfer Books........................ 6.
1.9 Tax Consequences......................................... 6.
1.10 Adjustments for Capital Changes.......................... 6.
1.11 Further Action........................................... 7.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE MANAGEMENT SHAREHOLDERS.......................... 7.
2.1 Due Organization; Qualification; Corporate Documents..... 7.
2.2 Capitalization........................................... 8.
2.3 Corporate Authority; Authorization....................... 9.
2.4 Governmental Approvals; No Conflicts..................... 10.
2.5 Financial................................................ 10.
2.6 Absence of Certain Changes or Events..................... 11.
2.7 Tax Matters.............................................. 11.
2.8 Contracts................................................ 12.
2.9 Employees................................................ 14.
2.10 Litigation and Claims; Compliance with Law............... 16.
2.11 Environmental Provisions................................. 17.
2.12 Properties............................................... 18.
2.13 Intellectual Property.................................... 19.
2.14 Insurance................................................ 20.
2.15 Disclosure............................................... 20.
2.16 Transactions with Affiliates............................. 20.
2.17 Accounting and Tax Matters............................... 20.
2.18 Company Action........................................... 20.
2.19 Financial Advisor........................................ 20.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.. 21.
3.1 Due Organization; Capitalization......................... 21.
3.2 Corporate Authority; Authorization....................... 21.
3.3 Governmental Approvals; No Conflicts..................... 22.
3.4 SEC Filings; Financial Statements........................ 22.
3.5 Absence of Certain Changes or Events..................... 23.
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.6 Disclosure............................................... 23.
3.7 SEC Registration......................................... 23.
ARTICLE 4 - CONDUCT AND TRANSACTIONS PRIOR TO
CLOSING; ADDITIONAL AGREEMENTS........................... 23.
4.1 Information and Access................................... 23.
4.2 Conduct of Business of the Company....................... 24.
4.3 Negotiation with Others.................................. 26.
4.4 Regulatory Approvals..................................... 27.
4.5 California Permit; Fairness Hearing...................... 28.
4.6 Additional Agreements.................................... 28.
4.7 Disclosure............................................... 29.
4.8 Best Efforts............................................. 29.
4.9 Covenants of Parent during the Earn-Out Period........... 29.
4.10 Registration Rights...................................... 29.
4.11 Indemnification.......................................... 30.
4.12 Current Public Information............................... 31.
4.13 Transferability of Registration Rights................... 32.
ARTICLE 5 - CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER
SUB...................................................... 32.
5.1 Securities Law Requirements.............................. 32.
5.2 Resignations............................................. 32.
5.3 Approval by Shareholders................................. 32.
5.4 Termination of 401(k) Plan............................... 32.
5.5 Absence of Restraint..................................... 32.
ARTICLE 6 - CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS........ 32.
6.1 Fairness Hearing......................................... 32.
6.2 Absence of Restraint..................................... 33.
ARTICLE 7 - INDEMNITY BY THE MANAGEMENT SHAREHOLDERS................. 33.
7.1 Indemnification Obligations.............................. 33.
7.2 Threshold................................................ 34.
7.3 Limitation............................................... 34.
7.4 Right to Require Cure of Breach.......................... 34.
7.5 No Contribution.......................................... 34.
7.6 Interest................................................. 34.
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TABLE OF CONTENTS
(CONTINUED)
7.7 Setoff................................................... 35.
7.8 Indemnification Remedies................................. 35.
7.9 Defense of Third Party Claims............................ 35.
7.10 Exercise of Remedies by Indemnitees Other Than Parent.... 36.
7.11 Definitions.............................................. 36.
ARTICLE 8 - TERMINATION OF AGREEMENT................................. 37.
8.1 Termination.............................................. 37.
8.2 Effect of Termination.................................... 37.
8.3 Confidentiality.......................................... 38.
8.4 Fees and Expenses........................................ 38.
8.5 Extension of Time; Waivers............................... 38.
ARTICLE 9 - MISCELLANEOUS............................................ 38.
9.1 Amendment................................................ 38.
9.2 Waiver................................................... 38.
9.3 Survival of Representations and Warranties............... 39.
9.4 Entire Agreement; Counterparts; Applicable Law........... 39.
9.5 Attorneys' Fees.......................................... 39.
9.6 Assignability............................................ 39.
9.7 Notices.................................................. 39.
9.8 Severability............................................. 41.
9.9 Cooperation.............................................. 41.
9.10 Parties in Interest...................................... 41.
9.11 Certain Terms............................................ 41.
9.12 Titles................................................... 42.
9.13 Articles, Sections and Exhibits.......................... 42.
iii.
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
September 20, 1996, by and among ASYST TECHNOLOGIES, INC., a California
corporation ("Parent"), RADIANCE ACQUISITION, INC., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), RADIANCE SYSTEMS INCORPORATED,
a California corporation (the "Company"), and the following shareholders of the
Company: Xxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxx and Xxxxxx Xxxxxxxx (the
"Selling Shareholders" and each, individually, a "Selling Shareholder"). Xxxxxxx
Xxxxxx, Xxxxxx Xxxxx and Xxxx Xxxxx are sometimes collectively referred to
herein as the "Management Shareholders" and each, individually, as a "Management
Shareholder." Xxxxxx Xxxxxxxx is sometimes referred to herein as the "Minority
Shareholder."
RECITALS
A. Parent has formed Merger Sub as a wholly-owned subsidiary in order to
effect the merger of Merger Sub with and into the Company (the "Merger") in
accordance with the laws of the State of California and the State of Delaware
and in accordance with this Agreement, so that upon consummation of the Merger,
Merger Sub will cease to exist and the Company will become a wholly-owned
subsidiary of Parent.
B. This Agreement has been approved by the Boards of Directors of Parent,
Merger Sub and the Company and by Parent in its capacity as the sole shareholder
of Merger Sub.
AGREEMENT
NOW, THEREFORE, in consideration of their mutual covenants, promises and
obligations contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be bound hereby, agree as follows:
ARTICLE 1
DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Subject to the terms and
conditions of this Agreement, Merger Sub shall be merged with and into the
Company and the separate existence of Merger Sub shall cease. The Company shall
be the surviving corporation in the Merger under the corporate name it possesses
immediately prior to the Merger, and Parent will own all of the issued and
outstanding shares of capital stock of the Company. The Company, in its capacity
as the corporation surviving the Merger, is sometimes referred to herein as the
"Surviving Corporation."
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1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
the General Corporation Law of the State of California (the "California Law")
and the Delaware General Corporation Law (the "Delaware Law"). Without limiting
the generality of the foregoing, the Surviving Corporation shall possess all the
rights, privileges, powers and franchises, of a public as well as a private
nature, and be subject to all the restrictions, disabilities and duties, of each
of Merger Sub and the Company (collectively, the "Constituent Corporations").
The Surviving Corporation shall be vested with the rights, privileges, powers
and franchises, all property (real, personal, and mixed) and all debts due on
whatever account and all other things in action or belonging to, and all and
every other interest of, each of the Constituent Corporations. All debts,
liabilities and duties of each of the Constituent Corporations shall attach to
the Surviving Corporation and may be enforced against it to the same extent as
if such debts, liabilities and duties had been incurred or contracted by it.
1.3 CLOSING. Consummation of the transactions contemplated by this
Agreement (the "Closing") will take place at Xxxxxx Godward Xxxxxx Xxxxxxxxx &
Xxxxx, Five Xxxx Xxxx Xxxxxx, 0xx Xxxxx, Xxxx Xxxx, XX 00000 at such time and
date as Parent and the Company may mutually select (the "Closing Date"), which
shall be as soon as practicable following the satisfaction or waiver of the
closing conditions contained in Articles 5 and 6 hereof. At the Closing, the
Company, Merger Sub and Parent will each carry out the procedures specified
under the applicable provisions of the California Law and the Delaware Law,
including duly executing and filing an Agreement of Merger in substantially the
form attached hereto as Exhibit A with the California Secretary of State and the
Delaware Secretary of State (the "Agreement of Merger"), to the end that the
Merger shall become effective. The Merger shall become effective on the date the
Agreement of Merger is duly filed with the California Secretary of State or on
such later date as specified in the Agreement of Merger (the "Effective Date").
On the Closing Date, the Selling Shareholders shall deliver to Parent the stock
certificates representing the Shares (as defined below), duly endorsed (or
accompanied by duly executed stock powers), and Parent shall issue to the
Selling Shareholders the number of shares of Parent Common Stock (as defined
below) contemplated by Section 1.4. Stock certificates representing shares of
Parent Common Stock issued at the Closing and subsequent to the Closing pursuant
to Section 1.4 below shall be delivered to the Selling Shareholders as soon as
practicable following the issuance thereof.
1.4 CONVERSION OF COMPANY STOCK.
(a) On the Effective Date, the outstanding shares of common stock,
no par value, of the Company (the "Company Common Stock") and the outstanding
shares of preferred stock, no par value, of the Company (the "Company Preferred
Stock" and, together with the Company Common Stock, the "Shares") shall cease to
be existing and issued shares and shall become and be converted into, by virtue
of the Merger and without any action on the part of Parent, Merger Sub, the
Company or the holder thereof, into shares of Parent common stock, no par value
("Parent Common Stock"), to be paid by Parent to the Selling Shareholders in the
manner and subject to the conditions set forth in Sections 1.4(b) through 1.4(g)
below. Each of the Selling Shareholders hereby agrees to accept the shares of
Parent Common Stock to be exchanged for such Selling Shareholder's Shares
pursuant to, and in the manner set forth in, this
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Section 1.4 and acknowledges that such shares of Parent Common Stock shall
constitute full, complete and adequate consideration for such Shareholder's
Shares and that such Selling Shareholder shall not be entitled to any additional
consideration therefor.
(b) An aggregate of 39,740 shares of Parent Common Stock shall be
issued to the Selling Shareholders (the "Closing Payment") at the Closing. The
Closing Payment shall be divided among the Selling Shareholders in the manner
set forth on Schedule 1.4(b).
(c) Subject to Section 1.4(f), an aggregate of 5,000 shares of
Parent Common Stock shall be issued to the Selling Shareholders on the last
business day in each of the twelve (12) calendar quarters following the Closing;
provided, however, that in the event the Closing occurs after September 30,
1996, the first issuance under this Section 1.4(c) shall be made on the Closing
Date. Each such issuance shall be divided among the Selling Shareholders in the
manner set forth on Schedule 1.4(b).
(d) Subject to Section 1.4(f), an aggregate of 15,000 shares of
Parent Common Stock, as adjusted below, shall be issued to the Selling
Shareholders on March 31, 1997 (the "First Earn-out Payment"). The First
Earn-Out Payment shall be divided among the Selling Shareholders in the manner
set forth on Schedule 1.4(b). The First Earn-out Payment shall be reduced by
that number of shares of Parent Common Stock equal to (i) the First Revenue
Shortfall Percentage (as defined below), multiplied by (ii) 30,000; provided,
however, that the First Earn-Out Payment shall not be reduced by more than 7,500
shares. The "First Revenue Shortfall Percentage" shall equal one (1) minus a
fraction, (i) the numerator of which are the Company Revenues (as defined below)
for the six-month period ending March 31, 1997, and (ii) the denominator of
which is $1,300,000 (such fraction being rounded to the nearest one hundredth);
provided, however, that in the event such fraction yields a number greater than
one (1), then the First Revenue Shortfall Percentage shall equal zero (0).
"Company Revenues" shall mean revenues derived from: (i) all sales of Data Flow,
Data View, SECSView, SECSMux and related and future versions of such products as
agreed to by the Management Shareholders and Parent; and (ii) the sale of
products or provision of services to any customer of Asyst Software, Inc.
("ASI") including sales and services by the Company, provided such sales or
services are furnished pursuant to a customer relationship that is separate and
distinct from any relationship such customer may have with Parent or its
affiliates (other than ASI).
(e) Subject to Section 1.4(f), an aggregate of 15,000 shares of
Parent Common Stock, as adjusted below, shall be issued to the Selling
Shareholders on March 31, 1998 (the "Second Earn-out Payment"). The Second
Earn-Out Payment shall be divided among the Selling Shareholders in the manner
set forth on Schedule 1.4(b). The Second Earn-out Payment shall be reduced by
that number of shares of Parent Common Stock equal to (i) the Second Revenue
Shortfall Percentage (as defined below), multiplied by (ii) 30,000; provided,
however, that the Second Earn-Out Payment shall not be reduced by more than
7,500 shares. The "Second Revenue Shortfall Percentage" shall equal one (1)
minus a fraction, (i) the numerator of which are Company Revenues for the twelve
(12) month period ending March 31, 1998, and (ii) the denominator of which is
$3,000,000 (such fraction being rounded to the nearest one hundredth);
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provided, however, that in the event such fraction yields a number greater than
one (1), then the Second Revenue Shortfall Percentage shall equal zero (0).
