1
EXHIBIT 10.35
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of
December 2, 1998, by and between Visioneer, Inc., a Delaware corporation
("Seller" or the "Company"), Primax V Acquisition Corp., a California
corporation ("Buyer") and Primax Electronics Ltd., a corporation organized under
the laws of Taiwan ("Buyer Parent").
RECITALS
Buyer and Buyer Parent are in the business of designing, manufacturing,
marketing and selling computer peripheral devices. Seller is in the business of
designing, manufacturing, marketing and selling desktop and flatbed scanners
(the "Hardware Business"), and Seller is also in the business of designing,
marketing and selling software (the "Software Business"). The Hardware and
Software Business are collectively referred to herein as the "Business." Buyer
desires to acquire from Seller, and Seller desires to sell to Buyer, all of
Seller's assets relating to the Hardware Business and certain additional
specified assets, and Buyer desires to assume, and Seller desires to delegate to
Buyer, all of Seller's liabilities relating to the Hardware Business and certain
additional specified liabilities, on the terms and subject to the conditions set
forth in this Agreement.
AGREEMENT
In consideration of the mutual agreements, representations, warranties
and covenants set forth below, Buyer and Seller agree as follows:
1. DEFINITIONS. Certain capitalized terms used in this Agreement are
defined in Exhibit A.
2. SALE AND PURCHASE.
2.1 TRANSFER OF ASSETS. Subject to the terms and conditions of this
Agreement, Seller shall sell, assign, grant, transfer, and deliver (or cause to
be sold, assigned, granted, transferred and delivered) to Buyer, or to any
Affiliate of Buyer designated by Buyer, and Buyer shall purchase and accept from
Seller effective as of the Closing Date (as defined in Section 3.1 below) the
following assets, properties and business of Seller as the same shall exist on
the Closing Date:
(a) HARDWARE ASSETS. All of Seller's rights, title and
interest in and to all of the following assets, properties and business owned,
held or used by Seller (the "Hardware Assets"):
(i) all real property and leases of and other
interests in real property, in each case together with all buildings, fixtures
and improvements thereon, including without limitation, the items listed in Part
4.6 of the Disclosure Schedule and identified as Purchased Assets;
2
(ii) all leases of and other interests in the
equipment listed in Part 4.6 of the Disclosure Schedule and identified as
Purchased Assets;
(iii) all tangible personal property and assets
listed in Part 4.7 of the Disclosure Schedule and identified as Purchased
Assets;
(iv) all raw materials, work-in-process, finished
goods, supplies and other inventories relating solely to the Hardware Business;
(v) all accounts receivable, notes receivable and
other receivables to the extent relating to the Hardware Business (for this
purpose, the parties agree that accounts receivable from Seller's sales in the
ordinary course of hardware and software bundled products prior to the Closing
Date constitute accounts receivable of the Hardware Business);
(vi) all prepaid expenses to the extent relating to
the Hardware Business or any Purchased Assets including, but not limited to
Taxes, leases, royalties and rentals;
(vii) all of Seller's rights, claims, credits, causes
of action (including Legal Proceedings set forth in Part 4.20(a) of the
Disclosure Schedule and identified as Purchased Assets) or rights of set-off
against third parties to the extent relating to the Hardware Business,
including, without limitation, unliquidated rights under warranties;
(viii) all patents and patent applications,
trademarks (whether or not registered), trademark applications, trade names,
fictitious business names, service marks (whether or not registered), service
xxxx applications, copyrights (whether or not registered), copyright
applications, maskworks, maskwork applications, moral rights, and proprietary
products (but excluding bundled software and all intellectual property rights
associated therewith, except to the limited extent that such bundled software or
intellectual property rights are designated as Purchased Assets) listed on Part
4.9(a) of the Disclosure Schedule and identified as Purchased Assets, together
with all associated goodwill and all intellectual property rights of Seller
therein;
(ix) all things authored, discovered, developed,
made, perfected, improved, designed, engineered, acquired, produced, conceived
or first reduced to practice by Seller or any of its employees or agents that
are solely embodied in, derived from or relating solely to the Hardware Business
(but excluding bundled software and all intellectual property rights therein),
in any stage of development, including, without limitation, modifications,
enhancements, designs, concepts, techniques, methods, ideas, flow charts, coding
sheets, notes and all other information relating solely to the Hardware Business
(but excluding bundled software and all intellectual property rights therein);
(x) any and all design and code documentation,
methodologies, processes, trade secrets, design information, product
information, technology, formulae, routines, engineering specifications,
technical manuals and data, drawings, inventions, know-how, techniques,
engineering work papers, and notes, development work-in-process, business
-2-
3
and marketing plans, and other proprietary information and materials of any kind
solely relating to, used in, or derived from the Hardware Business (but
excluding bundled software and all intellectual property rights therein)
(collectively with subsections (viii) and (ix), the "Intellectual Property");
(xi) all the Material Contracts listed in Part 4.10
of the Disclosure Schedule and identified as Purchased Assets, Contracts of
Seller relating solely to the Hardware Business, and sales and purchase orders
of Seller to the extent relating to the Hardware Business (collectively, the
"Purchased Contracts"), provided however, that "Purchased Contracts" shall
exclude any Material Contracts listed in Part 4.10 of the Disclosure Schedule
and identified as Purchased Assets for which a Consent is required under such
contracts to effect the assignment of all rights and delegation of all
obligations thereunder to Buyer, and for which a Consent is not obtained prior
to Closing; provided further, however, that the provisions of Section 2.8 shall
apply with respect to all Distribution and Marketing Agreements listed in Part
4.10 (a)(ii)(B) of the Disclosure Schedule for which a Consent is not obtained
prior to Closing;
(xii) all licenses, permits, authorizations, consents
and approvals of any Governmental Entity solely affecting or relating in any way
to the Hardware Business which are transferable to Buyer;
(xiii) subject to Section 6.8 below, all books,
records, files and papers, whether in hard copy or electronic format, used in
the Hardware Business, including without limitation, a copy of sales and
promotional literature, sales and purchase correspondence, lists of present,
former and prospective suppliers or customers, personnel and employment records,
and any information relating to Taxes imposed on the Hardware Business or the
Hardware Assets;
(xiv) all computer software programs, data and
associated licenses used internally by Seller in its conduct of the Hardware
Business;
(xv) all goodwill associated with the Hardware
Business or the Hardware Assets, together with the right to represent to third
parties that Buyer is the successor to the Hardware Business; and
(xvi) all software and firmware driver technology
relating to Seller's Strobe, flatbed and OneTouch scanner products, including
all Intellectual Property rights of Seller therein, provided however, that the
Purchased Assets shall not include the Intellectual Property related to the
OneTouch software module; and
(b) "VISIONEER." All of Seller's rights, title and interest in
and to the "Visioneer" name, including all intellectual property rights
(including trademark rights) of Seller therein (the "Visioneer Name"); and
(c) OTHER INCLUDED ASSETS. All of Seller's rights, title and
interest in and to all of the assets, properties and business set forth on
Schedule 2.1(c) attached hereto ("Other Assets"). The Hardware Assets, the
Visioneer Name, and Other Assets are collectively referred to herein as the
"Purchased Assets."
-3-
4
2.2 EXCLUDED ASSETS. Buyer agrees that only the assets, properties and
business expressly identified in Section 2.1 above shall be Purchased Assets,
and that the assets, properties and business that are not identified as
Purchased Assets in the Disclosure Schedules shall not be Purchased Assets.
Notwithstanding the provisions of Section 2.1 above, Buyer agrees that all of
Seller's rights, title and interest in and to the assets, properties and
business set forth on Schedule 2.2 attached hereto shall be excluded from the
Purchased Assets (collectively, the "Excluded Assets"):
2.3 TRANSFER OF LIABILITIES. Subject to the terms and conditions of
this Agreement, Buyer shall assume from Seller, and Seller shall delegate to
Buyer, effective as of the Closing Date, the following liabilities and
obligations of Seller (whether actual, contingent or otherwise) as the same
shall exist as of the Closing Date:
(a) HARDWARE LIABILITIES all liabilities and obligations of
Seller (whether actual, contingent or otherwise) relating to the Hardware
Business (the "Hardware Liabilities"), including:
(i) all liabilities and obligations relating to the
Purchased Assets, including but not limited to all liabilities of Seller
pursuant to the Purchased Contracts and any Unassigned Contracts (as that term
is defined in Section 2.8(a) below);
(ii) all liabilities and obligations included within
Total Accounts Payable of the Hardware Business as set forth on the Closing
Balance Sheet (as defined in Section 2.6 below; and
(iii) all liabilities and obligations included within
Other Current Liabilities of the Hardware Business set forth on the Closing
Balance Sheet, including sale, use and value-added taxes, state income or
franchise taxes (based on or measured by property), real, personal or intangible
property taxes, and other liabilities relating to the real property and
equipment leases assumed by Buyer, and all similar liabilities and obligations
that arise after the Closing Date.
(b) OTHER INCLUDED LIABILITIES all liabilities and
obligations of Seller set forth in Schedule 2.3(b) attached hereto ("Other
Liabilities"). The Hardware Liabilities and Other Liabilities are collectively
referred to herein as the "Assumed Liabilities."
2.4 EXCLUDED LIABILITIES. All liabilities and obligations of Seller
(whether actual, contingent or otherwise) which are not expressly assumed by
Buyer pursuant to Section 2.3 above shall be excluded from the Assumed
Liabilities, including without limitation the liabilities set forth on Schedule
2.4 ("Excluded Liabilities").
2.5 PURCHASE PRICE. Subject to the performance by Seller of all of its
obligations under this Agreement at or prior to the Closing, in consideration of
the acquisition of the Purchased Assets under Section 2.1 and the assumption of
the Assumed Liabilities under Section 2.3, Buyer agrees to deliver to Seller or
to an account or accounts designated by Seller (i) $1,100,000 plus (ii) the net
book value of the Purchased Assets (based on the Closing Balance
-4-
5
Sheet (as defined in Section 2.6)) in immediately available funds denominated in
U.S. dollars (collectively, the "Purchase Price").
2.6 DETERMINATION OF CLOSING BALANCE SHEET. No later than five (5)
business days prior to the Closing Date, Seller shall deliver to Buyer an
unaudited balance sheet of the Hardware Business prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied, which
shall include Seller's asset and liability accounts as of such date (the "Seller
Balance Sheet"). From the date of the Seller Balance Sheet to the Closing Date,
Buyer and Seller shall mutually monitor and maintain a ledger reflecting
Seller's receipt of payments for accounts receivable, the payment by Seller of
any accounts payable and events that impact any of Seller's other balance sheet
accounts. Based on such events, Buyer and Seller shall agree upon the
appropriate adjustments to be made to the Seller Balance Sheet and any change to
the net book value of the Purchased Assets since the date of the Seller Balance
Sheet. The resulting adjusted balance sheet of Seller, which shall include the
unaudited asset and liability accounts of the Business as of the Closing Date,
shall be known as the "Closing Balance Sheet." Notwithstanding the foregoing,
either party may deliver to the other party prior to the Closing Date written
notice (the "Objection Notice") of its disagreement as to the value of any item
included in the Seller Balance Sheet or in the calculation of any adjustment
thereto pursuant to this Section 2.6. The Objection Notice shall specify in
reasonable detail the nature of such disagreement and the basis and supporting
evidence for the objecting party's position with respect to the disputed
item(s). Seller and Buyer shall attempt in good faith to resolve any
disagreement prior to the Closing Date in order to determine the Closing Balance
Sheet. Buyer and Seller shall each be entitled to review all work papers and
other supporting documentation used in or relevant to the Seller Balance Sheet,
and the calculation of any adjustment thereto pursuant to this Section 2.6. If
Buyer and Seller are unable to reach agreement on the Closing Balance Sheet
prior to the Closing Date, they shall submit the disputed items to Xxxxxx
Xxxxxxxx L.L.P. (the "Arbitrator"), whose decision with respect to the matters
disputed in the Objection Notice shall be final and binding. Buyer and Seller
shall each promptly provide all information and documents within their
respective possession that the Arbitrator, in its sole discretion, deems
necessary in order to make its decision with respect to the disputed matters.
