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EXHIBIT 2.2
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AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
among:
XXXXXXXX XXXXXXXXXXXX,
a Delaware corporation;
WITHIN ACQUISITION CORP.,
a Delaware corporation;
WITHIN TECHNOLOGY, INC.,
a Pennsylvania corporation;
and
THE SHAREHOLDERS OF WITHIN TECHNOLOGY, INC.
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Dated as of March 17, 2000
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EXHIBITS
Exhibit A - Shareholders
Exhibit B - Certain definitions
Exhibit C - Directors and officers of Surviving Corporation
Exhibit D - Form of Noncompetition Agreement
Exhibit E - Persons to sign Noncompetition Agreements
Exhibit F - Form of legal opinion of Xxxxx, Unkovic & Xxxxx, LLP.
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TABLE OF CONTENTS
PAGE
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SECTION 1. DESCRIPTION OF TRANSACTION .................................. 1
1.1 Merger of Merger Sub into the Company ...................... 1
1.2 Effect of the Merger ....................................... 1
1.3 Closing; Effective Time .................................... 1
1.4 Articles of Incorporation and Bylaws; Directors and Officers 2
1.5 Conversion of Shares ....................................... 2
1.6 Legends .................................................... 2
1.7 Closing of the Company's Transfer Books .................... 2
1.8 Exchange of Certificates ................................... 3
1.9 Tax Consequences ........................................... 3
1.10 Further Action ............................................. 3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS .......... 4
2.1 Due Organization; No Subsidiaries; Etc ..................... 4
2.2 Articles of Incorporation and Bylaws; Records .............. 4
2.3 Capitalization, Etc ........................................ 5
2.4 Financial Statements ....................................... 5
2.5 Absence of Changes ......................................... 6
2.6 Title to Assets ............................................ 7
2.7 Bank Accounts; Receivables ................................. 8
2.8 Equipment; Leasehold ....................................... 8
2.9 Proprietary Assets ......................................... 8
2.10 Contracts .................................................. 10
2.11 Liabilities ................................................ 12
2.12 Compliance with Legal Requirements ......................... 12
2.13 Governmental Authorizations ................................ 12
2.14 Tax Matters ................................................ 13
2.15 Employee and Labor Matters; Benefit Plans .................. 14
2.16 Environmental Matters ...................................... 16
2.17 Insurance .................................................. 17
2.18 Related Party Transactions ................................. 17
2.19 Legal Proceedings; Orders .................................. 17
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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2.20 Authority; Binding Nature of Agreement ..................... 18
2.21 Non-Contravention; Consents ................................ 18
2.22 Full Disclosure ............................................ 19
2.23 Investment Representations ................................. 19
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ..... 20
3.1 Corporate Existence and Power .............................. 20
3.2 SEC Filings; Financial Statements .......................... 21
3.3 Authority; Binding Nature of Agreement ..................... 21
3.4 Valid Issuance ............................................. 21
SECTION 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB 21
4.1 Accuracy of Representations ................................ 22
4.2 Performance of Covenants ................................... 22
4.3 Consents ................................................... 22
4.4 Agreements and Documents ................................... 22
4.5 Termination of Employee Plans .............................. 22
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY .......... 23
5.1 Accuracy of Representations ................................ 23
5.2 Performance of Covenants ................................... 23
5.3 Documents .................................................. 23
SECTION 6. INDEMNIFICATION, ETC ........................................ 23
6.1 Survival of Representations, Etc ........................... 23
6.2 Indemnification ............................................ 24
6.3 Threshold; Ceiling ......................................... 24
6.4 No Contribution ............................................ 25
6.5 Interest ................................................... 25
6.6 Defense of Third Party Claims .............................. 25
6.7 Exercise of Remedies by Indemnitees Other Than Parent ...... 25
SECTION 7. DELIVERY AND REGISTRATION OF SHARES ......................... 26
7.1 Delivery of Parent Common Stock ............................ 26
7.2 S-3 Registration Statement ................................. 26
7.3 Transferability of Registration Rights ..................... 26
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TABLE OF CONTENTS
(CONTINUED)
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7.4 Delay of Registration ...................................... 26
7.5 Amendment of Section 17 .................................... 27
SECTION 8. MISCELLANEOUS PROVISIONS .................................... 27
8.1 Further Assurances ......................................... 27
8.2 Fees and Expenses .......................................... 27
8.3 Attorneys' Fees ............................................ 27
8.4 Notices .................................................... 27
8.5 Confidentiality ............................................ 28
8.6 Time of the Essence ........................................ 28
8.7 Headings ................................................... 28
8.8 Counterparts ............................................... 28
8.9 Governing Law .............................................. 29
8.10 Successors and Assigns ..................................... 29
8.11 Remedies Cumulative; Specific Performance .................. 29
8.12 Waiver ..................................................... 29
8.13 Amendments ................................................. 29
8.14 Severability ............................................... 29
8.15 Parties in Interest ........................................ 30
8.16 Entire Agreement ........................................... 30
8.17 Disclosure Schedules ....................................... 30
8.18 Construction ............................................... 30
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of March 17, 2000, by and among: XXXXXXXX XXXXXXXXXXXX,
a Delaware corporation ("Parent"); WITHIN ACQUISITION CORP., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"); WITHIN
TECHNOLOGY, INC., a Pennsylvania corporation (the "Company"); and the
SHAREHOLDERS OF THE COMPANY identified on EXHIBIT A (each a "Shareholder" and
collectively the "Shareholders"). Certain other capitalized terms used in this
Agreement are defined in EXHIBIT B.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement, the Delaware
General Corporation Law (the "DGCL") and the Pennsylvania Business Corporation
Law (the "PBCL") (the "Merger"). Upon consummation of the Merger, Merger Sub
will cease to exist, and the Company will become a wholly owned subsidiary of
Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
C. This Agreement has been approved by the respective boards of
directors of Parent, Merger Sub and the Company.
D. The Shareholders own all of the presently issued and outstanding
shares of capital stock of the Company (the "Company Capital Stock").
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the DGCL and the PBCL.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx
00000 at 10:00 a.m. on the date hereof, or at such other time and date as the
parties may agree in writing (the "Closing Date").
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Contemporaneously with or as promptly as practicable after the Closing, a
properly executed agreement of merger conforming to the requirements of the DGCL
and properly executed Articles of Merger conforming to the requirements of the
PBCL shall be filed with the Secretaries of State of the State of Delaware and
the Commonwealth of Pennsylvania (collectively, the "Certificate of Merger").
The Merger shall become effective at the time the Certificate of Merger is filed
with the Secretaries of State of the State of Delaware and the Commonwealth of
Pennsylvania (the "Effective Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS. Unless
otherwise determined by Parent prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation
shall be the Articles of Incorporation of the Company as in effect
immediately prior to the Effective Time;
(b) the Bylaws of the Surviving Corporation shall be the Bylaws
of Merger Sub as in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified
on EXHIBIT C.
1.5 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger and without
any further action on the part of Parent, Merger Sub, the Company or any
shareholder of the Company:
(i) each share of Company Capital Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive 32.272 shares of the common stock (par value $.0001 per share) of Parent
(such shares are the "Parent Common Stock"); and
(ii) each share of the common stock (with no par value) of
Merger Sub outstanding immediately prior to the Effective Time shall be
converted into one share of common stock of the Surviving Corporation.
1.6 LEGENDS. The certificates representing the Parent Common Stock shall
have endorsed thereon legends in substantially the following forms:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
1.7 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time,
holders of certificates representing shares of Company Capital Stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of the Company, and
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the stock transfer books of the Company shall be closed with respect to all
shares of such capital stock outstanding immediately prior to the Effective
Time. No further transfer of any such shares of Company Capital Stock shall be
made on such stock transfer books after the Effective Time.
1.8 EXCHANGE OF CERTIFICATES.
(a) At the Closing, Parent shall deliver to the Shareholders
certificates representing the Parent Common Stock in exchange for the Company
Stock Certificates. In lieu of any fractional Parent shares to which such holder
would otherwise be entitled, the holder of such Company Stock Certificate shall
be paid in cash an amount equal to the sum of (1) the dollar amount (rounded to
the nearest whole cent) determined by multiplying $132.80 by the fraction of a
share of Parent Common Stock that would otherwise be deliverable to such holder
above. All Company Stock Certificates so exchanged shall be canceled. Until
surrendered as contemplated by this Section 1.8, each Company Stock Certificate
shall be deemed, from and after the Effective Time, to represent only the right
to receive the Parent Common Stock (and cash in lieu of fractional Parent
shares) in accordance with this Agreement. If any Company Stock Certificate
shall have been lost, stolen or destroyed, Parent may, in its reasonable
discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock or the payment of cash in lieu of fractional
shares, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Parent may reasonably direct) as indemnity against any claim that may be
made against Parent or the Surviving Corporation with respect to such Company
Stock Certificate.
(b) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of any fractional share shall be paid to any such holder, until
such holder surrenders such Company Stock Certificate in accordance with this
Section 1.8 (at which time such holder shall be entitled to receive all such
dividends and distributions and such cash payment).
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 of the Code. The parties to this Agreement hereby adopt this Agreement as a
"plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
1.10 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation or Parent
with full right, title and possession of and to all rights and property of
Merger Sub and the Company, the officers and directors of the Surviving
Corporation and Parent shall be fully authorized (in the name of Merger Sub, in
the name of the Company and otherwise) to take such action.
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders jointly and severally represent and warrant to
and for the benefit of the Indemnitees, as follows:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Pennsylvania and has all
necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Company Contracts.
(b) Except as set forth in Part 2.1(b) of the Disclosure
Schedule, the Company has not conducted any business under or otherwise used,
for any purpose or in any jurisdiction, any fictitious name, assumed name, trade
name or other name, other than the name "Within Technology, Inc."
(c) The Company is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1(c) of the
Disclosure Schedule. The Company is in good standing as a foreign corporation in
each of the jurisdictions identified in Part 2.1(c) of the Disclosure Schedule.
(d) Part 2.1(d) of the Disclosure Schedule accurately sets forth
(i) the names of the members of the Company's board of directors, (ii) the names
of the members of each committee of the Company's board of directors, and (iii)
the names and titles of the Company's officers.
(e) The Company has no Subsidiaries.