(f) In the event that a Management Shareholder's employment with
Parent and any affiliate of Parent is terminated without "cause" and not for
"failure to perform" (as such terms are defined in the form of Employment and
Noncompetition Agreement attached hereto as Exhibit B (the "Employment and
Noncompetition Agreement")), then such Management Shareholder shall only be
entitled to receive, as soon as practicable after such termination, (i) if the
termination occurs during the period beginning on the date of this Agreement and
continuing through March 31, 1997, 90% of the maximum number of shares of Parent
Common Stock payable to such Management Shareholder pursuant to Sections 1.4(c)
through 1.4(e) above for which payment has not been made, and (ii) if the
termination occurs thereafter, 65% of the maximum number of shares of Parent
Common Stock payable to such Management Shareholder pursuant to Sections 1.4(c)
through 1.4(e) above for which payment has not been made; provided, however,
that 100% of the shares of Parent Common Stock that are owed to a Management
Shareholder pursuant to Sections 1.4(c) through (e) above as of the date of
termination but for which payment has not been made shall be paid to such
Management Shareholder. In the event that a Management Shareholder's employment
with Parent and any affiliate of Parent is terminated for failure to perform and
not for cause, then such Management Shareholder shall only be entitled to
receive, as soon as practicable after such termination, 25% of the maximum
number of shares of Parent Common Stock payable to such Management Shareholder
pursuant to Sections 1.4(c) through 1.4(e) above for which payment has not been
made; provided, however, that 100% of the shares of Parent Common Stock that are
owed to a Management Shareholder pursuant to Sections 1.4(c) through (e) above
as of the date of termination but for which payment has not been made shall be
paid to such Management Shareholder. In the event that a Management
Shareholder's employment with Parent and any affiliate of Parent is terminated
for cause or a Management Shareholder resigns from his employment with Parent
and any affiliate of Parent (absent "constructive termination" (as defined in
the Employment and Noncompetition Agreement)), then such Management Shareholder
shall not be entitled to receive any further payments under Sections 1.4(c)
through 1.4(e) above following the date of such termination; provided, however,
that 100% of the shares of Parent Common Stock that are owed to a Management
Shareholder pursuant to Sections 1.4(c) through (e) above as of the date of
termination or resignation, as the case may be, but for which payment has not
been made shall be paid to such Management Shareholder. The application of this
Section 1.4(f) to a Management Shareholder as a result of such Management
Shareholder's termination or resignation from Parent and any affiliate of Parent
shall not affect the number of shares of Parent Common Stock, if any, to which
the other Selling Shareholders may be entitled under Sections 1.4(c) through
1.4(e); provided, however, that the number of shares of Parent Common Stock that
each Selling Shareholder is entitled to receive pursuant to Sections 1.4(d) and
1.4(e) above shall be increased by such Selling Shareholder's pro rata portion
(as set forth in Schedule 1.4(b)) of the number of shares of Parent Common Stock
under Sections 1.4(d) and 1.4(e), respectively, forfeited by a Management
Shareholder pursuant to this Section 1.4(f) multiplied by .5. In the event a
Management Shareholder dies or becomes permanently disabled during the period
beginning on the date of this Agreement and terminating on the last business day
of the twelfth fiscal quarter of Parent following the date of this Agreement
(the "Earn-Out
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Period"), such Management Shareholder or his successor, as the case may be,
shall be entitled to receive the maximum number of shares of Parent Common Stock
payable to such Management Shareholder pursuant to Sections 1.4(c) through
1.4(e).
(g) No fractional share shall be paid under this Section 1.4, but,
in each case, when a fractional share results, it shall be carried over until a
subsequent payment date or dates under this Section 1.4 and until a full share
is accrued, at which time payment shall be made. In the event there is no such
subsequent payment date, the remaining fractional share shall be rounded to the
nearest whole share, with any whole share to be paid to the Selling Shareholder
entitled to the same.
1.5 COMPANY OPTIONS. Concurrently with the signing of this Agreement,
ASI and each holder of options to purchase Company Common Stock shall execute
and deliver an Option Cancellation and Exchange Agreement in the form attached
hereto as Exhibit H, which provides for the cancellation of such options as of
the Closing Date and the grant to such holders of new options to purchase shares
of ASI common stock.
1.6 DELIVERY OF DOCUMENTS.
Concurrently with the signing of this Agreement:
(a) LEGAL OPINIONS. Parent shall receive a legal opinion of Fenwick
& West LLP, counsel to the Company, dated the date of this Agreement,
substantially to the effect of Exhibit C1 hereto and the Company shall receive a
legal opinion of Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx, counsel to Parent,
dated the date of this Agreement, substantially to the effect of Exhibit C2;
(b) TAX OPINIONS. The Company shall receive a tax opinion of Fenwick
& West LLP, dated the date of this Agreement and addressed to the Company, and
Parent shall receive a tax opinion of Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx,
dated the date of this Agreement and addressed to Parent, each substantially to
the effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a)(1) of the Code.
(c) EMPLOYMENT AND NONCOMPETITION AGREEMENTS. Each of the Management
Shareholders shall execute and deliver to Parent, and Parent shall execute and
deliver to each of the Management Shareholders, an Employment and Noncompetition
Agreement in the form attached hereto as Exhibit B1 and a Proprietary
Information and Inventions Agreement in the form attached hereto as Exhibit B2.
(d) AFFILIATE AGREEMENTS. Each of the Management Shareholders shall
execute and deliver to Parent an Affiliate Agreement in the form attached hereto
as Exhibit F (the "Affiliate Agreements").
5.
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(e) CONTINUITY OF INTEREST CERTIFICATES. Each of the Management
Shareholders shall execute and deliver to Parent a continuity of interest
certificate in the form attached hereto as Exhibit G (the "Continuity of
Interest Certificates").
(f) OPTION CANCELLATION AND EXCHANGE AGREEMENT. ASI, Xxxxx Xxxxxxxxx
and Xx Xxxx shall execute and deliver an Option Cancellation and Exchange
Agreement in the form attached hereto as Exhibit H.
(g) FIRPTA. Parent, as agent for the shareholders of the Company,
shall receive a properly executed "FIRPTA" Notification Letter, in accordance
with applicable Treasury Regulations, which states that shares of the Company
Common Stock and the Company Preferred Stock do not constitute "United States
Real Property Interests" under Section 897(c) of the Code for purposes of
satisfying Parent's obligations under Treasury Regulations Section
1.144-2(c)(3).
(h) TAX CERTIFICATES. An officer of each of Parent and the Company
shall execute certificates in the form of Exhibits I1 and I2, together with an
acknowledgement that such certificates will be relied upon by counsel for Parent
and the Company in the preparation of their respective tax opinions.
1.7 CONVERSION OF MERGER SUB COMMON STOCK. Each share of Merger Sub's
common stock issued and outstanding immediately prior to the Effective Date
shall automatically be converted into and become one validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation and the
aggregate of such shares issuable upon such conversion shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
1.8 CLOSING OF COMPANY TRANSFER BOOKS. On and after the Effective Date,
holders of certificates representing the Shares shall cease to have any rights
as shareholders of the Company and the stock transfer books of the Company shall
be closed with respect to shares of Company Common Stock and Company Preferred
Stock issued and outstanding immediately prior to the Effective Date and no
further transfer of such shares shall thereafter be made on such stock transfer
books.
1.9 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a tax-free reorganization within the meaning of Section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"). None of
the Company, Parent, Merger Sub, any subsidiary or any controlled affiliate of
any of them nor any Selling Shareholder shall take a position inconsistent with
this Section 1.9 on any tax returns.
1.10 ADJUSTMENTS FOR CAPITAL CHANGES. If prior to the Closing Date, Parent
or the Company recapitalizes through a split-up of its outstanding shares into a
greater number, or a combination of its outstanding shares into a lesser number,
reorganizes, reclassifies or otherwise changes its outstanding shares into a
lesser number, reorganizes, reclassifies or otherwise changes it outstanding
shares into the same or a different number of shares of other classes
6.
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(other than through a split-up or combination of shares provided for in the
previous clause), or declares a dividend on its outstanding shares payable in
shares or securities convertible into shares, the number of shares of Parent
Common Stock into which the shares of Company Common and Preferred Stock are to
be converted will be adjusted appropriately so as to maintain the proportionate
interests of the holders of the Company Common and Preferred Stock and the
holders of Parent shares.
1.11 FURTHER ACTION. If at any time after the Closing Date any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement, the officers and directors of the Company (or
Parent, as the case may be) shall be fully authorized (in the name of the
Company and otherwise) to take such action.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE MANAGEMENT SHAREHOLDERS
Except as set forth in the disclosure schedule delivered to Parent on the
date of this Agreement (the "Company Disclosure Schedule"), the Company and the
Management Shareholders represent and warrant to Parent that the following are
true and complete as of the date hereof:
2.1 DUE ORGANIZATION; QUALIFICATION; CORPORATE DOCUMENTS.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California. The Company has
all necessary power and authority under applicable corporate law and its
organizational documents to own or lease its properties, to perform its
obligations under all Contracts (as defined below) and to carry on its business
as presently conducted (the "Business"). The Company has not ever and does not
presently own or hold, directly or indirectly, any debt or equity securities of,
or have any other interest in, any corporation, partnership, joint venture or
other entity, nor has the Company entered into any agreement to acquire any such
interest.
(b) The Company is qualified to do business as a foreign corporation
and is in good standing under the corporation laws of each jurisdiction where
the nature of its business requires such qualification except where the failure
to so qualify would not have a "Material Adverse Effect" on the Company. For the
purposes of this Agreement, "Material Adverse Effect" as it applies to the
Company or Parent means an adverse effect on the business, operations, condition
(financial or otherwise) or assets of the Company or Parent and its subsidiaries
(in each case, taken as a whole), respectively, that is material; provided,
however, that following the date hereof, "Material Adverse Effect" shall not be
deemed to include any adverse effect on the business, operations, condition
(financial or otherwise) or the assets of the Company or Parent due to general
economic conditions.
7.
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(c) The Company has delivered to Parent copies of its Articles of
Incorporation and Bylaws, each as amended, and minutes of all meetings of the
directors and shareholders of the Company, including meetings of committees
thereof, and actions by written consent of such directors and shareholders, and
committees thereof, and the stock records of the Company. There have been no
meetings or other proceedings of the shareholders of the Company, the Board of
Directors of the Company or any committee of the Board of Directors of the
Company intended to cause, authorize or approve action by the Company that are
not fully reflected in such minutes or other records. There has not been any
violation of any of the provisions of the Company's Articles of Incorporation or
any material violation of the Bylaws or any violation of any resolution adopted
by the shareholders of the Company, the Board of Directors of the Company or any
committee of the Board of Directors of the Company. The books of account, stock
records, minute books and other records of the Company are accurate, up-to-date
and complete.
(d) The Company does not own any Parent Common Stock.
2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Company Common Stock, and 5,000,000 shares of Company
Preferred Stock, of which 400,000 shares have been designated Series A Preferred
Stock. Of the authorized shares, 4,599,999 shares of Common Stock and 400,000
shares of Series A Preferred Stock are issued and outstanding. All of the issued
and outstanding shares of the Company are validly issued, fully paid and
nonassessable and are free of preemptive rights and were issued in compliance
with federal and state securities laws and any other Legal Requirement (as
defined below) then in effect. The Company Disclosure Schedule sets forth (i)
the ownership by each of the holders of outstanding Company Common Stock and
Company Preferred Stock including the number of shares each of the shareholders
holds and the series and class held, and there are no other holders of the
capital stock of the Company and (ii) the name of the holder, number of shares
subject to option or warrant, vesting schedule, exercise price and term of each
outstanding option and each outstanding warrant. No shares of Company Common
Stock or Company Preferred Stock are subject to vesting or any escrow or right
of repurchase or forfeiture other than any such rights that may be held by the
Company and described in the Company Disclosure Schedule.
(b) Except as set forth in Section 2.2(a), (i) there are no shares
of capital stock of the Company authorized, issued or outstanding, (ii) there
are no outstanding subscriptions, options, warrants, stock appreciation right
plans, calls, rights, convertible securities, stockholder rights plans or other
agreements or commitments of any character relating to issued or unissued
capital stock or other securities of the Company, or obligating the Company or
any other party to issue, transfer or sell any shares of the capital stock or
other securities of the Company, and (iii) there are no other outstanding
securities convertible into, exchangeable for or evidencing the right to
subscribe for any shares of the capital stock or other securities of the
Company. The Company has never repurchased, redeemed or otherwise reacquired any
shares of its capital stock or other of its securities.