The fees and expenses of the Arbitrator shall be borne equally by Buyer and
Seller. The Arbitrator shall render its decision with respect to such matters
within 10 days after such matters are submitted to it and then deliver the
Closing Balance Sheet to Buyer and Seller at such time. The Closing shall take
place as soon as practicable thereafter. For purposes of Section 2.5, the net
book value of the Purchased Assets shall not include (i.e. shall be increased
by) liabilities and obligations included within Total Accrued Wages of the
Hardware Business, such as accrued payroll, federal and state income taxes,
commissions, 401(k) contributions made by employees, 401(k) loans payable to
employees, vacation, insurance, Section 125 contributions, and employee stock
purchase plan contributions, except to the extent the parties agree that such
liabilities shall constitute Assumed Liabilities.
2.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets as provided in a schedule to be prepared by Buyer
(Schedule 2.7 hereto) for purposes of complying with the requirements of Section
1060 of the Code and the regulations thereunder. As soon as practicable after
the delivery of the Closing Balance Sheet, Buyer shall
-5-
6
deliver to Seller a revised allocation reflecting any adjustment to the Seller
Balance Sheet represented by the Closing Balance Sheet, which revised allocation
shall be reasonably consistent with the principles of the allocation set forth
in Schedule 2.7 as determined by Buyer in its good faith discretion. Buyer and
Seller agree to each prepare and file on a timely basis with the Internal
Revenue Service (and applicable state tax authorities) substantially identical
and supplemental Internal Revenue Service Forms 8594 (and corresponding state
tax forms) consistent with Buyer's allocation of the Purchase Price. If any Tax
authority challenges such allocation, the party receiving notice of such
challenge shall give the other prompt written notice thereof and the parties
shall cooperate in order to preserve the effectiveness of such allocation.
2.8 CERTAIN UNASSIGNED CONTRACTS.
(a) Buyer and Seller agree that with respect to all
Distribution and Marketing Agreements listed in Part 4.10 (a)(ii)(B) of the
Disclosure Schedule which constitute a Purchased Asset and Assumed Liability for
which a Consent under such contract is required to assign the rights and
delegate the obligations under such contract to Buyer but not obtained on or
prior to the Closing Date (an "Unassigned Contract"), Seller and Buyer shall
take the following actions: Seller shall (i) promptly transfer to Buyer all
payments to the extent relating to the Hardware Business received from any
third-party under the Unassigned Contract, if applicable; (ii) take, at Buyer's
expense, all reasonable actions to enforce Buyer's rights relating to the
Hardware Business under the Unassigned Contract after prior consultation with
Buyer; and (iii) promptly provide Buyer with a copy of all correspondence,
notices, and other communications received by the third-party under the
Unassigned Contract that relate specifically to Buyer and the Hardware Business.
Buyer shall (i) perform all obligations under the Unassigned Contract which
Buyer would be required to perform thereunder if the Unassigned Contract were
assigned to Buyer under this Agreement, including making any payments directly
to any third-party that would be required by Buyer; (ii) indemnify and reimburse
Seller for all expenses and costs incurred by Seller arising under or relating
to the Unassigned Contract, and (iii) hold harmless Seller for all expenses and
costs incurred by Buyer arising under or relating to the Unassigned Contract.
Buyer acknowledges that Seller shall not be required to obtain Consents for each
Unassigned Contract, however, Seller shall provide assistance and information
upon Buyer's reasonable request to assist Buyer in negotiating a new contract
with such third parties after the Closing Date.
(b) Buyer and Seller agree that with respect to all
Distribution and Marketing Agreements listed in Part 4.10 (a)(ii)(B) of the
Disclosure Schedule which are included as Purchased Assets (either because no
Consent to assignment is required or because such Consent has been obtained)
(each an "Assigned Contract"), Seller and Buyer shall take the following
actions: Buyer shall (i) promptly transfer to Seller all payments to the extent
relating to the Software Business received from any third-party under the
Assigned Contract, if applicable; (ii) take, at Seller's expense, all reasonable
actions to enforce Seller's rights relating to the Software Business under the
Assigned Contract after prior consultation with Seller; and (iii) promptly
provide Seller with a copy of all correspondence, notices, and other
communications received from any third-party under the Assigned Contract that
relates specifically to Seller and the Software Business. Seller shall (i)
perform all applicable
-6-
7
obligations under the Assigned Contract which Seller would be required to
perform thereunder if the Assigned Contract had not been assigned to Buyer under
this Agreement, including making any payments directly to any third-party that
would be required by Buyer; (ii) indemnify and reimburse Buyer for all expenses
and costs incurred by Buyer arising under or relating to the Assigned Contract
that were undertaken on behalf of Seller or that relate to Seller's rights in
connection with the Software Business, and (iii) hold harmless Buyer for all
expenses and costs incurred by Seller arising under or relating to the Assigned
Contract. Seller acknowledges that Buyer shall not be required to assist Seller
in negotiating a new contract with such third parties after the Closing Date.
3. CLOSING.
3.1 CLOSING. The Closing shall take place at the offices of Venture Law
Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 on January 3, 1999, or
as soon as practicable thereafter on such other date as may be jointly
designated by Buyer and Seller (the "Closing Date").
3.2 ACTIONS AT THE CLOSING. At the Closing, Seller shall deliver to
Buyer and Buyer shall accept from Seller the Purchased Assets and Assumed
Liabilities, and Buyer shall deliver to Seller and Seller shall accept from
Buyer the Purchase Price, and Buyer and Seller shall take such actions and
execute and deliver such agreements, bills of sale, and other instruments and
documents as necessary or appropriate to effect the transactions contemplated by
this Agreement in accordance with its terms, including without limitation the
following:
(a) XXXX OF SALE; ASSIGNMENT AND ASSUMPTION AGREEMENT. Seller
shall deliver to Buyer a general Xxxx of Sale duly executed by Seller
substantially in the form attached as Exhibit B, and with respect to each
Purchased Contract and item of Intellectual Property, an Assignment and
Assumption Agreement substantially in the form attached as Exhibit C
(collectively, the "Transfer Documents") in each case duly executed by Seller
and Buyer, and in the aggregate assigning to Buyer all of Seller's right, title
and interest in and to the Purchased Assets, and delegating to Buyer all of
Seller's obligations under the Assumed Liabilities. Buyer may designate one or
more of its Affiliates as the recipient of certain of the Purchased Assets, and
as the party to assume certain of the Assumed Liabilities, in which case Seller
shall transfer such Purchased Assets and Assumed Liabilities to Buyer or the
Affiliate(s) designated by Buyer pursuant to such Transfer Documents.
(b) THIRD PARTY CONSENTS AND ASSIGNMENTS. Seller shall deliver
to Buyer any assignments, and any required consents to assignment, that it has
obtained in respect of the Purchased Contracts, duly executed by parties having
the authority to so assign or consent to assign, in form and substance as Buyer
shall reasonably request.
(c) SELLER DOCUMENTS. At the Closing, Seller shall deliver to
Buyer any and all documents required to satisfy the conditions set forth in
Section 9 of this Agreement and any other closing documents reasonably requested
by Buyer.
-7-
8
(d) BUYER DOCUMENTS. At the Closing, Buyer shall deliver to
Seller any and all documents required to satisfy the conditions set forth in
Section 8 of this Agreement and any other closing documents reasonably requested
by Seller.
(e) POST-CLOSING ACTIONS. Subsequent to the Closing Date,
Seller shall, and shall cause any Affiliate of Seller to, from time to time
execute and deliver, upon the request of Buyer, all such other and further
materials and documents and instruments of conveyance, transfer or assignment as
may reasonably be requested by Buyer to effect, record or verify the transfer to
and vesting in Buyer of Seller's and any of Seller's Affiliates' right, title
and interest in and to the Purchased Assets, free and clear of all Liens in
accordance with the terms of this Agreement.
(f) OBLIGATIONS OF BUYER PARENT. Buyer Parent shall take all
actions necessary to cause Buyer to perform all obligations of Buyer existing
prior to and in connection with the Closing, including without limitation
Buyer's obligations under Section 6.4 below.
(g) USE OF CORPORATE NAME. Buyer acknowledges that Seller
contemplates entering into the Merger Agreement providing for the Merger of
Seller with the Third Party, and pursuant to which the corporate name of the
successor entity will be a name other than "Visioneer." Seller expects that it
will be required to obtain the consent of its stockholders to such Merger and
change of corporate name at a special meeting of stockholders to be held as soon
as practicable following the execution date of the Merger Agreement and prior to
the effective time of the Merger. Seller acknowledges that the Hardware Assets
include all of Seller's right, title and interest, including intellectual
property rights, in and to the name "Visioneer". Buyer acknowledges Seller's
desire to use the corporate name "Visioneer" after the Closing Date, on the
terms and subject to the below conditions. Effective as of the Closing Date,
Buyer hereby grants to Seller and the successor entity of Seller, if applicable,
a non-exclusive, worldwide, royalty-free, irrevocable, perpetual right and
license, under all of Buyer's intellectual property rights, to use, with right
of sublicense, the name "Visioneer" as the corporate name of Seller (the
"Corporate Name License"). The Corporate Name License shall terminate on the
earlier of (i) one week following the Effective Time of the Merger or (ii) April
30, 1999; provided, however, in the event the Merger does not close by April 30,
1999, Seller shall have the right to use the name "Visioneer" as its legal
corporate name, except that Seller shall do business with a name other than
"Visioneer," and Seller shall recommend to its stockholders at its next annual
meeting of stockholders that Seller change its legal corporate name to a name
not using the name "Visioneer." Seller shall provide to Buyer reasonable
evidence of Seller's change of corporate name in compliance with this Section
3.2(g). In addition, as of the Closing Date, Seller shall inform the California
Secretary of State of Seller's consent to Buyer's use of the name "Visioneer."
Seller shall use its best efforts to ensure that each affiliate of
Seller listed in Part 4.19 of the Disclosure Schedule enters into a voting
agreement prior to the Closing Date providing that such affiliate agrees to vote
all shares of capital stock of Seller held by it in favor of Seller's
recommendation at its next annual meeting of stockholders to change its
corporate name to a name not using the name "Visioneer."
-8-
9
Seller acknowledges that Buyer may commence use of the name "Visioneer"
as of the Closing. Buyer and Seller shall cooperate with regard to their
respective uses of the name "Visioneer" between Closing and the termination of
the License to prevent confusion between each of Seller and Buyer and their
respective customers, suppliers and other partners.
(h) PRODUCT NAME LICENSE GRANTED TO SELLER. Seller
acknowledges that the Hardware Assets include all of Seller's right, title and
interest, including intellectual property rights, in and to the trademarks of
Seller identified as Purchased Assets in Part 4.9(b) of the Disclosure Schedule.
Buyer acknowledges Seller's desire to use those trademarks on the terms and
subject to the below conditions. Effective as of the Closing Date, Buyer hereby
grants to Seller and the successor of Seller, if applicable, a non-exclusive,
worldwide, royalty-free, irrevocable right and license, under all of Buyer's
intellectual property rights related to Hardware Assets, to use those trademarks
identified as Purchased Assets in Part 4.9(b) of the Disclosure Schedule for the
purposes of marketing, selling and distributing Seller's software products alone
or bundled with third-party products (other than imaging hardware devices (as
that term is defined in the Software License Agreement) with a retail price less
than $300) under the same product name that such products were marketed, sold
and distributed immediately prior to the Closing Date (the "Product Name License
Granted to Seller"). The Product Name License Granted to Seller shall continue
for Seller, any successor of Seller, or any distributor, OEM or reseller
thereof, until March 31, 2000; provided that Seller shall use commercially
reasonable efforts to rename any products to which the Product Name License
Granted to Seller applies as soon as it is feasible to do so.