(f) The Company does not own any controlling interest in any
Entity and the Company has never owned, beneficially or otherwise, any shares or
other securities of, or any direct or indirect equity interest in, any Entity
except for the equity interests identified in Part 2.1(f) of the Disclosure
Schedule. The Company has not agreed and is not obligated to make any future
investment in or capital contribution to any Entity. The Company has not
guaranteed and is not responsible or liable for any obligation of any of the
Entities in which it owns or has owned any equity interest except as set forth
in Part 2.1(f) of the Disclosure Schedule.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's articles
of incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) all minutes and other records of the meetings
and other proceedings (including any actions taken by written consent or
otherwise without a meeting) of the shareholders of the Company, the board of
directors of the Company and all committees of the board of directors of the
Company. There have been no formal 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
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that are not fully reflected in such minutes or other records, and there have
been no actions taken by the Board of Directors, any committee thereof or the
shareholders of the Company except as 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 bylaws, and the Company has not taken any
action that is inconsistent in any material respect with any resolution adopted
by the Company's shareholders, the Company's board of directors or any committee
of the Company's board of directors. The books of account, stock records, minute
books and other records of the Company are accurate, up-to-date and complete in
all material respects, and have been maintained in accordance with prudent
business practices.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of
10,000 shares of Common Stock, with no par value (the "Company Common Stock"),
of which seven hundred (700) shares have been issued and are outstanding as of
the date of this Agreement. All of the outstanding shares of Company Common
Stock have been duly authorized and validly issued, and are fully paid and
non-assessable. Part 2.3 of the Disclosure Schedule provides an accurate and
complete description of the terms of each repurchase option which is held by the
Company and to which any of such shares is subject. The Shareholders own all of
the outstanding capital stock of the Company, which consists solely of Common
Stock held by each Shareholder as described on Part 2.3 of the Disclosure
Schedule.
(b) There is no: (i) outstanding subscription, option, call,
warrant or right (whether or not currently exercisable) to acquire any shares of
capital stock or other securities of the Company; (ii) outstanding security,
instrument or obligation that is or may become convertible into or exchangeable
for any shares of capital stock or other securities of the Company; (iii)
Contract under which the Company is or may become obligated to sell or otherwise
issue any shares of its capital stock or any other securities of the Company; or
(iv) to the knowledge of the Company, any condition or circumstances that may
give rise to or provide a reasonable basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any
shares of the capital stock or other securities of the Company.
(c) All outstanding shares of Company Common Stock have been
issued and granted in compliance with (i) all applicable securities laws and
other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts.
(d) Except as set forth in Part 2.3 of the Disclosure
Schedule, the Company has never repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities of the Company. All securities
so reacquired by the Company were reacquired in compliance with (i) the
applicable provisions of the PBCL and all other applicable Legal Requirements,
and (ii) all requirements set forth in applicable restricted stock purchase
agreements and other applicable Contracts.
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Parent the following Company
prepared financial statements (collectively, the "Company Financial
Statements"):
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(i) The unaudited balance sheets of the Company as of
December 31, 1999 and the related unaudited income statements for the year then
ended.
(b) The Company Financial Statements (I) are accurate and
complete in all material respects, (ii) have been prepared on the accrual basis
of accounting with the exception that depreciation and the resulting fixed asset
accounts are sated using accelerated depreciation methods in accordance with
applicable IRS regulations and (iii) present fairly the financial condition of
the Company as of the date thereof and the results of operations for the period
covered thereby. There are no material transactions, agreements or accounts that
have not been properly recorded in the Company Financial Statements. Receivables
represent bona fide claims against debtors for sales, and all receivables have
been appropriately reduced to their estimated net realizable value.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since December 31, 1999:
(a) there has not been any material adverse change in the
Company's business, condition, assets, liabilities, operations, financial
performance or prospects, and, to the best of the knowledge of the Company and
the Shareholders, no event has occurred that will, or could reasonably be
expected to, have a Material Adverse Effect on the Company;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the Company's assets
(whether or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Company has not sold, issued or authorized the issuance
of (i) any capital stock or other security, (ii) any option or right to acquire
any capital stock or any other security, or (iii) any instrument convertible
into or exchangeable for any capital stock or other security;
(e) the Company has not amended or waived any of its rights
under, or permitted the acceleration of vesting under, (i) any provision of any
agreement evidencing any outstanding option to purchase Company Capital Stock,
or (ii) any restricted stock purchase agreement;
(f) there has been no amendment to the Company's articles of
incorporation or bylaws, and the Company has not effected or been a party to any
merger, consolidation or other acquisition transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(g) the Company has not formed any subsidiary or acquired any
equity interest or other interest in any other Entity;
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(h) the Company has not made any capital expenditure which, when
added to all other capital expenditures made on behalf of the Company that
exceeds $10,000;
(i) the Company has not (i) entered into or permitted any of the
assets owned or used by it to become bound by any Contract that is or would
constitute a Material Contract (as defined in Section 2.10(a)), or (ii) amended
or prematurely terminated, or waived any material right or remedy under, any
such Contract;
(j) the Company has not (i) acquired, leased or licensed any
right or other asset from any other Person, (ii) sold or otherwise disposed of,
or leased or licensed, any right or other asset to any other Person, or (iii)
waived or relinquished any right, except for immaterial rights or other
immaterial assets acquired, leased, licensed or disposed of in the ordinary
course of business and consistent with the Company's past practices;
(k) the Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable or
other indebtedness;
(l) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Company's past practices;
(m) the Company has not (i) lent money to any Person (other than
pursuant to routine travel advances made to employees in the ordinary course of
business), or (ii) incurred or guaranteed any indebtedness for borrowed money;
(n) the Company has not (i) established or adopted any Employee
Benefit Plan, (ii) paid any bonus or made any profit-sharing or similar payment
to, or increased the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors, officers
or employees, or (iii) hired any new employee;
(o) the Company has not changed any of its methods of accounting
or accounting practices in any respect;
(p) the Company has not made any election under applicable tax
laws to change the tax status of the Company as a "C" corporation;
(q) the Company has not commenced or settled any Legal
Proceeding;
(r) the Company has not entered into any material transaction or
taken any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(s) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(r)" above.
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2.6 TITLE TO ASSETS.
(a) The Company owns, and has good, valid and marketable title
to, all assets purported to be owned by it, including: (i) all assets reflected
in the Company Financial Statements; (ii) all assets referred to in Parts 2.1,
2.7(b) and 2.9 of the Disclosure Schedule and all of the Company's rights under
the Contracts identified in Part 2.10 of the Disclosure Schedule; and (iii) all
other assets reflected in the Company's books and records as being owned by the
Company. Except as noted on such Parts of the Disclosure Schedule, all of said
assets are owned by the Company free and clear of any liens or other
Encumbrances, except for (x) any lien for current taxes not yet due and payable,
and (y) minor liens that have arisen in the ordinary course of business and that
do not (in any case or in the aggregate) materially detract from the value of
the assets of or materially impair the operations of the Company.
(b) Part 2.6 of the Disclosure Schedule identifies all assets
that are material to the business of the Company and that are being leased or
licensed to the Company.
2.7 BANK ACCOUNTS; RECEIVABLES.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
information with respect to each account maintained by or for the benefit of the
Company at any bank or other financial institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate
and complete breakdown and aging of all accounts receivable, notes receivable
and other receivables of the Company as of December 31, 1999. Except as noted on
Part 2.7(b) of the Disclosure Schedule, all existing accounts receivable of the
Company (including those accounts receivable reflected in the Company Financial
Statements that have not yet been collected and those accounts receivable that
have arisen since December 31, 1999 and have not yet been collected) (i)
represent valid obligations of customers of the Company arising from bona fide
transactions entered into in the ordinary course of business, (ii) are current
and (iii) are reasonably expected by Company to be collected in full when due,
without any counterclaim or set off (net of an allowance for doubtful accounts
not to exceed $10,000 in the aggregate).
2.8 EQUIPMENT; LEASEHOLD.
(a) All material items of equipment and other tangible assets
owned by or leased to the Company, and used by the Company in its business, are
adequate for the uses to which they are being put, are in good condition and
repair (ordinary wear and tear excepted) and are adequate for the conduct of the
Company's business in the manner in which such business is currently being
conducted.
(b) The Company does not own any real property or any interest in
real property, except for the leasehold created under the real property lease
identified in Part 2.8(b) of the Disclosure Schedule.
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2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Company Proprietary Asset registered with any Governmental Body
or for which an application has been filed with any Governmental Body, (i) a
brief description of such Proprietary Asset, and (ii) the names of the
jurisdictions covered by the applicable registration or application. Part
2.9(a)(ii) of the Disclosure Schedule identifies and provides a brief
description of all other Company Proprietary Assets owned by the Company. Part
2.9(a)(iii) of the Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset licensed to the Company by any Person
(except for any Proprietary Asset that is licensed to the Company under any
third party software license generally available to the public at a cost of less
than $10,000), and identifies the license agreement under which such Proprietary
Asset is being licensed to the Company. The Company has good, valid and
marketable title to all of the Company Proprietary Assets identified in Parts
2.9(a)(i) and 2.9(a)(ii) of the Disclosure Schedule, free and clear of all liens
and other Encumbrances, and to the best of Shareholders' knowledge has a valid
right to use all Proprietary Assets identified in Part 2.9(a)(iii) of the
Disclosure Schedule. Except as set forth in Part 2.9(a)(iv) of the Disclosure
Schedule, the Company is not to the best of Shareholders' knowledge obligated to
make any payment to any Person for the use of any Company Proprietary Asset.
Except as set forth in Part 2.9(a)(vi) of the Disclosure Schedule, the Company
has not to the best of Shareholders' knowledge developed jointly with any other
Person any Company Proprietary Asset with respect to which such other Person has
any rights. Except as set forth in Part 2.9(a)(vii) of the Company Disclosure
Schedule, there is to the best of Shareholders' knowledge no Company Contract
pursuant to which any Person has any right (whether or not currently
exercisable) to use, license or otherwise exploit any Company Proprietary Asset.
(b) To the best of Shareholders' knowledge, the Company has taken
all measures and precautions necessary to protect and maintain the
confidentiality and secrecy of all Company Proprietary Assets (except Company
Proprietary Assets whose value would be unimpaired by public disclosure) and
otherwise to maintain and protect the value of all Company Proprietary Assets.
Except as set forth in Part 2.9(b) of the Disclosure Schedule, the Company has
not (other than pursuant to license agreements identified in Part 2.10 of the
Disclosure Schedule) disclosed or delivered to any Person, or permitted the
disclosure or delivery to any Person of, (i) the source code, or any portion or
aspect of the source code, of any Company Proprietary Asset, or (ii) the object
code, or any portion or aspect of the object code, of any Company Proprietary
Asset.
(c) To the best of Shareholders' knowledge, (i) none of the
Company Proprietary Assets infringes or conflicts with any Proprietary Asset
owned or used by any other Person, (ii) the Company is not infringing,
misappropriating or making any unlawful use of, and the Company has not at any
time infringed, misappropriated or made any unlawful use of, or received any
notice or other communication (in writing or otherwise) of any actual, alleged,
possible or potential infringement, misappropriation or unlawful use of, any
Proprietary Asset owned or used by any other Person and (iii) no other Person is
infringing, misappropriating or making any unlawful use of, and no Proprietary
Asset owned or used by any other Person infringes or conflicts with, any Company
Proprietary Asset.