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(c) The Selling Shareholders have, and Parent will acquire at the
Closing, good and valid title to the Shares free and clear of any Encumbrances
(as defined below). Of the outstanding capital stock of the Company:
(i) Xxxxxxx Xxxxxx and Xxxxxx Xxxxxx own, beneficially and of
record, 1,533,333 shares of Company Common Stock and no shares of Company
Preferred Stock;
(ii) Xxxxxx Xxxxx owns, beneficially and of record, 1,533,333
shares of Company Common Stock and no shares of Company Preferred Stock;
(iii) Xxxx Xxxxx and Xxxx Xxxxx own, beneficially and of
record, 1,533,333 shares of Company Common Stock and no shares of Company
Preferred Stock; and
(iv) Xxxxxx Xxxxxxxx and X. Xxxxxxxx own, beneficially and of
record, no shares of Company Common Stock and 400,000 shares of Company Series A
Preferred Stock.
The above-listed shares constitute all of the outstanding shares of
Capital Stock of the Company.
"Encumbrance" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, equity, trust, equitable interest,
claim, preference, right of possession, license, covenant, order, proxy, option,
right of first refusal, preemptive right, community property interest, legend,
defect, impediment, exception, reservation, limitation, impairment, imperfection
of title, condition or restriction of any nature (including any restriction on
the voting of any security, any restriction on the transfer of any security or
other asset, any restriction on the receipt of any income derived from any
asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
2.3 CORPORATE AUTHORITY; AUTHORIZATION. The Company has full corporate
power and authority to execute, deliver and perform this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
board of directors and the shareholders of the Company. No other corporate
proceedings on the part of the Company are necessary for the Company to
authorize this Agreement, and no other such proceedings are necessary to enable
the Company to perform or consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by a duly authorized officer of
the Company. This Agreement constitutes a legal, valid and binding obligation of
the Company enforceable against it in accordance with the terms hereof (except
as enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws, both state and federal, affecting the enforcement
of creditors' rights or remedies in general as from time to time in effect and
the exercise by courts of equity powers).
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2.4 GOVERNMENTAL APPROVALS; NO CONFLICTS.
Except as may be required by the Securities Act of 1933, as amended
(the "Securities Act"), state securities laws, or the California Law, there is
no applicable law, statute, legislation, rule, regulation, ruling, ordinance,
determination, decision, opinion or interpretation that is or has been issued,
enacted, adopted, passed, approved, promulgated, made, implemented or otherwise
put in effect by or under the authority of any Governmental Authority (as
defined below) ("Legal Requirements") that requires that the Company make any
filing with, or obtain any permit, authorization, consent or approval of, any
applicable federal, state, local or foreign governmental or regulatory
authority, including any court (a "Governmental Authority"), as a condition to
the lawful consummation of the transactions contemplated by this Agreement.
Neither the execution and delivery of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated by this Agreement
will (i) contravene, conflict with or result in any breach of any provision of
the Articles of Incorporation or Bylaws of the Company or any Subsidiary or any
resolution adopted by the shareholders of the Company or the board of directors
of the Company, (ii) result in a default (or with notice or lapse of time or
both would result in a default) under, or impair the rights of the Company or
alter the rights or obligations of any third party under, or require the Company
to make any payment or become subject to any liability to any third party under,
or give rise to any right of termination, amendment, cancellation, acceleration,
repurchase, put or call under, any of the terms, conditions or provisions of any
Contract (as defined below) or other note, bond, mortgage, indenture, license
agreement, lease or other contract, instrument or obligation to which the
Company is a party or by which the Company or any of its assets may be bound,
(iii) violate any Legal Requirement, order, writ, injunction, decree or
arbitration award applicable to the Company or its assets, or (iv) result in the
creation of any Liens (as defined in Section 2.12 below) on any of the assets of
the Company. The Company neither is nor will be required to make any filing with
or give any notice to, or to obtain any consent from, any person in connection
with the execution and performance of this Agreement and the consummation of the
transactions contemplated hereby.
2.5 FINANCIAL.
(a) The unaudited financial statements of the Company (consisting of
a balance sheet as of December 31 of each year and a statement of income for the
twelve-month period then ended) for the fiscal years ended December 31, 1995,
December 31, 1994, December 31, 1993 and December 31, 1992 (collectively, the
"Historical Financial Statements") and the unaudited balance sheet of the
Company as of June 30, 1996 and the statement of income of the Company for the
six-month period ended June 30, 1996 (the "Interim Financial Statements"), all
of which have been provided to Parent by the Company, have been prepared in
accordance with the books and records of the Company (which books and records
are complete, maintained on a consistent basis and correctly reflect its income,
expenses, assets and liabilities), present fairly the financial position of the
Company as of the dates thereof and the results of operations of the Company for
the periods then ended in accordance with generally accepted accounting
principles ("GAAP") consistently applied, except as otherwise disclosed therein,
for normally recurring year-end audit adjustments, which adjustments will not be
material either individually or in the aggregate, and for the fact that such
statements do not contain footnotes.
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(b) The Company has no Liabilities (as defined below), except for
(i) those which are reflected in the Interim Financial Statements, (ii) those
which were incurred after June 30, 1996 in the ordinary course of business
consistent with past practice and which resulted in an offsetting asset (e.g.,
the purchase of inventory or equipment), or (iii) those under Contracts or other
agreements to which it is a party. As used herein, "Liabilities" shall mean any
currently existing liability or obligation of the Company of any kind or nature,
secured or unsecured (whether absolute, accrued, contingent or otherwise, and
whether due or to become due).
(c) The inventories of the Company on the date hereof are usable in
the ordinary course of business at a value which is not less than the value at
which such inventory was or will be carried on the books of the Company. Such
inventories are adequate for the conduct of the Business, and inventory levels
are not in excess of the normal operating requirements of the Company.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1996, there has
not been
(a) any change, or any development or combination of changes or
developments that has had or could reasonably be expected at this time to have a
Material Adverse Effect on the Company or
(b) any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not in the ordinary course
of business) which would be prohibited by Section 4.2(c) if it were to occur or
be effected between the date of this Agreement and the Closing Date, nor any
approval by the Company's board of directors of any such transaction,
commitment, or other event or condition.
2.7 TAX MATTERS.
(a) the Company has filed or caused to be filed, within the time and
in the manner prescribed by law (including any extensions), all tax returns,
declarations, reports, estimates, information returns and statements
("Returns"), required to be filed by the Company and due on or prior to the date
hereof, and all Returns so filed have complied in all material respects with the
laws, rules and regulations applicable to such Returns as of the date filed.
(b) the Company has, within the time and in the manner prescribed by
law, paid all Taxes (as defined below) relating to the Company that are due and
payable on or prior to the date hereof.
(c) the Company has established on its books and records reserves
that are adequate for the payment of all Taxes not yet due and payable through
the date hereof, and there is (and until the Closing shall be) no material
difference between the amounts of the book basis and the tax basis of assets
(net of liabilities) that is not accounted for by an accrual on the books or, if
not required to be so accrued under GAAP, is not described in the Company
Disclosure Schedule.
(d) There are no Liens (as defined below) for Taxes upon the assets
of the Company except Liens for Taxes not yet due.
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(e) No deficiency or adjustment for any Taxes has been proposed or
asserted in writing or assessed against the Company and no foreign, federal,
state or local audits, examinations or other administrative proceedings or court
proceedings are presently pending or, to the Company's knowledge, threatened
with regard to any such Taxes, and no waiver or consent extending any statute of
limitations for the assessment or collection of any such Taxes, which waiver or
consent remains in effect, has been executed by (or on behalf of) the Company,
nor are any requests for such waiver or consent pending. The Company Disclosure
Schedule lists the years involved, type of Tax and taxing authority involved for
each audit of the Company.
(f) The Company is not a party to any tax-sharing or allocation
agreement, nor does the Company owe any amount under any tax-sharing or
allocation agreement.
(g) The acquisition of the Company by Parent (even if followed by
the termination of any employee or consultant of the Company) will not result in
the payment of any "excess parachute payment" within the meaning of Section 280G
of the Code. There is no agreement, plan or arrangement covering any employee or
independent contractor of the Company or any Subsidiary which would give rise to
any payment that would not be deductible pursuant to Sections 280G or 162 of the
Code.
(h) The Company has not made any election under Section 338(g) of
the Code with respect to any acquisition, and no outstanding debt obligation of
the Company is "corporate acquisition indebtedness" within the meaning of
Section 279(b) of the Code.
(i) The Company is not a United States Real Property Holding
Corporation as defined under Section 897(c)(2) of the Code.
(j) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross receipts,
sales, use, value-added, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance, stamp, net
worth, environmental, occupancy or property taxes, customs duties, fees,
assessments or charges of any kind whatsoever (together with any interest and
any penalties, additions to tax or additional amounts) imposed by any
Governmental Authority (domestic or foreign).
2.8 CONTRACTS.
(a) The Company is not a party to, nor is the Company or any of its
assets bound by, any:
(i) contract for the employment for any period of time
whatsoever, or restricting the employment, of any employee (as defined below);
(ii) consulting agreement involving payments in excess of
$30,000 per annum;
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(iii) contract or agreement restricting in any material manner
the Company's right to compete with any other person or restricting the
Company's right in any material manner to sell to or purchase products from any
other person;
(iv) agreement with any affiliate (as defined in the
Securities Act) of the Company or person controlled by any affiliate of the
Company for or with respect to the purchase or sale of goods or the performance
of services;
(v) contract for the payment or receipt of license fees or
royalties to or from any person, firm or corporation involving payments in
excess of $30,000 per annum;
(vi) contract of agency, representation, distribution or
franchise which cannot be canceled without payment or penalty upon notice of
ninety (90) days or less;
(vii) service contract involving payments in excess of $30,000
per annum;
(viii) material guaranty, performance, bid or completion bond,
or surety or indemnification agreement;
(ix) contract relating to the purchase, sale, use or license
of technology except licenses for third party software generally available to
the public;
(x) contracts relating to the sale, transfer or disposition of
the securities of the Company;
(xi) lease or sublease, either as lessee or sublessee, lessor
or sublessor, of real property;
(xii) material lease or sublease, either as lessee or
sublessee, lessor or sublessor, of personal property or intangibles;
(xiii) contracts relating to the purchase, sale or margining
of securities held by the Company;
(xiv) warranty or maintenance contracts involving payments in
excess of $30,000 per annum;
(xv) joint venture, partnership or other contract involving a
sharing of profits, losses, costs or liabilities; or
(xvi) any other contract which provides for the receipt or
expenditure by the Company of more than $30,000 per annum.
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All contracts, leases and subleases and other instruments of the
type referred to in this Section 2.8(a) (each a "Contract" and, collectively,
"Contracts") are in full force and effect and are valid and binding upon the
Company and, to the Company's knowledge, are binding on the other parties
thereto, except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws, both state and federal,
affecting the enforcement of creditors' rights or remedies in general from time
to time in effect and the exercise by courts of equity powers. No material
breach or default by the Company has occurred (or will occur with notice or
lapse of time) thereunder and, to the Company's knowledge, no material breach or
default by the other contracting parties has occurred (or will occur with notice
or lapse of time) thereunder. The Company has delivered to Parent a copy of each
Contract.
(b) The Company Disclosure Schedule contains a list of every
license, permit or governmental approval, order, directive and agreement
required with respect to the Business. The Company and the Subsidiaries possess
all licenses, permits, and governmental approvals and authorizations which are
required in order to operate the Business. The Company and the Subsidiaries are
in material compliance with all such licenses, permits, approvals and
authorizations.
2.9 EMPLOYEES.
(a) The Company Disclosure Schedule contains a true and complete
list of each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program or agreement (collectively,
the "Plans"), sponsored, maintained or contributed to or required to be
contributed to by the Company for the benefit of any employee of the Company
("Employee").
(b) The Company does not maintain, sponsor, or contribute to or has
at any time in the past maintained, sponsored or contributed to, any employee
pension benefit plan (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), whether or not excluded from
coverage under specific Titles or Subtitles of ERISA) for the benefit of
Employees or former Employees (a "Pension Plan").
(c) The Company maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Subtitles of ERISA) for the
benefit of Employees or former Employees which are described in the Company
Disclosure Schedule (the "Welfare Plans"), none of which is a multiemployer plan
(within the meaning of Section 3(37) of ERISA).
(d) With respect to each of the Plans, the Company has delivered to
Parent true and complete copies of each of the following documents:
(i) a copy of each such Plan (including all amendments
thereto);
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(ii) a copy of the annual report, if required under ERISA,
with respect to each such Plan for the last two years;
(iii) a copy of the most recent summary plan description,
together with each summary of material modifications, if required under ERISA,
with respect to each such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof;
(v) all contracts relating to the Plans, including, without
limitation, service provider agreements, insurance contracts, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and
(vi) the most recent determination letter received from the
IRS with respect to each such Plan that is intended to be qualified under
Section 401(a) of the Code.
