Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
By and Among
ADEPT TECHNOLOGY, INC.;
BYE/OASIS ENGINEERING, INC.;
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; AND
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
June 28, 1999
TABLE OF CONTENTS
Page
INDEX OF EXHIBITS .......................................................... iv
ARTICLE I THE MERGER ....................................................... 1
1.1 The Merger ..................................................... 1
1.2 Effective Time of the Merger ................................... 2
1.3 Effect of the Merger ........................................... 2
1.4 Articles of Incorporation; Bylaws .............................. 2
1.5 Directors and Officers ......................................... 2
1.6 Effect on Capital Stock ........................................ 2
1.7 Dissenting Shares .............................................. 5
1.8 Exchange of Certificates ....................................... 5
1.9 No Further Ownership Rights in Company Common .................. 6
1.10 Lost, Stolen or Destroyed Certificates ......................... 6
1.11 Tax and Accounting Consequences ................................ 6
1.12 Taking of Necessary Action; Further Action ..................... 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................... 7
2.1 Organization ................................................... 7
2.2 Capital Structure .............................................. 7
2.3 Obligations With Respect to Capital Stock ...................... 8
2.4 Subsidiaries ................................................... 8
2.5 Authority ...................................................... 8
2.6 Financial Statements ........................................... 9
2.7 Accounts Receivable ............................................ 9
2.8 Business Changes ............................................... 10
2.9 Title of Properties; Absence of Liens and Encumbrances;
Condition of Equipment ......................................... 12
2.10 Tax and Other Returns and Reports .............................. 13
2.11 Restrictions on Business Activities ............................ 15
2.12 Intellectual Property .......................................... 15
2.13 Agreements, Contracts and Commitments .......................... 19
2.14 Employees; Compensation ........................................ 20
2.15 Employee Matters and Benefit Plans ............................. 20
2.16 Business Practices ............................................. 24
2.17 Interested Party Transactions .................................. 25
2.18 Compliance with Law; Governmental Authorization ................ 25
2.19 Litigation ..................................................... 25
2.20 Insurance ...................................................... 25
2.21 Bank Accounts .................................................. 26
2.22 Environmental Matters .......................................... 26
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TABLE OF CONTENTS
(continued)
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2.23 Brokers and Finders ............................................ 27
2.24 Certain Advances ............................................... 27
2.25 Minute Books; Books and Records ................................ 27
2.26 Product Warranties; Defects; Liabilities ....................... 27
2.27 Year 2000 Compliance ........................................... 27
2.28 No Changes In Equity Interests ................................. 28
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT ....................... 28
3.1 Organization of Parent ......................................... 28
3.2 Authority ...................................................... 28
3.3 Parent Common Shares ........................................... 29
3.4 SEC Documents; Parent Financial Statements ..................... 29
3.5 No Material Adverse Change ..................................... 30
3.6 Brokers' and Finders' Fees ..................................... 30
ARTICLE IV SECURITIES ACT COMPLIANCE; REGISTRATION ......................... 30
4.1 Securities Act Exemption ....................................... 30
4.2 Stock Restrictions ............................................. 30
4.3 Registration ................................................... 31
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS ........................ 31
5.1 Conduct of Business of the Company ............................. 31
ARTICLE VI ADDITIONAL AGREEMENTS AND COVENANTS ............................. 33
6.1 Shareholder Approval ........................................... 33
6.2 Access to Information .......................................... 34
6.3 Confidentiality ................................................ 34
6.4 Public Disclosure .............................................. 34
6.5 Consents ....................................................... 34
6.6 Affiliate Agreements ........................................... 35
6.7 Legal Conditions to the Merger ................................. 35
6.8 Blue Sky Laws .................................................. 35
6.9 Best Efforts; Additional Documents and Further Assurances ...... 35
6.10 Notification of Certain Matters ................................ 35
6.11 Employment Agreements .......................................... 36
6.12 Non-competition Agreements ..................................... 36
6.13 Implementation of Representations and Warranties ............... 36
6.14 Form S-8 ....................................................... 36
6.15 Nasdaq National Market Listing ................................. 36
6.16 No Solicitation ............................................... 36
6.17 Termination of 401(k) Plan ..................................... 37
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TABLE OF CONTENTS
(continued)
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6.18 Reorganization ................................................. 37
6.19 Pooling Accounting ............................................. 37
6.20 Director Indemnification ....................................... 37
6.21 Employee Benefit Plans ......................................... 37
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW ............. 38
7.1 Survival of Representations and Warranties ..................... 38
7.2 Escrow Arrangements ............................................ 38
ARTICLE VIII LIMITATION OF LIABILITY ....................................... 47
8.1 Limitation ..................................................... 47
ARTICLE IX CONDITIONS PRECEDENT ............................................ 47
9.1 Conditions to Obligations of Each Party to Effect the Merger ... 47
9.2 Additional Conditions to Obligations of the Company ............ 48
9.3 Additional Conditions to the Obligations of Parent ............. 49
ARTICLE X TERMINATION, AMENDMENT AND WAIVER ................................ 51
10.1 Termination .................................................... 51
10.2 Effect of Termination .......................................... 52
10.3 Amendment ...................................................... 52
10.4 Extension; Waiver .............................................. 52
ARTICLE XI GENERAL ......................................................... 53
11.1 Notices ........................................................ 53
11.2 Expenses ....................................................... 54
11.3 Interpretation ................................................. 54
11.4 Counterparts ................................................... 54
11.5 Entire Agreement; Assignment ................................... 55
11.6 Severability ................................................... 55
11.7 Other Remedies ................................................. 55
11.8 Governing Law .................................................. 55
11.9 Rules of Construction .......................................... 55
11.10 Specific Performance ........................................... 55
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INDEX OF EXHIBITS
Exhibit Description
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Exhibit A Articles of Merger
Exhibit B Form of Investment Representation Statement
Exhibit C Registration Rights Agreement
Exhibit D Form of Affiliate Agreement
Exhibit E Form of Employment Agreements
Exhibit F Form of Noncompetition Agreement
Exhibit G Escrow Fund Allocation
Exhibit H Form of Legal Opinion, Counsel to Parent
Exhibit I Form of Legal Opinion, Counsel to the Company
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INDEX OF SCHEDULES
Schedule Description
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2.2 Capital Structure
2.2(a) Issued and outstanding shares of Company Common Stock
2.2(b) Outstanding Rights to Acquire Securities of the Company
2.3(a) Obligations With Respect to Capital Stock
2.5 Authority
2.7 Accounts Receivable
2.8 Business Changes
2.9(a) Title of Properties
2.9(c) Equipment
2.10 Tax Returns an Audits
2.12(b) Company Registered Intellectual Property
2.12(c) Title to Company Intellectual Property
2.12(d) Ownership of Intellectual Property
2.12(e) Licenses and other transfers of Intellectual Property from
the Company
2.12(f) Licenses and other transfers of Intellectual Property to the
Company
2.12(g) Infringement
2.12(i) Invention Assignment and Non-Disclosure Agreement
2.12(j) Dispute Over Payments
2.12(k) Pending Claims Over Intellectual Property
2.12(l) Restrictions on Intellectual Property
2.12(m) Violations of Law or Regulations
2.13 Agreements, Contracts and Commitments
2.14 Employees and Compensation
2.15 Employee Matters and Benefit Plans
2.15(b) Schedule
2.15(d) Employee Plan Compliance
2.15(e) Pension Plans
2.15(g) No Post-Employment Obligations
2.15(h)(i) No Violation
2.15(h)(ii) Excess Parachute Payments
2.17 Interested Party Transactions
2.18 Compliance with Law; Governmental Authorization
2.19 Litigation
2.20 Insurance
2.21 Bank Accounts
2.23 Brokers and Finders
2.26 Product Warranties; Defects; Liabilities
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6.6 Affiliates
6.7 Individuals Entering Employment Agreements
6.12 Non-competition Agreements
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AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of June 28, 1999, by and among Adept Technology, Inc., a
California corporation ("Parent"); BYE/OASIS Engineering, Inc., a Texas
corporation (the "Company"); ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Securityholder Agent; and Chase
Manhattan Bank and Trust Company, National Association, as Escrow Agent.
RECITALS
A. The Boards of Directors of each of the Company and Parent, believe
it to be in the best interests of each such company and each such company's
respective shareholders that the Company and Parent combine into a single
company through the statutory merger of Company with and into the Parent (the
"Merger") and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, all the outstanding
shares of Common Stock of the Company ("Company Common") will be converted into
shares of Common Stock of Parent ("Parent Common"), at the rate determined
herein.
C. A portion of the shares of Parent Common otherwise issuable by
Parent in connection with the Merger shall be placed in escrow by Parent, the
release of which amount shall be contingent upon certain events and conditions,
all as set forth in Article VII hereof.
D. The Company and Parent, desire to make certain representations and
other agreements in connection with the Merger.
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"). NOW, THEREFORE, in consideration of the
covenants, promises, and representations set forth herein, and for other good
and valuable consideration, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement, the Articles of
Merger attached hereto as Exhibit A (the "Merger Articles"), the applicable
provisions of the Business Corporation Act of the State of Texas ("Texas Law")
and the California Corporations Code, Company shall be merged with and into
Parent, the separate corporate existence of Company shall cease, and the Parent
shall continue as the surviving corporation. Parent as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2 Effective Time of the Merger. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
the Texas Merger Articles with the Secretary of State of the State of Texas and
California Merger Articles (sometimes referred to collectively herein as the
"Merger Articles") with the Secretary of State of California (and any other
certificates which may be deemed necessary) in accordance with the relevant
provisions of Texas Law and California Law (the time at which both the Texas
Merger Articles and the California Merger Articles have been so filed (or such
later time as may be agreed in writing by the Company and Parent and specified
in the Merger Articles) being the "Effective Time"). Unless this Agreement is
earlier terminated pursuant to Article X, the closing of the Merger (the
"Closing") will take place as promptly as practicable after all conditions
precedent to the obligations of the parties hereto have been satisfied or
waived, but in no event earlier than July 1, 1999 at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, unless another place or time is agreed to by Parent
and the Company. The date upon which the Closing actually occurs is referred to
herein as the "Closing Date".
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Texas Law and
California Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all rights, privileges, powers, and franchises
of the Company shall vest in the Surviving Corporation, and all debts,
liabilities, and duties of the Company shall become the debts, liabilities, and
duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) The Articles of Incorporation of Parent, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended as provided in California
Law and such Articles of Incorporation.
(b) The Bylaws of Parent, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 Directors and Officers. The directors of Parent immediately prior
to the Effective Time shall be the directors of the Surviving Corporation, each
to hold office in accordance with the Articles of Incorporation and Bylaws of
the Surviving Corporation. The officers of Parent immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, in each case
to serve until their respective successors are duly elected or appointed and
qualified.
1.6 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger, and without any action on the part of the holder of any of the issued
and outstanding shares of Company Common:
(a) Cancellation of Parent-Owned and Company-Owned Stock. All shares
of Company Common that are owned directly or indirectly by the Company or any
subsidiary of the Company, or by Parent or any subsidiary of Parent, shall be
cancelled and extinguished, and no stock of Parent or other consideration shall
be delivered in exchange therefor.
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(b) Conversion of Company Common.
(i) Other than shares to be cancelled pursuant to Section 1.6(a)
above, Dissenting Shares (as defined in Section 1.7(a) below), and fractional
shares, if any, as provided in Section 1.6(g) below, each share of Company
Common issued and outstanding immediately prior to the Effective Time shall be
cancelled and extinguished and shall be converted automatically, without any
action on the part of the holder thereof, into the right to receive 0.7017454
shares of Parent Common (the "Exchange Ratio"), upon surrender in the manner
provided in Section 1.8 hereof of the certificate(s) representing such shares of
Company Common.
(ii) In addition to any adjustment required pursuant to Section
1.6(f) hereof, the Exchange Ratio shall be adjusted at the Closing as follows:
(A) If Third Party Expenses (as defined in Section 11.2)
exceed $400,000, the Exchange Ratio shall be reduced by an amount determined by
dividing (i) the aggregate number of shares of Company Common outstanding
immediately prior to the Closing, assuming conversion or exercise of all
outstanding securities convertible into or exercisable for shares of the
Company's capital stock (the "Aggregate Company Common") into (ii) the amount
determined by dividing $6.50 into the amount by which Third Party Expenses
exceed $400,000.