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(d) Except as set forth in Part 2.9(d) of the Disclosure
Schedule, to the best of Shareholders' knowledge: (i) each Company Proprietary
Asset conforms in all material respects with any specification, documentation,
performance standard, representation or statement made or provided with respect
thereto by or on behalf of the Company; and (ii) there has not been any claim by
any customer or other Person alleging that any Company Proprietary Asset
(including each version thereof that has ever been licensed or otherwise made
available by the Company to any Person) does not conform in all material
respects with any specification, documentation, performance standard,
representation or statement made or provided by or on behalf of the Company, and
there is no basis for any such claim. The Company has established adequate
reserves on the Company Financial Statements to cover all costs associated with
any obligations that the Company may have with respect to the correction or
repair of programming errors or other defects in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Company to conduct its business in the manner in
which such business has been and is being conducted. Except as set forth in Part
2.9(e) of the Disclosure Schedule, (i) the Company has not licensed any of the
Company Proprietary Assets to any Person on an exclusive basis, and (ii) the
Company has not entered into any covenant not to compete or Contract limiting
its ability to exploit fully any of its Proprietary Assets or to transact
business in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure
Schedule, (i) all current and former employees of the Company have executed and
delivered to the Company confidentiality agreements substantially in the form
previously delivered to Parent, and (ii) all current and former consultants and
independent contractors to the Company have executed and delivered to the
Company confidentiality agreements substantially in the form previously
delivered to Parent.
2.10 CONTRACTS.
(a) Part 2.10 of the Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of,
or the performance of services by, any employee, consultant or independent
contractor;
(ii) each Company Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset;
(iii) each Company Contract imposing any restriction on
the Company's right or ability (A) to compete with any other Person, (B) to
acquire any product or other asset or any services from any other Person, to
sell any product or other asset to or perform any services for any other Person
or to transact business or deal in any other manner with any other Person, or
(C) develop or distribute any technology;
(iv) each Company Contract creating or involving any
agency relationship, distribution arrangement or franchise relationship;
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(v) each Company Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) each Company Contract relating to the creation of any
Encumbrance with respect to any asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(ix) each Company Contract relating to the purchase or
sale of any product or other asset by or to, or the performance of any services
by or for, any Related Party (as defined in Section 2.18);
(x) each Company Contract constituting or relating to a
Government Contract or Government Bid;
(xi) any other Company Contract that was entered into
outside the ordinary course of business or was inconsistent with the Company's
past practices;
(xii) any other Company Contract that has a term of more
than 60 days and that may not be terminated by the Company (without penalty)
within 60 days after the delivery of a termination notice by the Company; and
(xiii) any other Company Contract that contemplates or
involves (A) the payment or delivery of cash or other consideration in an amount
or having a value in excess of $10,000 in the aggregate, or (B) the performance
of services having a value in excess of $10,000 in the aggregate.
(Contracts in the respective categories described in clauses "(i)" through
"(xiii)" above, the termination, breach or enforcement of which could have a
Material Adverse Effect, are referred to in this Agreement as "Material
Contracts.")
(b) The Company has delivered to Parent accurate and complete
copies of all written Material Contracts, including all amendments thereto. Part
2.10(c) of the Disclosure Schedule provides an accurate description of the terms
of each Material Contract that is not in written form. Each Material Contract
identified in Part 2.10(a) and Part 2.10(b) of the Disclosure Schedule is valid
and in full force and effect, and, to the best of the knowledge of the Company
and the Shareholders, is enforceable by the Company in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 2.10(c) of the Disclosure
Schedule:
(i) the Company has not violated or breached, or committed
any default under, any Material Contract, and, to the best of the knowledge of
the Company and the
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Shareholders, no other Person has violated or breached, or committed any default
under, any Material Contract;
(ii) to the best of the knowledge of the Company and the
Shareholders, no event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time) will, or could reasonably be
expected to, (A) result in a violation or breach of any of the provisions of any
Material Contract, (B) give any Person the right to declare a default or
exercise any remedy under any Material Contract, (C) give any Person the right
to accelerate the maturity or performance of any Material Contract, or (D) give
any Person the right to cancel, terminate or modify any Material Contract; and
(iii) the Company has not waived any of its material
rights under any Material Contract.
(d) The Company is not presently in active negotiations
regarding, and no Person has a right pursuant to the terms of any Material
Contract to renegotiate, any amount paid or payable to the Company under any
Material Contract or any other material term or provision of any Material
Contract.
(e) The Material Contracts collectively constitute all of the
Contracts necessary to enable the Company to conduct in all material respects
its business in the manner in which its business is currently being conducted.
2.11 LIABILITIES. The Company has no accrued, contingent or other
liabilities of any nature, either matured or unmatured (whether or not required
to be reflected in financial statements, and whether due or to become due),
except for: (a) liabilities identified as such in the Company Financial
Statements; (b) accounts payable or accrued salaries that have been incurred by
the Company since December 31, 1999 in the ordinary course of business and
consistent with the Company's past practices; (c) liabilities under the Company
Contracts identified in Part 2.10 of the Disclosure Schedule, to the extent the
nature and magnitude of such liabilities can be specifically ascertained by
reference to the text of such Company Contracts; and (d) the liabilities
identified in Part 2.11 of the Disclosure Schedule.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and has at all
times since the Company's inception been, in compliance with all applicable
Legal Requirements, except where the failure to comply with such Legal
Requirements has not had and will not have a Material Adverse Effect on the
Company. Except as set forth in Part 2.12 of the Disclosure Schedule, since the
Company's inception, the Company has not received any notice or other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Company, and the
Company has delivered to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. The
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule
are valid and in full force and effect, and collectively constitute all
Governmental Authorizations necessary to enable the Company to conduct its
business in the
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manner in which its business is currently being conducted. The Company is, and
at all times since the Company's inception has been, in substantial compliance
with the terms and requirements of the respective Governmental Authorizations
identified in Part 2.13 of the Disclosure Schedule except where the failure to
comply with such Governmental Authorizations has not had and will not have a
Material Adverse Effect on the Company. Since the Company's inception, the
Company has not received notice or other communication from any Governmental
Body regarding (a) any actual or possible violation of or failure to comply with
any term or requirement of any Governmental Authorization, or (b) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or
modification of any Governmental Authorization, other than as disclosed on Part
2.13 of the Disclosure Schedule.
2.14 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) have been, or will be when filed, accurately and completely
prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the Closing Date have been or will be paid on or before the Closing Date. The
Company has delivered to Parent accurate and complete copies of all Company
Returns filed since the Company's inception which have been requested by Parent.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof. The Company will establish, in the ordinary course of business and
consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from the Company's inception through the Closing Date, and
the Company will disclose the dollar amount of such reserves to Parent on or
prior to the Closing Date.
(c) No Company Return relating to income Taxes has ever been
examined or audited by any Governmental Body. Except as set forth in Part 2.14
of the Disclosure Schedule, no extension or waiver of the limitation period
applicable to any of Company Returns has been granted (by the Company or any
other Person), and no such extension or waiver has been requested from the
Company.
(d) Except as set forth in Part 2.14 of the Disclosure Schedule,
no claim or Proceeding is pending or has been threatened against or with respect
to the Company in respect of any Tax. There are no unsatisfied liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by the Company with respect to any Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by the Company and with respect
to which adequate reserves for payment have been established). There are no
liens for Taxes upon any of the assets of the Company except liens for current
Taxes not yet due and payable. The Company has not entered into or become bound
by any agreement or consent pursuant to Section 341(f) of the Code. The Company
has not been, and the Company will not be, required to include any adjustment in
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taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
not disclosed on the Disclosure Schedule covering any employee or independent
contractor or former employee or independent contractor of the Company that,
considered individually or considered collectively with any other such
Contracts, will, or could reasonably be expected to, give rise directly or
indirectly to the payment of any amount that would not be deductible pursuant to
Section 280G or Section 162 of the Code. The Company is not, and has never been,
a party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by the Company for
the benefit of any employee of the Company ("Employee"), except for Plans which
would not require the Company to make payments or provide benefits having a
value in excess of $25,000 in the aggregate.
(b) Except as set forth in Part 2.15(a) of the Disclosure
Schedule, the Company does not maintain, sponsor or contribute to, and, to the
best of the knowledge of the Company and the Shareholders, has not 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 Merger 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 Merger Subtitles of ERISA)
for the benefit of Employees or former Employees which are described in Part
2.15(c) of the 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 Plan, the Company has delivered to
Parent:
(i) an accurate and complete copy of such Plan (including
all amendments thereto);
(ii) an accurate and complete copy of the annual report,
if required under ERISA, with respect to such Plan for the last two years;
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(iii) an accurate and complete copy of the most recent
summary plan description, together with each Summary of Material Modifications,
if required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third
party funding vehicle, an accurate and complete copy of the trust or other
funding agreement (including all amendments thereto) and accurate and complete
copies the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating
to such Plan, including service provider agreements, insurance contracts,
minimum premium contracts, stop-loss agreements, investment management
agreements, subscription and participation agreements and recordkeeping
agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) The Company is not required to be, and, to the best of the
knowledge of the Company and the Shareholders, has never 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), (m) or (o) of the Code. The Company has never been
a member of an "affiliated service group" within the meaning of Section 414(m)
of the Code. To the best of the knowledge of the Company and the Shareholders,
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 to comply with applicable law)
in a manner that would affect any Employee.
(g) Except as set forth in Part 2.15(g) of the Disclosure
Schedule, no Welfare Plan provides death, medical or health benefits (whether or
not insured) with respect to any current or former Employee after any such
Employee's termination of service (other than (i) benefit coverage mandated by
applicable law, including coverage provided pursuant to Section 4980B of the
Code, (ii) deferred compensation benefits accrued as liabilities on the Company
Financial Statements, and (iii) benefits the full cost of which are borne by
current or former Employees (or the Employees' beneficiaries)).
(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 Legal Requirements, 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 from the Internal
Revenue Service, and neither the Company nor any of the Shareholders is aware of
any reason why any such determination letter should be revoked.
(k) Except as set forth in Part 2.15(k) of the Disclosure
Schedule, neither the execution, delivery or performance of this Agreement, nor
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will result in any payment by Company (including any bonus,
golden parachute or severance payment) to any current or former Employee or
director of the Company.
(l) Part 2.15(l) of the Disclosure Schedule contains a list of
all salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the Company's employees are "at will" employees.
(m) Part 2.15(m) of the Disclosure Schedule identifies each
Employee who is not fully available 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) Except as set forth in Part 2.15(o) of the Disclosure
Schedule, the Company has good labor relations, and none of the Shareholders has
any reason to believe that the consummation of the Merger or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on the Company's labor relations.