(i) PRODUCT NAME LICENSE GRANTED TO BUYER. Buyer acknowledges
that the Hardware Assets exclude all of Seller's right, title and interest,
including intellectual property rights, in and to the trademarks of Seller set
forth in Part 4.9(b) of the Disclosure Schedule that are identified as not being
Purchased Assets. Seller acknowledges Buyer's desire to use those trademarks on
the terms and subject to the below conditions. Effective as of the Closing Date,
Seller hereby grants to Buyer and its affiliates, if applicable, a
non-exclusive, worldwide, royalty-free, irrevocable right and license, under all
of Seller's intellectual property rights, to use those trademarks set forth in
Part 4.9(b) of the Disclosure Schedule that are identified as not being
Purchased Assets for the purposes of marketing, selling and distributing Buyer's
hardware products alone or bundled with third-party products (except paper
management or OCR software other than software provided by Seller or a successor
Seller) under the same product name that such products were marketed, sold and
distributed immediately prior to the Closing Date (the "Product Name License
Granted to Buyer"). The Product Name License Granted to Buyer shall continue for
Buyer, any successor Buyer, or any distributor, OEM or reseller thereof, until
March 31, 2000; provided that Buyer shall use commercially reasonable efforts to
rename any products to which the Product Name License Granted to Buyer applies
as soon as it is feasible to do so.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Each representation
-9-
10
and warranty set forth below is qualified by any exception or disclosures set
forth in the Disclosure Schedule attached hereto delivered to Buyer by Seller.
Seller represents and warrants to Buyer as of the date of this Agreement as
follows:
4.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) Seller has no Subsidiaries and Seller does not own any
capital stock of, or any equity interest of any nature in, any other Entity.
Seller has not agreed nor is it obligated to make, nor is it bound by any
Contract under which it may become obligated to make, any future investment in
or capital contribution to any other Entity. Seller has not at any time been a
general partner of any general partnership, limited partnership or other Entity.
(b) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all corporate 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 Contracts by which it is bound.
(c) Seller 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 4.1(c) of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on the Seller. Seller is in good standing as a foreign corporation in each of
the jurisdictions identified in Part 4.1(c) of the Disclosure Schedule.
4.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Seller has delivered to
Buyer accurate and complete copies of its certificate of incorporation, bylaws
and other charter and organizational documents, including all amendments
thereto. Seller is not in violation of any of the provisions of its certificate
of incorporation or bylaws or equivalent governing instruments.
4.3 [Intentionally left blank.]
4.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Seller has delivered or made available to Buyer accurate
and complete copies of all publicly available registration statements, proxy
statements and other statements, reports, schedules, forms and other documents
filed by Seller with the SEC and will deliver to Buyer accurate and complete
copies of all such publicly available registration statements, proxy statements
and other statements, reports, schedules, forms and other documents filed after
the date of this Agreement and prior to the Closing Date (collectively, the
"Seller SEC Documents"). All statements, reports, schedules, forms and other
documents required to have been filed by Seller with the SEC have been so filed.
As of the time it was filed with the SEC (or, if amended or superseded by a
later filing, then on the date of such filing): (i) each of the Seller SEC
Documents filed with the SEC complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act and the rules
and regulations under either of them (as the case may be) as of the date of such
filing and any Seller SEC Documents filed after the date
-10-
11
hereof will so comply; and (ii) none of the Seller 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
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including any
related notes) contained in the Seller SEC Documents filed with the SEC (the
"Seller Financial Statements"): (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 GAAP applied on a consistent basis throughout
the periods covered (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC, and except that the unaudited financial statements may not contain
footnotes and other information required for complete financial statements), and
(iii) fairly present the consolidated financial position of Seller as of the
respective dates thereof and the consolidated results of operations of Seller
for the periods covered thereby. All adjustments (consisting of recurring
accruals) considered necessary for a fair presentation of the financial
statements have been included. The audited consolidated balance sheet of the
Seller included in Seller's Annual Report on Form 10-K for the year ended
December 28, 1997 is sometimes referred to herein as the "1997 Balance Sheet"
and the unaudited consolidated balance sheet of Seller as of September 27, 1998
is sometimes referred to herein as the "Seller Unaudited Interim Balance Sheet."
All financial statements (including any related notes) contained in Seller SEC
Documents filed after the date hereof shall meet the conditions set forth in
(i), (ii) and (iii) of this Section 4.4(b).
(c) The Seller Unaudited Interim Balance Sheet and the
statement of operations of Seller for the quarter ended September 27, 1998 and
delivered to Buyer were prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered (except that the such financial statements
may not contain footnotes and other information required for complete financial
statements), and fairly present the financial position of the Business as of the
respective dates thereof and the results of operations of the Business for the
periods covered thereby.
(d) Seller has recognized revenues in accordance with GAAP and
Statement of Position 91-1 entitled "Software Revenue Recognition," dated
December 12, 1991, issued by the American Institute of Certified Public
Accountants. Seller has recognized (i) initial license fee revenues only after
delivery of software and hardware products and upon satisfaction of all
significant post-delivery obligations; (ii) revenues associated with the grant
of additional licenses to Seller's existing customers upon shipment and upon
satisfaction of all significant post-delivery obligations and (iii) maintenance
revenues ratably over the term of the maintenance period.
4.5 ABSENCE OF CHANGES. Since the date of the Seller Unaudited Interim
Balance Sheet and except as set forth in Part 4.5 of the Disclosure Schedule:
(a) there has not been any material adverse change in the
business, condition, assets, Liabilities, operations, financial performance or
prospects of the Hardware Business, and
-11-
12
no event has occurred that could reasonably be expected to have a Material
Adverse Effect on the Purchased Assets;
(b) there has not been any material loss, damage or
destruction to, or any material interruption in the use of, any of the Purchased
Assets (whether or not covered by insurance);
(c) there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of Seller,
and Seller has not effected or been a party to any merger, consolidation, share
exchange, business combination, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction, other than the Merger
Agreement;
(d) Seller has not (i) received any Acquisition Proposal, or
(ii) solicited, initiated, encouraged or induced, or provided any nonpublic
information to or entered into any discussions with any Person for the purpose
of soliciting, initiating, encouraging or inducing, the making or submission of
any Acquisition Proposal;
(e) Seller has not formed any Subsidiary or acquired any
equity interest or other interest in any other Entity:
(f) Seller has not made any capital expenditures which exceed
$25,000 with respect to any single matter, or $50,000 in the aggregate;
(g) except in the ordinary course of business and consistent
with past practices and except for the Merger Agreement, Seller has not (i)
entered into or permitted any of the Purchased Assets to become bound by any
Material Contract (as defined in Section 4.10), or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any Purchased
Contract;
(h) except as contemplated by the Merger Agreement, Seller has
not (i) acquired, leased or licensed any material right or other material asset
from any other Person, (ii) sold or otherwise disposed of, or leased or
licensed, any Purchased Asset to any other Person, or (iii) waived or
relinquished any material right relating to the Purchased Assets or Assumed
Liabilities, except for rights or other assets acquired, leased, licensed or
disposed of in the ordinary course of business and consistent with past
practices;
(i) Seller has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable or
other indebtedness that constitutes a Purchased Asset or Assumed Liability in
excess of $25,000 with respect to any single matter, or in excess of $50,000 in
the aggregate;
(j) Seller has not made any pledge or otherwise permitted any
of the Purchased Assets to become subject to any Encumbrance, except for pledges
of immaterial assets made in the ordinary course of business and consistent with
past practices and except as set forth in the Merger Agreement;
-12-
13
(k) except for relocation and travel advances referred to in
Section 4.8(b), Seller has not (i) lent money to any Person, or (ii) incurred or
guaranteed any indebtedness for borrowed money that constitutes a Purchased
Asset or an Assumed Liability;
(l) Seller has not (i) established or adopted any Plan (as
defined in Section 4.16(a)), (ii) caused or permitted any Plan to be amended in
any material respect, or (iii) paid any bonus or made any profit-sharing or
similar payment to, or materially increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
any of its directors, officers or employees;
(m) Seller has not changed any of its methods of accounting or
accounting practices in any respect with respect to the Hardware Business;
(n) Seller has not made any material election with respect to
Taxes;
(o) Seller has not commenced or settled any Legal Proceeding;
(p) Seller has not entered into any material transaction or
taken any other material action that has had, or could reasonably be expected to
have, a Material Adverse Effect on the Purchased Assets or the Assumed
Liabilities; and
(q) Seller has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(p)" above.
4.6 LEASEHOLD; EQUIPMENT. Seller does not own any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Part 4.6 of the Disclosure Schedule (which Part
4.6 indicates that such leaseholds are included as part of the Purchased Assets
hereunder). All such real property is being leased pursuant to lease agreements
that are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default). Part 4.6 of the Disclosure Schedule
accurately identifies all material items of equipment leased by Seller and
indicates whether or not such items of equipment are included as Purchased
Assets. All material items of equipment and other tangible assets owned by or
leased to Seller are adequate for the uses to which they are being put, are in
good condition and repair (ordinary wear and tear excepted).
4.7 TITLE TO ASSETS. Seller owns, and has good, valid and marketable
title to, or in the case of leased properties and assets, valid leasehold
interests in, all of its tangible properties and assets, real, personal and
mixed, that constitute Purchased Assets. Except as set forth in Part 4.7 of the
Disclosure Schedule, all of said assets are owned or leased by Seller free and
clear of any 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 subject thereto or materially impair the operations
of Seller. Part 4.7 sets forth a list of all material tangible personal property
and assets of Seller and identifies which of such assets constitute Purchased
Assets.
-13-
14
4.8 RECEIVABLES; SIGNIFICANT CUSTOMERS OF THE BUSINESS.
(a) Part 4.8(a) of the Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable of Seller
as of the date of the Seller Unaudited Interim Balance Sheet. All such accounts
receivable are current, and the Company believes that there is reasonable basis
that such accounts receivable will be collected (net of the allowance of
doubtful accounts set forth on the Company Unaudited Interim Balance Sheet,
which allowance the Company believes is reasonable).
(b) Part 4.8(b) of the Disclosure Schedule contains an
accurate and complete list as of date of this Agreement of all loans and
advances made by Seller to any employee, director, consultant or independent
contractor of Seller outstanding as of the date of this Agreement, other than
routine travel or relocation advances made to employees in the ordinary course
of business. All of such loans and advances existing as of the Closing Date are
Purchased Assets, except the loans and advances indicated on Part 4.8(b) that
were made by Seller to any employee, director, consultant or independent
contractor of Seller offered employment by Merger Party.
(c) Part 4.8(c) of the Disclosure Schedule sets forth a
complete and accurate list of all Significant Customers of the Business. For
purposes of this Agreement, "Significant Customers of the Business" are the
thirty (30) customers of the Seller (including without limitation original
equipment manufacturers and royalty-paying customers) that have effected the
most purchases from the Business, in dollar terms, and accounted for the most
revenues for the Business, in dollar terms, during the eight fiscal quarter
period ended September 27, 1998. None of the Company's Significant Customers of
the Business has canceled or returned or, to the knowledge of Seller, is
currently attempting or threatening to cancel or return, any purchases from,
orders to or services provided by the Seller. Seller has not received any
material customer complaints concerning its products and/or services.
4.9 PROPRIETARY ASSETS.
(a) Part 4.9(a) of the Disclosure Schedule sets forth a list
of all patents and patent applications, trademarks (whether or not registered),
trademark applications, trade names, fictitious business names, service marks
(whether or not registered), service xxxx applications, copyrights (whether or
not registered), copyright applications, maskworks, maskwork applications,
computer software, computer programs (in source and executable form),
proprietary products of Seller and which of such Proprietary Assets are
Purchased Assets. Part 4.9(a) of the Disclosure Schedule indicates each
Proprietary Asset of Seller registered with any Governmental Body or for which
an application has been filed with any Governmental Body and the names of the
jurisdictions covered by the applicable registration or application. Seller owns
no Proprietary Assets registered with any Governmental Body or for which an
application has been filed with any Governmental Body other than the Proprietary
Assets set forth in Part 4.9(a) of the Disclosure Schedule. Part 4.9(a) of the
Disclosure Schedule identifies and provides a brief description of each
Proprietary Asset licensed to Seller by any Person (except for any Proprietary
Asset that is licensed to Seller under any third party software license
generally available to the
-14-
15
public at a cost of less than $25,000), and identifies the license agreement
under which such Proprietary Asset is being licensed to Seller. Seller has good
and marketable title to all of the Proprietary Assets identified in Parts 4.9(a)
of the Disclosure Schedule, free and clear of all liens and other Encumbrances,
and has a right to use all of such Proprietary Assets that constitute Purchased
Assets. To Seller's knowledge, except as set forth in Part 4.9(a) of the
Disclosure Schedule, Seller is not obligated to make any payment after the date
of this Agreement to any Person for the use of any Proprietary Asset. To
Seller's knowledge, Seller has not developed jointly with any other Person any
Proprietary Asset with respect to which such other Person has any rights.