(B) If Third Party Expenses are less than $400,000, the
Exchange Ratio shall be increased by an amount determined by dividing (i) the
Aggregate Company Common into (ii) the amount determined by dividing $6.50 into
the amount by which Third Party Expenses are less than $400,000.
(iii) At the Closing, the Company shall deliver to Parent a
certificate of its Chief Financial Officer, certifying the amount of Third Party
Expenses incurred by the Company in connection with the Merger. Any inaccuracy
or misstatement of Third Party Expenses in such certificate shall be deemed a
breach of a representation by the Company, subject to recovery by Parent of any
Losses (as defined in Section 7.2(a)) in accordance with the terms of Article
VII hereof.
(iv) Of the total shares of Parent Common issued pursuant to this
Section 1.6(b), ten percent (10%) shall be subject to the escrow (the "Escrow")
established pursuant to Article VII below (with fractional shares as to any
holder of Company Common to be rounded down to a whole share) (the "Escrow
Amount").
(c) Stock Options. At the Effective Time, all options to purchase
Company Common (each, a "Company Option") then outstanding under the Company's
1997 Stock Option Plan or otherwise (the "Option Plan") (whether or not
exercisable and whether or not vested), or otherwise, shall remain outstanding
following the Effective Time and shall be assumed by Parent in accordance with
provisions described below:
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(i) Each Company Option so assumed by Parent under this Agreement
shall continue to have, and be subject to, the same terms and conditions set
forth in the Option Plan and/or as provided in the respective option agreements,
governing such Company Option immediately prior to the Effective Time
(including, without limitation, any vesting or repurchase rights relating
thereto), except that (A) such Company Option shall be exercisable for that
number of whole shares of Parent Common equal to the product of the number of
shares of Company Common that were issuable upon exercise of such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio (as
adjusted in accordance with Sections 1.6(b)(ii)(A) and 1.6(b)(ii)(B)), rounded
down to the nearest whole number of shares of Parent Common and (B) the per
share exercise price for the shares of Parent Common issuable upon exercise of
such assumed Company Option shall be equal to the quotient determined by
dividing the exercise price per share of Company Common at which such Company
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio (as adjusted in accordance with Sections 1.6(b)(ii)(A) and 1.6(b)(ii)(B)),
rounded up to the nearest whole cent.
(ii) It is the intention of the parties that the Company Options
assumed by Parent qualify following the Effective Time as incentive stock
options as defined in Section 422 of the Code to the extent the Company Options
qualified as incentive stock options immediately prior to the Effective Time.
(iii) Promptly following the Effective Time, Parent will issue to
each holder of an outstanding Company Option a document evidencing the foregoing
assumption of such Company Option by Parent.
(d) Stock Subject to Repurchase. All shares of Parent Common which
are issued in the Merger in exchange for shares of Company Common which, under
applicable stock purchase, stock restriction, or similar agreements with the
Company, are unvested or subject to a repurchase option or other condition of
forfeiture which by its terms does not terminate due to the Merger ("Company
Restricted Stock"), will also be unvested or subject to the same repurchase
option or other condition, as the case may be, and the certificates evidencing
such shares will be marked with an appropriate legend.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common or Company Common), reorganization, recapitalization, or
other like change with respect to Parent Common or Company Common occurring
after the date hereof and prior to the Effective Time. If at the Effective Time,
the Company shall have outstanding or subject to option or similar right more
shares or fewer shares of Company Common than contemplated to be outstanding or
subject to option or similar right as set forth in the representations and
warranties of the Company in Section 2.2, then, at the election of Parent or
Company, respectively, and notwithstanding any other provision hereof, and
without limiting any of other rights hereunder, the Exchange Ratio shall be
adjusted downward or upward, as the case may require, to a ratio that would
result in an aggregate number of shares of Parent Common to be issued by Parent
in the Merger equal to the aggregate number of shares of Parent
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Common to be issued by Parent in the Merger that would have resulted if such
representation and warranty had been true at the Effective Time. Except as
provided herein, no change in the outstanding shares of Company Common or option
or similar right to acquire shares of Company Common shall result in any
adjustment in the Exchange Ratio.
(f) Fractional Shares. No fractional shares of Parent Common shall
be issued, but in lieu thereof, each holder of shares of Company Common who
would otherwise be entitled to receive a fraction of a share of Parent Common
(after aggregating all fractional shares of Parent Common to be received by such
holder) shall be entitled to receive from Parent a whole share of Parent Common.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares ("Dissenting Shares") of the Company's capital stock held by a holder
("Dissenting Shareholder") who has demanded and perfected dissenter's rights for
such shares in accordance with Article 5.12 of Texas Law and who, as of the
Effective Time, has not effectively withdrawn or lost such dissenter's rights,
shall not be converted into Parent Common pursuant to Section 1.6(b), and the
holder thereof shall only be entitled to such rights as are granted by Texas
Law.
(b) Notwithstanding the provisions of Section 1.7(a) above, if any
Dissenting Shareholder shall effectively withdraw or lose (through failure to
perfect or otherwise) the right to dissent, then, as of the later of the
Effective Time and the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
shares of Parent Common to which such Dissenting Shareholder is then entitled
under this Agreement and Texas Law, without interest thereon and upon surrender
of the certificate representing such shares.
(c) The Company shall give Parent (i) prompt notice of any written
demands of the Company to purchase any shares of capital stock of the Company,
withdrawals of such demands, and any other instruments served pursuant to Texas
Law and received by the Company and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands under Texas Law. The
Company shall not, except with the prior written consent of Parent, voluntarily
make any payment with respect to such demands or offer to settle or settle any
such demands.
1.8 Exchange of Certificates.
(a) Surrender of Certificates for Company Common Stock. At the
Closing, each Shareholder shall deliver or cause to be delivered to Parent all
certificates representing the shares of Company Common held by each Shareholder,
duly endorsed or accompanied by stock powers duly endorsed in blank, with any
required transfer stamps affixed thereto.
(b) Delivery of Certificates for Parent Common Stock. Subject to
delivery of the certificates representing the shares of Company Common held by
the Shareholders, Parent shall deliver to the Shareholders certificates
registered in such Shareholder's name as set forth in Exhibit
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G, and on behalf of the holders of Company Common, Parent shall deposit into the
Escrow that number of shares of Parent Common equal to the Escrow Amount out of
the aggregate number of shares of Parent Common otherwise issuable pursuant to
Section 1.6(b). The portion of the Escrow Amount contributed on behalf of each
holder of Company Common shall be in proportion to the aggregate number of
shares of Parent Common which such holder would otherwise be entitled to receive
under Section 1.6(b) by virtue of ownership of outstanding shares of Company
Common immediately prior to the Effective Time.
(c) No Liability. Notwithstanding anything to the contrary in this
Section 1.8, none of the Surviving Corporation or any party hereto shall be
liable to a holder of shares of Parent Common or Company Common for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat, or similar law.
1.9 No Further Ownership Rights in Company Common. All Parent Common
delivered upon the surrender for exchange of Certificates representing shares of
Company Common in accordance with the terms hereof shall be deemed to have been
delivered in full satisfaction of all rights pertaining to such shares of
Company Common. There shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of Company Common shall have been lost, stolen,
or destroyed, ChaseMellon Shareholder Services, LLC shall issue in exchange for
such lost, stolen, or destroyed Certificates, upon the making of an affidavit of
that fact by the holder thereof, such shares of Parent Common as may be required
pursuant to Section 1.6; provided, however, that Parent may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen, or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against Parent
with respect to the Certificates alleged to have been lost, stolen, or
destroyed.
1.11 Tax and Accounting Consequences. It is intended by the parties
hereto that the Merger shall (i) constitute a reorganization within the meaning
of Section 368 of the Code and (ii) qualify for accounting treatment as a
pooling-of-interests.
1.12 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title, and possession to all assets, property, rights, privileges,
powers and franchises of the Company and the Parent, the officers and directors
of the Company and the Parent shall be fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent, subject to the
specific exceptions disclosed in the disclosure letter and schedules thereto
(each referencing the appropriate section numbers of this Article II as to which
an exception exists) delivered by the Company to Parent and dated as of the date
hereof (the "Company Schedules"), as follows:
2.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. The Company
has all requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted and as proposed
to be conducted and is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which the failure to be so
qualified would have a material adverse effect on the condition (financial or
otherwise), business, net worth, assets (including intangible assets),
properties, operations, obligations, or liabilities (fixed or contingent)
("Material Adverse Effect") of the Company. The Company has delivered a true and
correct copy of its Articles of Incorporation (the "Articles") and Bylaws (the
"Bylaws"), each as currently in effect, to counsel for Parent.
2.2 Capital Structure. The authorized capital stock of the Company
consists of 10,000,000 shares of Company Common, of which 1,026,013 shares are
issued and outstanding. The Company has no Preferred Stock authorized, issued,
or outstanding. All outstanding shares of Company Common are, and any shares of
Company Common issuable upon exercise of any outstanding options to acquire
Company Common will be, duly authorized, validly issued, fully paid, and
nonassessable and not subject to preemptive rights created by statute, the
Articles, or any agreement to which the Company is a party or is bound. All
outstanding Company Common and all other outstanding securities of the Company
have been issued in compliance with all applicable federal and state securities
laws. Schedule 2.2(a) sets forth a complete and accurate list of all issued and
outstanding shares of Company Common, identifying the registered holder thereof,
the price paid for such securities, the acquisition date (if known to the
Company), and the number of shares, if any, subject to the Company's repurchase
option (or similar vesting terms) as of the date of this Agreement. The Company
has reserved 600,000 shares of Company Common for issuance to employees and
consultants pursuant to the Option Plan, of which 68,897 shares subject to
Company Options issued under the Option Plan have been exercised, of which
Company Options to acquire 264,103 shares of Company Common are outstanding and
unexercised, and of which 267,000 shares remain available for future option
grants. Schedule 2.2(b) sets forth each outstanding option, warrant, or similar
right to acquire any securities of the Company, the name of the holder thereof,
the number and class of shares subject thereto, the exercise price, the number
of shares or amount of securities as to which such option is exercisable as of
the date of this Agreement, the vesting terms of such option, and, if the
exercisability of such option or warrant will be accelerated in any way by the
transactions contemplated by this Agreement, an indication of such acceleration.
No repricing of
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options has taken place since the Company's incorporation. Schedule 2.2 shall be
updated and delivered to Parent in final form immediately prior to the Closing.
2.3 Obligations With Respect to Capital Stock.
(a) Except as set forth in Schedule 2.2, the Company has no
commitment or obligation of any character, either firm or conditional, written
or oral, to issue, deliver or sell, or cause to be issued, delivered or sold,
under offers, stock option agreements, stock bonus agreements, stock purchase
plans, incentive compensation plans, warrants, calls, conversion rights or
otherwise, any shares of the capital stock or other securities of the Company.
There are no voting trusts or other agreements or understandings with respect to
the shares of capital stock of the Company. Except as set forth in Schedule 2.2,
there are no securities of the Company issued, reserved for issuance, or
outstanding.
(b) At or before the Effective Time, any rights of any holder or
prospective holder of the Company's securities to cause such securities to be
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and any information rights, voting rights, rights of co-sale, rights to maintain
equity percentage, rights of first refusal and the like that may exist for the
benefit of any such holder or prospective holder shall have been terminated,
except as expressly contemplated by this Agreement.
2.4 Subsidiaries. The Company has no subsidiaries or affiliated
companies, has never had any subsidiaries or affiliated companies, and does not
own and has not at any time owned any equity or other interest, directly or
indirectly, in any corporation, partnership, joint venture, firm or entity.