2.16 ENVIRONMENTAL MATTERS. The Company is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes 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 notice or other
communication (in writing or otherwise), whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that the Company is not in
compliance with any Environmental Law, and, to the best of the knowledge of the
Company and Shareholders, there are no circumstances that may prevent or
interfere with the Company's compliance with any Environmental Law in the
future. To the best of the knowledge of the Company and the Shareholders, no
current or prior owner of any property leased or controlled by the Company has
received any notice or other communication (in writing or otherwise), whether
from a Government Body, citizens group, employee or otherwise, that alleges that
(i) such current or prior owner is not in compliance with any Environmental Law
where such non-compliance involves the premises occupied by the Company or (ii)
the Company is not in compliance with any Environmental Law. All Governmental
Authorizations currently held by
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the Company pursuant to Environmental Laws are identified in Part 2.16 of the
Disclosure Schedule. (For purposes of this Section 2.16: (i) "Environmental Law"
means any federal, state, local or foreign Legal Requirement relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any law or regulation 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; and (ii) "Materials
of Environmental Concern" include chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance that
is now or hereafter regulated by any Environmental Law or that is otherwise a
danger to health, reproduction or the environment.)
2.17 INSURANCE. Part 2.17 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Company and identifies any material claims made thereunder, and the Company has
delivered to Parent accurate and complete copies of the insurance policies
identified on Part 2.17 of the Disclosure Schedule. Each of the insurance
policies identified in Part 2.17 of the Disclosure Schedule is in full force and
effect. Since the Company's inception, the Company has not received any notice
or other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any claim under any insurance policy, or (c) material adjustment in the
amount of the premiums payable with respect to any insurance policy.
2.18 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.18 of the
Disclosure Schedule: (a) to the best of Shareholders' knowledge, no Related
Party has, and no Related Party has at any time since the Company's inception
had, any direct or indirect interest in any material asset used in or otherwise
relating to the business of the Company; (b) to the best of Shareholders'
knowledge, no Related Party is, or has at any time since the Company's inception
been, indebted to the Company; (c) to the best of Shareholders' knowledge, since
the Company's inception, no Related Party has entered into, or has had any
direct or indirect financial interest in, any material Contract, transaction or
business dealing involving the Company; (d) to the best of Shareholders'
knowledge, no Related Party is competing, or has at any time since the Company's
inception competed, directly or indirectly, with the Company; and (e) to the
best of Shareholders' knowledge, no Related Party has any claim or right against
the Company (other than rights to receive compensation for services performed as
an employee of the Company). (For purposes of the Section 2.18 each of the
following shall be deemed to be a "Related Party": (i) each of the Shareholders;
(ii) each individual who is, or who has at any time since the Company's
inception been, an officer of the Company; (iii) each member of the immediate
family of each of the individuals referred to in clauses "(i)" and "(ii)" above;
and (iv) any trust or other Entity (other than the Company) in which any one of
the individuals referred to in clauses "(i)", "(ii)" and "(iii)" above holds (or
in which more than one of such individuals collectively hold), beneficially or
otherwise, a material voting, proprietary or equity interest.)
2.19 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.19 of the Disclosure Schedule,
there is no pending Legal Proceeding, and, to the best of the knowledge of the
Company and the
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Shareholders, no Person has threatened to commence any Legal Proceeding: (i)
that involves the Company or any of the assets owned or used by the Company or
any Person whose liability the Company has or may have retained or assumed,
either contractually or by operation of law; or (ii) that challenges, or that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Merger or any of the other transactions contemplated by
this Agreement. To the best of the knowledge of the Company and the
Shareholders, except as set forth in Part 2.19 of the Disclosure Schedule, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that will, or that could reasonably be expected to, give rise to or
serve as a basis for the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.19 of the Disclosure Schedule,
no Legal Proceeding has ever been commenced by or has ever been pending against
the Company.
(c) The Company has received no notice of, and to the best of
Shareholders' knowledge there is no order, writ, injunction, judgment or decree
to which the Company, or any of the assets owned or used by the Company, is
subject. The Shareholders have received no notice of, and to the best of
Shareholders' knowledge there is no order, writ, injunction, judgment or decree
to which either of the Shareholders is subject that relates to the Company's
business or to any of the assets owned or used by the Company. To the best of
the knowledge of the Company and the Shareholders, no officer or other employee
of the Company is subject to any order, writ, injunction, judgment or decree
that prohibits such officer or other employee from engaging in or continuing any
conduct, activity or practice relating to the Company's business.
2.20 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under this Agreement; and the execution, delivery and
performance by the Company of this Agreement have been duly authorized by all
necessary action on the part of the Company and its board of directors. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
2.21 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.21 of
the Disclosure Schedule, neither (1) the execution, delivery or performance of
this Agreement or any of the other agreements referred to in this Agreement, nor
(2) the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will directly or indirectly (with or without notice or lapse
of time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of the Company's articles of incorporation or bylaws, or (ii)
any resolution adopted by the Company's shareholders, the Company's board of
directors or any committee of the Company's board of directors;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement
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or any order, writ, injunction, judgment or decree to which the Company, or any
of the assets owned or used by the Company, is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the Company's business
or to any of the assets owned or used by the Company;
(d) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any Company Contract that is
or would constitute a Material Contract, or give any Person the right to (i)
declare a default or exercise any remedy under any such Company Contract, (ii)
accelerate the maturity or performance of any such Company Contract, or (iii)
cancel, terminate or modify any such Company Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the Company
(except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of the Company).
Except as set forth in Part 2.21 of the Disclosure Schedule, the Company is not
and will not be required to make any filing with or give any notice to, or to
obtain any Consent from, any Person in connection with (x) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, or (y) the consummation of the Merger or any of
the other transactions contemplated by this Agreement.
2.22 FULL DISCLOSURE. This Agreement (including the Disclosure Schedule)
does not, and the Shareholders' Closing Certificate will not, (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact, or (ii) omit to state any material fact or necessary in
order to make the representations, warranties and information contained and to
be contained herein and therein (in the light of the circumstances under which
such representations, warranties and information were or will be made or
provided) not false or misleading.
2.23 INVESTMENT REPRESENTATIONS. Each of the Shareholders makes the
following certifications and representations in connection with his, her or its
receipt of Parent Common Stock in the Merger:
(a) The Shareholder represents and warrants that the Shareholder
is acquiring the shares of Parent Common Stock solely for the Shareholder's
account for investment and not with a view to or for sale or distribution of the
shares of Parent Common Stock or any part thereof. The Shareholder also
represents that the entire legal and beneficial interests of the shares of
Parent Common Stock the Shareholder is acquiring is being acquired for, and will
be held for, the Shareholder's account only.
(b) The Shareholder understands that the shares of Parent Common
Stock have not been registered under the Securities Act, on the basis that no
distribution or public offering of the Shares is to be effected. The Shareholder
realizes that the basis for the exemption
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may not be present if, notwithstanding the Shareholder's representations, the
Shareholder has in mind merely acquiring the shares of Parent Common Stock for a
fixed or determinable period in the future, or for a market rise, or for sale if
the market does not rise. The Shareholder has no such intention, excluding any
transfer of the Parent Common Stock to employees of the Company.
(c) The Shareholder represents that it is an accredited investor
within the meaning of Regulation D under the Securities Act.
(d) The Shareholder recognizes that the shares of Parent Common
Stock being acquired by the Shareholder must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. The Shareholder recognizes that, except as provided
in Section 7, Parent has no obligation to register the shares of Parent Common
Stock or to comply with any exemption from such registration.
(e) The Shareholder is aware that the shares of Parent Common
Stock may not be sold pursuant to Rule 144 and/or Rule 145 adopted under the
Securities Act ("Rule 144/145") unless certain conditions are met, each of which
is understood by each Shareholder.
(f) The Shareholder further agrees not to make any disposition of
all or any part of the shares of Parent Common Stock being acquired in any event
unless and until:
(i) The shares of Parent Common Stock are transferred
pursuant to Rule 144/145, and Parent shall have received from the Shareholder
documentation acceptable to Parent that a sale of the shares of Parent Common
Stock has occurred in accordance with all of the provisions of Rule 144/145; or
(ii) Parent shall have received a letter secured by the
Shareholder from the SEC stating that no action will be recommended to the SEC
with respect to the proposed disposition; or
(iii) There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with said registration statement; or
(iv) (1) The Shareholder shall have notified Parent of the
proposed disposition and shall have furnished Parent with a detailed statement
of the circumstances surrounding the proposed disposition, (2) the Shareholder
shall have furnished Parent with an opinion of counsel for the Shareholder to
the effect that such disposition will not require registration of such shares of
Parent Common Stock under the Securities Act, and (3) such opinion of counsel
for the Shareholder shall have been concurred in by Parent's counsel and Parent
shall have advised the Shareholder of such concurrence.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant
to the Company and the Shareholders as follows:
20.
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3.1 CORPORATE EXISTENCE AND POWER. Each of Parent and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of their incorporation, and has all necessary power and
authority required to conduct its business as now conducted, and is duly
qualified to do business and is in good standing in each jurisdiction in which
the conduct of its business or the ownership or leasing of its properties
requires such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect on Parent.
3.2 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has delivered to the Company accurate and complete
copies (excluding copies of exhibits) of each report, registration statement (on
a form other than Form S-8) and definitive proxy statement filed by Parent with
the SEC between January 1, 1999 and the date of this Agreement (the "Parent SEC
Documents"). As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the Parent SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be); and (ii) none of the Parent SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements contained in the Parent
SEC Documents: (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered, except as may be indicated in
the notes to such financial statements and (in the case of unaudited statements)
as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the consolidated financial position of
Parent and its subsidiaries as of the respective dates thereof and the
consolidated results of operations of Parent and its subsidiaries for the
periods covered thereby.
3.3 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement (including the contemplated issuance of
Parent Common Stock in the Merger in accordance with this Agreement) have been
duly authorized by all necessary action on the part of Parent and Merger Sub and
their respective boards of directors. No vote of Parent's stockholders is needed
to approve the Merger. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
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3.4 VALID ISSUANCE. Subject to Section 1.5(c), the Parent Common Stock
to be issued in the Merger will, when issued in accordance with the provisions
of this Agreement, be validly issued, fully paid and nonassessable.
SECTION 4. 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 satisfaction, at or prior to the Closing, of each of the following
conditions:
4.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Company and the Shareholders in this Agreement and in
each of the other agreements and instruments delivered to Parent in connection
with the transactions contemplated by this Agreement shall have been accurate as
of the date of this Agreement and the Closing.
4.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
the Company and the Shareholders are required to comply with or to perform at or
prior to the Closing shall have been complied with and performed in all material
respects.
4.3 CONSENTS. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement (including
the Consents identified in Part 2.21 of the Disclosure Schedule) shall have been
obtained and shall be in full force and effect.