(e) The Company is not required to be or has ever been required to
be treated as a single employer with any other person under Section 4001(b)(1)
of ERISA or Section 414(b), (c) or (o) of the Code nor has the Company ever been
a member of an "affiliated service group" within the meaning of Section 414(m)
of the Code. To the Company's knowledge, the Company has never made a complete
or partial withdrawal from a multiemployer plan, as such term is defined in
Section 3(37) of ERISA, resulting in "withdrawal liability," as such term is
defined in Section 4201 of ERISA (without regard to subsequent reduction or
waiver of such liability under either Section 4207 or 4208 of ERISA).
(f) The Company does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan, other than changes to comply with applicable law,
that would affect any Employee.
(g) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to current or former Employees after any
such Employee's retirement or other termination of service (other than benefit
coverage mandated by applicable law, including, without limitation, coverage
provided pursuant to Section 4980B of the Code).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code.
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(j) Each of the Plans intended to be qualified under Section 401(a)
of the Code has received a favorable determination as to its qualification from
the Internal Revenue Service, and nothing has occurred that would adversely
affect such qualification.
(k) Neither the execution of this Agreement, nor the consummation of
the Merger and the other transactions contemplated hereby, will result in any
payment (including, without limitation, any bonus, golden parachute, or
severance payment) to any current or former director or Employee (whether or not
under any Plan), or materially increase the benefits payable under any Plan, or
result in any acceleration of the time of payment or vesting of any such
benefits.
(l) The Company Disclosure Schedule contains a list of all salaried
employees of the Company. The Company Disclosure Schedule correctly reflects, in
all material respects, the salaries, any other compensation other than under the
Welfare Plans (e.g., bonus, deferred compensation, or commission arrangements),
dates of employment and positions of each employee whose salary exceeds $30,000.
The Company is not a party to any collective bargaining contract or other
Contract with a labor union involving any Employees.
(m) The Company Disclosure Schedule identifies all Employees of the
Company as of the date thereof who are not available fully to perform work
because of disability or other leave and sets forth the basis of such leave and
the anticipated date of return to full service.
(n) The Company is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
Employee compensation matters.
(o) The Company believes that it has good labor relations, and no
officer of the Company has notified the Company that he or she intends to
terminate his or her employment with the Company.
2.10 LITIGATION AND CLAIMS; COMPLIANCE WITH LAW.
(a) There is no arbitration, suit, litigation, or proceeding, in law
or in equity, pending or, to the knowledge of the Company, threatened before any
Governmental Authority in which the Company is a party or otherwise involved or
to which its business or property is subject ("Proceeding"). There are no
preliminary proceedings or governmental investigations before any Governmental
Authority pending or, to the knowledge of the Company, threatened against the
Company.
(b) The Company is not a party to any order, writ, injunction,
decree or arbitration award (or agreement entered into in any Proceeding with
any Governmental Authority) with respect to its properties, assets, personnel or
business activities related to the Business.
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(c) The Company is not in violation of, or delinquent to, any order,
writ, injunction, decree, arbitration award, Legal Requirement, or agreement
with, or any license, permit or governmental approval from, any Governmental
Authority to which the Company or any of its properties, assets, personnel or
business activities are subject, excluding violations that, either individually
or in the aggregate, are not material. The Company has not received any notice
of noncompliance or other violation of any Legal Requirement.
2.11 ENVIRONMENTAL PROVISIONS.
(a) For the purposes of this Section 2.11:
(i) "Environmental Claim" means any claim, action, cause of
action, or written notice by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) resulting from (A) the presence, or
release into the environment, of any Material of Environmental Concern at any
location, whether or not owned or operated by the Company or any Subsidiary, or
(B) any violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all applicable federal, state,
local and foreign laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, wastes, and substances that are hazardous, toxic or
otherwise a danger to health, reproduction, or the environment and are regulated
by Environmental Laws currently in effect.
(b) The Company is in compliance in all material respects with all
applicable Environmental Laws, which compliance includes, but is not limited to,
the possession by the Company of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof. The Company has not received any written
communication, whether from a Governmental Authority, citizens group, employee
or otherwise, that alleges that it is not in such full compliance, and, to the
best knowledge of the Company, there are no circumstances that may prevent or
interfere with such full compliance in the future. To the Company's knowledge,
no current or prior owner of any property owned or leased by the Company has
received any written communication, whether from a Government Authority,
citizens group, employee or otherwise, that alleges that it or the Company is
not in such full compliance. All permits and other governmental authorizations
currently held by the Company pursuant to the Environmental Laws are identified
in the Company Disclosure Schedule.
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(c) There is no Environmental Claim pending or, to the knowledge of
the Company, threatened against the Company or, to the knowledge of the Company,
against any person or entity whose liability for any Environmental Claim the
Company has or may have retained or assumed either contractually or by operation
of law.
(d) To the knowledge of the Company, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of
any Material of Environmental Concern, that would reasonably form the basis for
any Environmental Claim against the Company or, to the knowledge of the Company,
against any person or entity whose liability for any Environmental Claim the
Company has or may have retained or assumed either contractually or by operation
of law.
(e) Without in any way limiting the generality of the foregoing, (i)
all on-site and off-site locations where the Company has stored, treated,
disposed of or arranged for the disposal of, Materials of Environmental Concern
are identified in the Company Disclosure Schedule, (ii) to the best knowledge of
the Company all underground storage tanks (whether or not in use by the
Company), and the capacity and contents of such tanks, located on property owned
or leased by the Company, are identified in the Company Disclosure Schedule,
(iii) to the knowledge of the Company there is no friable asbestos contained in
or forming part of any building, building component, structure or office space
owned or leased by the Company, (iv) to the knowledge of the Company no
polychlorinated biphenyls (PCBs) are used or stored at any property owned or
leased by the Company or any Subsidiary and (v) all environmental inspections,
investigations, studies and other reports or analyses conducted on any property
leased or operated by the Company of which the Company is aware are identified
in the Company Disclosure Schedule.
2.12 PROPERTIES.
(a) The Company has previously delivered to Parent complete and
accurate copies of all leases pursuant to which the Company leases real property
(the "Leases"). Each of the Leases is valid, binding and enforceable in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws, both
state and federal, affecting the enforcement of creditors rights or remedies in
general from time to time in effect and the exercise by courts of equity powers,
and is in full force and effect. The Company is not in material default under
any Lease, nor, to the Company's knowledge, is any other party thereto in
material default thereunder, and no event has occurred which (whether with or
without notice, lapse of time or both) would constitute a material default by
the Company.
(b) The Company owns no real property.
(c) The Company has good, valid and marketable title to all of its
assets reflected in the Interim Financial Statements as owned as of June 30,
1996 (as well as all its properties and assets which have been fully depreciated
and are not reflected therein) or acquired
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after June 30, 1996, free and clear of any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, encumbrances or charges
of any kind (collectively, "Liens"), other than (i) Liens covering specified
liabilities shown on the Interim Financial Statement and disclosed in the
Company Disclosure Schedule as securing such liabilities, (ii) Liens for current
taxes not yet due and (iii) any minor imperfections of title and encumbrances,
if any, which do not individually or in the aggregate have a Material Adverse
Effect (collectively, "Permitted Liens"). All of the assets of the Company are
fit for the purposes for which intended and in good operating condition and
repair, ordinary wear and tear excepted.
2.13 INTELLECTUAL PROPERTY.
(a) The Company Disclosure Schedule lists all domestic and foreign
patents and patent applications ("Patents"), domestic and foreign registered and
unregistered copyrights ("Copyrights"), and domestic and foreign trademarks and
trademark applications, service marks and service xxxx applications
("Trademarks") owned or licensed by the Company from or to third parties
indicating in each case whether the Patent, Trademark or Copyright is owned or
licensed, registered or unregistered. The Company owns free and clear of all
liens, claims or encumbrances the Patents, Trademarks and Copyrights which are
so designated as owned by them. All registered Patents, Trademarks and
Copyrights are in compliance with all Legal Requirements (including, in the case
of Trademarks, the timely post-registration filing of affidavits of use and
incontestability and of renewal applications) and are valid and enforceable.
There are no interference, opposition or cancellation proceedings or
infringement suits pending or, to the knowledge of the Company, threatened, with
respect to any of the Patents, Trademarks or Copyrights. The Company has not
been advised, nor has it any reasonable basis to believe, that the Company is
infringing a Patent, Trademark or Copyright held by another person.
(b) The Company owns or has in its possession certain current
information that it regards as trade secrets, including customer information and
proprietary business practices, in each case of the sort typically considered as
trade secrets in the software industry ("Trade Secrets"). The Company has taken
precautions to maintain Trade Secrets in confidence and to prevent their
disclosure to unauthorized persons, has had each Employee execute a
confidentiality agreement in the form previously delivered to Parent, have had
each third party to which Trade Secrets are revealed sign a confidentiality
agreement and has not publicly revealed any Trade Secret. The Company has good
title and an absolute right to use all Trade Secrets, and the use of the Trade
Secrets does not infringe the rights of any third party.
(c) To the Company's knowledge, no person is infringing upon any
Patent, Trademark or Copyright or is misappropriating any Trade Secret owned by
the Company. None of the products manufactured or sold or licensed by, nor any
processes or know-how used by the Company, to the Company's knowledge, infringes
any Patent, Trademark or Copyright of any third party. There is no intellectual
property, in any form, necessary for the operation of the Business as currently
conducted which the Company does not currently own or license on commercially
reasonable terms.
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2.14 INSURANCE. The Company Disclosure Schedule contains an accurate and
complete list and description of all insurance policies with respect to the
Company and any of its assets or businesses presently in effect. The Company has
in effect policies of insurance with respect to its respective assets and
businesses against such casualties and contingencies and in such amounts, types,
and forms as are reasonably appropriate for its respective businesses,
operations, properties, and assets. All such insurance policies are in full
force and effect and all premiums that are due and payable with respect thereto
have been paid.
2.15 DISCLOSURE.
(a) The copies of all documents furnished by the Company pursuant to
the terms of this Agreement are complete and accurate copies of the original
documents. The Company has provided Parent and its counsel with full and
complete access to all of the records and other documents and data of the
Company.
(b) For purposes of this Agreement and the transactions contemplated
hereby, none of (i) the representations and warranties made by the Company in
this Agreement or (ii) the Company Disclosure Schedule, contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements made herein or therein, in light of the circumstances in
which they were made, not misleading.
2.16 TRANSACTIONS WITH AFFILIATES. Except for compensation of employees
and directors, all transactions between the Company and any of its "affiliates"
(as such term is defined in Rule 144 under the Securities Act) which are
currently in effect or were consummated since January 1, 1994, and which involve
more than $30,000 are reflected in the Company Disclosure Schedule.
2.17 ACCOUNTING AND TAX MATTERS. Neither the Company nor any of its
affiliates has taken or agreed to, or plans to, take any action that would
prevent the Merger from qualifying as a "Reorganization" within the meaning of
Section 368(a)(1) of the Code.
2.18 COMPANY ACTION. The board of directors of the Company (at meetings
duly called and held) have (a) determined that the Merger is advisable and fair
and in the best interests of the Company and its shareholders, and (b)
unanimously approved this Agreement in accordance with the provisions of the
California Law.
2.19 FINANCIAL ADVISOR. No broker, finder or investment banker is entitled
to any brokerage or finder's fee or commission in connection with the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or the Selling Stockholders.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered to the Company on
the date of this Agreement (the "Parent Disclosure Schedule"), Parent and Merger
Sub represent and warrant to the Company as follows which representations and
warranties shall be true and correct as of the date hereof:
3.1 DUE ORGANIZATION; CAPITALIZATION.
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Parent and Merger Sub has all necessary power
and authority under applicable corporate law and its organizational documents to
own or lease its properties and to carry on its business as presently conducted.
Each of Parent and Merger Sub is qualified to do business as a foreign
corporation and is in good standing under the corporation laws of each
jurisdiction where the nature of its business requires such qualification except
where the failure to so qualify would not have a Material Adverse Effect.
(b) The authorized capital stock of Parent consists of 20,000,000
shares of Parent Common Stock, and 4,000,000 shares of Preferred Stock, no par
value ("Parent Preferred Stock"). Of the authorized shares, 5,086,156 shares of
Parent Common Stock and no shares of Parent Preferred Stock were issued and
outstanding as of September 19, 1996.
3.2 CORPORATE AUTHORITY; AUTHORIZATION.
(a) Each of Parent and Merger Sub has full corporate power and
authority to execute, deliver and perform this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the boards of directors of
Parent and Merger Sub and by Parent as the sole shareholder of Merger Sub, and
no other corporate proceedings on the part of Parent or Merger Sub are necessary
for Parent and Merger Sub to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement (a) has been duly executed and
delivered by a duly authorized officer of each of Parent and Merger Sub and (b)
constitutes a legal, valid and binding obligation of Parent and Merger Sub,
enforceable against each of them in accordance with its terms (except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws, both state and federal, affecting the
enforcement of creditors' rights or remedies in general from time to time in
effect and the exercise by courts of equity powers).