2.5 Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject only to
approval of the Merger and the transactions contemplated hereby by the Company's
shareholders as contemplated by Section 6.1. The vote required of the Company's
shareholders to duly approve the Merger is two-thirds of the outstanding shares
of Company Common. The Company's Board of Directors has approved the Merger and
this Agreement. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws and principles of equity. The
execution and delivery of this Agreement by the Company do not, and as of the
Effective Time, the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation of or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of any
benefit under (any such event, a "Conflict") (i) any provision of the Articles
or Bylaws or (ii) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or its
properties or assets. No consent, waiver, approval, order
-8-
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority,
instrumentality, agency or commission ("Governmental Entity") or any third party
(so as not to trigger a Conflict) is required by or with respect to the Company
in connection with the execution and delivery of this Agreement by the Company
or the consummation by the Company of the transactions contemplated hereby,
except for (i) the filing of the Merger Articles with the Secretary of State of
Texas, (ii) such consents, waivers, authorizations, filings, orders,
declarations, approvals, and registrations as may be required under applicable
state securities laws, and (iii) such other consents, waivers, authorizations,
filings, orders, declarations, and approvals set forth on Schedule 2.5.
2.6 Financial Statements.
(a) The Company's (i) unaudited statements of income (loss),
statements of shareholders' equity (deficit), and statements of cash flow for
the fiscal year ended September 30, 1998, (ii) audited balance sheet at
September 30, 1998 (iii) unaudited statements of income (loss), statements of
shareholders' equity (deficit), and statements of cash flow for the seven month
period ended April 30, 1999, and (iv) audited balance sheet at April 30, 1999
are complete and correct in all material respects, have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated (except as expressly indicated
therein or in the notes thereto), and accurately and fairly present the
financial condition and results of operations of the Company as of the
respective dates and for the respective periods indicated, subject, in the case
of the unaudited financial statements, to normal year end adjustments. The
Company's audited Balance Sheet at April 30, 1999 is referred to as the "Company
Balance Sheet," and all such financial statements together are referred to
collectively herein as the "Company Financial Statements."
(b) The Company has no liabilities or obligations, fixed,
contingent, or otherwise not reflected on the Company Balance Sheet, except for
those incurred in the ordinary and usual course of business since the date of
the Company Balance Sheet, consistent with past practice and contractual
obligations and other liabilities and obligations identified herein or in the
schedules hereto.
2.7 Accounts Receivable . All accounts receivable shown on the Company
Balance Sheet (net of reserves indicated on the Company Balance Sheet) or
thereafter acquired until the Effective Time (net of reserves accrued in the
normal course of business and consistent with past practice) arose from valid
transactions in the ordinary and usual course of business and are collectible
within one year of the Closing Date, except that the value of any account
receivable, the collection of which is doubtful or which is subject to a defense
or set-off, has been written down to an amount not in excess of net realizable
value or adequate reserves or allowances therefor have been provided. None of
the receivables of the Company is subject to any claim of offset, recoupment,
set-off, or counterclaim, and, to the knowledge of the Company, there are no
facts or circumstances (whether asserted or unasserted) that would give rise to
any such claim. Except as described in Schedule 2.7, no person or entity has any
lien, charge, pledge, security interest, or other encumbrance on any such
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receivables, and no agreement for deduction or discount has been made with
respect to any of such receivables.
2.8 Business Changes. Since the date of the Company Balance Sheet (or
such other date specifically set forth herein), except as otherwise contemplated
by this Agreement and except as described in Schedule 2.8, the Company has
conducted its business only in the ordinary and usual course, consistent with
past practice, and, without limiting the generality of the foregoing:
(a) The Company has not sustained any damage, destruction, or loss
by reason of fire, explosion, earthquake, casualty, labor trouble (including but
not limited to any claim of wrongful discharge or other unlawful labor
practice), requisition or taking of property by any government or agent thereof,
windstorm, embargo, riot, act of God or public enemy, flood, accident,
revocation of license or right to do business, total or partial termination,
suspension, default or modification of contracts, governmental restriction or
regulation, other calamity, or other similar or dissimilar event (whether or not
covered by insurance) that would result in a Material Adverse Effect on the
Company.
(b) There have been no changes in the condition (financial or
otherwise), business, net worth, assets, properties, operations, obligations, or
liabilities (fixed or contingent) of the Company which, individually or in the
aggregate, have resulted or would reasonably be expected to result (whether
before or after the Effective Time) in a Material Adverse Effect on the Company.
(c) The Company has not issued, or authorized for issuance, any
equity security, bond, note or other security of the Company, except for shares
of Company Common issued upon the exercise of the outstanding Company Options
listed in Schedule 2.2(b), or accelerated the vesting of any employee stock
benefits (including vesting under stock purchase agreements or exercisability of
Company Options). The Company has not granted or entered into any commitment or
obligation to issue or sell any such equity security, bond, note or other
security of the Company, whether pursuant to offers, stock option agreements,
stock bonus agreements, stock purchase plans, incentive compensation plans,
warrants, calls, conversion rights or otherwise, except for shares of Company
Common issued upon the exercise of the Company Options.
(d) The Company has not incurred any additional debt for borrowed
money.
(e) The Company has not paid any obligation or liability (fixed,
contingent or otherwise), or discharged or satisfied any lien or encumbrance, or
settled any liability, claim, dispute, proceeding, suit, or appeal, pending or
threatened against it or any of its assets or properties, except for current
liabilities included in the Company Balance Sheet and current liabilities
incurred since the date of the Company Balance Sheet in the ordinary and usual
course of the business of the Company, consistent with past practice.
(f) The Company has not declared, set aside for payment, or paid any
dividend, payment, or other distribution on or with respect to any share of
capital stock of the Company.
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(g) The Company has not purchased, redeemed or otherwise acquired or
committed itself to acquire, directly or indirectly, any share or shares of
capital stock of the Company.
(h) The Company has not mortgaged, pledged, otherwise encumbered or
subjected to lien any of its assets or properties, tangible or intangible, nor
has it committed itself to do any of the foregoing, except for liens for current
taxes which are not yet due and payable and purchase money liens arising out of
the purchase or sale of products or services made in the ordinary and usual
course of business consistent with past practice.
(i) The Company has not disposed of, or agreed to dispose of, any
asset or property, tangible or intangible, with an individual book value in
excess of $25,000, except in the ordinary and usual course of business
consistent with past practice, and in each case for a consideration at least
equal to the fair value of such asset or property, nor has the Company leased or
licensed to others (including officers and directors of the Company), or agreed
so to lease or license, any such asset or property, nor has the Company
discontinued any product line or the production, sale or other disposition of
any of its products or services.
(j) The Company has not purchased or agreed to purchase or otherwise
acquire any debt or equity securities of any corporation, partnership, joint
venture, firm or other entity. The Company has not made any expenditure or
commitment for the purchase, acquisition, construction or improvement of a
capital asset, except in the ordinary and usual course of business consistent
with past practice, and the aggregate amount of all such expenditures and
commitments has not exceeded $50,000.
(k) The Company has not entered into any transaction or contract, or
made any commitment to do the same, except in the ordinary and usual course of
business consistent with past practice (excluding agreements under which the
obligation of payment or performance has been satisfied in full or which, if not
satisfied, do not and will not have a Material Adverse Effect on the Company).
The Company has not waived any right of substantial value or cancelled any debts
or claims or voluntarily suffered any extraordinary losses other than in the
ordinary and usual course of business consistent with past practice.
(l) The Company has not sold, assigned, transferred or conveyed, or
committed itself to sell, assign, transfer or convey, any Company Intellectual
Property (as defined in Section 2.12), and the Company has not entered into any
product development, technology or product sharing, or similar strategic
arrangement with any other party.
(m) The Company has not effected or agreed to effect any amendment
or supplement to any employee profit sharing, stock option, stock purchase,
pension, bonus, incentive, retirement, medical reimbursement, life insurance,
deferred compensation or any other employee benefit plan or arrangement.
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(n) The Company has not paid or committed itself to pay to or for
the benefit of any of its directors, officers, employees or shareholders any
compensation of any kind other than wages, salaries, and benefits at times and
rates in effect prior to the date of the Company Balance Sheet.
(o) The Company has not effected or agreed to effect any change,
including by way of hiring or involuntary termination, in its directors,
executive officers, or key employees.
(p) Since June 25, 1999, the Company has not effected or committed
itself to effect any amendment or modification of the Articles or Bylaws.
(q) The Company has not changed its accounting methods or practices
in any material respect (including any change in depreciation or amortization
policies or rates, any changes in policies in making or reversing accruals, or
any change in capitalization of software development costs).
(r) The Company has not made any loan to any person or entity, and
the Company has not guaranteed the payment of any loan or debt of any person or
entity, except for (x) travel or similar advances made to employees in
connection with their employment duties in the usual and ordinary course of
business, consistent with past practice and (y) accounts receivable incurred in
the usual and ordinary course of business, consistent with past practice.
(s) The Company has not changed the prices or royalties set or
charged by the Company.
(t) The Company has not negotiated or agreed to do any of the things
described in the preceding clauses (a) through (s) (other than negotiations with
Parent and its representatives regarding the transactions contemplated by this
Agreement).
2.9 Title of Properties; Absence of Liens and Encumbrances; Condition
of Equipment.
(a) The Company owns no real property, has never owned any real
property, and holds no option or other right to purchase any real property.
Schedule 2.9(a) sets forth a true and complete list of all real property
currently leased by the Company, the dates of the lease agreements and any
amendments thereto and the name of the lessors. All such leases are in full
force and effect, are valid and effective in accordance with their respective
terms, except as enforceability may be limited by bankruptcy and other similar
laws and general principles of equity, 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 and in respect of which the Company
has not taken adequate steps to prevent such default from occurring). To the
knowledge of the Company, neither the Company's operations on any such real
property, nor such real property, including improvements thereon, violate any
applicable building code, zoning requirement, or classification, or pollution
control ordinance or statute relating to the particular property or to such
operations, and such non-violation is not dependent, in any instance, on
so-called non-conforming use exceptions. The
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Company is not aware of any improvements or corrections that need to be made
prior to returning the property to the lessors at the end of the leasing period.
(b) The Company holds good and valid 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, used in its business, free and
clear of any liens, charges, pledges, security interests or other encumbrances,
except as reflected in the Company Financial Statements and except for such
imperfections of title and encumbrances, if any, which are not substantial in
character, amount or extent, and which do not materially detract from the value,
or interfere with the present use, of the property subject thereto or affected
thereby.
(c) All equipment (the "Equipment") currently owned or leased by the
Company is listed in Schedule 2.9(c), except individual pieces of equipment
owned by the Company with an individual value of less than $10,000. Except as
set forth in Schedule 2.9(c), the Equipment, taken as a whole, is currently (i)
adequate for the conduct of the business of the Company consistent with its past
practice, (ii) suitable for the uses to which it is currently employed, (iii) in
good operating condition, reasonable wear and tear excepted, (iv) regularly and
properly maintained, and (v) not obsolete, dangerous or in need of material
renewal or replacement, except for renewal or replacement in the ordinary course
of business.
2.10 Tax and Other Returns and Reports.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax"
or, collectively, "Taxes" means any and all federal, state, local, and foreign
taxes, assessments, and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) Tax Returns and Audits. Except as set forth in Schedule 2.10:
(i) The Company as of the Effective Time will have accurately
prepared and timely filed all required federal, state, local, and foreign
returns, estimates, information statements, and reports ("Returns") relating to
any and all Taxes of the Company or its operations, and such Returns are true
and correct in all material respects and have been completed in accordance with
all applicable laws.
(ii) As of the Effective Time, the Company (A) will have paid or
accrued all Taxes it is required to pay or accrue and (B) will have withheld
with respect to its employees all federal, state, or foreign income Taxes, FICA,
FUTA, and other Taxes required to be withheld.
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(iii) The Company has not been delinquent in the payment of any
Tax nor is there any Tax deficiency outstanding, proposed or assessed against
the Company, nor has the Company executed any waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
(iv) No audit or other examination of any Return of the Company
is presently in progress, nor has the Company been notified of any request for
such an audit or other examination.
(v) The Company has no liability for unpaid federal, state,
local, or foreign Taxes which has not been accrued or reserved against on the
Company Balance Sheet, whether asserted or unasserted, contingent or otherwise.
The accruals for the Taxes of the Company shown on the Company Balance Sheet are
sufficient to discharge the Taxes for all periods (or the portion of any period)
ending on or prior to the date of the Company Balance Sheet, and no Taxes will
be incurred by the Company between that date and the Closing Date, except in the
ordinary course of business, consistent with past practice.
(vi) The Company has provided or made available to Parent copies
of all federal, state, and foreign income and all state sales and use Tax
Returns of the Company for the last three fiscal years.