4.4 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) Stock certificates representing the shares of the Company's
Capital Stock being sold hereby duly endorsed for transfer to Parent;
(b) A copy of this Agreement duly executed by the Company and the
shareholders;
(c) A certificate signed on behalf of the Company by the Chief
Executive Officer and the Treasurer of the Company representing and warranting
that the conditions set forth in Sections 4.1, 4.2 and 4.3 have been duly
satisfied;
(d) Noncompetition Agreements in the form of EXHIBIT D, executed
by the individuals identified on EXHIBIT E;
(e) Confidential invention and assignment agreements, as
requested by Parent and reasonably satisfactory in form and content to Parent,
executed by all employees and former employees of the Company and by all
consultants and independent contractors and former consultants and former
independent contractors to the Company who have not already signed such
agreements (including the individuals identified in Part 2.9(f) of the
Disclosure Schedule);
(f) A legal opinion of Xxxxx, Xxxxxxx & Xxxxx, LLP, counsel to
the Company, dated as of the Closing Date, in the form of EXHIBIT F;
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(g) Written resignations of all officers and directors of the
Company resigning from such positions after the Closing Date, effective as of
the Closing Date.
4.5 TERMINATION OF EMPLOYEE PLANS. To the extent requested by the
Company, the Company shall have provided Parent with evidence, reasonably
satisfactory to Parent, as to the termination of the benefit plans referred to
in Section 2.15.
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
5.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall have been
accurate in all material respects as of the date of this Agreement (without
giving effect to any materiality or similar qualifications contained in such
representations and warranties).
5.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all respects.
5.3 DOCUMENTS. The Company shall have received a copy of this Agreement
duly executed by Parent and Merger Sub.
SECTION 6. INDEMNIFICATION, ETC.
6.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) The representations and warranties made by the Company and
the Shareholders (including the representations and warranties set forth in
Section 2 and the representations and warranties set forth in the Shareholders'
Closing Certificate) shall survive the Closing and shall expire on the first
anniversary of the Closing Date; provided, however, that if, at any time prior
to the first anniversary of the Closing Date, any Indemnitee (acting in good
faith) delivers to any of the Shareholders a written notice alleging the
existence of an inaccuracy in or a breach of any of the representations and
warranties made by the Company and the Shareholders (and setting forth in
reasonable detail the basis for such Indemnitee's belief that such an inaccuracy
or breach may exist) and asserting a claim for recovery under Section 6.2 based
on such alleged inaccuracy or breach, then the claim asserted in such notice
shall survive the first anniversary of the Closing until such time as such claim
is fully and finally resolved. The representations and warranties made by the
Parent and Merger Sub shall survive the Closing and shall expire on the first
anniversary of the Closing Date; provided, however, that if, at any time prior
to the first anniversary of the Closing Date, any Shareholder (acting in good
faith) delivers to Parent and Merger Sub a written notice alleging the existence
of an inaccuracy in or a breach of any of the representations and warranties
made by Parent and Merger Sub (and setting forth in reasonable detail the basis
for such Shareholder's belief that such an inaccuracy or breach may exist) and
asserting a claim for recovery under Section 6.2 based on such alleged
23.
29
inaccuracy or breach, then the claim asserted in such notice shall survive the
first anniversary of the Closing until such time as such claim is fully and
finally resolved.
(b) The representations, warranties, covenants and obligations of
the Company and the Shareholders, and the rights and remedies that may be
exercised by the Indemnitees, shall not be limited or otherwise affected by or
as a result of any information furnished to, or any investigation made by or
knowledge of, any of the Indemnitees or any of their Representatives. The
representations, warranties, covenants and obligations of the Parent and Merger
Sub shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, the
Shareholders or any of their Representatives.
(c) For purposes of this Agreement, each statement or other item
of information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Shareholders in this Agreement.
6.2 INDEMNIFICATION.
(a) From and after the Effective Time (but subject to Section
6.1(a)), the Shareholders, jointly and severally, shall hold harmless and
indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages which are directly or
indirectly suffered or incurred by any of the Indemnitees or to which any of the
Indemnitees may otherwise become subject (regardless of whether or not such
Damages relate to any third-party claim) and which arise from or as a result of,
or are directly or indirectly connected with: (i) any inaccuracy in or breach of
any representation or warranty of the Company or the Shareholders as set forth
in this Agreement or the Company Compliance Certificate; or (ii) any breach of
any covenant or obligation of the Company or any of the Shareholders.
(b) The Shareholders acknowledge and agree that, if the Surviving
Corporation suffers, incurs or otherwise becomes subject to any Damages as a
result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have incurred Damages as a result of and in connection with such inaccuracy or
breach.
6.3 THRESHOLD; CEILING.
(a) No Indemnitee shall be entitled to indemnification pursuant
to Section 6.2 for any inaccuracy in or breach of any of the Company's and the
Shareholders' representations and warranties set forth in this Agreement or the
Company Compliance Certificate until such time as and except to the extent that
the total amount of all Damages (including the Damages arising from such
inaccuracy or breach and all other Damages arising from any other inaccuracies
in or breaches of any representations or warranties) that have been directly or
indirectly suffered or incurred by any one or more of the Indemnitees, or to
which any one or
24.
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more of the Indemnitees has or have otherwise become subject, exceeds $100,000
in the aggregate.
(b) The maximum aggregate liability of the Shareholders,
including, without limitation, liability for indemnification under this
Agreement for Section 6.2 of this Agreement for damages incurred by Parent,
Merger Sub and/or any Indemnitee as a result of any breach of any
representation, warranty, covenant or obligation of the Shareholders, shall not
exceed $3 million.
6.4 NO CONTRIBUTION. Each Shareholder waives, and acknowledges and
agrees that he shall not have and shall not exercise or assert (or attempt to
exercise or assert), any right of contribution, right of indemnity or other
right or remedy against the Surviving Corporation in connection with any
indemnification obligation or any other liability to which he may become subject
under or in connection with this Agreement or the Shareholders' Closing
Certificate.
6.5 INTEREST. Any Shareholder who is required to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 6
with respect to any Damages shall also be liable to such Indemnitee for interest
on the amount of such Damages (for the period commencing as of the date on which
such Shareholder first received notice of a claim for recovery by such
Indemnitee and ending on the date on which the liability of such Shareholder to
such Indemnitee is fully satisfied by such Shareholder) at a floating rate equal
to 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.
6.6 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which the Company or any of the Shareholders may become obligated to hold
harmless, indemnify, compensate or reimburse any Indemnitee pursuant to this
Section 6, Parent shall have the right, at its election, to proceed with the
defense of such claim or Legal Proceeding on its own. If Parent so proceeds with
the defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such
claim or Legal Proceeding shall be borne and paid exclusively by the
Shareholders;
(b) each Shareholder shall make available to Parent any documents
and materials in his possession or control that may be necessary to the defense
of such claim or Legal Proceeding; and
(c) Parent shall have the right to settle, adjust or compromise
such claim or Legal Proceeding with the consent of the Shareholders; provided,
however, that such consent shall not be unreasonably withheld.
Parent shall give the Shareholders prompt notice of the commencement of any such
Legal Proceeding against Parent or the Surviving Corporation; provided, however,
that any failure on the part of Parent to so notify the Company or the
Shareholders shall not limit any of the obligations of the Company or the
Shareholders under this Section 6 (except to the extent such failure materially
prejudices the defense of such Legal Proceeding).
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6.7 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.
SECTION 7. DELIVERY AND REGISTRATION OF SHARES.
7.1 DELIVERY OF PARENT COMMON STOCK. As soon as practicable after the
Closing Date, but no later than the earlier of 30 days from the Closing or the
effectiveness of the Registration Statement (as defined in Section 7.2(a) below)
as declared by the SEC, Parent will deliver to the Shareholders stock
certificates representing the Parent Common Stock which each Shareholder is
entitled to receive pursuant to Section 1.5 bearing the name and number of
shares to which such Shareholder is entitled.
7.2 S-3 REGISTRATION STATEMENT.
(a) Within 30 days after the Closing, and at its own
expense, Parent shall file with the SEC a registration statement on Form S-3
(the "Registration Statement") registering for resale, subject to the terms of
this Agreement, the shares of Parent Common Stock to be issued pursuant to this
Agreement. Parent shall use commercially reasonable efforts: (a) to cause the
Registration Statement to be declared effective by the SEC as soon as
practicable after the Closing; and (b) cause the Registration Statement to
remain effective until the earlier of (i) the first anniversary of the Closing
Date, or (ii) the date on which all of the Parent Common Stock covered by the
Registration Statement have been sold.
(b) In connection with this Section 7.2, Parent shall (at its
own expense):
(i) prepare and file with the SEC such amendments to the
Registration Statement, and such supplements to the related prospectuses, as may
be required in order to comply with the applicable provisions of the Securities
Act;
(ii) promptly furnish to the holders of the Parent Common
Stock such numbers of copies of a prospectus conforming to the requirements of
the Securities Act as they may reasonably request in order to facilitate the
disposition, subject to the terms of this Agreement, of the Parent Common Stock
covered by the Registration Statements; and
(iii) use reasonable efforts to register and qualify the
Parent Common Stock under the securities laws of such states as the holders of
the Parent Common Stock may reasonably request, provided, however, 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
of such states.
7.3 TRANSFERABILITY OF REGISTRATION RIGHTS. The rights of the
Shareholders under this Section 7 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 transferor, or to a charity
qualified under Section 501(c)(3) of the Code.
26.
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7.4 DELAY OF REGISTRATION. For a period not to exceed 60 days, Parent
may delay the filing or effectiveness of either of the Registration Statement,
or suspend the use of the Registration Statement (and the Shareholders hereby
agree not to offer or sell any Parent Common Stock pursuant to the Registration
Statement during such period) after receiving notice of such delay or
suspension), at any time when Parent, in its reasonable judgment after
consultation with counsel, believes that there is or may be in existence
material nonpublic information or events involving Parent, the failure of which
to be disclosed in the prospectus included in the Registration Statement could
result in a violation of the Securities Act, the Exchange Act or any provision
of any state securities law (the "Suspension Right"). In the event Parent
exercises the Suspension Right, such suspension shall continue for the period of
time, and only such period of time, reasonably necessary for disclosure to occur
at a time that is not detrimental to Parent or its stockholders or until such
time as the information or event is no longer material, each as determined in
good faith by Parent after consultation with counsel. Parent will promptly give
the Shareholders notice of any such delay or suspension and prompt notice of the
cessation of suspension or delay. In the event Parent reasonably believes that
any of the foregoing circumstances are continuing after such 60-day period, it
may, with the consent of each of the Shareholders (which consent shall not be
unreasonably withheld) extend such 60-day period for one additional 30-day
period. Parent will use all reasonable efforts to minimize the length of any
suspension or delay under this Section 7.4; provided however that nothing
contained in this Section 7.4 shall be deemed to require Parent to make any
disclosures. Parent shall not delay the filing or the effectiveness of the
Registration Statement, as provided under this Section 7.4, more than once.