(b) At the time of its issuance, the Parent Common Stock issued
pursuant to the Merger will be duly authorized, validly issued, fully paid and
nonassessable, will be issued in compliance with applicable securities laws and
will be free and clear of all liens,
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encumbrances and adverse claims and, except as provided in the Affiliate
Agreements and the Continuity of Interest Certificates and assuming compliance
with Section 3(a)(10) of the Securities Act or, alternatively, effectiveness of
the Registration Statement (as defined below), may be resold by the Selling
Shareholders. The Parent Common Stock to be issued in the Merger will be
authorized for listing on the Nasdaq National Market.
3.3 GOVERNMENTAL APPROVALS; NO CONFLICTS. Except as may be required by the
Securities Act, the Securities Exchange Act of 1934, as amended, state
securities laws, the California Law and the Delaware Law, there is no material
Legal Requirement that parent or Merger Sub make any filing with, or obtain any
permit, authorization, consent or approval of, any Governmental Authority as a
condition to the lawful consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement. Neither the execution and delivery
of this Agreement by Parent and Merger Sub nor the consummation by Parent and
Merger Sub of the transactions contemplated by this Agreement will (i) conflict
with or result in any breach of any provision of the Articles of Incorporation
or Bylaws of Parent or the Certificate of Incorporation or Bylaws of Merger Sub,
or (ii) violate any Legal Requirement, order, writ, injunction, decree or
arbitration award applicable to Parent or Merger Sub or their respective assets
which violation could have a Material Adverse Effect on Parent.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has provided the Company with a true and correct copy of
each report, schedule, registration statement and definitive proxy statement
filed by Parent with the Securities and Exchange Commission ("SEC") on or after
January 1, 1995 (other than reports filed under Form S-8) (the "Parent SEC
Reports"), which are all the forms, reports and documents required to be filed
by Parent with the SEC between January 1, 1995 and the date of this Agreement.
The Parent SEC Reports (i) complied with the requirements of the Securities Act
or the Securities Exchange Act of 1934, as amended, as the case may be, at the
times 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), and (ii) did not at and as
of 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 light of
the circumstances under which they were made, not misleading.
(b) Each of the sets of consolidated financial statements
(including, in each case, any notes thereto) contained in the Parent SEC Reports
was prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
fairly presents the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal year-end
audit adjustments which were not or are not expected to be material in amount.
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3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of filing of the
most recent Parent SEC report (or if amended or superseded by a filing prior to
the date of this Agreement then the date of such filing) there has not been any
change, or any development or combination of changes or developments that has
had or could reasonably be expected to have a Material Adverse Effect on Parent.
3.6 DISCLOSURE. The copies of all documents furnished by Parent pursuant
to the terms of this Agreement are complete and accurate copies of the original
documents. For purposes of this Agreement and the transactions contemplated
hereby, none of (a) the representations and warranties made by Parent or Merger
Sub in this Agreement or (ii) the Parent Disclosure Schedule, contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements made herein or therein, in light of the
circumstances in which they were made, not misleading.
3.7 SEC REGISTRATION. Parent is eligible to file a registration statement
on Form S-3 pursuant to the rules of the SEC.
ARTICLE 4
CONDUCT AND TRANSACTIONS PRIOR TO
CLOSING; ADDITIONAL AGREEMENTS
4.1 INFORMATION AND ACCESS.
(a) During the period from the date of this Agreement through the
Closing:
(i) the Company shall afford, and shall cause the independent
auditors, counsel and other advisors and representatives (collectively,
"Representatives") of the Company to afford, to Parent and to Parent's
Representatives, upon prior notice during regular business hours, reasonable
access to the properties, books, records (including filed tax returns, tax
returns in preparation and the audit work papers and other records of the
independent auditors of the Company) and personnel of the Company in order that
Parent and Parent's Representatives may have a full opportunity to make such
additional investigation as Parent reasonably desires to make of the Company;
(ii) the Company shall permit Parent and Parent's
Representatives, upon prior notice during regular business hours, to make such
reasonable inspections of the Company and its operations as Parent may require
from time to time; and
(iii) the Company shall furnish Parent and Parent's
Representatives with, and shall cause the Representatives of the Company to
furnish Parent with, such financial and operating data and other information
with respect to the business and properties of the Company as Parent may
reasonably request from time to time.
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(b) Without limiting the generality of Section 4.1(a), during the
period from the date of this Agreement through the Closing, the Company shall
promptly provide Parent with copies of all operating and financial reports
prepared by the Company for its senior management, including copies of the
unaudited monthly consolidated balance sheets of the Company and the related
unaudited monthly consolidated statements of operations, changes in financial
position and changes in shareholders' equity (with copies of such monthly
financial statements to be delivered to Parent no later than the 20th day after
the last day of the month to which they relate), and any material notice, report
or other document filed with or sent to any Governmental Authority.
(c) No investigation by Parent or any of its Representatives
pursuant to this Section 4.1 shall limit or otherwise affect any representations
or warranties of the Company made herein or any condition to any obligation of
Parent.
4.2 CONDUCT OF BUSINESS OF THE COMPANY.
(a) During the period from the date of this Agreement through the
Closing, (i) the Company shall conduct its Business in the ordinary and usual
course and (ii) the Company shall use its best efforts to maintain and preserve
intact the Business, to keep available the services of its officers and
employees and to maintain satisfactory relations with lessors, suppliers,
contractors, distributors, customers and others having business relationships
with the Business.
(b) During the period from the date of this Agreement through the
Closing, the Company shall do each of the following:
(i) promptly advise Parent in writing of (A) any Material
Adverse Effect on the Company; (B) the occurrence of any event which causes the
representations and warranties made by the Company in this Agreement or the
information included in the Company Disclosure Schedule to be incomplete or
inaccurate in any material respect; and (C) the receipt of any inquiry relating
to an Merger Proposal (as defined below) from a third party, including the
identity of the third party and a copy of the inquiry; and
(ii) take all such actions as Parent may reasonably request in
order that the issuance of the Parent Common Stock to the Selling Shareholders
in accordance with the terms of this Agreement shall be exempt from registration
under the Securities Act and shall be registered or qualified (or shall be
exempt from registration or qualification) under the registration, permit and
qualification requirements of all applicable state securities laws.
(c) During the period from the date of this Agreement through the
Closing, the Company shall not do any of the following, except as expressly
contemplated herein, without Parent's prior written consent:
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(i) take any actions, or fail to take any actions which would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a)(1)(B) of the Code;
(ii) amend the Company's organizational documents as
previously delivered to Parent;
(iii) issue any of the Company's capital shares or grant any
options, warrants or rights to acquire any capital shares, or modify the terms
or waive any rights under any options, warrants or other securities currently
outstanding; or declare, set aside or pay any dividend or make any other
distribution in respect of the Company's capital shares, or make any direct or
indirect redemption, purchase or other acquisition of the Company's capital
shares;
(iv) undertake any stock split, combination, recapitalization,
reorganization or similar transaction;
(v) enter into, materially amend or terminate any Contract or
waive any material rights thereunder;
(vi) incur any obligation, or mortgage, pledge or subject to a
Lien any of their property or assets other than in the ordinary course of
business consistent with past practice;
(vii) borrow money (other than on terms approved by Parent) or
incur new or additional indebtedness (other than accounts payable or trade
payables incurred in the ordinary course of business consistent with past
practice) or lend money to any person (other than travel and similar advances to
employees in the ordinary course of business) or incur any contingent liability
as a guarantor or otherwise with respect to the obligations of any person;
(viii) incur liabilities in connection with the leasing of
property, equipment or other assets in excess of $30,000;
(ix) make any investment in any other business or entity
through purchase of stock or securities, contribution to capital, property
transfer, purchase of property or assets or otherwise (except short-term
investments of idle funds in the ordinary course of business consistent with
past practice);
(x) make any loans to or engage in transactions with any of
their shareholders, officers, directors or employees;
(xi) establish, adopt or amend any Plan or make any change in
the compensation payable or to become payable to any of their officers or
employees (except changes to the compensation of non-exempt employees in the
ordinary course of business consistent with past practice not to exceed 10% per
annum);
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(xii) commence any Proceeding;
(xiii) materially impair any of their Patents, Copyrights,
Trademarks or Trade Secrets;
(xiv) alter the manner of keeping their books and accounts or
their accounting practices and procedures in any material way;
(xv) revalue any of their assets, including without limitation
writing down the value of inventory or accounts receivable other than in the
ordinary course of business consistent with past practice;
(xvi) make any Tax election except in the ordinary course of
business consistent with past practice, change any Tax election already made,
adopt any Tax accounting method except in the ordinary course of business
consistent with past practice, change any Tax accounting method, enter into any
closing agreement, settle any Tax claim or assessment or consent to any Tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment;
(xvii) fail to maintain their qualifications to do business in
every state in which such qualification is required, or fail to maintain any
other permit, license, authorization or approval required or useful to the
operations of their business; or
(xviii) agree to do any of the foregoing.
(d) During the period from the date of this Agreement through the
Closing, the Management Shareholders shall not do any of the following:
(i) directly or indirectly sell or otherwise transfer, or
offer, agree or commit (in writing or otherwise) to sell or otherwise transfer,
their Shares or any interest in or right relating to such Shares; or
(ii) permit, or offer, agree or commit (in writing or
otherwise) to permit, their Shares to become subject, directly or indirectly to
any Encumbrance.
4.3 NEGOTIATION WITH OTHERS. From the date hereof until the Closing:
(a) The Company and the Management Shareholders shall not, and the
Company shall not authorize or permit any of its officers, directors or
employees or any of its independent auditors, counsel, other advisors or
representatives, directly or indirectly, to (i) solicit, initiate or knowingly
encourage or induce the making of any Acquisition Proposal (as defined below),
(ii) furnish information regarding the Company in connection with an Acquisition
Proposal or potential Acquisition Proposal, (iii) negotiate or engage in
discussions with any third party with respect to any Acquisition Proposal, (iv)
approve, endorse or
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recommend any Acquisition Proposal or (v) enter into any letter of intent,
contract or other instrument related directly or indirectly to any Acquisition
Proposal.
(b) The Company and the Management Shareholders shall promptly
advise Parent orally and in writing of the receipt of any Acquisition Proposal
or any inquiry relating to an Acquisition Proposal prior to the Closing.
(c) The Company and the Management Shareholders shall immediately
cease and cause to be terminated any discussions or negotiations with any
parties existing as of the date of this Agreement and that relate to any
Acquisition Proposal.
(d) "Acquisition Proposal" shall mean a proposal that contemplates:
(i) any merger or consolidation of the Company with any person
other than Parent,
(ii) any sale of assets of the Company, except the sale of
inventory in the ordinary course of business consistent with past practice, to
any person other than Parent,
(iii) any equity or debt investment (other than on terms
approved by Parent) in the Company by any person, or
(iv) any purchase of outstanding securities of the Company by
any person.
4.4 REGULATORY APPROVALS.
(a) Parent, the Company and the Management Shareholders shall use
all commercially reasonable efforts to file as soon as practicable after the
date of this Agreement all notices, reports and other documents required by law
to be filed with any Governmental Authority with respect to the Merger and the
other transactions contemplated by this Agreement and to submit promptly any
additional information requested by any such Governmental Authority.
(b) From the date hereof until the Closing, Parent, the Company and
the Management Shareholders shall (i) give each other prompt notice of the
commencement of any Proceeding by or before any court on Governmental Authority
with respect to the Merger or any of the other transactions contemplated by this
Agreement, (ii) keep each other informed as to the status of any such Proceeding
and (iii) except as may be prohibited by any Governmental Authority or by any
law or court order or decree, permit the other party to be present at each
meeting or conference relating to any such Proceeding and to have access to and
be consulted in connection with any document filed or provided to any
Governmental Authority in connection with any such Proceeding.
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4.5 CALIFORNIA PERMIT; FAIRNESS HEARING. Promptly after the execution of
this Agreement, the Company and Parent shall prepare and cause to be filed with
the California Commissioner of Corporations (the "California Commissioner") a
permit application under Section 25121 of the California Law, and a related
information statement or other disclosure document (the "Information
Statement"), and shall request a hearing on the fairness of the terms and
conditions of the Merger pursuant to Section 25142 of the California Law (the
"Fairness Hearing"), such hearing to be held with the minimum notice period
required by applicable law. The parties to this Agreement shall use all
commercially reasonable efforts to cause the California Commissioner to approve
the fairness of the terms and conditions of the Merger at such a hearing and
issue the requested permit (the "Permit"); provided, however, neither party
shall be required to modify any of the terms of the Merger in order to cause the
California Commissioner to approve the fairness of such terms and conditions.