(vii) There are (and as of immediately following the Closing
there will be) no liens, pledges, charges, claims, security interests or other
encumbrances of any sort ("Liens") on any asset of the Company relating to or
attributable to Taxes, other than Liens for Taxes not yet due and payable.
(viii) None of the Company's assets are treated as "tax-exempt
use property" within the meaning of Section 168(h) of the Code.
(ix) As of the Effective Time, there will not be any contract,
agreement, plan or arrangement, including but not limited to the provisions of
this Agreement, covering any employee or former employee of the Company that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to Section 280G, 162, or 404 of the Code.
(x) The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.
(xi) The Company has never been a part of a consolidated,
combined, or affiliated group of corporations for Tax purposes, is not party to
a tax sharing or allocation agreement, nor does the Company owe any amount under
any such agreement.
(xii) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of Section
897 of the Code.
-14-
2.11 Restrictions on Business Activities. There is no agreement
(noncompetition, field of use, or otherwise), judgment, injunction, order or
decree binding upon the Company which has or reasonably would be expected to
have the effect of prohibiting or impairing any business practice of the
Company, any acquisition of property (tangible or intangible) by the Company, or
the conduct of business by the Company. Without limiting the foregoing, the
Company has not entered into any agreement under which the Company is restricted
from selling, licensing, or otherwise distributing any of its products to any
class of customers, in any geographic area, during any period of time or in any
segment of the market.
2.12 Intellectual Property.
(a) For purposes of this Agreement, the following definitions shall
apply:
(i) "Commercial Software Rights" shall mean packaged
commercially available software programs available to the public through retail
dealers in computer software which have been licensed to the Company pursuant to
an end-user license and which are used in the business of the Company but are in
no way a component of the Company's products and related Company Intellectual
Property.
(ii) "Company Intellectual Property" shall mean any Intellectual
Property or Related Technology that is owned by or exclusively licensed to the
Company.
(iii) "Intellectual Property" means any or all of the following
and all rights in, arising out of, or associated therewith anywhere in the
world: (A) Patent Rights; (B) trade secrets and other proprietary information;
(C) copyrights, mask work rights, copyright registrations and applications
therefor; (D) all Web addresses, sites and domain names; (E) all industrial
designs and any registrations and applications therefor throughout the world;
(F) all trademarks; and (G) any similar, corresponding or equivalent rights to
any of the foregoing.
(iv) "Patent Rights" means (A) all patents and patent
applications and any inventions disclosed in any of the foregoing patents and
patent applications; (B) any and all counterpart United States, international
and foreign patents, applications and certificates of invention based upon or
covering any portion of the foregoing patents, applications and inventions; (C)
all divisions, continuations, continuations-in-part, and substitutions of any of
the preceding patents and patent applications; (D) all foreign or international
applications corresponding to any of the preceding applications or patents; (E)
all divisions, continuations, continuations-in-part, and substitutions of any of
such foreign or international applications described in (D); and (F) all U.S.,
international and foreign patents issuing on any of the preceding applications,
including extensions, reissues and re-examinations.
(v) "Registered Intellectual Property" shall mean all United
States, international and foreign (A) patents and patent applications (including
provisional applications); (B) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or applications
related to trademarks; (C) registered copyrights and applications for
-15-
copyright registration; (D) any mask work registrations and applications to
register mask works; and (E) any other Company Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any state, government or other public
legal authority.
(vi) "Related Technology" means any or all of the following and
all rights in, arising out of, or associated therewith anywhere in the world:
(A) all inventions (whether patentable or not), invention disclosures,
improvements, know how, technology, technical data; (B) all schematics,
drawings, net lists, notes and notebooks, specifications, bills of material, and
tooling; (C) all computer software, including all source code, object code,
firmware, development tools, flow charts, annotations, files, records and data,
and all media on which any of the foregoing is recorded; (D) all customer lists;
(E) all databases and data collections and all rights therein throughout the
world; (F) all documentation relating to any of the foregoing; and (G) any
Intellectual Property in, arising out of, or associated with any of the
foregoing throughout the world.
(b) Schedule 2.12(b) lists all Registered Intellectual Property
owned by, or filed in the name of, the Company (the "Company Registered
Intellectual Property") and lists any proceedings or actions before any court,
tribunal (including the United States Patent and Trademark Office (the "PTO") or
equivalent authority anywhere in the world) related to any of the Company
Registered Intellectual Property.
(c) Except as set forth in Schedule 2.12(c), the Company (i) owns
and has good and exclusive title to each item of Company Intellectual Property,
including all Company Registered Intellectual Property listed on Schedule
2.12(b), free and clear of any Lien, (ii) has exclusive rights (and is not
contractually obligated to pay any compensation to any third party in respect
thereof under any license of rights, covenant not to ▇▇▇, settlement, or other
agreement) to the use thereof or the material covered thereby in connection with
the services or products in respect of which the Company Intellectual Property
is being used, and (iii) is not party to any contract, license, or agreement
(other than those set forth on Schedule 2.12(e)) with respect to any of the
Company Intellectual Property.
(d) Except as set forth in Schedule 2.12(d), (i) the Company is the
exclusive owner of all trademarks, service marks, and trade names used in
connection with the operation or conduct of its businesses as currently
conducted, including the sale of any products or technology or the provision of
any services by the Company; (ii) the Company is the exclusive owner of, and has
good and valid title to, all copyrighted works that are the Company's products
or other works of authorship which the Company otherwise purports to own; and
(iii) to the extent that any work, invention, or material has been developed or
created by a third party for the Company, the Company has a written agreement
with such third party with respect thereto and the Company thereby has obtained
ownership of, and is the exclusive owner of, all Intellectual Property in such
work, material or invention by operation of law or by valid assignment.
(e) Except as set forth in Schedule 2.12(e), the Company has not
transferred ownership of or granted any license of or right to use or authorized
the retention of any rights to use
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any Intellectual Property that is or was Company Intellectual Property, to any
other person. Schedule 2.12(e) sets forth a complete list of all licenses,
sublicenses, and other agreements pursuant to which any person is authorized to
use any Company Intellectual Property or any trade secret relating to any of the
Company's products or its business, and includes the identity of all parties
thereto, a description of the nature and subject matter thereof, the applicable
royalty, and the term thereof. The execution and delivery of this Agreement by
the Company, and the consummation of the transactions contemplated hereby, will
not cause the Company to be in violation or default under any such license,
sublicense, or agreement, nor entitle, any other party to any such license,
sublicense, or agreement to terminate or modify such license, sublicense, or
agreement.
(f) Except as set forth in Schedule 2.12(f), the Company
Intellectual Property constitutes all of the Intellectual Property and Related
Technology used in or, to the best knowledge of the Company, that is needed in
order to conduct the businesses of the Company as currently conducted, or as
reasonably contemplated to be conducted, including, without limitation, the
design, development, distribution, marketing, manufacture, use, import, license
and sale of the products, technology and services of the Company (including
products, technology or services currently under development). Except as set
forth in Schedule 2.12(f), no person who has licensed Intellectual Property or
Related Technology to the Company has ownership rights or license rights to
improvements made by the Company in such Intellectual Property or Related
Technology which has been licensed to the Company.
(g) Except as set forth in Schedule 2.12(g), the operation of the
business of the Company as currently conducted or as contemplated to be
conducted (including but not limited to the design, development, distribution,
marketing, use, import, manufacture, license and sale of the products,
technology or services (including products, technology or services currently
under development) of the Company), has not and does not infringe or
misappropriate the Intellectual Property of any person, violate the rights of
any person (including rights to privacy or publicity), or constitute unfair
competition or trade practices under the laws of any jurisdiction. The Company
has not received notice, nor have any claims been asserted or threatened against
the Company or, to the knowledge of the Company, any of its customers, from any
person claiming that such operation or any act, product, technology or service
(including products, technology or services currently under development) of the
Company infringes or misappropriates the Intellectual Property of any person or
that the Company has engaged in unfair competition or trade practices under the
laws of any jurisdiction (nor to the knowledge of the Company is there any basis
therefor).
(h) Each item of Company Registered Intellectual Property is valid
and subsisting, all necessary registration, maintenance, and renewal fees in
connection with such Company Registered Intellectual Property have been paid,
and all necessary documents and certificates in connection with Company
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purpose of maintaining such Company
Registered Intellectual Property.
(i) The Company has taken all reasonable steps that are required to
protect the Company's rights in confidential information and trade secrets of
the Company or provided by any
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third party to the Company, it being understood that "reasonable steps" shall
include, without limitation, entering into written confidentiality agreements
with consultants or other third parties having access to the Company's
confidential information. Except as set forth in Schedule 2.2(i), each employee
of or consultant to the Company has executed and delivered to the Company an
Invention Assignment and Non-Disclosure Agreement in the form set forth in
Schedule 2.2(i).
(j) Except as set forth in Schedule 2.12(j), there are no contracts,
licenses or agreements between the Company and any other person with respect to
any Company Intellectual Property under which there is any dispute known to the
Company regarding the scope of such agreement, or performance under such
agreement including with respect to any payments to be made or received by the
Company.
(k) Except as set forth in Schedule 2.12(k), the Company has no
currently pending claim against any person for infringing or misappropriating
any Company Intellectual Property.
(l) Except as set forth in Schedule 2.12(l), no Company Intellectual
Property or product, technology or service of the Company is subject to any
proceeding or outstanding decree, order, judgment, agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by the Company or
may affect the validity, use or enforceability of such Company Intellectual
Property.
(m) To the knowledge of the Company, no (i) product, technology,
service or publication of the Company or (ii) material published or distributed
by the Company is defamatory, or constitutes false advertising, or with respect
to other laws or regulations otherwise violates such laws or regulations in a
manner that would have a Material Adverse Effect on the Company.
(n) Neither this Agreement nor any transactions contemplated by this
Agreement will, pursuant to the express terms of any contract or agreement to
which the Company is a party, result in Parent's granting any rights or licenses
with respect to the Intellectual Property of Parent to any third party.
(o) None of the Company's professional services agreements with its
end user customers, its agreements with outside consultants for the performance
of professional services on behalf of the Company or customer of the Company,
nor any agreement or license with any end-user or reseller of the Company's
products confers upon any party any ownership right with respect to any
Intellectual Property or Related Technology developed in connection with such
agreement of license.
(p) The Company has not breached or violated in any material respect
the terms of its license, sublicense, or other agreement relating to any
Commercial Software Rights, and the Company has a valid right to use such
Commercial Software Rights under such licenses and agreements. The Company is
not and will not be as a result of the execution and delivery of this Agreement
or the performance of its obligations hereunder, in violation of any license,
sublicense, or agreement relating to the Commercial Software Rights. No claims
with respect to Commercial
-18-
Software Rights have been asserted or, to the knowledge of the Company, are
threatened by any person against the Company in connection with any Commercial
Software Right. To the knowledge of the Company, there is no material
unauthorized use, infringement, or misappropriation of any Commercial Software
Right by the Company or any employee or former employee of the Company. To the
knowledge of the Company, no Commercial Software Right is subject to any
outstanding order, judgment, decree, stipulation, or agreement restricting in
any matter the use thereof by the Company.
2.13 Agreements, Contracts and Commitments . Except as required by
applicable law, contemplated by this Agreement, or as set forth on Schedule
2.13, the Company is not a party to, and is not bound by:
(a) any collective bargaining agreements;
(b) any agreements or arrangements that contain any severance pay or
post-employment liabilities or obligations;
(c) any stock option or stock purchase plan or arrangement (other
than the Option Plan), stock appreciation, bonus, deferred compensation,
pension, profit sharing or retirement plans, or any other employee benefit plans
or arrangements;
(d) any agreement, contract, or commitment relating to the
disposition or acquisition of material assets or any interest in any business
enterprise;
(e) any employment or consulting agreement with an employee or
individual consultant or salesperson or consulting or sales agreement, under
which a firm or other organization provides services to the Company not
terminable by the Company on thirty days notice without liability;
(f) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation rights 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 occurrence 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;
(g) any fidelity or surety bond or completion bond;
(h) any agreement or group of related agreements for the lease of
personal property having a value individually in excess of $35,000 to or from
any entity;
(i) any agreement of indemnification or guaranty;
(j) any agreement containing any covenant limiting the freedom of
the Company to engage in any line of business or to compete with any person or
entity;
-19-
(k) any agreement relating to the purchase of materials or capital
expenditures and involving future payments not incurred in the ordinary and
usual course of business, consistent with past practice;
(l) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of money
by the Company or extension of credit to the Company;
(m) any agreement concerning confidentiality;
(n) any construction contracts;
(o) any distribution, joint marketing or development agreement;
(p) any agreement pursuant to which the Company has granted or may
grant in the future, to any party a source-code license or option or other right
to use or acquire source-code; or
(q) to the extent not reported on the Company Balance Sheet, any
other agreement that involves payment by the Company not incurred in the
ordinary and usual course of business, consistent with past practice or which is
not cancellable without penalty within thirty (30) days.