7.5 AMENDMENT OF SECTION 7. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Section 7 may be amended by
Parent at any time with the consent of each of the Shareholders (which consent
shall not be unreasonably withheld).
SECTION 8. MISCELLANEOUS PROVISIONS
8.1 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
8.2 FEES AND EXPENSES. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement.
8.3 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
8.4 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath
27.
33
the name of such party below (or to such other address or facsimile telephone
number as such party shall have specified in a written notice given to the other
parties hereto):
IF TO PARENT:
XXXXXXXX Xxxxxxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
Attn: General Counsel
Fax: (000) 000-0000
IF TO THE COMPANY:
Within Technology, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxxx
Fax: (000) 000-0000
IF TO XXXXXXXX XXXX XXXXXXXX:
Xxxxxxxx Xxxx Xxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
IF TO XXXX XXXXXX XXXXX:
Xxxx Xxxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000-0000
8.5 CONFIDENTIALITY. On and at all times after the Closing Date, each
Shareholder shall keep confidential, and shall not use or disclose to any other
Person (except in the proper performance of such Shareholder's duties for the
Parent or Company), any non-public document or other non-public information in
such Shareholder's possession that relates to the business of the Company or
Parent, including without limitation the existence or terms of this Agreement
and any information received, on or after the Closing Date, in connection with
Section 7.4 hereof.
8.6 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
8.7 HEADINGS. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
28.
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8.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
8.9 GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
8.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Shareholders and their
respective personal representatives, executors, administrators, estates, heirs,
successors and assigns (if any); Parent and its successors and assigns (if any);
and Merger Sub and its successors and assigns (if any). This Agreement shall
inure to the benefit of: the Company; the Shareholders; Parent; Merger Sub; the
other Indemnitees (subject to Section 6.8); and the respective successors and
assigns (if any) of the foregoing. Parent may freely assign any or all of its
rights under this Agreement (including its indemnification rights under Section
6), in whole or in part, to any other Entity controlling, controlled by or under
common control with the Parent without obtaining the consent or approval of any
other party hereto or of any other Person.
8.11 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
8.12 WAIVER.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person 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 Person 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 duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
8.13 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
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8.14 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
8.15 PARTIES IN INTEREST. Except for the provisions of Section 6, 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).
8.16 ENTIRE AGREEMENT. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof.
8.17 DISCLOSURE SCHEDULES.
(a) The Company shall prepare and deliver to Parent concurrently
herewith a Company Disclosure Schedule which has been duly executed on behalf of
the Company by its President and which contains exceptions to the Company's
representations and warranties made in Section 2 of this Agreement.
8.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, 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."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
30.
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The parties hereto have caused this Agreement to be executed and
delivered as of March 17, 2000.
XXXXXXXX XXXXXXXXXXXX,
a Delaware corporation
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Name:
-------------------------------
Title:
------------------------------
WITHIN ACQUISITION CORP.,
a Delaware corporation
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Name:
-------------------------------
Title:
------------------------------
WITHIN TECHNOLOGY, INC.,
a Pennsylvania corporation
By: /s/ XXXXXXXX XXXX XXXXXXXX
---------------------------------
Name: Xxxxxxxx Xxxx Xxxxxxxx
-------------------------------
Title: President
------------------------------
/s/ Xxxxxxxx Xxxx Xxxxxxxx
------------------------------------
Xxxxxxxx Xxxx Xxxxxxxx
/s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx
31.
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EXHIBIT A
SHAREHOLDERS
NAME SHARES OWNED
---- ------------
Xxxxxxxx Xxxx Xxxxxxxx 500
Xxxx X. Xxxxx 200
38
EXHIBIT B
CERTAIN DEFINITIONS
For purposes of the Agreement (including this EXHIBIT B):
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this EXHIBIT B is attached (including the Disclosure
Schedule), as it may be amended from time to time.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Company is a party and (b) by which the Company or any of its assets
is or may become bound or under which the Company has, or may become subject to,
any obligation or under which the Company has or may acquire any right or
interest.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, liability,
claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable attorneys' fees), charge, cost (including costs of investigation) or
expense of any nature (excluding decline in value and lost opportunity).
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Parent on behalf of the
Company and the Shareholders.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest 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).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
B-1.
39
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
GOVERNMENT CONTRACT. "Government Contract" shall mean any prime
contract, subcontract, letter contract, purchase order or delivery order
executed or submitted to or on behalf of any Governmental Body or any prime
contractor or higher-tier subcontractor, or under which any Governmental Body or
any such prime contractor or subcontractor otherwise has or may acquire any
right or interest.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) an Entity controlling, controlled by or under common control with Parent
(including the Surviving Corporation); (c) the respective Representatives of the
Persons referred to in clauses "(a)" and "(b)" above; and (d) the respective
successors and assigns of the Persons referred to in clauses "(a)", "(b)" and
"(c)" above; provided, however, that the Shareholders shall not be deemed to be
"Indemnitees."
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement or
in the Shareholders' Closing Certificate but for the presence of "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications, in
B-2.
40
such representations and warranties) would have a material adverse effect on the
Company's business, condition, assets, liabilities, operations, financial
performance or prospects.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, domain name, domain name
registration, maskwork, maskwork application, trade secret, know-how, customer
list, franchise, system, computer software, computer program, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (b) right to
use or exploit any of the foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
B-3.
41
EXHIBIT C
LIST OF DIRECTORS AND OFFICERS
OF WITHIN TECHNOLOGY, INC.
DIRECTORS
1. Xxxxxx X. Xxxxxx
2. Xxxxxxx Xxxxxxxx
OFFICERS
1. Xxxxxx X. Xxxxxx, President, Chief Executive Officer and Secretary
2. Xxxxxxx Xxxxxxxx, Vice President and Chief Financial Officer
C-1.
42
EXHIBIT D
FORM OF NONCOMPETITION AGREEMENT
D-1.
43
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is being executed and delivered as of
March __, 2000 by _______________ (the "Shareholder") in favor of, and for the
benefit of WITHIN TECHNOLOGY, INC., a Pennsylvania corporation (the "Company"),
XXXXXXXX XXXXXXXXXXXX, a Delaware corporation (the "Purchaser"), and the other
"Indemnitees" (as hereinafter defined). Certain capitalized terms used in this
Noncompetition Agreement are defined in Section 19.
RECITALS
A. As a shareholder and employee of the Company, the Shareholder has
obtained extensive and valuable knowledge and confidential information
concerning the businesses of the Company.
B. Pursuant to an Agreement and Plan of Merger and Reorganization (the
"Merger Agreement") by and among the Purchaser, Within Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of the Purchaser, the Company
and the shareholders of the Company, (collectively, the "Shareholders"), all of
the shares of stock of the Company owned by the Shareholders will be converted
into outstanding stock of the Purchaser contemporaneously with the execution and
delivery of this Noncompetition Agreement. As a result of the Merger Agreement
and the transactions contemplated thereby, the Company is becoming a subsidiary
of the Purchaser.
C. In connection with the Merger Agreement (and as a condition to the
execution and delivery thereof), and to enable the Purchaser to secure more
fully the benefits of the acquisition effected thereby, the Purchaser has
required that the Shareholder enter into this Noncompetition Agreement; and the
Shareholder is entering into this Noncompetition Agreement in order to induce
the Purchaser to execute and deliver the Merger Agreement.
D. Following the acquisition effected by the Merger Agreement, the
Shareholder is becoming a key employee of the Purchaser and will accordingly
obtain extensive and valuable knowledge and confidential information concerning
the businesses of the Purchaser, the Company and the Purchaser's other
subsidiaries.
E. The Purchaser, the Company and the Purchaser's other subsidiaries
have conducted and are conducting their respective businesses on a national
basis.
AGREEMENT
In order to induce the Purchaser to execute and deliver the Merger
Agreement, and for other good and valuable consideration, the Shareholder agrees
as follows:
1. RESTRICTION ON COMPETITION. The Shareholder agrees that, during the
Noncompetition Period, the Shareholder shall not, and shall not permit any of
his Affiliates to:
(a) engage directly or indirectly in Competition in any
Restricted Territory; or
1.
44
(b) directly or indirectly (i) be or become an officer, director,
shareholder, owner, co-owner, Affiliate, partner or promoter of, or
acquire or hold (of record, beneficially or otherwise) any direct or
indirect interest in, any Person that engages directly or indirectly in
Competition in any Restricted Territory or (ii) be or become an
employee, agent, representative, consultant, advisor, manager, licensor,
sublicensor or (with respect to any products other than off the shelf
products available to the general public) licensee or sublicensee of any
division or business unit of any Person if such division or business
unit engages directly or indirectly in Competition in any Restricted
Territory;
provided, however, that the Shareholder may, without violating this Section 1,
own, as a passive investment, shares of capital stock of a publicly-held
corporation that engages in Competition if (i) such shares are actively traded
on an established national securities market in the United States, (ii) the
number of shares of such corporation's capital stock that are owned beneficially
(directly or indirectly) by the Shareholder and the number of shares of such
corporation's capital stock that are owned beneficially (directly or indirectly)
by the Shareholder's Affiliates collectively represent less than one percent of
the total number of shares of such corporation's capital stock outstanding, and
(iii) neither the Shareholder nor any Affiliate of the Shareholder is otherwise
associated directly or indirectly with such corporation or with any Affiliate of
such corporation; and provided, further, that the Shareholder may continue to
hold his interest in the Persons described in Exhibit A attached hereto.
2. NO HIRING OR SOLICITATION OF EMPLOYEES. The Shareholder agrees that,
during the Noncompetition Period, the Shareholder shall not, and shall not
permit any of his Affiliates to: (a) hire any Specified Employee (including as
an independent contractor), or (b) directly or indirectly, personally or through
others, encourage, induce, attempt to induce, solicit or attempt to solicit (on
the Shareholder's own behalf or on behalf of any other Person) any Specified
Employee or any other employee to leave his or her employment with the
Purchaser, the Company or any of the Purchaser's other subsidiaries. (For
purposes of this Section 2, "Specified Employee" shall mean any individual who
(i) is or was an employee of the Company on the date of this Noncompetition
Agreement or during the 180-day period ending on the date of this Noncompetition
Agreement, and (ii) remains or becomes an employee of the Purchaser, the Company
or any of the Purchaser's other subsidiaries on the date of this Noncompetition
Agreement or at any time during the Noncompetition Period.)
3. CONFIDENTIALITY. The Shareholder agrees that he shall hold all
Confidential Information in strict confidence and shall not at any time (whether
during or after the Noncompetition Period): (a) reveal, report, publish,
disclose or transfer any Confidential Information to any Person (other than the
Purchaser or the Company or any Affiliate of the Purchaser), except in the
performance of his obligations under the Employment Letter; (b) use any
Confidential Information for any purpose, except in the performance of his
obligations under the Employment Letter; or (c) use any Confidential Information
for the benefit of any Person (other than the Purchaser or the Company or any
Affiliate of the Purchaser).