(b) Seller has taken all reasonable and appropriate steps to
protect and preserve all Seller Proprietary Assets that constitute Purchased
Assets that are not otherwise protected by patents, copyright or maskwork
registrations and that are not publicly known ("Trade Secrets"). The use,
possession or disclosure by Seller of any Proprietary Assets that constitute
Purchased Assets used in the Business but which are not owned by Seller has been
in compliance with the terms and conditions of a valid and enforceable agreement
between Seller and the owner of such Proprietary Assets that constitute
Purchased Assets, or such use, possession or disclosure is otherwise lawful
under the circumstances. To Seller's knowledge, there has been no unauthorized
disclosures of any Trade Secrets, no unauthorized disclosures of any Proprietary
Assets of any third party by Seller or any of its respective employees or
consultants, and there has been no breach of any confidentiality or
nondisclosure agreements to which Seller is a party.
(c) Except as set forth in Part 4.9(c) of the Disclosure
Schedule, to Seller's knowledge, none of Seller's Proprietary Assets that
constitute Purchased Assets infringes or conflicts with any Proprietary Asset
owned or used by any other Person and Seller is not infringing, misappropriating
or making any unlawful use of, and Seller 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. To Seller's knowledge, 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 Proprietary Asset of Seller that constitutes a Purchased Asset.
(d) There has not been any claim by any customer or other
Person alleging that any Proprietary Asset of Seller that constitutes a
Purchased Asset (including each version thereof that has ever been licensed or
otherwise made available by Seller 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 Seller. Seller
has established adequate reserves on the Seller Unaudited Interim Balance Sheet
to cover all costs that Seller reasonably anticipates to be associated with any
obligations that Seller may have with respect to the correction or repair of
programming errors or other defects in the Proprietary Assets.
(e) Seller's Proprietary Assets constitute all the Proprietary
Assets necessary to enable Seller to conduct the Hardware Business in the manner
in which such Hardware
-15-
16
Business has been and is being conducted. Except as set forth in Part 4.9(e) of
the Disclosure Schedule (which Part 4.9(e) indicates whether or not such
disclosure relates to the Purchased Assets), (i) Seller has not licensed any of
the Proprietary Assets to any Person on an exclusive basis, and (ii) Seller has
not entered into any material restriction on the right or ability of Seller (A)
to compete in any market or geographic area 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) to develop or distribute any technology.
(f) All current and former employees have executed and
delivered to Seller an agreement (containing no exceptions to or exclusions from
the scope of its coverage) that is substantially identical to the form of
confidential information and invention assignment agreement previously delivered
to Buyer and identified as satisfying the conditions of this Section 4.9(f). All
current and former consultants and independent contractors to Seller have
executed and delivered to Seller an agreement (containing no exceptions to or
exclusions from the scope of its coverage) that is substantially identical to
the form of consultant confidential information and invention assignment
agreement previously delivered to Buyer and identified as satisfying the
conditions of this Section 4.9(f).
4.10 CONTRACTS.
(a) Part 4.10 of the Disclosure Schedule identifies each
Contract of Seller that constitutes a "Material Contract" and indicates whether
or not each such Contract is a Purchased Asset. For purposes of this Agreement,
each of the following shall be deemed to constitute a "Material Contract":
(i) (A) any Contract or outstanding offer relating to
the employment of, or the performance of services by, any employee, (B) any
Contract pursuant to which Seller is required to make any severance, termination
or similar payment, bonus or relocation payment or any other payment (other than
payments in respect of salary) to any current or former employee or director of
Seller (if any such payment is disclosed on Part 4.10 of the Disclosure
Schedule, such reference also states whether or not such payment is an Assumed
Liability for purposes of this Agreement) and (C) any Contract or Plan
(including, without limitation, any stock option plan, stock appreciation plan
or stock purchase plan), any of the benefits of which may be increased, or the
vesting of benefits of which may be accelerated;
(ii) any Contract (A) relating to the acquisition,
transfer, development, sharing, license (to or by Seller), use or other
exploitation of any Proprietary Asset (except for any Contract pursuant to which
any Proprietary Asset is licensed to Seller under any third party software
license generally available to the public); or (B) with respect to the
distribution or marketing of any products of Seller, in each case the absence of
which would have a Material Adverse Effect on Seller or the Hardware Business;
(iii) any Contract which provides for indemnification
of any officer, director, employee or agent of Seller;
-16-
17
(iv) any Contract imposing any material restriction
on the right or ability of Seller (A) to compete in any market or geographic
area 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) to develop or distribute any technology;
(v) any Contract (A) relating to the acquisition,
issuance, voting, registration, sale or transfer of any securities (other than
the issuance of Seller Common Stock upon the valid exercise of Seller Options,
Employee Stock Purchase Plan Rights or Seller Warrants outstanding as of the
date of this Agreement), (B) providing any Person with any preemptive right,
right of participation, right of maintenance or any similar right with respect
to any securities, or (C) providing Seller with any right of first refusal with
respect to, or right to repurchase or redeem, any securities;
(vi) any Contract requiring that Seller give any
notice or provide any information to any Person prior to accepting any
Acquisition Proposal;
(vii) any Contract that (A) contemplates or involves
payment or delivery of cash or other consideration in an amount or having a
value in excess of $25,000 per month and (B) has a term of more than 90 days and
that may not be terminated by Seller within 90 days after the delivery of a
termination notice by Seller;
(viii) any Contract that contemplates or involves
payment or delivery of cash or other consideration by Seller in an amount or
having a value in excess of $75,000 in the aggregate;
(ix) any Contract or Plan (including, without
limitation, any stock option plan, stock appreciation plan or stock purchase
plan), any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the execution of this Agreement or the
consummation of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement;
(x) any joint marketing or development Contract
currently in force under which Seller has continuing material obligations to
jointly market any product, technology or service and which may not be canceled
without penalty upon notice of 90 days or less, or any Material Contract
pursuant to which Seller has continuing material obligations to jointly develop
any Proprietary Asset that will not be owned, in whole or in part, by Seller and
which may not be canceled without penalty upon notice of 90 days or less;
(xi) any Contract currently in force to disclose or
deliver to any Person, or permit the disclosure or delivery to any escrow agent
or other Person, of the source code, or any portion or aspect of the source
code, or any proprietary information or algorithm contained in or relating to
any source code, of any Seller Proprietary Asset that is material to Seller
taken as a whole;
-17-
18
(xii) any Contract (not otherwise identified in
clauses "(i)" through "(xi)" of this sentence) that is or would be material to
any of Seller, to the business, condition, capitalization or operations of
Seller or the Hardware Business, or to any of the transactions contemplated by
this Agreement; and
(xiii) any other Contract, if a breach of such
Contract could reasonably be expected as of the date of this Agreement to have a
Material Adverse Effect on Seller.
(b) Each Material Contract is valid and in full force and
effect, and is enforceable by Seller 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. To the best of the knowledge of
Seller, no Person has violated or breached, or committed any default under, any
Material Contract.
(c) (i) Seller has not violated or breached, or committed any
default under, any Material Contract, and, to the best of the knowledge of
Seller, no other Person has violated or breached, or committed any default
under, any Material Contract that could reasonably be expected as of the date of
this Agreement to have a Material Adverse Effect on Seller; (ii) to the best of
the knowledge of Seller, 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 a rebate, chargeback, penalty or change in delivery schedule under any
Material Contract, (D) give any Person the right to accelerate the maturity or
performance of any Material Contract, or (E) give any Person the right to
cancel, terminate or modify any Material Contract that will have a Material
Adverse Effect on Seller; (iii) neither Seller nor any of its Representatives
has received any notice or other communication regarding any actual or possible
violation or breach of, or default under, any Material Contract that will have a
Material Adverse Effect on Seller; and (iv) Seller has obtained all necessary
export licenses related to the export of its products and is not, and has not
been, in violation of such export licenses.
(d) There is no Material Contract to which any Governmental
Body is a party or under which any Governmental Body has any rights or
obligations, or directly or indirectly benefiting any Governmental Body
(including any subcontract or other Material Contract between Seller and any
contractor or subcontractor to any Governmental Body).
(e) No Person is renegotiating, or has a right pursuant to the
terms of any Material Contract to renegotiate, any amount paid or payable to
Seller under any Material Contract or any other material term or provision of
any Material Contract.
4.11 LIABILITIES. To Seller's knowledge, Seller has no Liabilities,
except for: (a) Liabilities identified as such in the "liabilities" column of
the Seller Unaudited Interim Balance Sheet; (b) normal and recurring liabilities
that have been incurred by Seller since the date of the Seller Unaudited Interim
Balance Sheet in the ordinary course of business and consistent with
-18-
19
past practices; (c) transaction expenses payable to Seller's accountants, legal
and financial advisors incurred in connection with this Agreement and the Merger
Agreement.
4.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Seller is, and has at all
times 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 Seller. Seller 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.
4.13 CERTAIN BUSINESS PRACTICES. Neither Seller nor any director,
officer, agent or employee of Seller has, on behalf of Seller, (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iii) made any other unlawful payment.
4.14 GOVERNMENTAL AUTHORIZATIONS. Seller holds all Governmental
Authorizations necessary to enable Seller to conduct its business in the manner
in which such business is currently being conducted. All Governmental
Authorizations held by Seller are valid and in full force and effect. Seller is,
and at all times has been, in substantial compliance with the terms and
requirements of such Governmental Authorizations. Seller has not received any
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.
4.15 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of
Seller with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Seller Returns") (i) have been or will be filed
on or before the applicable due date (including any extensions of such due date
if properly obtained), and (ii) have been, or will be when filed, prepared in
all material respects in compliance with all applicable Legal Requirements. All
amounts shown on the Seller Returns to be due on or before the Closing Date have
been or will be paid on or before the Closing Date or accrued on the Seller's
financial statements.
(b) Seller's Financial Statements fully accrue all actual and
contingent Liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. Sellers 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 date of this Agreement through the
Closing Date or accrued in the Company's financial statements.
(c) Except as provided in Seller's Disclosure Schedules, no
Seller Tax Return has ever been examined or audited by any Governmental Body. No
extension or waiver of the limitation period applicable to any of Seller's Tax
Returns has been granted (by Seller or any
-19-
20
other Person) that is still in effect, and no such extension or waiver is
currently being requested from Seller.
(d) No claim or Legal Proceeding is pending or, to the best of
the knowledge of Seller, has been threatened against or with respect to Seller
in respect of any material Tax. There are no unsatisfied liabilities for
material 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 Seller with respect to any material Tax (other
than liabilities for Taxes asserted under any such notice of deficiency or
similar document which are being contested in good faith by Seller and with
respect to which adequate reserves for payment have been established). There are
no liens for material Taxes upon any of the assets of any of Seller except liens
for current Taxes not yet due and payable.
(e) Seller is not, nor has it ever been, a party to or bound
by any tax indemnity agreement, tax sharing agreement, tax allocation agreement
or similar Contract, other than agreements to which only the Seller is a party.
4.16 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 4.16(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 Seller for the
benefit of any current or former employee of Seller.
(b) Seller does not maintain, sponsor or contribute to, and
Seller 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 its employees or former employees (a "Pension Plan"). None of the
Plans identified in Part 4.16(a) of the Disclosure Schedule is subject to Title
IV of ERISA or Section 412 of the Code.
(c) Seller does not maintain, sponsor or contribute to any:
(i) employee welfare benefit plan (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 any of its employees or former employees (a "Welfare
Plan"), or (ii) self-funded medical, dental or other similar Plan. None of the
Plans identified in Part 4.16(a) of the Disclosure Schedule is a multi-employer
plan (within the meaning of Section 3(37) of ERISA).
(d) With respect to each Plan, Seller has made available to
Buyer: (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; (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
-20-
21
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) Seller is not nor has it ever been required to be treated
as a single employer with any other Person under Section 4001(b)(1) of ERISA or
Section 414(b), (c), (m) or (o) of the Code. Seller has never been a member of
an "affiliated service group" within the meaning of Section 414(m) of the Code.