The Company has not breached, violated, or defaulted under, or received
notice that it has breached, violated or defaulted under, any of the terms or
conditions of any agreement, contract or commitment required to be set forth on
Schedule 2.12(c), Schedule 2.12(d), Schedule 2.12(e), Schedule 2.12(f), or
Schedule 2.13 (any such agreement, contract or commitment, a "Contract"). Each
Contract is in full force and effect and, except as otherwise disclosed in
Schedule 2.13, is not subject to any default thereunder of which the Company has
knowledge by any party obligated to the Company pursuant thereto.
2.14 Employees; Compensation. Schedule 2.14 constitutes a full and
complete list of all current directors, officers, employees or consultants of
the Company, specifying their names and job designations, the total amount paid
or payable to such director, officer, employee, or consultant in the prior
fiscal year and from the beginning of the current fiscal year through the date
of the Company Balance Sheet, and the basis of such compensation, whether fixed
or commission or a combination thereof. Except as otherwise disclosed on
Schedule 2.14, since the date of the Company Balance Sheet, there has been no
material change in compensation, by means of wages, salaries, bonuses,
gratuities or otherwise, to any such director, officer, employee or consultant
of the Company, or any change in compensation either material in amount or other
than in the ordinary and usual course of business to any other director,
officer, employee or consultant of the Company.
2.15 Employee Matters and Benefit Plans.
-20-
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.15(a)(i) below (which definition shall only apply to this
Section 2.15), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "Affiliate" shall mean any person or entity under common
control with the Company within the meaning of Section 414(b), (c), (m) or (o)
of the Code and the regulations thereunder;
(ii) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(iii) "Company Employee Plan" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement excluding those
required by applicable law, providing for bonuses, compensation, severance,
termination pay, deferred compensation, pensions, profit sharing, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether formal or informal, written or
otherwise, funded or unfunded, including without limitation, each "employee
benefit plan" within the meaning of Section 3(3) of ERISA which is or has been
maintained, contributed to, or required to be contributed to, by the Company or
any Affiliate for the benefit of any "Employee" (as defined below), and pursuant
to which the Company or any Affiliate has or may have any material liability
contingent or otherwise;
(iv) "Employee" shall mean any current, former, or retired
employee, officer, or director of the Company or any Affiliate;
(v) "Employee Agreement" shall refer to each management,
employment, severance, consulting, relocation, repatriation, expatriation, visa,
work permit or similar agreement or contract or any of their amendments, whether
written or unwritten and whether or not legally binding, between the Company or
any Affiliate and any Employee or consultant;
(vi) "IRS" shall mean the Internal Revenue Service;
(vii) "Multiemployer Plan" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan", as defined in Section 3(37) of
ERISA; and
(viii) "Pension Plan" shall refer to each Company Employee Plan
which is an "employee pension benefit plan", within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Schedule 2.15(b) contains an accurate and complete
list of each Company Employee Plan and each Employee Agreement, together with a
schedule of all liabilities, whether or not accrued, under each such Company
Employee Plan or Employee Agreement. The Company does not have any stated plan
or commitment, whether legally binding or not, to establish any new Company
Employee Plan or Employee Agreement, to modify any Company Employee Plan or
Employee Agreement (except to the extent required by law or to conform any such
Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as
-21-
previously disclosed to Parent in writing, or as required by this Agreement), or
to enter into any Company Employee Plan or Employee Agreement nor does it have
any intention or commitment to do any of the foregoing.
(c) Documents. The Company has made available to Parent (i) correct
and complete copies of all documents embodying or relating to each Company
Employee Plan and each Employee Agreement including all amendments thereto,
copies of all forms of agreement and enrollment used therewith, and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Company Employee Plan; (iii) all taxing or other
governmental authority opinions, notifications, or determination letters and
rulings relating to Company Employee Plans and copies of all applications and
correspondence to or from any taxing or other governmental authority with
respect to any Company Employee Plan, including the three most recent annual
reports (Series 5500 and all schedules thereto), if any, required under ERISA or
the Code in connection with each Company Employee Plan or related trust; (iv) if
the Company Employee Plan is funded, the most recent annual and periodic
accounting of Company Employee Plan assets; (v) all material agreements and
contracts relating to each Company Employee Plan, including but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (vi) the most recent summary plan description together with the most
recent summary of material modifications, if any, required under ERISA with
respect to each Company Employee Plan; (vii) all IRS determination letters and
rulings relating to Company Employee Plans and copies of all applications and
correspondence to or from the IRS or the Department of Labor ("DOL") with
respect to any Company Employee Plan; (viii) all communications material to any
Employee or Employees relating to any Company Employee Plan and any proposed
Company Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to the Company; and (ix) all registration statements and prospectuses prepared
in connection with each Company Employee Plan.
(d) Employee Plan Compliance. Except as set forth on Schedule
2.15(d), (i) the Company has performed all material obligations required to be
performed by it under each Company Employee Plan, each Employee Agreement and
each Company Employee Plan and each Employee Agreement has been established and
maintained in accordance with its terms and in material compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Section 406 of ERISA, has occurred with
respect to any Company Employee Plan; (iii) there are no actions, suits or
claims pending, or, to the knowledge of the Company, threatened or anticipated
(other than routine claims for benefits) against any Company Employee Plan or
against the assets of any Company Employee Plan or under any Employee Agreement;
and (iv) each Company Employee Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to the Company, Parent or any of its Affiliates (other than ordinary
administration expenses typically incurred in a termination event); (v) there
are no inquiries or proceedings pending or, to the knowledge of the Company or
any Affiliates, threatened by any governmental authority with respect to any
Company Employee Plan or any Employee Agreement; (vi) neither the Company nor
any Affiliate is subject to any penalty or Tax
-22-
with respect to any Company Employee Plan or any Employee Agreement; and (vii)
each Company Employee Plan intended to qualify under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of the Code has either
received a favorable determination letter with respect to each such Company
Employee Plan from the IRS or has remaining a period of time under applicable
Treasury regulations or IRS pronouncements in which to apply for such
determination letter and make any amendments necessary to obtain a favorable
determination, and nothing has occurred since the date of such letter that would
reasonably be expected to affect the qualified status of such Company Employee
Plan.
(e) Pension Plans. The Company does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title
IV of ERISA or Section 412 of the Code. The Company has no retirement or pension
plans other than as set forth on Schedule 2.15(e).
(f) Multiemployer Plans. At no time has the Company contributed to
or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. Except as set forth in Schedule
2.15(g), no Company Employee Plan and no agreement with any employee provides,
or has any liability to provide, life insurance, medical or other employee
benefits to any Employee upon his or her retirement or termination of employment
for any reason, except as may be required by applicable law, and the Company has
never legally committed to provide such Employee(s) with life insurance, medical
or other employee welfare benefits upon their retirement or termination of
employment, except to the extent required by applicable law. Except to the
extent (if any) to which provision or allowance has been made in the Company
Balance Sheet, no liability has been incurred by the Company to make any
redundancy payments or any protective awards or to pay damages or compensation
(for wrongful or unfair dismissal or for failure to comply with any order for
the reinstatement or re-engagement of any employee), and no gratuitous payments
have been made or promised by the Company in connection with the actual or
proposed termination or suspension of employment or variation of any contract of
employment of any present or former director or employee.
(h) Effect of Transaction.
(i) Except as provided in Section 1.6 of this Agreement or as
set forth on Schedule 2.15(h)(i), the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee.
(ii) Except as set forth on Schedule 2.15(h)(ii), no payment or
benefit which will or may be made by the Company or Parent or any of their
respective affiliates with
-23-
respect to any Employee will be characterized as an "excess parachute payment,"
within the meaning of Section 280G(b)(1) of the Code.
(i) No Violations. The Company has not prior to the Effective Time
and in any material respect, violated any of the health care continuation
requirements of Section 4980B(f) of the Code (and Sections 600-608 of ERISA) or
any similar provisions of any other federal or state law applicable to its
Employees.
(j) Employment Matters. The Company is in material compliance with
all applicable foreign, federal, state and local laws, rules and regulations
respecting health and safety, employment, employment practices, employment
discrimination, immigration or other laws governing the employment of foreign
nationals, terms and conditions of employment and wages and hours, in each case,
with respect to Employees. The Company has not received any notice in writing
from any Governmental Entity, and to the knowledge of the Company, there has not
been asserted in writing before any Governmental Entity, any claim, action, or
proceeding to which the Company is a party or involving the Company, and there
is neither pending nor, to the knowledge of the Company, threatened in writing,
any investigation or hearing concerning the Company arising out of or based upon
any such laws, regulations, or practices. The Company has withheld all amounts
required by law or by agreement to be withheld from the wages, salaries and
other payments to Employees or other persons who by virtue of their activities
performed on behalf of the Company or Affiliate may be deemed employees within
the meaning of applicable law. The Company is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of the
foregoing or liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice).
(k) Labor. No work stoppage or labor strike against the Company is
pending or threatened. The Company is not involved in or threatened with, any
labor dispute, grievance, or litigation relating to labor, safety or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, result in
material liability to the Company. The Company has not engaged in any unfair
labor practices which would, individually or in the aggregate, directly or
indirectly result in a material liability to the Company. The Company is not
presently, nor has the Company been in the past, a party to, or bound by, any
collective bargaining agreement negotiated with its Employees. No collective
bargaining agreement is being negotiated by the Company.
2.16 Business Practices. To the knowledge of the Company, no officer,
agent, or employee of the Company has paid any bribe or provided services in
order unlawfully to obtain advantage for any person or otherwise taken any
action that would result in a violation of the United States Foreign Corrupt
Practices Act of 1977 or any similar law or regulation applicable to the Company
or any employee, agent, or affiliate thereof. Without limiting the foregoing, to
the knowledge of the Company, neither the Company nor any of its officers,
employees, agents, or
-24-
affiliates has directly or indirectly given or agreed to give any illegal gift,
contribution, payment, or similar benefit to any supplier, customer,
governmental official, or employee or other person who was or is in a position
to help or hinder the business of the Company (or assist in connection with any
actual transaction) or made or agreed to make any illegal contribution, or
reimbursed any illegal political gift or contribution made by any other person
or entity, to any candidate for United States federal, state, or local office or
any public office in any jurisdiction outside the United States, in any event
(A) which may subject the Company to any damage or penalty in any civil,
criminal, or governmental litigation or proceeding or (B) the non-continuation
of which has had or could have, individually or in the aggregate, a Material
Adverse Effect on the business of the Company. To the knowledge of the Company,
neither the Company nor any of its officers, employees, agents, or affiliates
has established or maintained any unrecorded fund or asset or intentionally made
any materially false entries on any books or records for any purpose.
2.17 Interested Party Transactions. Except as set forth in Schedule
2.17, no officer, director, or shareholder of the Company (nor any parent,
sibling, son, daughter, or spouse of any of such persons, or any trust,
partnership or corporation in which any of such persons has an economic
interest), has, directly or indirectly, (i) an economic interest in any entity
which furnishes or sells services or products that the Company furnishes or
sells, or proposes to furnish or sell, (ii) an economic interest in any entity
that purchases from or sells or furnishes to the Company any goods or services,
or (iii) a beneficial interest in any Contract; provided, however, that no
officer, director, or shareholder the Company shall be deemed to have such an
interest solely by virtue of holding less than one percent (1%) of the
outstanding voting stock of a corporation whose equity securities are traded on
a recognized stock exchange in the United States or quoted on The Nasdaq Stock
Market.