4. REPRESENTATIONS AND WARRANTIES. The Shareholder represents and
warrants, to and for the benefit of the Indemnitees, that: (a) he has full power
and capacity to execute and deliver, and to perform all of his obligations
under, this Noncompetition Agreement; and (b)
2.
45
neither the execution and delivery of this Noncompetition Agreement nor the
performance of this Noncompetition Agreement will result directly or indirectly
in a violation or breach of (i) any agreement or obligation by which the
Shareholder or any of his Affiliates is or may be bound, or (ii) any law, rule
or regulation. The Shareholder's representations and warranties shall survive
the expiration of the Noncompetition Period for an unlimited period of time.
5. SPECIFIC PERFORMANCE. The Shareholder agrees that, in the event of
any breach or threatened breach by the Shareholder of any covenant or obligation
contained in this Noncompetition Agreement, each of the Purchaser, the Company
and the other Indemnitees shall be entitled (in addition to any other remedy
that may be available to it, including monetary damages) to seek and obtain (a)
a decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach. The Shareholder further agrees that no
Indemnitee shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 5, and the Shareholder irrevocably waives any right he may
have to require any Indemnitee to obtain, furnish or post any such bond or
similarly instrument.
6. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any of the Indemnitees, the Shareholder shall
indemnify and hold harmless each Indemnitee against and from any loss, damage,
injury, harm, detriment, lost opportunity, liability, exposure, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including attorneys'
fees), charge or expense (whether or not relating to any third-party claim) that
is directly or indirectly suffered or incurred at any time (whether during or
after the Noncompetition Period) by such Indemnitee, or to which such Indemnitee
otherwise becomes subject at any time (whether during or after the
Noncompetition Period), and that arises directly or indirectly out of or by
virtue of, or relates directly or indirectly to, (a) any inaccuracy in or breach
of any representation or warranty contained in this Noncompetition Agreement, or
(b) any failure on the part of the Shareholder to observe, perform or abide by,
or any other breach of, any restriction, covenant, obligation or other provision
contained in this Noncompetition Agreement. The maximum aggregate liability of
the Shareholder for indemnification under this Noncompetition Agreement shall
not exceed $6 million.
7. NON-EXCLUSIVITY. The rights and remedies of the Purchaser, the
Company and the other Indemnitees under this Noncompetition Agreement are not
exclusive of or limited by any other rights or remedies which they may have,
whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative). Without limiting the generality of the
foregoing, the rights and remedies of the Purchaser, the Company and the other
Indemnitees under this Noncompetition Agreement, and the obligations and
liabilities of the Shareholder under this Noncompetition Agreement, are in
addition to their respective rights, remedies, obligations and liabilities under
the law of unfair competition, under laws relating to misappropriation of trade
secrets, under other laws and common law requirements and under all applicable
rules and regulations. Nothing in this Noncompetition Agreement shall limit any
of the Shareholder's obligations, or the rights or remedies of the Purchaser,
the Company or any of the other Indemnitees, under the Merger Agreement or the
Employment Letter; and nothing in the Merger Agreement shall limit any of the
Shareholder's obligations, or any of the rights or remedies of the Purchaser,
the Company, or any of the other Indemnitees, under this
3.
46
Noncompetition Agreement. No breach on the part of the Purchaser, the Company or
any other party of any covenant or obligation contained in the Merger Agreement
or any other agreement shall limit or otherwise affect any right or remedy of
the Purchaser, the Company or any of the other Indeminitees under this
Noncompetition Agreement.
8. SEVERABILITY. If any provision of this Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
9. GOVERNING LAW; VENUE.
(a) This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the Commonwealth
of Pennsylvania (without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement may be brought or otherwise commenced in any state or
federal court located in the County of San Diego, California. The Shareholder:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of
San Diego, California (and each appellate court located in the State of
California), in connection with any such legal proceeding;
(ii) agrees that service of any process, summons, notice
or document by U.S. mail addressed to him at the address set forth on
the signature page of this Noncompetition Agreement shall constitute
effective service of such process, summons, notice or document for
purposes of any such legal proceeding;
(iii) agrees that each state and federal court located in
the County of San Diego, California, shall be deemed to be a convenient
forum; and
(iv) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any state or
federal court located in the County of San Diego, California, any claim
that the Shareholder is not subject personally to the jurisdiction of
such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or
that this
4.
47
Noncompetition Agreement or the subject matter of this Noncompetition
Agreement may not be enforced in or by such court.
Nothing contained in this Section 9 shall be deemed to limit or otherwise affect
the right of any Indemnitee to commence any legal proceeding or otherwise
proceed against the Shareholder in any other forum or jurisdiction.
(c) THE SHAREHOLDER IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL
IN CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS NONCOMPETITION
AGREEMENT OR THE ENFORCEMENT OF ANY PROVISION OF THIS NONCOMPETITION AGREEMENT.
10. WAIVER. No failure on the part of the Purchaser, the Company or any
other Indemnitee to exercise any power, right, privilege or remedy under this
Noncompetition Agreement, and no delay on the part of the Purchaser, the Company
or any other Indemnitee in exercising any power, right, privilege or remedy
under this Noncompetition 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. No Indemnitee shall be deemed
to have waived any claim of such Indemnitee arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy of such Indemnitee under
this Noncompetition Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly executed
and delivered on behalf of such Indemnitee; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
11. SUCCESSORS AND ASSIGNS. Each of the Purchaser, the Company and the
other Indemnitees may freely assign any or all of its rights under this
Noncompetition Agreement, at any time, in whole or in part, to any Person
without obtaining the consent or approval of the Shareholder or of any other
Person. This Noncompetition Agreement shall be binding upon the Shareholder and
his heirs, executors, estate, personal representatives, successors and assigns,
and shall inure to the benefit of the Purchaser, the Company and the other
Indemnitees.
12. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision of
this Noncompetition Agreement is brought against the Shareholder, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled).
13. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
14. CONSTRUCTION. Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; and the neuter gender shall include the masculine
and feminine genders. Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not
5.
48
be applied in the construction or interpretation of this Noncompetition
Agreement. Neither the drafting history nor the negotiating history of this
Noncompetition Agreement shall be used or referred to in connection with the
construction or interpretation of this Noncompetition Agreement. As used in this
Noncompetition Agreement, the words "include" and "including," and variations
thereof, shall not be deemed to be terms of limitation, and shall be deemed to
be followed by the words "without limitation." Except as otherwise indicated in
this Noncompetition Agreement, all references in this Noncompetition Agreement
to "Sections" are intended to refer to Sections of this Noncompetition
Agreement.
15. SURVIVAL OF OBLIGATIONS. Except as specifically provided herein, the
obligations of the Shareholder under this Noncompetition Agreement (including
his obligations under Sections 3, 6 and 12) shall survive the expiration of the
Noncompetition Period. The expiration of the Noncompetition Period shall not
operate to relieve the Shareholder of any obligation or liability arising from
any prior breach by the Shareholder of any provision of this Noncompetition
Agreement.
16. OBLIGATIONS ABSOLUTE. The Shareholder's obligations under this
Noncompetition Agreement are absolute and shall not be terminated or otherwise
limited by virtue of any breach (on the part of the Purchaser, the Company, any
other Indemnitee or any other Person) of any provision of the Merger Agreement
or any other agreement, or by virtue of any failure to perform or other breach
of any obligation of the Purchaser, the Company, any other Indemnitee or any
other Person.
17. AMENDMENT. This Noncompetition Agreement may not be amended,
modified, altered or supplemented other than by means of a written instrument
duly executed and delivered on behalf of the Shareholder, the Purchaser (or any
successor to the Purchaser) and the Company (or any successor to the Company).
18. DEFINED TERMS. For purposes of this Noncompetition Agreement:
(a) "Affiliate" means, with respect to any specified Person, any
other Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
(b) "Competing Product" means any: (i) any of the following:
product, equipment, device or system that has been designed, developed,
manufactured, assembled, promoted, sold, supplied, distributed, resold,
installed, supported, maintained, repaired, refurbished, licensed, sublicensed,
financed, leased or subleased by or on behalf of the Company (or any predecessor
of the Company) at any time on or prior to this date of this Noncompetition
Agreement; (ii) any of the following for or with respect to which the
Shareholder has performed any work or service or had any involvement: product,
equipment, device or system that is designed, developed, manufactured,
assembled, promoted, sold, supplied, distributed, resold, installed, supported,
maintained, repaired, refurbished, licensed, sublicensed, financed, leased or
subleased by or on behalf of the Purchaser, the Company or any of the
Purchaser's other subsidiaries at any time during the Noncompetition Period; or
(iii) product, equipment, device or system that is substantially the same as,
incorporates, is a material component or part of, is based
6.
49
upon, is functionally similar to or competes in any material respect with any
product, equipment, device or system of the type referred to in clause "(i)" or
clause "(ii)" of this sentence.
(c) "Competing Service" means any: (i) any Core Service, as
defined below; (ii) service that has been provided, performed or offered by or
on behalf of the Company (or any predecessor of the Company) at any time on or
prior to the date of this Noncompetition Agreement; (iii) any of the following
for or with respect to which the Shareholder has performed any work or service
or had any involvement: service that is provided, performed or offered by the
Purchaser, the Company or any of the Purchaser's other subsidiaries at any time
during the Noncompetition Period; (iv) any of the following for or with respect
to which the Shareholder has performed any work or service or had any
involvement: service that facilitates, supports or otherwise relates to the
design, development, manufacture, assembly, promotion, sale, supply,
distribution, resale, installation, support, maintenance, repair, refurbishment,
licensing, sublicensing, financing, leasing or subleasing of any Competing
Product; or (v) service that is substantially the same as, is based upon or
competes in any material respect with any service referred to in clause "(i)",
clause "(ii)", clause "(iii)" or clause "(iv)" of this sentence; provided,
however, that Competing Service shall not include any Noncompeting Service which
is not a Core Service. "Core Service" shall mean : (i) collaborative writing
systems; (ii) collaborative document management software systems; (iii)
collaborative defect tracking systems; (iv) collaborative discussion systems;
(v) collaborative document analysis systems; (vi) electronic mail systems; (vii)
internet based advertising delivery systems; (viii) cross platform collaboration
frameworks; (ix) retail internet service (dialup and web hosting) and (x) the
design and development of any other collaborative software systems.
"Noncompeting Service" shall mean any service which facilitates, supports,
consists of or relates to the design, creation, writing, development,
manufacture, assembly, promotion, sale, supply, distribution, resale,
installation, support, maintenance, repair, refurbishment, licensing,
sublicensing, financing, leasing or subleasing of products, including software
and code, which are not Competing Products ("Noncompeting Service").