Seller has never made a complete or partial withdrawal from a multi-employer
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) Seller does not have any plan or commitment to create any
Welfare Plan or any additional Pension Plan, or to modify or change any existing
Pension Plan (other than to comply with applicable law) in a manner that would
affect any of its employees.
(g) No Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former employee of
Seller 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 Seller Balance Sheet, and (iii) benefits the full cost of
which are borne by current or former employees of Seller (or the employees'
beneficiaries)).
(h) With respect to any Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code, to the knowledge of the
Seller, the provisions of Section 4980B of the Code ("COBRA") have been complied
with in all material respects. Part 2.16(h) of the Disclosure Schedule describes
all obligations of Seller as of the date of this Agreement under any of the
provisions of COBRA.
(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.
(j) To the knowledge of the Seller, 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 or has remaining a period of
time in which to file an application for such determination, and the Company is
not aware of any reason why any such determination letter should be revoked or
not issued.
-21-
22
(k) Neither the execution, delivery or performance of this
Agreement or the Merger Agreement, nor the consummation of the Merger thereunder
or the transaction contemplated by this Agreement, or any of the other
transactions contemplated by this Agreement or the Merger Agreement, will result
in any payment (including any bonus, golden parachute or severance payment) to
any current or former employee, consultant, or director of Seller (whether or
not under any Plan), or materially increase the benefits payable under any Plan,
or result in any acceleration of the time of payment or vesting of any such
benefits. If any such payment is disclosed in Part 4.16(k) of the Disclosure
Schedule, such reference also states whether or not such payment is an Assumed
Liability for purposes of this Agreement.
(l) Part 4.16(l) of the Disclosure Schedule contains a list of
all employees of Seller as of the date of this Agreement, and correctly
reflects, in all material respects, their base salaries, their targeted annual
bonus amounts, their dates of employment and their positions. Seller is not a
party to any collective bargaining Contract or other Contract with a labor union
involving any of its employees. All of Seller's employees are "at will"
employees under applicable law.
(m) Part 4.16(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) To Seller's knowledge, each Plan complies in all material
respects with all applicable Legal Requirements. To Seller's knowledge, Seller
is in compliance in all material respects with all Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters.
(o) Seller has good labor relations, and it has no knowledge
of any facts indicating that (i) the consummation of the Merger pursuant to the
Merger Agreement or the transaction contemplated by this Agreement or any of the
other transactions contemplated by this Agreement or the Merger Agreement will
have a Material Adverse Effect on the labor relations of Seller, or (ii) any of
the Hardware Employees (as defined in Section 7.1 below) intends to terminate
his or her employment with Seller prior to the Closing
4.17 ENVIRONMENTAL MATTERS. Seller is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes the
possession by Seller of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. Seller 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 it is not in compliance with any
Environmental Law, and, to the best of the knowledge of Seller, there are no
circumstances that may prevent or interfere with the compliance by Seller with
any Environmental Law in the future. To the best of the knowledge of Seller, no
current or prior owner of any property leased or controlled by Seller has
received any notice or other communication (in writing or otherwise), whether
from a Government Body, citizens group, employee or otherwise, that alleges that
such current or prior owner or Seller is not in compliance with any
Environmental Law. To the best knowledge of
-22-
23
Seller, all property that is leased to, controlled by or used by Seller, and all
surface water, groundwater and soil associated with or adjacent to such property
is in clean and healthful condition and is free of any material environmental
contamination of any nature.
4.18 INSURANCE. Seller has delivered to Buyer a copy of each insurance
policy and each self insurance program relating to the business, assets or
operations of Seller. Each such insurance policy is in full force and effect.
Seller 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 material claim under any insurance
policy, or (c) material adjustment in the amount of the premiums payable with
respect to any insurance policy. There is no pending claim (including any
workers' compensation claim) under or based upon any insurance policy of Seller;
and, to the best of the knowledge of Seller, no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any such
claim.
4.19 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Seller
SEC Documents, since the date of the Seller's last proxy statement filed with
the SEC, no event has occurred that would be required to be reported by Seller
pursuant to Item 404 of Regulation S-K promulgated by the SEC. Part 4.19 of the
Disclosure Schedule identifies each Person who is an "affiliate" (as that term
is used in Rule 145 promulgated under the Securities Act) of Seller as of the
date of this Agreement.
4.20 LEGAL PROCEEDINGS; ORDERS.
(a) There are no pending Legal Proceedings (including, to the
best knowledge of Seller, any investigation), and no Person has overtly
threatened to commence any Legal Proceeding, except as set forth in Part 4.20(a)
of the Disclosure Schedule (which Part 4.20(a) indicates whether or not such
Legal Proceedings are Purchased Assets or Purchased Liabilities): (i) that
involves Seller or any of the assets owned or used by Seller, including, without
limitation, any Proprietary Asset of Seller; or (ii) that challenges, or that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the transactions contemplated by this Agreement or the
Merger Agreement. To the best knowledge of Seller, 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. To the best knowledge of Seller, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that will, or that could reasonably be expected to, cause or provide a
basis for a director, officer or other Representative of Seller to seek
indemnification from, or commence a Legal Proceeding against or involving
Seller.
(b) There is no order, writ, injunction, judgment or decree to
which Seller, or any of the assets owned or used by Seller, is subject. To the
best knowledge of Seller, no officer or other employee of Seller 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 business of Seller.
-23-
24
4.21 AUTHORITY; BINDING NATURE OF AGREEMENTS. Seller has the absolute
and unrestricted right, corporate power and authority to enter into and to
perform its obligations under this Agreement, the Merger Agreement and the other
agreements contemplated hereby. The Board of Directors of Seller (at a meeting
duly called and held) has (a) unanimously determined that the transactions
contemplated by the Agreement and the Merger Agreement are advisable and fair
and in the best interests of Seller and its stockholders, (b) unanimously
approved the execution, delivery and performance of this Agreement and the
Merger Agreement by Seller and has unanimously approved the transactions
contemplated by the Agreement and the Merger Agreement. This Agreement, the
Merger Agreement and the other agreements contemplated hereby and thereby,
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective 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.
4.22 [Intentionally left blank.]
4.23 VOTE REQUIRED. No vote of Seller's stockholders is required to
adopt and approve this Agreement and the transactions contemplated by this
Agreement.
4.24 NON-CONTRAVENTION; CONSENTS. Neither (i) the execution, delivery
or performance of this Agreement, the Merger Agreement or any of the other
agreements referred to in this Agreement or the Merger Agreement, nor (ii) the
consummation of any of the transactions contemplated by this Agreement or the
Merger 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 certificate of incorporation, bylaws or other
charter or organizational documents of Seller, or (ii) any resolution adopted by
the stockholders, the board of directors or any committee of the board of
directors of Seller;
(b) to the knowledge of Seller, 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 the
Merger Agreement or to exercise any remedy or obtain any relief under, any Legal
Requirement or any order, writ, injunction, judgment or decree to which Seller,
or any of the assets owned or used by Seller, is subject, except as provided
under U.S. antitrust laws, including the Xxxx-Xxxxx-Xxxxxx Anti-Trust
Improvements Act (the "HSR Act"), Xxxxxxx Act and Xxxxxxx Act;
(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 Seller or that otherwise relates to the business
of Seller or to any of the assets owned or used by Seller;
(d) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Material Contract,
or give any Person the right to (i) declare a default or exercise any remedy
under any Material Contract, (ii) a rebate, chargeback, penalty or
-24-
25
change in delivery schedule under any Material Contract, (iii) accelerate the
maturity or performance of any Material Contract, or (iv) cancel, terminate or
modify any term of any Material Contract; or
(e) result in the imposition or creation of any Encumbrance
upon or with respect to any asset owned or used by Seller (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
Seller).
Except as may be required by the Exchange Act, the DGCL (solely with
respect to the obligations of Seller under Section 3.2(g) above), the rules of
the NASD and the HSR Act, and except as listed in Part 4.24 of the Disclosure
Schedule, Seller was not, is not, nor or will it 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 any of the transactions contemplated by this Agreement.
4.25 [Intentionally left blank.]
4.26 FINANCIAL ADVISOR. Except for Broadview Associates, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with any of the transactions contemplated by this
Agreement or the Merger Agreement based upon arrangements made by or on behalf
of Seller. None of such fees, commissions or other amounts are "Assumed
Liabilities."
4.27 SURVIVING CORPORATION LIABILITIES. Except as disclosed on Part
4.27 of the Disclosure Schedule, after the consummation of the transaction
contemplated by this Agreement, to Seller's knowledge, Seller will not have any
Liabilities, except for normal and recurring Liabilities that have been incurred
by Seller since the date of Seller's Unaudited Interim Balance Sheet in the
ordinary course of the Software Business consistent with past practices.
4.28 [Intentionally left blank.]
4.29 FULL DISCLOSURE.
(a) This Agreement (including the Disclosure Schedule) does
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 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.
(b) Seller has provided Buyer and Buyer's Representatives with
reasonable access to Seller's Representatives, Personnel and assets and to all
existing books, records, Tax Returns, work papers and other documents and
information relating to Seller; and (b) provided Buyer and Buyer's
Representatives with such copies of the existing books, records, Tax Returns,
-25-
26
work papers and other documents and information relating to Seller, and with
such additional financial, operating and other data and information regarding
Seller, as Buyer has requested.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
Seller as follows:
5.1 ORGANIZATION. Buyer is a corporation duly formed and validly
existing under the State of California and has full corporate power and
authority and the legal right to execute and deliver this Agreement and all of
the other agreements and instruments to be executed and delivered by Buyer
pursuant hereto, and to consummate the transactions contemplated hereby and
thereby.
5.2 AUTHORITY. The execution and delivery of this Agreement (and all
other agreements and instruments contemplated hereunder) by Buyer, the
performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors and sole
shareholder of Buyer, and no other act or proceeding on the part of Buyer is
necessary to approve the execution and delivery of this Agreement and such other
agreements and instruments, the performance by Buyer of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. The signatory officers of Buyer have the power and authority
to execute and deliver this Agreement and all of the other agreements and
instruments to be executed and delivered by Buyer pursuant hereto, to consummate
the transactions hereby and thereby contemplated and to take all other actions
required to be taken by Buyer pursuant to the provisions hereof and thereof.
5.3 EXECUTION AND BINDING EFFECT. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes, and the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, upon their execution and delivery by Buyer, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Seller), legal, valid and binding agreements of Buyer, enforceable against Buyer
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, or other laws affecting the
enforcement of creditors' rights generally or provisions limiting competition,
and by equitable principles.
5.4 CONSENT AND APPROVALS. There is no requirement applicable to Buyer
to make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto, except as may be required by the Exchange Act, the
DCGL (with respect to the obligations of Seller under Section 3.2(g) above), the
rules of the NASD and the HSR Act.
5.5 NO VIOLATION. Neither the execution, delivery and performance of
this Agreement and of all the other agreements and instruments to be executed
and delivered pursuant hereto, nor the consummation of the transactions
contemplated hereby or thereby, will, with or without the passage of time or the
delivery of notice or both, (a) conflict with, violate or result in any breach
-26-
27
of the terms, conditions or provisions of the Articles of Incorporation or
Bylaws of Buyer, (b) conflict with or result in a violation or breach of, or
constitute a default or require consent of any Person (or give rise to any right
of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any notice, bond, mortgage, indenture, license,
franchise, permit, agreement, lease or other instrument or obligation to which
Buyer is a party or by which Buyer or any of its properties or assets may be
bound, or (c) violate any statute, ordinance or law or any rule, regulation,
order, writ, injunction or decree of any Governmental Entity applicable to Buyer
or by which any of its properties or assets may be bound.