The Company shall provide and include in the Information Statement such
information relating to the Company as may be required pursuant to the rules of
the California Commissioner. The Information Statement shall include the
recommendations of the boards of directors of the Company and Parent in favor of
the Merger.
4.6 ADDITIONAL AGREEMENTS.
(a) Subject to Section 4.6(b), Parent and the Company agree to use
all commercially reasonable efforts to take, or cause to be taken, all actions
necessary to consummate the Merger and make effective the other transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, but subject to Section 4.6(b), Parent and the Company shall use all
commercially reasonable efforts to (i) obtain the consent and approval of each
Governmental Authority, lessor or other person whose consent or approval is
required (by virtue of any contractual provision or legal requirement or
otherwise) in order to permit the consummation of the Merger or in order to
enable Parent or the Company to conduct its business in the manner in which such
business is currently being conducted, (ii) effect all registrations and filings
necessary to consummate the Merger and (iii) lift any restraint, injunction or
other legal bar to the Merger.
(b) Notwithstanding anything to the contrary contained in Section
4.6(a) or elsewhere in this Agreement, Parent shall not have any obligation
under this Agreement to (i) dispose or cause any of its subsidiaries to dispose
of any assets, (ii) make any changes to its operations or proposed operations or
to the operations or proposed operations of any of its subsidiaries or (iii)
make any commitment (to any Governmental Authority or otherwise) regarding its
future operations, or the future operations of any of its subsidiaries, or the
future operations of the Company (even though the disposition of such assets or
the making of such change or commitment might facilitate the obtaining of a
required approval from a Governmental Authority or might otherwise facilitate
the consummation of the Merger).
(c) The Company will use all commercially reasonable efforts to
resolve all lawsuits or Proceedings against the Company or any Subsidiary in a
manner reasonably acceptable to Parent.
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4.7 DISCLOSURE. Except as may be required by Legal Requirement or the
Fairness Hearing, the parties hereto shall not, and the parties hereto shall not
permit any of their Representatives to, make any disclosure regarding the Merger
or any of the other transactions contemplated by this Agreement unless the other
parties hereto shall have approved such disclosure.
4.8 BEST EFFORTS. During the period from the date of this Agreement to the
Closing, each of the Management Shareholders shall use his best efforts to cause
the Company to comply with the covenants set forth in Sections 4.1, 4.2, 4.5 and
4.6.
4.9 COVENANTS OF PARENT DURING THE EARN-OUT PERIOD. During the Earn-Out
Period:
(a) Parent shall establish procedures to ensure that the Company's
revenues are recorded in a manner that permits the accurate calculation of the
First and Second Earn-Out Payments pursuant to Section 1.4 above and shall
record the Company's revenues in that manner; and
(b) Parent shall operate the Company's business in a manner that
provides the Management Shareholders with an opportunity to maximize the First
and Second Earn-Out Payments, so long as such operations are reasonable, prudent
and consistent with the long-term best interests of Parent and its affiliates;
provided, however, that Parent shall in good faith adjust the revenue goals upon
which the First and Second Earn-Out Payments are based (as agreed to by Parent
and a majority in interest of the Management Shareholders then employed by
Parent together with the Minority Shareholder) if significant resources are
diverted from the business of the Company to serve other interests of Parent.
4.10 REGISTRATION RIGHTS. In the event the California Commissioner fails
to approve the fairness of the terms and conditions of the Merger at the
Fairness Hearing:
(a) Parent shall file with the SEC a registration statement (the
"Registration Statement") on Form S-3 (or any successor form of Form S-3) for a
public resale offering of the Shares and shall use all commercially reasonable
efforts to cause the Shares to be registered for the offering on such form and
to be qualified in such jurisdictions as the Selling Shareholders shall
reasonably request, and shall use all commercially reasonable efforts to cause
such registration statement to become and remain effective for the period
commencing on the 75th day after the Closing Date (or such earlier practicable
date) and on the date the distribution described in the registration statement
is complete and will keep such Registration Statement effective until such time
as all the shares of Parent Common Stock issued to the Selling Shareholders may
be sold pursuant to Rule 144 under the Securities Act during any ninety (90) day
period.
(b) In the case of a registration pursuant to this section, Parent
shall keep each Selling Shareholder advised of the initiation and completion of
such registration. At its expense, Parent will promptly:
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(i) Prepare and file with the SEC the Registration Statement
and thereafter use its best efforts to cause the Registration Statement to
become effective;
(ii) Prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement;
(iii) Furnish to the Selling Shareholders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the securities
covered by the Registration Statement;
(iv) Use all commercially reasonable effort to register and
qualify the securities covered by the registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Seller Shareholders, provided that Parent shall not be required
in connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions;
(v) Notify each Selling Shareholder covered by such
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statement therein not misleading in the light of the circumstances then
existing;
(vi) Cause all such shares of Parent Common Stock to be listed
on each securities exchange or market system on which similar securities issued
by the Parent are then listed; and
(vii) Provide a transfer agent and registrar for all such
shares of Parent Common Stock not later than the effective dates of such
registration statements.
4.11 INDEMNIFICATION.
(a) Parent agrees to indemnify, to the extent permitted by law, each
Selling Shareholder, against all Damages (as defined below) caused by any untrue
or alleged untrue statement of material fact contained in the Registration
Statement, related prospectus or preliminary prospectus or any amendment thereof
or supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to Parent by such Selling Shareholder expressly
for use therein or by such Selling Shareholder's failure to deliver a copy of
the Registration Statement or related prospectus or any amendments or
supplements thereto after Parent has furnished such Selling Shareholder with a
sufficient number of copies of the same.
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(b) Each Selling Shareholder will furnish to Parent in writing such
information and affidavits as Parent reasonably requests for use in connection
with the Registration Statement or related prospectus and, to the extent
permitted by law, will indemnify Parent, its directors and officers and each
person who controls Parent (within the meaning of the Securities Act) against
all Damages resulting from any untrue or alleged untrue statement of material
fact contained in the Registration Statement, related prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
so made in reliance upon and in strict conformity with written information
provided by the Selling Shareholder specifically for use in the preparation of
the Registration Statement, provided, however, that the total amounts payable in
indemnity by a Selling Shareholder shall not exceed the gross proceeds received
by such Selling Shareholder in the registered offering out of which the
indemnity arises.
(c) Any person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any consent to the
entry of any judgment or any settlement made by the indemnified party without
its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonably judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and will survive the Merger. Each indemnifying party
also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event such indemnifying
party's indemnification is unavailable for any reason.
4.12 CURRENT PUBLIC INFORMATION. Until the rights specified in Section
4.10 are fully exercised or expire, Parent will timely file all reports required
to be filed by it under the Securities Act and the Securities Exchange Act of
1934, as amended, and the rules and regulations adopted by the SEC thereunder,
and will take such further action at its expense as any holder or holders of
Shares may reasonably request, all to the extent required to enable such holders
to sell their Shares pursuant to Form S-3 or similar registration form hereafter
adopted by the SEC. Upon written requests, Parent will deliver to such holders a
written statement as to whether it has complied with such requirements.
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4.13 TRANSFERABILITY OF REGISTRATION RIGHTS. The rights under Section 4.10
are not transferable except in connection with (a) a transfer by will or
intestacy and (b) estate planning transfers consisting of gifts to the spouse or
issue of the transferee and transfers to trusts for the benefit of the spouse or
issue of the transferee.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the fulfillment, at or prior to the Closing, of the conditions set forth
below.
5.1 SECURITIES LAW REQUIREMENTS; FAIRNESS HEARING. The Fairness Hearing
shall have occurred. The date of the Fairness Hearing shall be referred to as
the "Fairness Hearing Date."
5.2 RESIGNATIONS. Parent shall have received the written resignation,
effective as of the Closing Date, of each director and officer of the Company.
5.3 APPROVAL BY SHAREHOLDERS. Shareholders holding 100% of the outstanding
capital stock of the Company shall have approved the transactions contemplated
by this Agreement.
5.4 TERMINATION OF 401(k) PLAN. The Company shall have terminated its
401(k) plan.
5.5 ABSENCE OF RESTRAINT. No Proceeding shall be pending before any
Governmental Authority to prevent, challenge, restrain, enjoin or otherwise
prevent the consummation of, or which questions the validity or legality of,
this Agreement or any of the transactions contemplated by this Agreement. No
Legal Requirement, order, writ, injunction or decree shall have been enacted,
entered, issued or promulgated by any court or Governmental Authority which
prohibits or materially restricts the consummation of this Agreement and the
transactions contemplated hereby.
ARTICLE 6
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, at or prior to the Closing, of the conditions set forth below:
6.1 FAIRNESS HEARING. The Fairness Hearing shall have occurred.
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6.2 ABSENCE OF RESTRAINT. No Proceeding shall be pending before any
Governmental Authority to prevent, challenge, restrain, enjoin or otherwise
prevent the consummation of, or which questions the validity or legality of,
this Agreement or any of the transactions contemplated by this Agreement. No
Legal Requirement, order, writ, injunction or decree shall have been enacted,
entered, issued or promulgated by any court or Governmental Authority which
prohibits or materially restricts the consummation of this Agreement and the
transactions contemplated hereby.
ARTICLE 7
INDEMNITY BY THE MANAGEMENT SHAREHOLDERS
7.1 INDEMNIFICATION OBLIGATIONS.
(a) The Management Shareholders, jointly and severally, shall hold
harmless and indemnify each of the Indemnitees (as defined below) from and
against, and shall compensate and reimburse each of the Indemnitees for, any
Damages (as defined below) which are directly or indirectly suffered or incurred
by any of the Indemnitees or to which any of the Indemnitees may otherwise
become subject at any time (regardless of whether or not such Damages relate to
any third-party claim) and which arise directly or indirectly from or as a
direct or indirect result of, or are connected with:
(i) any Breach (as defined below) of any representation or
warranty made by the Company or any of the Management Shareholders in Article 2
of this Agreement (without giving effect to any update to the Company Disclosure
Schedule);
(ii) any Breach of any representation or warranty or
inaccuracy in any statement, information or provision contained in the Company
Disclosure Schedule;
(iii) any Breach of any covenant or obligation of the Company
or any of the Selling Shareholders in this Agreement;
(iv) the pending audit of the Company's tax records by the
California State Board of Equalization, identified in Section 2.7(e) of the
Company Disclosure Schedule;
(v) the Company's failure to pay GW Associates on a timely
basis for certain licenses, as indicated in Section 2.8(a)(xvi) of the Company
Disclosure Schedule; or
(vi) any Proceeding relating directly or indirectly to any
Breach, alleged Breach, liability or matter of the type referred to in clause
"(i)," "(ii)," "(iii)," "(iv)" and "(v)" above (including any Proceeding
commenced by any Indemnitee for the purpose of enforcing any of its rights under
this Article 7).
(b) The Management Shareholders acknowledge and agree that, if there
is any Breach of any representation, warranty or other provision relating to the
Company or the
33.
38
Company's business, condition, assets, liabilities, operations, financial
performance, net income or prospects (or any aspect or portion thereof), then
Parent itself shall be deemed, by virtue of its ownership of Company Common
Stock, to have incurred Damages as a result of such Breach or liability. Nothing
contained in this Section 7.1(b) shall have the effect of (i) limiting the
circumstances under which Parent may otherwise be deemed to have incurred
Damages for purposes of this Agreement, (ii) limiting the other types of Damages
that Parent may be deemed to have incurred (whether in connection with any such
Breach or liability or otherwise), or (iii) limiting the rights of Parent or any
of the other Indemnitees under this Section 7.1.
7.2 THRESHOLD. Subject to Section 7.8, the Management Shareholders shall
not be required to make any indemnification payment pursuant to Section 7.1
until such time as the total amount of all Damages that have been directly or
indirectly suffered or incurred by any one or more of the Indemnitees, or to
which any one or more of the Indemnitees has or have otherwise become subject,
exceeds $25,000 in the aggregate. At such time as the total amount of such
Damages exceeds $25,000 in the aggregate, the Indemnitees shall be entitled to
be indemnified against the full amount of such Damages that exceed $25,000.
7.3 LIMITATION. Subject to Section 7.8, the liability of the Management
Shareholders under this Section 7 shall be limited to the value of the shares of
Parent Common Stock that are issued to the Management Shareholders pursuant to
this Agreement. The value of each share of Parent Common Stock for purposes of
this Section 7.3 shall be the closing price of Parent's Common Stock on the date
(the "Notice Date") that the Management Shareholders are notified of a claim for
Damages under this Section 7. In the event that shares of Parent Common Stock
are issued to the Management Shareholders after the Notice Date, then the
limitation on liability under this Section 7.3 (for purposes of past, pending or
future claims for Damages under this Section 7) shall be increased by the value
of such shares as calculated on the date of issuance.