2.18 Compliance with Law; Governmental Authorization. The Company has
complied in all material respects with, is not in violation of, and has not
received any notices of violation with respect to, any foreign, federal, state
or local statute, law or regulation, except where any such non-compliance or
violation would not have a Material Adverse Effect on the Company. Schedule 2.18
lists each material federal, state, county, local, or foreign governmental
consent, license, permit, grant, or other authorization issued to the Company
(i) pursuant to which the Company currently operates or holds any interest in
any of its properties or (ii) which is required for the operation of its
business or the holding of any such interest (collectively, the "Company
Authorizations"), which Company Authorizations are in full force and effect.
2.19 Litigation. Except as set forth in Schedule 2.19, there is no
claim, dispute, action, proceeding, suit or appeal, or investigation, at law or
in equity, pending against the Company, or involving any of its assets or
properties, before any court, agency, authority, arbitration panel or other
tribunal, and, to the knowledge of the Company, none have been threatened in
writing against the Company. The Company is not subject to any order, writ,
injunction or decree of any court, agency, authority, arbitration panel or other
tribunal.
2.20 Insurance. Schedule 2.20 lists all material insurance policies and
fidelity bonds covering the assets, business, equipment, properties, operations,
software errors and omissions, employees, officers, and directors of the Company
as well as all claims made under any insurance
-25-
policy by the Company in the past three years. There is no claim by the Company
pending under any of such policies or bonds as to which coverage has been
questioned, denied, or disputed by the underwriters of such policies or bonds.
All premiums payable under all such policies and bonds have been paid, and the
Company is otherwise in material compliance with the terms of such policies and
bonds. To the knowledge of the Company, such policies of insurance and bonds are
of the type and in amounts customarily carried by persons conducting businesses
similar to those of the Company in the jurisdictions in which the Company
operates. The Company has no knowledge of any threatened termination of, or
premium increase with respect to, any of such policies. The Company has never
been denied insurance coverage nor has any insurance policy of the Company ever
been cancelled for any reason.
2.21 Bank Accounts. Schedule 2.21 constitutes a full and complete list
of all the bank accounts of the Company, together with the names of the persons
authorized to draw thereon. All cash in such accounts is held in demand deposits
and is not subject to any restriction or limitation as to withdrawal.
2.22 Environmental Matters.
(a) Hazardous Material. The Company has not (i) operated any
underground storage tanks at any property that the Company has at any time
owned, operated, occupied or leased or (ii) illegally released any substance
that has been designated by any Governmental Entity or by applicable federal,
state, local, or foreign law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including, without limitation, PCBs,
asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant
to the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws, (a "Hazardous Material").
No Hazardous Materials are present, as a result of the deliberate actions of the
Company on or under any property, including the land and the improvements,
ground water and surface water thereof, that the Company has at any time owned,
operated, occupied or leased.
(b) Hazardous Materials Activities. The Company has not transported,
stored, used, manufactured, disposed of, released or exposed their employees or
others to Hazardous Materials in violation of any law, nor has the Company
disposed of, transported, sold, or manufactured any product containing a
Hazardous Material (any or all of the foregoing being collectively referred to
as "Hazardous Materials Activities") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity to prohibit, regulate,
or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. The Company currently holds all environmental
approvals, permits, licenses, clearances, and consents (the "Environmental
Permits") necessary for the conduct of the Company's Hazardous Material
Activities and other businesses of the Company as such activities and businesses
are currently being conducted.
-26-
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
Company's knowledge, threatened, concerning any Environmental Permit, Hazardous
Material or any Hazardous Materials Activity of the Company. The Company is not
aware of any fact or circumstance which would reasonably be expected to involve
the Company in any environmental litigation or impose upon the Company any
environmental liability.
2.23 Brokers and Finders. Except as set forth in Schedule 2.23, the
Company has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
2.24 Certain Advances. There are no receivables of the Company owing by
directors, officers, employees, consultants or shareholders of the Company, or
owing by any affiliate of any director or officer of the Company, other than
advances in the ordinary and usual course of business to officers and employees
for reimbursable business expenses, consistent with past practice.
2.25 Minute Books; Books and Records. The minute books of the Company
provided to counsel for Parent contain a summary that is accurate and complete
in all material respects of all meetings of directors and shareholders and
reflect all other material corporate actions taken by the directors and
shareholders of the Company since the time of the Company's incorporation. The
books and records of the Company (i) are accurate in all material respects and
(ii) are in the Company's possession or under its control.
2.26 Product Warranties; Defects; Liabilities. Each product
manufactured, sold, licensed, leased, or delivered by the Company has been in
conformity with all applicable contractual commitments and all express and
implied warranties except where the failure to be in such conformity would not
have a Material Adverse Effect on the Company. The Company has no liability, and
to the knowledge of the Company, there is no current reasonable basis for any
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand giving rise to any liability, for replacement or repair of such products
or other damages in connection therewith. Except as set forth in Schedule
2.26(a), no product manufactured, sold, licensed, leased, or delivered by the
Company is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale, license, or lease or beyond
that implied or imposed by applicable law. Schedule 2.26 includes a copy of the
Company's standard terms and conditions of sale, license, or lease.
2.27 Year 2000 Compliance. Each product manufactured, sold, licensed,
leased, or delivered by the Company (and all Company Intellectual Property
embodied therein) is designed to be used prior to, during, and after the
calendar year 2000 A.D., and such products and related Company Intellectual
Property will operate during each such time period without error relating to, or
the product of, date data which represents or references different centuries or
more than one century. Without limiting the generality of the foregoing, such
products and Company Intellectual Property embodied therein (i) will not
abnormally end or provide invalid or incorrect results as a result of date
-27-
data, specifically including date data which represents or references different
centuries or more than one century; (ii) have been designed to ensure date data
century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values that
reflect the century; and (iii) includes Year 2000 Capabilities to the extent
necessary for the operation or functionality of the Company's products. For
purposes of this Agreement, "Year 2000 Capabilities" means that (i) such
products and related Company Intellectual Property will manage, calculate,
sequence, compare, and manipulate data involving dates, including single century
formulas and multi-century formulas and including leap years and will not cause
an abnormally ending scenario within the application or generate incorrect
values or invalid results involving such dates; (ii) all date-related user
interface functionalities and data fields associated with such products and
Company Intellectual Property embodied therein include the indication of
century; and (iii) all date-related data interface functionalities associated
with such products and related Company Intellectual Property embodied therein
include the indication of century.
2.28 No Changes In Equity Interests. The Company has not effected or
entered any agreement to effect any of the following transactions in
contemplation of the Merger: (i) accelerated the exercise or conversion date or
otherwise modified the terms of any outstanding warrant, option, or convertible
security, (ii) issued any shares of the Company's capital stock, (iii) granted
any new stock options or issued any bonus shares of the Company's capital stock
to any employee, (iv) induced conversion or exercise of any outstanding
securities, (v) repurchased or exchanged any outstanding equity securities, or
(vi) otherwise affected any material change in the equity interests of the
holders of the Company's outstanding securities. To the knowledge of the
Company, no shareholder of the Company, or group of shareholders has purchased
any securities of the Company from any other shareholder in contemplation of the
Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
3.1 Organization of Parent. Parent is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
California. Parent has all requisite power and authority to own, lease, and
operate its properties and to carry on its business as now being conducted and
as currently proposed to be conducted and is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction in which the
failure to be so qualified would have a Material Adverse Effect on Parent.
3.2 Authority. Parent has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent. This Agreement has been duly executed
and delivered by Parent and constitutes the valid and binding obligation of
Parent, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy and
-28-
other similar laws and principles of equity. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under (i) any provision of the Articles of Incorporation or
Bylaws of Parent, or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or on which Parent's business, financial condition, operations, or prospects is
substantially dependent, other than any such conflicts, violations, defaults,
terminations, cancellations or accelerations which individually or in the
aggregate would not have a material adverse effect on, or otherwise materially
delay, the ability of Parent to consummate the Merger and the transactions
contemplated hereby or have a Material Adverse Effect on Parent. Assuming the
accuracy of the Company Financial Statements, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent in connection with the execution
and delivery of this Agreement by Parent or the consummation by Parent of the
transactions contemplated hereby, except for (i) the filing of the Merger
Articles with the Secretaries of State of Texas and California, (ii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws, (iii) the
filing of such reports under Section 13 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated hereby, and (iv) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not have a material adverse effect on the ability of
Parent to consummate the transactions contemplated hereby.
3.3 Parent Common Shares. The shares of Parent Common to be issued
pursuant to the Merger, will, when issued and delivered in accordance with this
Agreement, be duly authorized, validly issued, fully paid, and nonassessable and
will be free of any liens or encumbrances other than any liens or encumbrances
created by or imposed upon the holders thereof; provided, however, that the
shares of Parent Common to be issued hereunder will be subject to restrictions
on transfer under applicable federal and state securities laws. As of June 24,
1999, 8,688,986 shares of Parent Common were issued and outstanding.
3.4 SEC Documents; Parent Financial Statements. Parent has furnished or
made available to the Company a true and complete copy of its Annual Report on
Form 10-K for the fiscal year ended June 30, 1998, its Quarterly Reports on Form
10-Q for the quarters ended September 26, 1998, December 26, 1998, and March 27,
1999, and its proxy statement dated October 5, 1998 (collectively, the "SEC
Documents"), which Parent filed under the Exchange Act with the Securities and
Exchange Commission (the "SEC"). As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act, and none of the 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 made therein, in light of the
circumstances under which they were made, not misleading, except to the extent
corrected by a document subsequently filed by or on behalf of Parent with the
SEC. The consolidated financial statements of Parent, including the notes
thereto, included in the SEC Documents (the "Parent
-29-
Financial Statements") are complete and correct, comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC), and fairly present
the consolidated financial position of Parent and the results of its operations
and cash flows as of the respective dates and for the periods indicated thereon
(subject, in the case of the unaudited statements, to normal recurring
accounting adjustments). There has been no change in Parent's accounting
policies or estimates except as described in the notes to the Parent Financial
Statements.
3.5 No Material Adverse Change. Since the date of the balance sheet
included in the Parent's most recently filed report on Form 10-Q, Parent has
conducted its business in the ordinary course and there has not occurred: (a)
any material adverse change in the condition (financial or otherwise), business,
net worth, assets, properties, operations, obligations, or liabilities (fixed or
contingent) of the Parent; (b) any amendment or change in the Articles of
Incorporation or Bylaws of Parent; or (c) any damage to, destruction or loss of
any assets of the Parent (whether or not covered by insurance) that materially
and adversely affects the financial condition or business of Parent. For
purposes of this section, a reduction in the trading price of Parent's Common
Stock or change in the market capitalization of Parent as reported by the Nasdaq
National Market or any other automated quotation system or exchange, in and of
themselves, or changes in domestic or international economic conditions or
changes in the industry and markets in which the Parent competes shall not
constitute a material adverse change, whether occurring at any time or from time
to time.
3.6 Brokers' and Finders' Fees. Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
ARTICLE IV
SECURITIES ACT COMPLIANCE; REGISTRATION
4.1 Securities Act Exemption. The Parent Common to be issued pursuant
to this Agreement will not be registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance on the exemption set forth in
Section 4(2) thereof. Prior to the Closing Date, each holder of Company Common
shall have completed an Investment Representation Statement in the form attached
hereto as Exhibit B and shall have provided Parent such additional information
regarding such holder's financial and investment background and investment
intent as Parent may reasonably request to ensure the availability of an
exemption from the registration requirements of the Securities Act.
4.2 Stock Restrictions. In addition to any legend imposed by applicable
state securities laws or the Affiliates Agreements (as defined in Section 6.6),
the certificates representing the shares of Parent Common issued pursuant to
this Agreement shall bear a restrictive legend (and stop
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transfer orders shall be placed against the transfer thereof with Parent's
transfer agent), stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THEY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT, OR A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION.