6. COVENANTS.
6.1 ACCESS TO INFORMATION. Prior and subsequent to the Closing, Seller
will permit Buyer to make a full and complete investigation of the Purchased
Assets and Assumed Liabilities and to receive from Seller all information of
Seller relating to the Purchased Assets and Assumed Liabilities or reasonably
related to Seller's conduct of the hardware Business. Without limiting this
right, Seller will give to Buyer and its accountants, legal counsel, and other
representatives full access, during normal business hours, at a mutually
agreeable location arranged in advance, to all of the books, records, files,
documents, properties, and Contracts of Seller relating to the Purchased Assets
and Assumed Liabilities or reasonably related to Seller's conduct of the
Hardware Business and allow Buyer and any such representatives to make copies
thereof, all of which shall be made available in an organized fashion and so as
to facilitate an orderly review. This Section 6.1 shall not affect or be deemed
to modify any representation or warranty contained herein or the conditions to
the obligations of the parties to consummate the transactions contemplated by
this Agreement. Seller shall maintain and make available the information and
records specified in this Section 6.1(a) in the ordinary course of Seller's
business and document retention policies, as if the transactions contemplated by
this Agreement had not occurred.
6.2 THIRD PARTY CONSENTS. Seller and Buyer shall use commercially
reasonable efforts to obtain, within the applicable time periods required, all
Consents, waivers, permits, consents and approvals and to effect all
registrations, filings and notices with or to third parties or Governmental
Entities which are necessary to consummate the transactions contemplated by this
Agreement so as to preserve all rights of and benefits to, and all obligations
of, the Buyer in the Purchased Assets and under the Assumed Liabilities,
respectively.
6.3 CERTAIN NOTIFICATIONS. At all times prior to the Closing, Seller
and Buyer shall promptly notify the other party in writing of the occurrence of
any event which will result, or has a reasonable prospect of resulting, in the
failure to satisfy any of the conditions specified in Section 8 or Section 9 of
this Agreement.
6.4 BEST EFFORTS. Except where otherwise expressly stated, Seller and
the Buyer shall use their best efforts to cause to be fulfilled and satisfied
all of the conditions to the Closing set forth in Section 8 and Section 9 below,
respectively and to cause to be performed all of the matters required by them at
the Closing.
-27-
28
6.5 SELLER'S CONDUCT OF THE BUSINESS PRIOR TO CLOSING. During the
period from the date of this Agreement to the Closing Date, Seller will conduct
the Business in its ordinary and usual course, consistent with past practice,
and will use all commercially reasonable efforts to preserve intact all rights,
privileges, franchises and other authority of the Business, to retain employees,
and to maintain favorable relationships with licensors, licensees, suppliers,
Contractors, distributors, customers, and others having relationships with the
Business. Seller shall promptly notify Buyer of any event or occurrence or
emergency not in the ordinary course of business, and any material event
involving the Hardware Business, the Purchased Assets or the Assumed
Liabilities. Without limiting the generality of the foregoing, and except as
approved in writing by Buyer in advance, prior to the Closing or as provided in
this Agreement, Seller:
(a) will not create, incur or assume (i) any borrowings under
capital leases, or (ii) any obligation which would in any material way affect
the Hardware Business, the Purchased Assets, the Assumed Liabilities or Buyer's
ability to conduct the Hardware Business in substantially the same manner and
condition as conducted by Seller on the date of this Agreement;
(b) will not change in any manner the compensation of, or
agree to provide additional benefits to, or enter into any employment agreement
with, any Hardware Employee;
(c) will maintain insurance coverage in amounts adequate to
cover the reasonably anticipated risks of the business conducted with the
Purchased Assets;
(d) will not acquire or agree to acquire by merging or
consolidating with, or by purchasing any assets or equity securities of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any assets which are material, individually or in the aggregate, to
the Hardware Business;
(e) will not sell, dispose of or encumber any of the Purchased
Assets or license any Purchased Assets to any Person except for the sale of
Inventory in the normal course of business;
(f) will not enter into any agreements or commitments relating
to the Hardware Business, except on commercially reasonable terms in the
ordinary course of business of the Hardware Business;
(g) will comply in all material respects with all laws and
regulations applicable to the Business;
(h) will use reasonable efforts to assist Buyer in employing
the Hardware Employees;
(i) will not change or announce any change to the products or
services sold by the Hardware Business;
-28-
29
(j) will not violate, amend or otherwise change in any
material way the terms of any of the Material Contracts that constitute
Purchased Assets;
(k) will not commence a lawsuit related to or involving the
Hardware Business, the Purchased Assets or the Assumed Liabilities other than
(a) for the routine collection of bills; (b) for injunctive relief on the
grounds that Seller has suffered immediate and irreparable harm not compensable
in money damages, provided that Seller has obtained the prior written consent of
Buyer, such consent not to be unreasonably withheld; or (c) for a breach of this
Agreement, the Merger Agreement or any of the transactions contemplated thereby;
or
(l) will not assign, sell or otherwise convey to any third
party, any of the accounts receivable relating to the Hardware Business prior to
the Closing Date.
6.6 NO OTHER BIDS. Until the earlier to occur of (a) the Closing or (b)
the termination of this Agreement pursuant to its terms, Seller shall not, and
Seller shall not authorize any of its Representatives to, directly or
indirectly, (i) initiate, solicit or encourage (including by way of furnishing
information regarding the Hardware Business or the Purchased Assets) any
inquiries, or make any statements to third parties which may reasonably be
expected to lead to any proposal concerning the sale of the Hardware Business or
the Purchased Assets (other than to Merger Party and its Representatives in
connection with the Merger), or (ii) negotiate, engage in any substantive
discussions, or enters into any agreement, with any Person concerning the sale
of Seller, the Business or the Purchased Assets (other than with the Merger
Party and its Representatives). Notwithstanding the foregoing, if Seller or any
of its Representatives shall receive an unsolicited set of terms, expression of
interest, inquiry, proposal or offer from any Person, entity or group (other
than Buyer and its Representations) relating to possible acquisition of the
Business or the Hardware Business ( an "Alternative Proposal"), then, (i) Seller
will give Buyer Parent prompt written notice thereof, providing the identity of
the other Person, entity or group, and a detailed description of the material
terms of such Alternative Proposal, and (ii) to the extent the Board of
Directors of Seller believes in good faith that such Alternative Proposal
represents a Superior Offer, and the Board of Directors of Seller determines in
good faith after consultation with outside legal counsel that it is necessary
for the Board of Directors of Seller to comply with its fiduciary duties to
Seller's stockholders under applicable law, Seller and its Representatives may
furnish in connection therewith information and take such other actions
consistent with the fiduciary obligations of the Board of Directors of Seller,
and such actions shall not be considered a breach of any obligations of Seller
hereunder. Notwithstanding the foregoing, if Buyer delivers to Seller a detailed
written proposal within five (5) business days of Buyer's receipt of the
material terms of the Alternative Proposal, and for which the economic value to
Seller is substantively the same or better than the economic value of a Superior
Offer as determined in good faith by Seller's outside legal counsel and
financial advisors ("Buyer's Proposal"), Seller shall accept Buyer's Proposal
and shall not accept the Superior Offer, and Buyer and Seller shall in good
faith and within five (5) business days of Seller's acceptance of Buyer's
Proposal amend this Agreement or enter into any additional agreements to reflect
the terms of Buyer's Proposal. In the event Seller does not receive Buyer's
Proposal within such period of time, or if Seller does so receive Buyer's
Proposal and Buyer and Seller are unable to amend this Agreement or enter into
any additional agreements within such period of time, Seller
-29-
30
shall have no further obligation to negotiate with Buyer under this Section 6.6,
and shall have the right to take such actions consistent with the fiduciary
obligations of the Board of Directors of Seller.
6.7 TAX RETURNS. Seller shall, to the extent that failure to do so
could adversely affect the Business or the Purchased Assets following Closing,
provide reasonable assistance to Buyer upon its request to enable Buyer to file
in a timely manner all returns and reports relating to Taxes, and such returns
and reports shall be true, correct and complete and shall be subject to the
review and consent of Buyer which consent shall not be unreasonably withheld.
6.8 NO POST-CLOSING RETENTION OF COPIES. Immediately after the Closing,
Seller shall deliver to Buyer or destroy copies of Purchased Assets in Seller's
possession that are in addition to copies delivered to Buyer as part of the
Closing, whether such copies are in paper form, on computer media or stored in
another form; provided, however, that Seller may retain and use copies of all
books, records, files and papers, whether in hard copy or electronic format,
used in the Hardware Business listed in Section 2.1(a)(xiii) above as well as
other documents required by law to be kept by Seller for the sole purpose of
preparing its statutory accounts; and provided further, that Seller may retain
copies of and use in a manner that is reasonably related to the conduct of its
business (other than for distribution, marketing or sale of an imaging hardware
device (as defined in the Software License Agreement) with a retail price of
$300 or less) the customer lists included in Section 2.1(a)(xiii) as Purchased
Assets.
6.9 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. Buyer and Seller acknowledge
that they previously executed a Mutual Nondisclosure Agreement, dated as of
September 29, 1998, and agree that such agreement will continue in full force
and effect in accordance with its terms. Buyer and Seller will have agreed to
the text of a joint press release announcing the signing of this Agreement and,
if required by Seller, the Merger Agreement. Buyer and Seller shall consult with
each other before issuing any other press release or otherwise making any public
statement with respect to this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement or the Merger Agreement. Without
limiting the generality of the foregoing, neither party shall or shall permit
any of its Representatives to make any disclosure regarding this Agreement, the
Merger or any of the other transactions contemplated by this Agreement or the
Merger Agreement unless (a) the other party shall have approved such disclosure
or (b) the other party shall have been advised in writing by its outside legal
counsel that such disclosure is required by applicable law; provided that such
party notifies the other party prior to making such disclosure.
6.10 POST-CLOSING ACTIONS. Subsequent to the Closing Date, Seller
shall, from time to time, execute and deliver, upon the request of Buyer, all
such other and further materials and documents and instruments of conveyance,
transfer or assignment as may reasonably be requested by Buyer to effect, record
or verify the transfer to, and vesting in Buyer, of Seller's right, title and
interest in and to the Purchased Assets, free and clear of all Liens, in
accordance with the terms of this Agreement.
-30-
31
6.11 PERMITS. Seller will assist Buyer in obtaining any licenses,
permits or authorizations, consents and approvals required for carrying on the
Hardware Business but which are not transferable.
6.12 TAXES. Buyer shall be responsible for paying, shall promptly
discharge when due, and shall reimburse, indemnify and hold harmless Seller
from, any sales or use, transfer, excise or other similar Taxes (excluding taxes
based on or measured by Seller's net income) arising from, imposed on or
attributable to the transactions contemplated by this Agreement. Buyer shall
provide Seller with a resale certificate within thirty (30) days following the
Closing Date to the extent Buyer determines that no sales tax is required to be
paid with regard to the transfer of the Purchased Assets to Buyer.
6.13 FIRPTA COMPLIANCE. On or prior to the Closing Date, Buyer shall
deliver to Seller a properly executed statement in a form reasonably acceptable
to Seller for purposes of satisfying Seller's obligations under Treasury
Regulation Section 1.1445-2(c)(3).
6.14 BULK SALES LAWS. Buyer and Seller shall comply with applicable
bulk sales laws with respect to the transfer of the Purchased Assets and Assumed
Liabilities to Buyer.
6.15 SERVICES AGREEMENT. Prior to the Closing Date, Buyer and Seller
shall negotiate in good faith to enter into a services agreement pursuant to
which Buyer shall provide to Seller certain administrative services to be agreed
upon between Buyer and Seller at Buyer's actual cost to enable Seller to
continue to operate its Software Business after the Closing Date and for a
period of six (6) months following the effective time of the Merger in a manner
substantially similar to the manner in which it was operated prior to the
Closing Date, which services shall include, among other things, office and
conference space at Seller's current facilities, provided Buyer maintains a
lease at such address; use of the telephone system, computer systems and other
infrastructure at Seller's current facilities; payroll services; accounting
services; and customer and technical support services (the "Services
Agreement").
6.16 ASSIGNMENT OF BUILDING LEASE. Prior to signing this Agreement,
Seller shall obtain an executed consent to assignment from its landlord in
connection with Seller's assignment to Buyer of that certain Lease Agreement
dated May 21, 1996 between Seller and Landlord (as that term is defined in the
Lease Agreement).
7. EMPLOYEE MATTERS.
7.1 TRANSFERRED EMPLOYEES.
(a) Prior to Closing, Buyer shall offer (the "Offer") all
employees and consultants of Seller listed on Exhibit D (the "Hardware
Employees") employment as of 12:01 a.m. on the day following the Closing Date.