7.4 RIGHT TO REQUIRE CURE OF BREACH. Without limiting the generality of
anything contained in Section 7.1, if there is any Breach of any representation
or warranty made by the Company or any of the Management Shareholders, then the
Management Shareholders, jointly and severally, shall be obligated to pay such
amounts to the Company and take such other actions as Parent may in good faith
request for the purpose of causing such Breach to be corrected, cured and
eliminated in all respects (at no cost to the Company or Parent).
7.5 NO CONTRIBUTION. Each Management Shareholder waives, and acknowledges
and agrees that such Management Shareholder shall not have and shall not
exercise or assert or attempt to exercise or assert, any right of contribution
or right of indemnity or any other right or remedy against the Company in
connection with any indemnification obligation or any other liability to which
such Management Shareholder may become subject under this Agreement or otherwise
in connection with any of the transactions contemplated hereby.
7.6 INTEREST. Any party that is required to indemnify any other person
pursuant to this Section 7 with respect to any Damages shall also be required to
pay such other person interest on the amount of such Damages (for the period
commencing as of the date on which such other person first incurred or otherwise
became subject to such Damages and ending on the
34.
39
date on which the applicable indemnification payment is made by such party) at a
floating rate three percentage points above the rate of interest publicly
announced by Bank of America, N.T. & S.A. from time to time as its prime, base
or reference rate.
7.7 SETOFF. In addition to any rights of setoff or other rights that
Parent or any of the other Indemnitees may have at common law or otherwise,
Parent shall have the right to set off any amount that may be owed to any
Indemnitee under this Section 7 against any shares of Parent Common Stock
payable to the Management Shareholders.
7.8 INDEMNIFICATION REMEDIES. The indemnification remedies and other
remedies provided in Section 4.11 and this Section 7 shall be deemed to be
exclusive and shall be the sole remedy of Parent and its affiliates arising out
of this Agreement. Notwithstanding any provision of this Agreement to the
contrary, liability of any Management Shareholder for common law fraud,
intentional misrepresentation or omission or other claim involving intentional
misconduct shall not be limited in amount or as to the time during which a claim
may be made.
7.9 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against the
Company, against any other Indemnitee or against any other Person) with respect
to which any of the Management Shareholders may become obligated to indemnify,
hold harmless, compensate or reimburse any Indemnitee pursuant to this Section
7, Parent shall have the right, at its election, to designate the Management
Shareholders to assume the defense of such claim or Proceeding at the sole
expense of the Management Shareholders. If Parent so elects to designate the
Management Shareholders to assume the defense of any such claim or Proceeding:
(a) the Management Shareholders shall proceed to defend such claim
or Proceeding in a diligent manner with counsel reasonably satisfactory to
Parent;
(b) Parent shall make available to the Management Shareholders any
nonprivileged documents and materials in the possession of Parent that may be
necessary to the defense of such claim or Proceeding;
(c) the Management Shareholders shall keep Parent informed of all
material developments and events relating to such claim or Proceeding;
(d) Parent shall have the right to participate in the defense of
such claim or Proceeding;
(e) the Management Shareholders shall not settle, adjust or
compromise such claim or Proceeding without the prior written consent of Parent;
provided, however, that Parent shall not unreasonably withhold such consent; and
(f) Parent may at any time (notwithstanding the prior designation of
the Selling Shareholders to assume the defense of such claim or Proceeding)
assume the defense of such claim or Proceeding.
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40
If Parent does not elect to designate the Management Shareholders to assume the
defense of any such claim or Proceeding (or if, after initially designating the
Management Shareholders to assume such defense, Parent elects to assume such
defense), Parent may proceed with the defense of such claim or Proceeding on its
own. If Parent so proceeds with the defense of any such claim or Proceeding on
its own:
(i) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by Parent) shall be borne and paid
exclusively by the Management Shareholders;
(ii) the Management Shareholders shall make available to
Parent any documents and materials in the possession or control of any of the
Management Shareholders that may be necessary to the defense of such claim or
Proceeding; and
(iii) Parent shall have the right to settle, adjust or
compromise such claim or Proceeding with the consent of the Management
Shareholders; provided, however, that the Management Shareholders shall not
unreasonably withhold such consent.
7.10 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PARENT. No Indemnitee
(other than Parent or any successor thereto or assign thereof) shall be
permitted to assert any indemnification claim or exercise any other remedy under
this Agreement unless Parent (or any successor thereto or assign thereof) shall
have consented to the assertion of such indemnification claim or the exercise of
such other remedy.
7.11 DEFINITIONS.
(a) BREACH. There shall be deemed to be a "Breach" of a
representation, warranty, covenant, obligation or other provision if there is or
has been (a) any inaccuracy in or breach of, or any failure to comply with or
perform, such representation, warranty, covenant, obligation or other provision,
or (b) any claim (by any Person) or other circumstance that is inconsistent with
such representation, warranty, covenant, obligation or other provision; and the
term "Breach" shall be deemed to refer to any such inaccuracy, breach, failure,
claim or circumstance.
(b) DAMAGES. "Damages" shall include any loss, damage, injury,
decline in value, lost opportunity, liability, claim, demand, settlement,
judgment, award, fine, penalty, Tax, fee (including any legal fee, expert fee,
accounting fee or advisory fee), charge, cost (including any cost of
investigation) or expense of any nature.
(c) INDEMNITIES. "Indemnitees" shall mean the following Persons:
(i) Parent;
(ii) Parent's current and future affiliates (including the
Company);
36.
41
(iii) the respective Representatives of the Persons referred
to in clauses "(i)" and "(ii)" above; and
(iv) the respective successors and assigns of the Persons
referred to in clauses "(i)", "(ii)" and "(iii)" above;
provided, however, that (i) the Company shall not be entitled to exercise any
rights as an Indemnitee prior to the Closing, and (ii) the Selling Shareholders
shall not be deemed to be "Indemnitees."
ARTICLE 8
TERMINATION OF AGREEMENT
8.1 TERMINATION. At any time prior to the Closing Date, this Agreement may
be terminated:
(a) by mutual consent of Parent and the Company;
(b) by either Parent or the Company if (i) there shall be a
non-appealable order of a federal or state court in effect preventing
consummation of the Merger, (ii) there shall be any action taken, or any
statute, rule, regulations or order enacted, promulgated, issued or deemed
applicable to the Merger by any Governmental Authority that would make
consummation of the Merger illegal or (iii) by either Parent or the Company,
after December 31, 1996, if the terminating party is not, at the time of
termination, in default of the observance of or the due and timely performance
of any of its covenants and agreements contained in this Agreement.
8.2 EFFECT OF TERMINATION. If this Agreement shall be terminated as
provided in Section 8.1, this Agreement shall be of no further force or effect
(except as otherwise provided in Section 9.3) and:
(a) there shall be no liability on the part of any party hereto to
any other party except for (i) payment of expenses, fees and payments pursuant
to Section 8.4, (ii) if appropriate, payment of legal fees pursuant to Section
9.5 and (ii) any damages for breach of this Agreement; and
(b) each party shall redeliver all documents, work papers or other
materials of the other party relating to the transaction contemplated hereby,
whether obtained before or after the execution of this Agreement, to the party
furnishing the same, and all confidential information received by any party
shall be treated in accordance with Section 8.3 and the Confidentiality
Agreements referred to therein, and all filings, applications or other
submissions made pursuant to this Agreement shall, at the Company's or Parent's
option, respectively be withdrawn from the agency or other person to which made.
37.
42
8.3 CONFIDENTIALITY. In the event this Agreement is terminated or the
Merger is not consummated for any reason, the Confidentiality Agreements signed
by Parent and the Company shall continue in full force and effect.
8.4 FEES AND EXPENSES. All fees and expenses incurred in connection with
this Agreement will be paid by the party incurring such expense; provided,
however, that if the Closing fails to occur on or before December 31, 1996 and
the Company and its Representatives are not responsible in any way for such
failure, then Parent shall pay the Company's legal fees incurred in connection
with the transactions contemplated by this Agreement since July 25, 1996, up to
$25,000.
8.5 EXTENSION OF TIME; WAIVERS. At any time prior to the Closing:
(a) Parent may (i) extend the time for the performance of any of the
obligations or other acts of the Company, and (ii) waive compliance with any of
the agreements or conditions contained herein to be performed by the Company.
Any agreement on the part of Parent to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of Parent;
and
(b) The Company may (i) extend the time for the performance of any
of the obligations or other acts of Parent, and (ii) waive compliance with any
of the agreements or conditions contained herein to be performed by Parent. Any
agreement on the part of the Company to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of the
Company.
ARTICLE 9
MISCELLANEOUS
9.1 AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
9.2 WAIVER.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument
38.
43
duly executed and delivered on behalf of such party; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties contained in this Agreement shall survive the Merger
through the first anniversary of the Closing; provided, however, that the
representations and warrants contained in Section 2.7 shall survive through the
18-month anniversary of the Closing. In the event of a breach or inaccuracy of
any such representation or warranty, the party liable therefore shall be liable
for all Damages resulting from such breach or inaccuracy to the extent that a
claim for Damages has been made within such one-year period or 18-month period,
as the case may be.
9.4 ENTIRE AGREEMENT; COUNTERPARTS; APPLICABLE LAW. This Agreement and the
other agreements referred to herein and the Confidentiality Agreements between
Parent and the Company constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among or between any of
the parties with respect to the subject matter hereof. This Agreement may be
executed in several counterparts, each of which shall be deemed an original and
all of which shall constitute one and the same instrument, and shall be governed
in all respects by the laws of the State of California as applied to contracts
entered into and to be performed entirely within California.
9.5 ATTORNEYS' FEES. In any action at law or suit in equity to enforce
this Agreement or the rights of any of the parties hereunder, the prevailing
party in such action or suit shall be entitled to receive a reasonable sum for
its attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
9.6 ASSIGNABILITY. This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and their
respective successors; provided, however, that this Agreement may not be
assigned by any party without the prior written consent of the other parties,
and any attempted assignment without such consent shall be void and of no
effect. Each of the Selling Shareholders agrees that he will not assign his
right to receive shares of Parent Common Stock pursuant to Section 1.4 above
except in the case of death and upon the condition that the assignee
acknowledges in writing that such shares of Parent Common Stock shall constitute
full, complete and adequate consideration for such Shareholder's Shares and that
such Selling Shareholder or his assigns shall not be entitled to any additional
consideration therefor.
9.7 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied with receipt confirmed, sent by nationally-recognized, overnight
courier with receipt confirmed or mailed by registered or certified mail (return
receipt requested), postage prepaid, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
39.
44
To Parent:
Asyst Technologies, Inc.
00000 Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx
3000 El Camino Real
Five Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
To the Company:
Radiance Systems Incorporated
0000 Xxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Fenwick & West LLP
0 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
To the Selling Shareholders:
Xxxxxxx Xxxxxx
0000 Xxxxx Xxxx
Xxx Xxxx, XX 00000
Telephone: (___) ___-____
Fax: (___) ___-____
40.
45
Xxxxxx Xxxxx
0000 Xxxxxxxxx Xxxxxx
Xx Xxxxx, XX 00000
Telephone: (___) ___-____
Fax: (___) ___-____
Xxxx Xxxxx
0000 Xxxxx Xxxxxx, #0000
Xxxxxxxxx, XX 00000
Telephone: (___) ___-____
Fax: (___) ___-____
Xxxxxx Xxxxxxxx
c/o Tekedge Corporation
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Telephone: (___) ___-____
Fax: (___) ___-____
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a telecopy, when the party receiving such telecopy shall have confirmed
receipt of the communication, (c) in the case of delivery by nationally-recog-
nized, overnight courier, on the business day following dispatch and (d) in the
case of mailing, on the fifth business day following such mailing.
9.8 SEVERABILITY. If any provision of this Agreement is declared invalid
in a court proceeding between the parties, such invalidity shall not invalidate
this entire Agreement if to so do would not deprive any of the parties of the
substantial benefit of his or its bargain, and this Agreement shall be modified
to make such provision enforceable in accordance with the intent of the parties,
and the rights and obligations of the parties shall be construed and enforced
accordingly.
9.9 COOPERATION. Parent and the Company each agree to execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate
expeditiously or implement the transactions contemplated by this Agreement.
9.10 PARTIES IN INTEREST. None of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and assigns (if any).
9.11 CERTAIN TERMS. As used in this Agreement:
(a) the word "Person" refers to any (i) individual, (ii)
corporation, partnership, company or other entity or (iii) Governmental
Authority; and
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46
(b) the words "include" and "including," and variations thereof,
shall not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words "without limitation."
(c) representations or warranties made to the "knowledge of" the
Company and Parent shall include only matters that are known or reasonably
should have been known by the officers of those corporations.