4.3 Registration. Parent agrees that the holders of Company Common
shall be entitled to the registration rights set forth in the Registration
Rights Agreement in the form attached hereto as Exhibit C.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business of the Company. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, the Company agrees (except to the extent that
Parent shall otherwise consent in writing or as contemplated by this Agreement),
to carry on its business in the usual and ordinary course in substantially the
same manner as heretofore conducted, to pay its debts and Taxes when due, to pay
or perform all other obligations when due, and, to the extent consistent with
such business, use all reasonable efforts consistent with past practice and
policies to preserve intact the Company's present business organization, keep
available the services of its present officers and employees, and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that the Company's goodwill
and ongoing businesses shall not be impaired in any material respect at the
Effective Time. The Company shall promptly notify Parent of any event or
occurrence or emergency not in the ordinary course of business of the Company
and any event which could have a Material Adverse Effect on the Company. Except
as expressly contemplated by this Agreement, the Company shall not, without the
prior written consent of Parent:
(a) Accelerate, amend or change the period of exercisability of any
outstanding Company Options or stock subject to vesting or authorize cash
payments in exchange for any such outstanding options;
(b) Enter into any commitment or transaction not in the ordinary
course of business;
(c) Transfer to any person or entity any rights to any Company
Intellectual Property Rights (other than end-user licenses granted to customers
of the Company in the ordinary course of business);
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(d) Enter into or amend any agreements pursuant to which any other
party is granted marketing, distribution, or similar rights of any type or scope
with respect to any products of the Company;
(e) Amend or otherwise modify (or agree to do so), except in the
ordinary course of business, or materially violate the terms of, any of the
agreements set forth or described in the Company Schedules;
(f) Commence any litigation except to enforce its rights under or to
interpret this Agreement or any other agreement, obligation or arrangement
contemplated hereby or entered into a established in connection herewith;
(g) Declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock, or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of capital stock, or repurchase, redeem or otherwise
acquire, directly or indirectly, any shares of its capital stock (or options,
warrants or other rights exercisable therefor), except upon termination of
employment at cost;
(h) Except for the issuance of shares of Company Common upon
exercise or conversion of presently outstanding Company Options, issue, grant,
deliver or sell or authorize or propose the issuance, grant, delivery or sale
of, or purchase or propose the purchase of, any shares of the Company's capital
stock or securities convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities;
(i) Purchase or redeem any shares of the Company's outstanding
capital stock;
(j) Cause or permit any amendments to the Articles or Bylaws or
similar governing documents of the Company;
(k) 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 in an amount in excess of $15,000 in the case of a single transaction or
in excess of $30,000 in the aggregate in any 30-day period;
(l) Sell, lease, license, or otherwise dispose of any of its
properties or assets, except in the ordinary course of business consistent with
past practice;
(m) Incur any indebtedness for borrowed money in excess of $25,000
or guarantee any such indebtedness or issue or sell any debt securities of the
Company or guarantee any debt securities of others;
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(n) Grant any severance or termination pay (i) to any director or
officer or (ii) to any other employee except payments made pursuant to standard
written agreements outstanding on the date hereof or payments required by law;
(o) Adopt or amend any employee benefit plan, or enter into any
employment contract, extend employment offers, pay or agree to pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates of its employees, other than regularly scheduled
increases for employees (other than officers) in the ordinary and usual course
of business, consistent with past practice;
(p) Hire or involuntary terminate any director, officer, or
employee;
(q) Revalue any of its assets, including without limitation writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business;
(r) Pay, discharge or satisfy, in an amount in excess of $50,000 (in
any one case) or $100,000 (in the aggregate), any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business,
consistent with past practice, of liabilities reflected or reserved against in
the Company Financial Statements (or the notes thereto) or that arose in the
ordinary and usual course of business, consistent with past practice, subsequent
to the date of the Company Balance Sheet or expenses consistent with the
provisions of this Agreement incurred in connection with any transaction
contemplated hereby;
(s) Make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes, provided that Parent shall not unreasonably
withhold its consent to any of the foregoing;
(t) Enter into any strategic alliance, joint development or joint
marketing agreement; or
(u) Take, or agree orally or in writing or otherwise to take, any of
the actions described in Sections 5.1(a) through (t) above, or any other action
that would prevent the Company from performing or cause the Company not to
perform its covenants hereunder.
ARTICLE VI
ADDITIONAL AGREEMENTS AND COVENANTS
6.1 Shareholder Approval. The Company shall promptly after the date
hereof take all action reasonably necessary in accordance with Texas Law, the
Articles, and the Bylaws to obtain the approval by the Company's shareholders of
the Merger, this Agreement, and the transactions contemplated hereby. The
Company agrees to use its best efforts and to take all action reasonably
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necessary or advisable to secure the necessary votes or written consents
required by Texas Law to effect the Merger. Parent shall cooperate with the
Company to the best of Parent's ability in the preparation of an information
statement for use in connection with the solicitation of a written consent from
the shareholders of the Company with respect to approval of the Merger.
6.2 Access to Information. The Company shall afford Parent and its
accountants, counsel, and other representatives reasonable access during normal
business hours during the period prior to the Effective Time to (i) all of its
properties, books, contracts, commitments, and records, and (ii) all other
information concerning the business, properties, and personnel of the Company as
Parent may reasonably request. The Company agrees to provide Parent and its
accountants, counsel, and other representatives copies of internal financial
statements promptly upon request. No information or knowledge obtained in any
investigation pursuant to this agreement or otherwise shall affect or be deemed
to limit the effect of any representation or warranty of the Company or Parent
contained herein or the conditions to the obligations of the parties to
consummate the Merger.
6.3 Confidentiality. From the date hereof to and including the
Effective Time, the parties hereto shall maintain, and cause their directors,
employees, agents and advisors to maintain, in confidence and not disclose or
use for any purpose, except the evaluation of the transactions contemplated
hereby and the accuracy of the respective representations and warranties of the
parties hereto contained herein, information concerning the other parties hereto
and obtained directly or indirectly from such parties, or their directors,
employees, agents or advisors, except such information as is or becomes (i)
available to the non-disclosing party from third parties not subject to an
undertaking of confidentiality; (ii) generally available to the public other
than as a result of a breach by the non-disclosing party hereunder; or (iii)
required to be disclosed under applicable law; and except such information as
was in the possession of such party prior to obtaining such information from
such other party as to which the fact of prior possession such possessing party
shall have the burden of proof. In the event that the transactions contemplated
hereby shall not be consummated, all such information which shall be in writing
shall be returned to the party furnishing the same, including to the extent
reasonably practicable, copies, reproductions, abstracts and summaries thereof
which may have been prepared.
6.4 Public Disclosure. Unless otherwise required by law, prior to the
Effective Time no disclosure (whether or not in response to an inquiry) of the
subject matter of this Agreement shall be made by any party hereto unless
approved by Parent and the Company prior to release, provided that such approval
shall not be unnecessarily withheld, subject, in the case of Parent, to Parent's
obligation to comply with applicable laws.
6.5 Consents. Each of Parent and the Company shall promptly apply for
or otherwise seek, and use its reasonable best efforts to obtain, all consents
and approvals required to be obtained by it for the consummation of the Merger,
and the Company shall use its best efforts to obtain all consents, waivers and
approvals under any of the Company's agreements, contracts, licenses or leases
in order to preserve the benefits thereunder for the Surviving Corporation and
otherwise in connection with the Merger. All of such consents and approvals
required by the Company are set forth in Schedule 2.5.
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6.6 Affiliate Agreements. Schedule 6.6 sets forth those persons who
are, in the Company's reasonable judgment, "affiliates" of the Company and the
Parent within the meaning of Rule 144 (each such person an "Affiliate")
promulgated under the Securities Act. The parties shall provide each other such
information and documents as the other shall reasonably request for purposes of
reviewing such list. Both the Company and the Parent shall use their best
efforts to deliver or cause to be delivered to the other party, concurrently
with the execution of this Agreement (and in any case prior to the Effective
Time) from each of the Affiliates, an executed Affiliate Agreement in the form
attached hereto as Exhibit D. Parent shall be entitled to place appropriate
legends on the certificates evidencing any Parent Common to be received or are
already held by such Affiliates of the Company, and to issue appropriate stop
transfer instructions to the transfer agent for Parent Common, consistent with
the terms of such Affiliate Agreements.
6.7 Legal Conditions to the Merger. Each of Parent and the Company will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on such party with respect to the Merger and
will promptly cooperate with and furnish information to any other party hereto
in connection with any such requirements imposed upon such other party in
connection with the Merger. Each party will take all reasonable actions to
obtain (and will cooperate with the other parties in obtaining) any consent,
authorization, order or approval of, or any registration, declaration, or filing
with, or any exemption by, any Governmental Entity, or other third party,
required to be obtained or made by such party or its subsidiaries in connection
with the Merger or the taking of any action contemplated thereby or by this
Agreement.
6.8 Blue Sky Laws. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of Parent Common pursuant hereto. The Company shall
use its best efforts to assist Parent as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable in
connection with the issuance of Parent Common pursuant hereto.
6.9 Best Efforts; Additional Documents and Further Assurances. Each of
the parties to this Agreement shall use its best efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the request of
another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be reasonably necessary or
desirable for effecting completely the consummation of this Agreement, the
Merger, and the transactions contemplated hereby.
6.10 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of
which is likely to cause any representation or warranty of the Company and
Parent, respectively, contained in this Agreement to be untrue or inaccurate in
any material respect at or prior to the Effective Time except as contemplated by
this Agreement (including the Company Schedules) and (ii) any failure of the
Company or Parent, as the case may be, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice
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pursuant to this Section 6.10 shall not limit or otherwise affect any remedies
available to the party receiving such notice.
6.11 Employment Agreements. The Company shall use its best efforts to
deliver or cause to be delivered to the Parent, concurrently with the execution
of this Agreement (and in any case prior to the Effective Time) employment
agreements for the individuals set forth on Schedule 6.11 (the "Employment
Agreements"), which shall become effective as of the Effective Time. All of the
Employment Agreements are substantially in the form of Exhibit E.
6.12 Non-competition Agreements. The Company shall use its best efforts
to deliver or cause to be delivered to the Parent, concurrently with the
execution of this Agreement (and in any case prior to the Effective Time),
Non-competition Agreements for the individuals set forth on Schedule 6.12 (the
"Noncompetition Agreements"), which shall become effective at the Effective
Time. All of the Non-competition Agreements are substantially the form attached
hereto as Exhibit F.
6.13 Implementation of Representations and Warranties. The Company and
Parent will each take all reasonable action within their capability necessary to
render accurate as of the Effective Time their representations and warranties
contained in this Agreement, and the Company and Parent will each refrain from
taking any action which would render inaccurate as of the Effective Time any
such representations or warranties.
6.14 Form S-8. As soon as practicable after the Effective Time, Parent
shall file a Registration Statement on Form S-8 with the SEC covering the shares
of Parent Common issuable with respect to assumed Company Options.
6.15 Nasdaq National Market Listing. Parent shall authorize for listing
on The Nasdaq National Market the shares of Parent Common issuable in connection
with the Merger (and the shares of Parent Common issuable upon exercise of
Company Options to be assumed by Parent pursuant to this Agreement), upon
official notice of issuance.
6.16 No Solicitation. From and after the date of this Agreement until
the earlier to occur of the Effective Time or termination of this Agreement
pursuant to its terms, the Company will not, and will instruct its directors,
officers, employees, representatives, investment bankers, agents, and affiliates
not to, directly or indirectly (i) solicit or encourage submission of any
Acquisition Proposal (as defined herein) by any person, entity, or group (other
than Parent and its affiliates, agents, and representatives) or (ii) participate
in any discussions or negotiations with, or disclose any non-public information
concerning the Company to, or afford access to the properties, books, or records
of the Company to, or otherwise assist or facilitate, or enter into any
agreement or understanding with, any person, entity, or group (other than Parent
and its affiliates, agents, and representatives) in connection with any
Acquisition Proposal with respect to the Company. For purposes of this
Agreement, an "Acquisition Proposal" means any proposal or offer relating to (i)
any merger, consolidation, sale or license of substantial assets or similar
transactions involving the Company (other than sales or licenses of assets or
inventory in the ordinary course of business or as permitted
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by this Agreement) or (ii) sales by the Company of any shares of its capital
stock (including, without limitation, by way of a tender offer or an exchange
offer and except upon exercise of Company Options). The Company will immediately
cease any and all existing activities, discussion, or negotiations with any
parties conducted heretofore with respect to any of the foregoing. The Company
will promptly (i) notify Parent if it receives any proposal or written inquiry
or written request for information in connection with an Acquisition Proposal or
potential Acquisition Proposal and (ii) notify Parent of the significant terms
and conditions of any such Acquisition Proposal. In addition, from and after the
date of this Agreement, until the earlier to occur of the Effective Time or
termination of this Agreement pursuant to its terms, the Company will not, and
will instruct its directors, officers, employees, representatives, investment
bankers, agents, and affiliates not to, directly or indirectly, make or
authorize any public statement, recommendation, or solicitation in support of
any Acquisition Proposal made by any person, entity, or group (other than
Parent).