The terms and conditions of such Offer to each Hardware Employee shall be in
writing, and, except as otherwise specifically agreed to by such Hardware
Employee, Buyer shall hire all Hardware Employees to whom it has made such an
Offer in accordance with this Section 7.1 (excluding any who were no longer
employees of Seller immediately prior to the Closing) and who accept such Offer
in the manner and within the time
-31-
32
frame specified by this Section 7.1 (such Transferred Employees hired by Buyer
being hereinafter referred to as the "Hired Employees"). The terms and
conditions of Buyer's Offer to the Hardware Employees shall include the
following:
(i) For six months following the Closing Date, Buyer
shall pay each such Hired Employee at the applicable salary rate which is not
less than the rate paid by the Company to him or her immediately preceding the
Closing Date;
(ii) Buyer agrees not to terminate any Hired Employee
other than for Cause during the six month period following the Closing Date
unless it provides such terminated employee a severance benefit equal to the
remaining amount of salary such Hired Employee would have been paid if such
Hired Employee remained employed with Buyer until the end of such six month
period. "Cause" means fraud, theft, the commission of any crime or similar act
or a material violation of any employment practice or policy of Buyer, any of
which result in material injury to Buyer;
(iii) Hired Employees shall be assigned to positions
with responsibilities and duties approximately comparable to those such Hired
Employees had at Seller immediately prior to the Closing Date, except as
otherwise specifically agreed to by such Hired Employee;
(iv) No Hired Employee shall, as a condition of
initial employment by Buyer, be required to take a drug test or a physical
examination; and
(v) Hired Employees shall be eligible to participate
in the employee benefit plans offered to comparably situated employees of Buyer
beginning on the date of commencement of employment with Buyer in accordance
with the terms and conditions of such plans.
(b) ACCEPTANCE OF OFFER. Buyer shall have no duty to hire any
Hardware Employee who has not signed and returned to Buyer a written form of
acceptance of the Offer on or before the Closing Date.
8. CONDITIONS TO BUYER'S OBLIGATIONS.
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived by Buyer in writing, except as
otherwise provided by law:
8.1 REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF COVENANTS;
MATERIAL ADVERSE EFFECT.
(a) The representations and warranties of Seller contained in
this Agreement shall have been accurate in all material respects as of the date
of this Agreement except that any inaccuracies in such representations and
warranties will be disregarded if the circumstances giving rise to such
inaccuracies (considered collectively) do not constitute, and are not
-32-
33
reasonably expected to result in, a Material Adverse Effect on the Hardware
Business or Purchased Assets satisfying the conditions set forth in Section
8.1(c) below;
(b) Seller shall have substantially performed and complied
with all of its materials agreements, covenants and conditions required by this
Agreement to be performed or complied with by Seller in all material respects
prior to or on the Closing Date; and
(c) No Material Adverse Effect on the Hardware Business or
Purchased Assets resulting (or which could reasonably be expect to result) in
actual and demonstrable out-of-pocket costs and expenses incurred (or to be
incurred) by Seller in excess of $2 million shall have occurred after the date
of this Agreement and prior to the Closing Date. Any decline in Seller's gross
revenues shall not be considered in determining whether such Material Adverse
Effect has occurred.
(d) Buyer shall have received a certificate, dated as of the
Closing Date, signed and verified by an officer of Seller on behalf of Seller
certifying as to the matter set forth in Sections 8.1(a), (b) and (c) above.
8.2 NO PROCEEDINGS OR LITIGATION.
(a) No preliminary or permanent injunction or other order
shall have been issued by any Governmental Entity, nor shall any statute, rule,
regulation or executive order be promulgated or enacted by any Governmental
Entity which prevents the consummation of the transactions contemplated by this
Agreement.
(b) No suit, action, claim, proceeding or investigation before
any Governmental Entity shall have been commenced and be pending against any of
the parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have a Material Adverse Effect on the Hardware Business or
the Purchased Assets satisfying the conditions set forth in Section 8.1(c)
above.
8.4 GOVERNMENTAL FILINGS. The parties shall have made any required
filing with Governmental Entities in connection with this Agreement, and any
approvals related thereto shall have been obtained or any applicable waiting
periods shall have expired. If a proceeding or review process by a Governmental
Entity is pending in which a decision is expected, Buyer shall not be required
to consummate the transactions contemplated by this Agreement until such
decision is reached or rendered, notwithstanding Buyer's legal ability to
consummate the transactions contemplated by this Agreement prior to such
decision being reached or rendered.
8.5 LICENSE AGREEMENT. Unless executed at the time of execution of this
Agreement, Seller shall have entered into a License Agreement substantially in
the form attached hereto as Exhibit E.
-33-
34
8.6 RELEASE OF SECURITY INTEREST. The Purchased Assets shall be free of
all Liens created by Silicon Valley Bank, and Seller shall have provided to
Buyer and Buyer Parent executed UCC-3 termination statements or other reasonable
evidence thereof.
9. CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller under this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions, all or any of which may be waived in writing
by Seller, except as otherwise provided by law:
9.1 REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF COVENANTS;
MATERIAL ADVERSE EFFECT.
(a) The representations and warranties of Buyer contained in
this Agreement shall have been accurate in all material respects as of the date
of the Agreement;
(b) Buyer shall have substantially performed and complied with
all of its material agreements, covenants and conditions required by this
Agreement to be performed or complied with by Buyer in all material respects
prior to or on the Closing Date; and
(c) Seller shall have received a certificate, dated as of the
Closing Date, signed and verified by an officer of Buyer on behalf of Buyer
certifying to the matters set forth in Sections 9.1(a) and 9.1(b) above.
9.2 [Intentionally left blank.]
9.3 NO PROCEEDING OR LITIGATION.
(a) No preliminary or permanent injunction or other order
shall have been issued by any Governmental Entity, nor shall any statute, rule,
regulation or executive order be promulgated or enacted by any Governmental
Entity which prevents the consummation of the transactions contemplated by this
Agreement.
(b) No suit, action, claim, proceeding or investigation before
any Governmental Entity shall have been commenced and be pending against any of
the parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have a Material Adverse Effect on the Hardware Business or
the Purchased Assets satisfying the conditions set forth in Section 9.1(a)
above.
9.4 GOVERNMENTAL FILINGS. The parties shall have made any filing
required with Governmental Entities in connection with this Agreement, and any
approvals related thereto shall have been obtained or any applicable waiting
periods shall have expired. If a proceeding or review process by a Governmental
Entity is pending in which a decision is expected, Seller shall not be required
to consummate the transactions contemplated by this Agreement until such
decision is reached or rendered, notwithstanding Seller's legal ability to
consummate the transactions contemplated by this Agreement prior to such
decision being reached or rendered.
-34-
35
9.5 PURCHASE PRICE. In the event that the Purchase Price shall be paid
in funds other than U.S. dollars, such currency shall have been exchanged for
U.S. dollars in the full amount of the Purchase Price.
9.6 LICENSE AGREEMENT. Unless executed at the time of execution of this
Agreement, Buyer shall have entered into a License Agreement substantially in
the form attached hereto as Exhibit G.
10. TERMINATION.
10.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual written consent of the Boards of Directors of
Buyer and Seller;
(b) by either Buyer or Seller if the Closing shall not have
been consummated by March 15, 1999 (unless the failure to consummate the Closing
is attributable to a failure on the part of the party seeking to terminate this
Agreement to perform any material obligation required to be performed by such
party at or prior to the Closing Date);
(c) by either Buyer or Seller if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
non-appealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement;
(d) by Seller if Seller enters into an agreement to sell the
Hardware Business or the Purchased Assets on terms constituting a Superior Offer
in accordance with terms contained in Section 6.6; or
(e) by Buyer upon the occurrence of a Material Adverse Effect
satisfying the conditions set forth in Section 8.1(c) above.
10.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination
under Section 10.1 above will be effective immediately upon the delivery of
written notice of the terminating party to the other parties hereto. In the
event of the termination of this Agreement as provided in Section 10.1, this
Agreement shall be of no further force or effect; provided, however, that (i)
this Section 10.2, Section 10.3 and Section 11 shall survive the termination of
this Agreement and shall remain in full force and effect, (ii) the termination
of this Agreement shall not relieve any party from any liability for any breach
of this Agreement and (iii) no termination of this Agreement shall affect the
obligations of the parties contained in the Mutual Nondisclosure Agreement, all
of which obligations shall survive termination of this Agreement in accordance
with their terms.
10.3 TERMINATION OF REPRESENTATION AND WARRANTIES. The representations
and warranties of Seller and Buyer made in this Agreement shall terminate as of
the Closing, and shall have no further force or effect, except in the cause of
fraud.
-35-
36
10.4 TERMINATION FEES. If this Agreement is terminated by Seller
pursuant to Section 10.1(d) above, Seller shall pay to Buyer a nonrefundable fee
in cash equal to $600,000 in cash within three (3) days of such termination,
which fee shall constitute liquidated damages to Buyer and the exclusive remedy
of Buyer for Seller's termination of this Agreement.
11. MISCELLANEOUS.
11.1 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
or waived with the written consent of the parties or their respective successors
and assigns. Any amendment or waiver effected in accordance with this Section
11.1 shall be binding upon the parties and their respective successors and
assigns.
11.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
11.3 GOVERNING LAW; JURISDICTION. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the courts of the state and federal courts of the
state of California.
11.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
11.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.6 NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient upon receipt, when delivered
Personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice, and (a) if to Seller, with a copy to Venture Law Group, 0000 Xxxx Xxxx
Xxxx, Xxxxx Xxxx, XX 00000, Attention: Xxxx Xxxxx or (b) if to Buyer, with a
copy to The Law Offices of Xxxxxx X. Xxxxxxx, 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx
000, Xxxxx Xxxxx, XX 00000.
11.7 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually
-36-
37
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
11.8 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein.
11.9 ADVICE OF LEGAL COUNSEL. Each party acknowledges and represents
that, in executing this Agreement, it has had the opportunity to seek advice as
to its legal rights from legal counsel and that the Person signing on its behalf
has read and understood all of the terms and provisions of this Agreement. This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.
11.10 COSTS AND EXPENSES. Each party hereto shall pay its own costs and
expenses incurred in connection herewith, including the fees of its counsel,
auditors and other representatives, whether or not the transactions contemplated
herein are consummated.
11.11 FINDER'S FEE. Except for Broadview Associates LLC, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with any of the transactions contemplated by this
Agreement or the Merger Agreement based upon arrangements made by or on behalf
of Buyer or Seller. Seller has communicated to Buyer and Merger Party the fee
formula pursuant to which fees, commissions and other amounts will be paid by
Seller to Broadview Associates LLC if the transactions contemplated by the
Merger Agreement and this Agreement are consummated. Seller has furnished to
Buyer accurate and complete copies of all agreements under which any such fees,
commissions or other amounts have been paid or may become payable and all
indemnification and other agreements relating to the engagement of Broadview
Associates LLC.
[Signature pages follow]
-37-
38
This Agreement has been duly executed and delivered by the duly
authorized officers of Seller and Buyer (and by Buyer Parent with respect to its
obligations under Section 3.2(f) of this Agreement ) as of the date first above
written.
PRIMAX ELECTRONICS LTD.,
A CORPORATION ORGANIZED UNDER THE
LAWS OF TAIWAN
By: /s/ XXXXXXX XXXXX
-----------------------------------------
Name: Xxxxxxx Xxxxx
----------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
Address: 6F Xx. 000 Xxxx Xxxx Xxxxxx
Xxx Xxxx Xxxx Xxxxxx Xxxxx Xxxxxx ROC
-------------------------------------
Telephone: (000) 0-0000-0000
------------------------------------
Fax Number: (000) 0-0000-0000
-----------------------------------
PRIMAX V ACQUISITION CORP.,
A CALIFORNIA CORPORATION
By: /s/ XXXXXXX XXXXX
------------------------------------------
Name: Xxxxxxx Xxxxx
----------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
Address:
--------------------------------------
Telephone:
------------------------------------
Fax Number:
-----------------------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
-38-
39
This Agreement has been duly executed and delivered by the duly
authorized officers of Seller and Buyer (and by Buyer Parent with respect to its
obligations under Section 3.2(f) of this Agreement ) as of the date first above
written.