(d) For purposes of this Agreement, whenever the context requires,
the singular shall include the plural, and vice versa and each of the masculine,
feminine and neutral genders shall include the other genders.
9.12 TITLES. The titles and captions of the Articles and Sections of this
Agreement are included for convenience of reference only and shall have no
effect on the construction or meaning of this Agreement.
9.13 ARTICLES, SECTIONS AND EXHIBITS. Except as otherwise indicated, all
references in this Agreement to "Articles," "Sections " and "Exhibits" are
intended to refer to Articles and Sections of this Agreement and Exhibits to
this Agreement.
42.
47
IN WITNESS WHEREOF, the parties hereby have executed this Agreement and
Plan of Reorganization as of the date first above written.
ASYST TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
Chief Executive Officer
RADIANCE ACQUISITION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
President
RADIANCE SYSTEMS INCORPORATED
By: /s/ Xxxx Xxxxx
--------------------------------
Xxxx Xxxxx
Chief Executive Officer
SELLING SHAREHOLDERS:
/s/ Xxxxxxx Xxxxxx
------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx
/s/ Xxxx Xxxxx
------------------------------------
Xxxx Xxxxx
/s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx
48
EXHIBITS
Exhibit A Form of Agreement of Merger
Exhibit B1 Form of Employment and Noncompetition Agreement
Exhibit B2 Form of Proprietary Information and Inventions Agreement
Exhibit C1 Form of Legal Opinion of Fenwick & West LLP
Exhibit C2 Form of Legal Opinion of Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx
Exhibit D Form of Tax Opinion of Fenwick & West LLP
Exhibit E Form of Tax Opinion of Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx
Exhibit F Form of Affiliate Agreement
Exhibit G Form of Continuity of Interest Certificate
Exhibit H Option Cancellation and Exchange Agreement
Exhibit I1 Tax Certificate of Parent
Exhibit I2 Tax Certificate of the Company
SCHEDULES
Schedule 1.4(b)Allocation of Payments to Shareholders of the Company
i.
49
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
AMONG ASYST TECHNOLOGIES, INC.,
RADIANCE ACQUISITION, INC.,
RADIANCE SYSTEMS INCORPORATED,
AND
XXXXXXX XXXXXX, XXXXXX XXXXX,
XXXX XXXXX AND XXXXXX XXXXXXXX
DATED SEPTEMBER 20, 1996
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION among
ASYST TECHNOLOGIES, INC., a California corporation ("Parent"), RADIANCE
ACQUISITION, INC., a Delaware corporation and wholly-owned subsidiary of Parent
("Merger Sub"), RADIANCE SYSTEMS INCORPORATED, a California corporation (the
"Company"), and XXXXXXX XXXXXX, XXXXXX XXXXX, XXXX XXXXX AND XXXXXX XXXXXXXX
(the "Selling Shareholders" and each, individually, a "Selling Shareholder")
dated September 20, 1996 (the "Agreement") is made as of the 21st day of
October, 1996 by and among Parent, Merger Sub, the Company and the Selling
Shareholders.
RECITALS
A. The Parties desire to amend the Agreement as set forth herein.
AGREEMENT
In consideration of the mutual covenants, promises and obligations
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
and intending to be bound hereby, the parties hereto agree as follows:
1. AMENDMENT TO SECTION 1.4. Section 1.4 of the Agreement is hereby
amended and restated in its entirety to read as follows:
"1.4 CONVERSION OF COMPANY STOCK.
(a) On the Effective Date, the outstanding shares of common
stock, no par value, of the Company (the "Company Common Stock") and the
outstanding shares of preferred stock, no par value, of the Company (the
"Company Preferred Stock" and, together with the Company Common Stock, the
"Shares") shall cease to be existing and issued shares and shall become and be
converted into, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or the holder thereof, into shares of Parent
common stock, no par value ("Parent Common Stock"), to be paid by Parent to the
Selling Shareholders in the manner and subject to the conditions set forth in
Sections 1.4(b) through 1.4(g) below. Each
1.
50
of the Selling Shareholders hereby agrees to accept the shares of Parent Common
Stock to be exchanged for such Selling Shareholder's Shares pursuant to, and in
the manner set forth in, this Section 1.4 and acknowledges that such shares of
Parent Common Stock shall constitute full, complete and adequate consideration
for such Selling Shareholder's Shares and that such Selling Shareholder shall
not be entitled to any additional consideration therefor.
(b) An aggregate of 129,740 shares of Parent Common Stock
shall be issued to the Selling Shareholders (the "Closing Payment") at the
Closing. The Closing Payment shall be divided among the Selling Shareholders in
the manner set forth on Schedule 1.4(b). Of the Closing Payment, 90,000 shares
of Parent Common Stock (the "Restricted Shares") shall be subject to
restrictions on transfer ("Transfer Restrictions") which shall restrict each
Selling Shareholder from, directly or indirectly, selling, offering, contracting
to sell, transferring the economic risk of ownership in, making any short sale,
pledging or otherwise disposing of any Restricted Shares held by such Selling
Shareholder for the period beginning on the Closing Date and terminating on the
ten (10) year anniversary of the Closing Date. Each stock certificate
representing Restricted Shares shall bear a legend setting forth the Transfer
Restrictions. Thirty-nine thousand seven hundred forty (39,740) shares of
Parent Common Stock, representing the remainder of the Closing Payment, shall
not be subject to the Transfer Restrictions.
(c) Subject to Section 1.4(f), an aggregate of 5,000
Restricted Shares shall be released from the Transfer Restrictions on the
Closing Date and on the last business day in each of the eleven (11) fiscal
quarters of Parent following the Closing. Each release of Restricted Shares
pursuant to this Section 1.4(c) shall be apportioned among the Selling
Shareholders in the manner set forth on Schedule 1.4(b).
(d) Subject to Section 1.4(f), an aggregate of 15,000
Restricted Shares, as adjusted below, shall be released from the Transfer
Restrictions on March 31, 1997 (the "First Earn-Out Release"). The First
Earn-Out Release shall be apportioned among the Selling Shareholders in the
manner set forth on Schedule 1.4(b). The First Earn-Out Release shall be reduced
by that number of shares of Parent Common Stock equal to (i) the First Revenue
Shortfall Percentage (as defined below), multiplied by (ii) 30,000; provided,
however, that the First Earn-Out Release shall not be reduced by more than 7,500
shares. The "First Revenue Shortfall Percentage" shall equal one (1) minus a
fraction, (i) the numerator of which are the Company Revenues (as defined below)
for the six-month period ending March 31, 1997, and (ii) the denominator of
which is $1,300,000 (such fraction being rounded to the nearest one hundredth);
provided, however, that in the event such fraction yields a number greater than
one (1), then the First Revenue Shortfall Percentage shall equal zero (0).
"Company Revenues" shall mean revenues derived from: (i) all sales of Data Flow,
Data View, SECSView, SECSMux and related and future versions of such products as
agreed to by the Management Shareholders and Parent; and (ii) the sale of
products or provision of services to any customer of Asyst Software, Inc.
("ASI") including sales and services by the Company, provided such sales or
services are furnished pursuant to a customer relationship that is separate and
distinct from any relationship such customer may have with Parent or its
affiliates (other than ASI).
2.
51
(e) Subject to Section 1.4(f), an aggregate of 15,000
Restricted Shares, as adjusted below, shall be released from the Transfer
Restrictions on March 31, 1998 (the "Second Earn-Out Release"). The Second
Earn-Out Release shall be apportioned among the Selling Shareholders in the
manner set forth on Schedule 1.4(b). The Second Earn-out Release shall be
reduced by that number of shares of Parent Common Stock equal to (i) the Second
Revenue Shortfall Percentage (as defined below), multiplied by (ii) 30,000;
provided, however, that the Second Earn-Out Release shall not be reduced by more
than 7,500 shares. The "Second Revenue Shortfall Percentage" shall equal one (1)
minus a fraction, (i) the numerator of which are Company Revenues for the twelve
(12) month period ending March 31, 1998, and (ii) the denominator of which is
$3,000,000 (such fraction being rounded to the nearest one hundredth); provided,
however, that in the event such fraction yields a number greater than one (1),
then the Second Revenue Shortfall Percentage shall equal zero (0).
(f) In the event that a Management Shareholder's employment
with Parent and any affiliate of Parent is terminated without "cause" and not
for "failure to perform" (as such terms are defined in the form of Employment
and Noncompetition Agreement attached hereto as Exhibit B (the "Employment and
Noncompetition Agreement")), then (i) if the termination occurs during the
period beginning on the Closing Date and continuing through March 31, 1997, 90%
of the Restricted Shares held by such Management Shareholder which have not been
released from the Transfer Restrictions pursuant to Sections 1.4(c) through
1.4(e) above shall be released from the Transfer Restrictions and (ii) if the
termination occurs thereafter, 65% of the Restricted Shares held by such
Management Shareholder which have not been released from the Transfer
Restriction pursuant to Sections 1.4(c) through 1.4(e) above shall be released
from the Transfer Restrictions. In the event that a Management Shareholder's
employment with Parent and any affiliate of Parent is terminated for failure to
perform and not for cause, then 25% of the Restricted Shares held by such
Management Shareholder which have not been released from the Transfer
Restrictions pursuant to Sections 1.4(c) through 1.4(e) above shall be released
from the Transfer Restrictions. In the event a Management Shareholder is
terminated for cause or a Management Shareholder resigns from his employment
with Parent and any affiliate of Parent (absent constructive termination (as
defined in the Employment and Noncompetition Agreement)), then none of the
Restricted Shares held by such Management Shareholder shall be released from the
Transfer Restrictions. The application of this Section 1.4(f) to the Restricted
Shares held by a Management Shareholder as a result of such Management
Shareholder's termination or resignation from Parent and any affiliate of Parent
shall not affect the Transfer Restrictions on Restricted Shares held by the
other Selling Shareholders. In the event a Management Shareholder dies or
becomes permanently disabled during the period beginning on the Closing Date and
terminating on the last business day of the eleventh fiscal quarter of Parent
following the date of this Agreement, all of the Restricted Shares held by such
Management Shareholder or his successor, as the case may be, shall be released
from the Transfer Restrictions.
(g) No fractional share shall be released from the Transfer
Restrictions under this Section 1.4, but, in each case, when a fractional share
results, it shall be carried over until a subsequent release date or dates under
this Section 1.4 and until a full share is accrued, at which time such share
shall be released from the Transfer Restrictions. In the event there is no
3.
52
such subsequent release date, the remaining fractional share shall be rounded to
the nearest whole share, with any whole share to be released from the Transfer
Restrictions."
2. AMENDMENT TO SCHEDULE 1.4(B). Schedule 1.4(b) to the Agreement is
hereby amended and restated in its entirety to read as set forth on Exhibit A
hereto.
3. NO OTHER CHANGES. Except for the changes set forth above, the
Agreement shall remain unchanged and continue in full force and effect.
4.
53
IN WITNESS WHEREOF, the parties have duly executed this First Amendment
to the Reorganization Agreement as of the date first written above.
ASYST TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. XxXxxxxxxx
----------------------------
RADIANCE ACQUISITION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
RADIANCE SYSTEMS INCORPORATED
By: /s/ Xxxx Xxxxx
----------------------------
SELLING SHAREHOLDERS:
/s/ Xxxxxxx Xxxxxx
--------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx
/s/ Xxxx Xxxxx
--------------------------------
Xxxx Xxxxx
/s/ Xxxxxx Xxxxxxxx
--------------------------------
Xxxxxx Xxxxxxxx
54
EXHIBIT A
SCHEDULE 1.4(b)
1. Allocation of Closing Payment - 129,740 shares (Section 1.4(b))
SHAREHOLDER NO. OF SHARES
Xxxxxx Xxxxx 39,787
Xxxx Xxxxx 39,787
Xxxxxxx Xxxxxx 39,787
Xxxxxx Xxxxxxxx 10,379
2. Allocation of shares of Parent Common Stock released from Transfer
Restrictions on Quarterly Basis - 5,000 shares on each date (Section 1.4(c))
SHAREHOLDER NO. OF SHARES
Xxxxxx Xxxxx 1,533 & 1/3
Xxxx Xxxxx 1,533 & 1/3
Xxxxxxx Xxxxxx 1,533 & 1/3
Xxxxxx Xxxxxxxx 400
3. Allocation of shares of Parent Common Stock released from Transfer
Restrictions on each of March 31, 1997 and 98 - 15,000 shares on each date
(Section 1.4(d) and (e))
SHAREHOLDER NO. OF SHARES
Xxxxxx Xxxxx 4,600
Xxxx Xxxxx 4,600
Xxxxxxx Xxxxxx 4,600
Xxxxxx Xxxxxxxx 1,200
NOTE: Fractional shares shall be released from the Transfer Restrictions in
accordance with Section 1.4(g) of the Agreement and Plan of Reorganization to
which this schedule is attached.
6.