(d) A Person shall be deemed to be engaged in "Competition" if:
(a) such Person is engaged directly or indirectly in the design, development,
manufacture, assembly, promotion, sale, supply, distribution, resale,
installation, support, maintenance, repair, refurbishment, licensing,
sublicensing, financing, leasing or subleasing of any Competing Product; or (b)
such Person is engaged directly or indirectly in providing, performing or
offering any Competing Service.
(e) "Confidential Information" means any non-public information
(whether or not in written form and whether or not expressly designated as
confidential) relating directly or indirectly to the Purchaser, or the Company
or relating directly or indirectly to the business, operations, financial
affairs, performance, assets, technology, processes, products, contracts,
customers, licensees, sublicensees, suppliers, personnel, consultants or plans
of the Purchaser, the Company or any of the Purchaser's other subsidiaries
(including any such information consisting of or otherwise relating to trade
secrets, know-how, technology, inventions, prototypes, designs, drawings,
sketches, processes, license or sublicense arrangements, formulae, proposals,
research and development activities, customer lists or preferences, pricing
lists, referral sources, marketing or sales techniques or plans, operations
manuals, service manuals, financial information, projections, lists of
consultants, lists of suppliers or lists of distributors);
7.
50
provided, however, that "Confidential Information" shall not be deemed to
include information of the Company that (a) was already publicly known and in
the public domain prior to the time of its initial disclosure to the Shareholder
or (b) becomes publicly known through a third party through no fault of the
Shareholder.
(f) "Indemnitees" shall include: (i) the Purchaser; (ii) the
Company; (iii) each Person who is or becomes an Affiliate of the Purchaser or
the Company; and (iv) the successors and assigns of each of the Persons referred
to in clauses "(i)", "(ii)" and "(iii)" of this sentence.
(g) "Noncompetition Period" shall mean the period commencing on
the date of this Noncompetition Agreement and ending on the (i) first
anniversary of the date of the termination of the Shareholder's employment with
the Purchaser if the Purchaser terminates the Shareholder's employment for any
reason or no reason, or (ii) third anniversary of the date of this
Noncompetition Agreement or the first anniversary of the termination of the
Shareholder's employment with the Purchaser, whichever is later, if the
Shareholder terminates his employment for any reason or no reason.
(h) "Person" means any: (i) individual; (ii) corporation, general
partnership, limited partnership, limited liability partnership, trust, company
(including any limited liability company or joint stock company) or other
organization or entity; or (iii) governmental body or authority.
(i) "Restricted Territory" means each county or similar political
subdivision of each State of the United States of America (including each of the
counties in the State of California), and each State, territory or possession of
the United States of America.
IN WITNESS WHEREOF, the Shareholder has duly executed and delivered this
Noncompetition Agreement as of the date first above written.
------------------------------------
Address:
Telephone No.:
Facsimile:
8.
51
EXHIBIT E
LIST OF PERSONS SIGNING
NONCOMPETITION AGREEMENTS
1. Xxxxxxxx Xxxx Xxxxxxxx
2. Xxxx X. Xxxxx
E-1.
52
EXHIBIT F
FORM OF LEGAL OPINION OF XXXXX, UNKOVIC & XXXXX, LLP
F-1.
53
(000) 000-0000
Xxxxxxxx Xxxxxxxxxxxx
Within Acquisition Corp.
March _, 2000
RE: Agreement and Plan of Merger and Reorganization by and among Within
Technology, Inc., a Pennsylvania corporation (the "Company"), Xxxxxxxx
Xxxxxxxxxxxx, a Delaware corporation ("Parent"), and Within Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of Qualcomm
("Merger Sub") dated as of March ___, 2000 (the "Merger Agreement")
Ladies/Gentlemen:
We have served as counsel for Within Technology, Inc. and its shareholders (the
"Shareholders") in connection with the negotiation, preparation and execution of
the Merger Agreement pursuant to which Merger Sub will merge into the Company
and the Company will become a wholly owned subsidiary of Qualcomm (the
"Merger").
All capitalized terms used but not defined herein have the meanings given to
them in the Merger Agreement.
Based upon and subject to the assumptions, qualifications and exceptions
hereinafter set forth, it is our opinion that:
1. Based on our examination of the Subsistence Certificate issued on behalf of
the Company on March 6, 2000 by the Commonwealth of Pennsylvania Department of
State, the Company has been duly incorporated and is a validly subsisting
corporation under the laws of the Commonwealth of Pennsylvania.
2. The Company has the requisite corporate power to own or lease its property
and assets and to conduct its business as it is currently being conducted. To
our knowledge, the Company is qualified as a foreign corporation to do business
and is in good standing
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in each jurisdiction in the United States in which the ownership of its property
or the conduct of its business requires such qualification, except where the
failure to be so qualified would not reasonably be expected to have a material
adverse affect on the Company, its assets, financial condition or operations.
"Knowledge" or words of similar import means that during the course of our
representation of the Company in connection with the Merger Agreement and the
Merger, no information has come to our attention which gives us actual, present
knowledge of the existence of facts inconsistent with the opinion so qualified.
3. Based upon our review of the stock records of the Company and our internal
files (we have not represented the Company other than in connection with the
Merger and the Merger Agreement), which the officers have advised us are the
only stock records of the Company, the Company's authorized capital stock
consists of ten thousand (10,000) shares of Common Stock, having no par value,
of which seven hundred (700) shares are issued and outstanding as of the date
hereof (the "Shares"). To our knowledge there are no options, warrants,
conversion privileges, preemptive rights or other rights outstanding as of the
date of the Merger Agreement to purchase any of the authorized but unissued
capital stock of the Company. The Shares have been duly authorized, are validly
issued and outstanding and are fully paid and nonassessable.
4. Based upon our review of the certificate duly executed by the officers of the
Company, the Merger Agreement has been duly and validly authorized, executed and
delivered by the Company and the Shareholders and, assuming the due
authorization, execution and delivery thereof by the other parties thereto,
constitutes a valid and binding agreement of the Company and the Shareholders,
enforceable against each of the Company and the Shareholders in accordance with
its terms, except as rights to indemnity under Section 6 of the Merger Agreement
may be limited by applicable laws and except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance. All necessary corporate action has been taken by the
Company under Pennsylvania law and the Company's Articles of Incorporation and
Bylaws to authorize the Company to enter into and to approve the Merger
Agreement and the Merger.
5. The execution and delivery of the Merger Agreement by the Company do not
violate any provision of the Company's Articles of Incorporation or Bylaws, and
do not constitute a material default under the provisions of any agreement
identified on Exhibit A attached hereto and to the best of our knowledge do not
violate or contravene (a) any governmental statute, rule or regulation
applicable to the Company or (b) any order, writ, judgment, injunction, decree,
determination or award which has been entered against the Company and of which
we are aware, the violation or contravention of which would materially and
adversely affect the Company, its assets, financial condition or operations.
55
March _, 2000
Page 3
6. To counsel's knowledge, there is no action, proceeding or investigation
pending or overtly threatened against the Company before any court or
administrative agency that questions the validity of the Merger Agreement.
7. All consents, approvals, authorizations or orders of, or filings,
registrations and qualifications required on the part of Company for the
consummation by the Company of the Merger contemplated by the Merger Agreement
under Pennsylvania law have been made or obtained, except the filing of the
Articles of Merger with the Secretary of State of the Commonwealth of
Pennsylvania as contemplated by Section 1.3 of the Merger Agreement.
8. The Merger Agreement has been duly authorized and executed by the Company and
the Shareholders and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, upon the filing of the Articles of Merger,
Docketing Statement, and all necessary filing fees with the Secretary of State
of the Commonwealth of Pennsylvania, the Merger will be effective under
Pennsylvania law.
The opinions set forth above are subject to and qualified as follows:
(a) As to the enforcement of the terms, covenants and conditions set
forth in the Merger Agreement, the opinions set forth herein are subject to the
effects of laws concerning liquidation, conservatorship, receivership,
insolvency, bankruptcy, reorganization, moratorium, fraudulent transfers and
similar debt or relief laws of general application; the power of Courts to award
damages in lieu of granting equitable remedies; principles of equity which may
limit the availability of certain remedies; and the application of the
"commercially reasonable" test by a Court having jurisdiction.
(b) We have assumed, without investigation, and therefore offer no
opinion with respect to: (i) the genuineness of all documents and the signatures
thereon; (ii) the authenticity and completeness of all documents submitted to us
as originals and the conformity to the originals of all documents submitted to
us as certified, notarial or photostatic copies (and the authenticity of such
originals); (iii) the accuracy and completeness of material factual matters set
forth in certificates of public officials and in certificates of officers,
shareholders or directors; (iv) the due authorization, execution and delivery of
the Merger Agreement by Parent and by Merger Sub; (v) the power and authority of
Parent and Merger Sub to perform their obligations under the Merger Agreement;
(vi) compliance by Parent and Merger Sub with all laws, statutes, rules and
regulations applicable to them, or either of them, including without limitation
obtaining any consent, approval, authorization, declaration, or filing required
by or with any governmental commission, board or agency, in connection with
execution, delivery and performance by Parent and Merger Sub of the Merger
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March _, 2000
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Agreement; and (vii) the legal competency of each natural person executing the
Merger Agreement.
(c) We have relied upon the representations and warranties as to factual
matters contained in and made pursuant to the Merger Agreement by the parties to
the Merger Agreement;
(d) We are members of the Bar of the Commonwealth of Pennsylvania and as
such, we express no opinion as to the law of any jurisdiction other than the
Federal law of the United States and the law of the Commonwealth of
Pennsylvania. We assume no responsibility for the effect or applicability of the
laws of any other jurisdiction. To the extent that the laws of any other
jurisdiction may be applicable to the opinions given herein, we have assumed
that the laws of such jurisdiction are identical in all respects to the laws of
the Commonwealth of Pennsylvania.
Finally, we express no opinion as to any matter that is not expressly set forth
above and no opinion is to, nor may, be inferred or implied therefrom and
specifically, we express no opinion as to (i) the financial ability of the
Company and the Shareholders to meet any of their obligations under the Merger
Agreement; (ii) the truthfulness or accuracy of any reports, documents,
financial statements or other matters furnished to Parent and/or Merger Sub on
behalf of the Company and/or the Shareholders; or (iii) the truthfulness or
accuracy of any of the representations or warranties made by the Company and/or
the Shareholders in the Merger Agreement.
This opinion is as of the date hereof and we undertake no, and hereby disclaim
any, obligation to further advise Parent and/or Merger Sub of any change in any
matter set forth herein. Further, this opinion is solely for the benefit of
Parent and/or Merger Sub, and this opinion may not be relied upon in any manner,
nor used by, any other persons. This opinion is provided as a legal opinion
only, and is not a guaranty or warranty of the matters discussed herein.
Very truly yours,
XXXXX, UNKOVIC & XXXXX LLP
KGJ:pwm