VISIONEER, INC.
By: /s/ J. XXXXX XXXXX
------------------------------------------
Name: J. Xxxxx Xxxxx
----------------------------------------
Title: President and CEO
---------------------------------------
00000 Xxxxxx Xxxxx
Xxxxxxx: Xxxxxxx, XX 00000
-------------------------------------
Telephone: 000-000-0000
-----------------------------------
Fax Number: 000-000-0000
----------------------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
-39-
40
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer or
proposal (other than an offer or proposal by Buyer) contemplating or otherwise
relating to any Acquisition Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 50% of the
assets, properties, or business of Seller relating to the Hardware Business.
AFFILIATE. "Affiliate" means with respect to any Person, a Person
directly or indirectly controlling or controlled by or under common control with
such Person.
AGREEMENT. "Agreement" shall mean the Asset Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may be
amended from time to time.
CLOSING. "Closing" means the consummation of the transactions
contemplated by this Agreement.
CLOSING BALANCE SHEET. "Closing Balance Sheet" means the unaudited
balance sheet of the Business prepared by the Buyer in accordance with GAAP,
consistently applied, and delivered to Seller on the Closing Date which includes
the asset and liability accounts of the Business as of the Closing Date,
inclusive of any adjustment from the Seller Balance Sheet.
CLOSING DATE. "Closing Date" means the date of the Closing.
CODE. "Code" means the Internal Revenue Code of 1986, as amended.
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 mean any loss, damage, injury, decline in
value, lost opportunity, 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.
X-0
00
XXXXXXXXXX XXXXXXXX. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Buyer on behalf of Seller.
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.
ENVIRONMENTAL LAW. "Environmental Law" shall mean 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.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
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).
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.
A-2
42
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.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability) relating to the any business
or activity of Seller, regardless of whether such debt, obligation, duty or
liability would be required to be disclosed on a balance sheet prepared in
accordance with GAAP and regardless of whether such debt, obligation, duty or
liability is immediately due and payable.
LIEN. "Lien" means any mortgage, pledge, lien, security interest,
option, covenant, condition, restriction, encumbrance, charge or other
third-party claim of any kind.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on Seller 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 but for the
presence of "Material Adverse Effect" or other materiality qualifications, or
any similar qualifications, in such representations and warranties) would have a
material adverse effect on Seller's business, condition, assets, Liabilities,
operations, financial performance or prospects either before or after giving
effect to the transaction contemplated by this Agreement.
MATERIALS OF ENVIRONMENTAL CONCERN. "Materials of Environmental
Concern" shall 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.
MERGER. "Merger" shall mean the Merger contemplated under the Merger
Agreement.
MERGER AGREEMENT. "Merger Agreement" shall mean the Agreement and Plan
of Merger and Reorganization between the Merger Party and Seller which Seller
contemplates it will enter into as of or shortly following the date of this
Agreement.
MERGER PARTY. "Merger Party" shall mean the third party, including any
affiliated entities of such third party, that have entered into the Merger
Agreement with Seller.
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, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software,
A-3
43
computer program (in source and executable form), algorithm, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset in any
jurisdiction in the world; or (b) right to use or exploit any of the foregoing
in any jurisdiction in the world.
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.
SELLER CONTRACT. "Seller Contract" shall mean any Contract: (a) to
which Seller is a party; (b) by which Seller or any asset of Seller is or may
become bound or under which Seller has, or may become subject to, any
obligation; or (c) under which Seller has or may acquire any right or interest.
SELLER PROPRIETARY ASSET. "Seller Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to Seller or otherwise used by Seller.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities of other interests in such Entity that is sufficient
to enable such Person to elect at leased a majority of the members of such
Entity's board of directors or other governing body.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to consummate any of the following
transactions: (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Seller pursuant to which the stockholders of Seller immediately preceding such
transaction hold less than 50% of the equity interests in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by Seller
of assets (excluding inventory and used equipment sold in the ordinary course of
business) representing in excess of 50% of the fair market value of Seller's
business immediately prior to such sale, or (iii) the acquisition by any Person
or group (including by way of a tender offer or an exchange offer or issuance by
Seller), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 50% of the voting power
of the then outstanding shares of capital stock of Seller, on terms that the
board of directors of Seller determines, in its reasonable judgment, after
consultation with its financial advisor, to be, if such offer is consummated,
more favorable to Seller's stockholders than the terms set forth in this
Agreement and/or the Merger Agreement.
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.
A-4
44
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.
X-0
00
Xxxxxxxx X-X have been omitted pursuant to S-K Item 601(b)(2). We agree to
furnish supplementally to the Commission any exhibits upon request.
46
SCHEDULE 2.1 (c)
OTHER INCLUDED ASSETS
None
47
SCHEDULE 2.2
OTHER EXCLUDED ASSETS
1. All cash and cash equivalents set forth on the Closing Balance Sheet.
2. OneTouch software module.
48
SCHEDULE 2.3(b)
OTHER INCLUDED LIABILITIES
1. Any sales or use, transfer, excise, or other similar Taxes (excluding
federal and state income taxes) arising from, unpaid on or attributable
to the transactions contemplated by this Agreement (but not the
transactions contemplated by the Merger Agreement).
49
SCHEDULE 2.4
OTHER EXCLUDED LIABILITIES
1. All obligations of the Company under the Merger Agreement, the Asset
Purchase Agreement and any agreements contemplated thereby.
2. Taxes imposed on the Company and arising from or attributable to the
actions contemplated by the Merger and the Merger Agreement.
3. Taxes imposed on the Company relating to its corporate existence, such
as state franchise taxes and fees based on state of incorporation,
capital structure, and doing business as a foreign corporation.
4. All obligations in favor of past and current directors and officers of
the Company for acts and omissions occurring prior to the Effective
Time, as provided in the Company's Bylaws and as provided in any
indemnification agreements between the Company and said officers and
directors.
5. Litigation expenses, including attorneys' fees, incurred by the Company
in connection with any shareholder derivative action.
6. Liabilities of the Company relating to the exercise of appraisal rights
by the Company's stockholders in connection with the Merger and the
Asset Purchase Agreement.
7. Costs and expenses of the Company associated with the Merger and the
Asset Purchase Agreement.
8. Liabilities of the Company in respect of employees that are not
Hardware Employees.
9. Liabilities of the Company to Silicon Valley Bank.
10. Without limiting item 7 above, any fees, commissions, expenses or other
obligations of the Company to Broadview Associates and Venture Law
Group.
11. Liabilities arising under any Material Contracts that are not
"Purchased Assets and Assumed Liabilities" as set forth in the
Disclosure Schedule.
50
SCHEDULE 2.7
ALLOCATION OF PURCHASE PRICE
51
WAIVER OF CLOSING CONDITION
AND
AMENDMENT TO ASSET PURCHASE AGREEMENT
WHEREAS, Visioneer, Inc., a Delaware corporation ("Seller"), Primax V
Acquisition Corp., a California corporation ("Buyer") and Primax Electronics
Ltd., a corporation organized under the laws of Taiwan ("Buyer Parent") executed
that certain Asset Purchase Agreement dated December 2, 1998 (the "Agreement")
pursuant to which Seller agreed to sell to Buyer and Buyer agreed to purchase
from Seller certain Purchased Assets in connection with Seller's Hardware
Business, all as more fully set forth in the Agreement;
WHEREAS, pursuant to Section 6.15 of the Agreement, Buyer and Seller
agreed that prior to the Closing Date they would negotiate in good faith to
enter into a services agreement pursuant to which Buyer would provide to Seller
certain administrative services to be agreed upon between Buyer and Seller at
Buyer's actual cost to enable Seller to continue to operate its Software
Business after the Closing Date for a period of six (6) months following the
effective time of a proposed merger between Seller and a third party in a manner
substantially similar to the manner in which it was operated prior to the
Closing Date (the "Services Agreement");
WHEREAS, Seller, Buyer and Buyer Parent wish to waive the respective
obligations of each party under Section 6.15 of the Agreement prior to the
Closing Date, and amend such obligations in the manner set forth herein below
pursuant to the terms of this Waiver of Closing Condition and Amendment to Asset
Purchase Agreement (this "Waiver and Amendment");
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged by each party, the parties agree as follows:
1. WAIVER. The respective obligations of Buyer and Seller as set forth
in Section 6.15 of the Agreement to negotiate in good faith to enter into the
Services Agreement prior to the Closing Date are hereby waived, and the
execution and delivery of the Services Agreement shall not be condition to the
Closing of the Agreement anticipated to take place on January 6, 1998.
2. AMENDMENT. Section 6.15 of the Agreement is hereby amended and
restated in its entirety as set forth below:
"6.15 SERVICES AGREEMENT. As soon as practicable following the Closing
Date and in any event no later than January 31, 1999, Buyer and Seller
shall negotiate in good faith to enter into a services agreement
pursuant to which Buyer shall provide to Seller certain administrative
services to be agreed upon between Buyer and Seller at Buyer's actual
cost to enable Seller to continue to operate its Software Business after
the Closing Date and for a period of six (6) months following the
effective time of the Merger in a manner substantially similar to the
manner in which it was operated prior to the Closing Date, which
services shall include, among other things, office and conference space
at Seller's
52
current facilities, provided Buyer maintains a lease at such address;
use of the telephone system, computer systems and other infrastructure
at Seller's current facilities; payroll services; accounting services;
and customer and technical support services (the "Services Agreement")."
3. DEFINITIONS. Unless specifically designated otherwise, all
capitalized terms used herein shall have the same meanings attributed to them in
the Agreement.
4. EFFECT OF WAIVER AND AMENDMENT. Except as specifically set forth
herein, the terms and conditions contained in the Agreement shall continue in
full force and effect.
5. MISCELLANEOUS.
5.1 THIRD PARTIES. Nothing in this Waiver and Amendment, express
or implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Waiver and Amendment, except as
expressly provided herein.
5.2 GOVERNING LAW. This Waiver and Amendment shall be governed by
and construed under the laws of the State of California in the United States of
America as applied to agreements among California residents entered into and to
be performed entirely within California.
5.3 COUNTERPARTS. This Waiver and Amendment may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
5.4 SEVERABILITY. If one or more provisions of this Waiver and
Amendment are held to be unenforceable under applicable law, portions of such
provisions, or such provisions in their entirety, to the extent necessary, shall
be severed from this Waiver and Amendment, and the balance of this Amendment
shall be enforceable in accordance with its terms.
[SIGNATURE PAGES FOLLOW]
53
This Waiver and Amendment has been duly executed and delivered by the
duly authorized officers of Seller, Buyer and Buyer Parent as of January 6,
1999.
PRIMAX ELECTRONICS LTD.,
A CORPORATION ORGANIZED UNDER THE
LAWS OF TAIWAN
By: /s/ XXXXXXX XXXXX
---------------------------------
Name: XXXXXXX XXXXX
-------------------------------
Title: CEO
------------------------------
Address: 6F. Xx. 000 Xxxx Xxxx Xx
----------------------------
Xxx Xxxx Xxxx Xxxxxx Xxxxxx
----------------------------
Telephone: 000-0-00000000
--------------------------
Fax Number: 000-0-00000000
--------------------------
PRIMAX V ACQUISITION CORP.,
A CALIFORNIA CORPORATION
By: /s/ XXXXXXX XXXXX
---------------------------------
Name: XXXXXXX XXXXX
-------------------------------
Title: CEO
------------------------------
Address:
----------------------------
----------------------------
Telephone:
--------------------------
Fax Number:
--------------------------
[SIGNATURE PAGE TO WAIVER AND AMENDMENT]
54
This Waiver and Amendment has been duly executed and delivered by the
duly authorized officers of Seller, Buyer and Buyer Parent as of January 6,
1999.
VISIONEER, INC.
By: /s/ J. XXXXX XXXXX
---------------------------------
Name: J. XXXXX XXXXX
-------------------------------
Title: CEO
------------------------------
Address: 00000 XXXXXX XX.
----------------------------
XXXXXXX, XX.
----------------------------
Telephone: 000 000 0000
--------------------------
Fax Number: 000 000 0000
--------------------------
[SIGNATURE PAGE TO WAIVER AND AMENDMENT]