6.17 Termination of 401(k) Plan. The Company agrees to terminate its
401(k) retirement savings plan on the day before the Effective Time. Parent
shall receive evidence from the Company that the Company's 401(k) Plan has been
terminated pursuant to the terms of such 401(k) plan and as set forth in the
resolutions of each such entity's Board of Directors (the form and substance of
which resolutions shall be subject to review and approval of the Parent),
effective as of the day immediately preceding the Effective Time.
6.18 Reorganization. No party to the Agreement shall take any action,
either prior to or subsequent to the Closing, that would cause the Merger to
fail to qualify as a "reorganization" under Section 368(a) of the Code, and each
party agrees to file all Returns consistent with such treatment.
6.19 Pooling Accounting. Each of Parent and the Company agrees not to
take any action, and to use its best efforts to cause its respective officers,
directors, and other affiliates not to take any action, either prior to or after
the Closing, that would adversely affect the ability of Parent to treat the
business combination to be effected by the Merger as a pooling of interests, and
each of Parent and the Company agrees to take such actions and to use its best
efforts to cause its respective affiliates to take such actions as may be
reasonably required to negate the impact of any past actions that would
adversely affect the ability of Parent to treat the business combination to be
effected by the Merger as a pooling of interests.
6.20 Director Indemnification. From and after the Effective Time,
Parent agrees to indemnify and hold harmless all past and present officers and
directors of the Company to the same extent as such persons are currently
indemnified by the Company pursuant to the Articles and Bylaws, in each case as
in effect as of the date hereof, for acts and omissions prior to the Effective
Time, provided that such persons provide any undertaking required by applicable
law, the Articles, and the Bylaws.
6.21 Employee Benefit Plans. Following the Effective Time, Parent shall
use its commercially reasonable best efforts, under each of Parent's Employee
Benefit Plans (as such term is defined in Section 3(3) of ERISA), to grant
employees of Company with full credit for years of service with the Company for
all purposes for which such service is recognized under Parent's
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Employee Benefits Plans including, but not limited to, eligibility to
participate and vesting; provided, however, such service with the Company shall
be determined, at Parent's sole discretion, either by utilizing the Company's
payroll records or pursuant to the service crediting records of the comparable
Company Employee Benefit Plan. Notwithstanding the foregoing, none of the
provisions contained herein shall operate to duplicate any benefit provided to
any Company employee or the funding of such benefit.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
7.1 Survival of Representations and Warranties. All of the
representations and warranties of the Company and the covenants and agreements
of the Company (other than the covenants set forth in Section 6.9) in this
Agreement (as modified by the Company Schedules) or in any instrument delivered
at the Closing shall survive the Merger and shall continue for the period
following the Closing Date set forth in Section 7.2(b). No other representations
or warranties shall survive the Merger.
7.2 Escrow Arrangements.
(a) Escrow Fund. At the Effective Time, each shareholder of the
Company (individually, a "Company Shareholder" and, collectively, the "Company
Shareholders") will be deemed to have received and deposited with the Escrow
Agent (as defined below) the Escrow Amount (plus any additional shares as may be
issued upon any stock split, stock dividend, or recapitalization effected by
Parent after the Effective Time with respect to shares constituting the Escrow
Amount) without any act of any Company Shareholder. As soon as practicable after
the Effective Time, the Escrow Amount, without any act of any Company
Shareholder, will be deposited with Chase Manhattan Bank and Trust Company,
National Association, or a trust company or other institution acceptable to
Parent and the Securityholder Agent (as defined in Section 7.2(g) below)) as
Escrow Agent (the "Escrow Agent"), such deposit to constitute an escrow fund
(the "Escrow Fund") to be governed by the terms set forth herein and to be
maintained at Parent's cost and expense. The portion of the Escrow Amount
contributed on behalf of each Company Shareholder shall be in proportion to the
aggregate Parent Common Stock to which such holder would otherwise be entitled
under Section 1.6(b) and shall be in the respective amounts listed opposite each
Company Shareholder's name listed in Exhibit G attached hereto. Any shares of
Parent Common contributed to the Escrow Fund shall not be unvested or subject to
any right of repurchase, risk of forfeiture, or other condition in favor of the
Surviving Corporation or Parent. The Escrow Fund shall be available to
compensate Parent and its affiliates for any claims, losses, liabilities,
damages, deficiencies, costs, and expenses, including reasonable attorneys' fees
and expenses and expenses of investigation and defense incurred by Parent, its
officers, directors, or affiliates directly or indirectly as a result of any
inaccuracy or breach of a representation or warranty of the Company contained
herein (as modified by the Company Schedules) or in the certificates, delivered
pursuant to Sections 9.3(b) and 9.3(c), or any failure by the Company prior to
the Closing to perform or comply with any covenant (except as Parent may have
expressly waived in writing) contained herein (hereinafter individually a "Loss"
and
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collectively "Losses"), provided that claims for any Losses must be asserted on
or before 5:00 p.m. (California Time) on the earlier to occur of (i) the date
that is one year following the Closing Date or (ii) the date of the issuance by
Parent's independent accountants of its first audit report relating to Parent's
financial statements which would include an audit of the combined operations of
Parent and the Company. Parent may not receive any shares from the Escrow Fund
unless and until Officer's Certificates (as defined in Section 7.2(d)(i) below)
identifying Losses, the aggregate amount of which exceed $50,000, have been
delivered to the Escrow Agent as provided in paragraph (d) and either there is
no objection thereto or any objection has been resolved in accordance with the
provisions of this Article VII; in such case, Parent may recover from the Escrow
Fund all Losses in excess of $50,000 threshold for which there is no objection
or any objection has been resolved in accordance with the provisions of this
Article VII. No portion of the Escrow Amount shall be contributed in respect of
any Company Options.
(b) Escrow Period; Distribution upon Termination of Escrow Period.
Subject to the following requirements, the Escrow Fund shall be in existence
immediately following the Effective Time and shall terminate at 5:00 p.m.
(California Time) on the earlier to occur of (i) date that is one year following
the Closing Date or (ii) the date of the issuance by Parent's independent
accountants of its first audit report relating to Parent's financial statements
which would include an audit of the combined operations of Parent and the
Company, all such dates to be certified to the Escrow Agent in an Officer's
Certificate (the "Escrow Period"). Such amount (or some portion thereof) that is
necessary in the reasonable judgment of Parent, subject to the objection of the
Securityholder Agent and the subsequent arbitration of the matter in the manner
provided in Section 7.2(f) hereof, to satisfy any unsatisfied claims concerning
facts and circumstances existing prior to the termination of such Escrow Period
as are specified in any Officer's Certificate delivered to the Escrow Agent and
the Securityholder Agent prior to termination of such Escrow Period, may be
retained in the Escrow Fund after termination of the Escrow Period. As soon as
any or all such claims have been resolved as evidenced by the written memorandum
of the Securityholder Agent and Parent, the Escrow Agent shall deliver to the
Company Shareholders the remaining portion of the Escrow Fund that is not
required to satisfy such claims. If no Officer's Certificate pertaining to
unsatisfied claims is delivered to the Escrow Agent and the Securityholder Agent
prior to the termination of the Escrow Period, upon termination of the Escrow
Period, the Escrow Agent, without further authorization or instruction, shall
distribute the remainder of the Escrow Fund to the Company Shareholders in
accordance with the provisions of this Section 7.2(b). Deliveries of Escrow
Amounts to the Company Shareholders pursuant to this Section 7.2(b) shall be
made in proportion to their respective original contributions to the Escrow Fund
(as set forth on Exhibit H attached hereto).
(c) Protection of Escrow Fund.
(i) The Escrow Agent shall hold and safeguard the Escrow Fund
during the Escrow Period, shall treat such fund as a trust fund in accordance
with the terms of this Agreement and not as the property of Parent and shall
hold and dispose of the Escrow Fund only in accordance with the terms hereof.
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(ii) Any shares of Parent Common or other equity securities
issued or distributed by Parent (including shares issued upon a stock dividend
or split) ("New Shares") in respect of Parent Common in the Escrow Fund which
have not been released from the Escrow Fund shall be deposited with the Escrow
Agent and added to the Escrow Fund and become a part thereof. New Shares issued
in respect of shares of Parent Common which have been released from the Escrow
Fund shall not be added to the Escrow Fund but shall be distributed to the
recordholders thereof. Cash dividends on Parent Common held in the Escrow Fund
shall not be added to the Escrow Fund but shall be distributed to the record
holders thereof.
(iii) Each Company Shareholder shall have voting rights with
respect to the shares of Parent Common contributed to the Escrow Fund by such
Company Shareholder (and on any New Shares added to the Escrow Fund in respect
of such shares of Parent Common).
(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Escrow Agent at any time before 5:00
p.m. (California Time) on the last day of the Escrow Period of a certificate
signed by any officer of Parent (an "Officer's Certificate"): (A) stating that
Parent has paid or properly accrued or reasonably anticipates that it will have
to pay or accrue Losses and (B) specifying in reasonable detail the individual
items of Losses included in the amount so stated, the date each such item was
paid or properly accrued, or the basis for such anticipated liability, and the
nature of the misrepresentation, breach of warranty or covenant to which such
item is related, the Escrow Agent shall, subject to the provisions of Section
7.2(e) hereof, deliver to Parent out of the Escrow Fund, as promptly as
practicable, shares of Parent Common held in the Escrow Fund in an amount equal
to such Losses.
(ii) For the purposes of determining the number of shares of
Parent Common to be delivered to Parent out of the Escrow Fund pursuant to
Section 7.2(d)(i) hereof, the shares of Parent Common shall be valued at a price
equal to the closing price of Parent Common in trading on the Nasdaq National
Market on the last trading day immediately prior to the Closing Date (the
"Parent Price Per Share"). The Parent Price Per Share shall be certified to the
Escrow Agent in an Officer's Certificate.
(e) Objections to Claims. At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such certificate shall be
delivered to the Securityholder Agent and for a period of thirty (30) days after
receipt of such Officer's Certificate, the Escrow Agent shall make no delivery
to Parent of any Escrow Amounts pursuant to Section 7.2(d) hereof unless the
Escrow Agent shall have received written authorization from the Securityholder
Agent to make such delivery. After the expiration of such thirty (30) day
period, the Escrow Agent shall make delivery of shares of Parent Common from the
Escrow Fund in accordance with Section 7.2(d) hereof, provided that no such
payment or delivery may be made if the Securityholder Agent shall object in a
written statement to the claim made in the Officer's Certificate, and such
statement shall have been delivered to the Escrow Agent prior to the expiration
of such thirty (30) day period.
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(f) Resolution of Conflicts; Arbitration.
(i) In case the Securityholder Agent shall so object in writing
to any claim or claims made in any Officer's Certificate, the Securityholder
Agent and Parent shall attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims. If the Securityholder
Agent and Parent should so agree, a memorandum setting forth such agreement
shall be prepared and signed by both parties and shall be furnished to the
Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum
and distribute shares of Parent Common from the Escrow Fund in accordance with
the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Parent or the Securityholder Agent may demand arbitration of
the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be commenced
until such amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted by three
arbitrators. Parent and the Securityholder Agent shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator,
each of which arbitrators shall be independent and have at least ten years
relevant experience. The arbitrators shall set a limited time period and
establish procedures designed to reduce the cost and time for discovery while
allowing the parties an opportunity, adequate in the sole judgment of the
arbitrators, to discover relevant information from the opposing parties about
the subject matter of the dispute. The arbitrators shall rule upon motions to
compel or limit discovery and shall have the authority to impose sanctions,
including attorneys fees and costs, to the same extent as a court of competent
law or equity, should the arbitrators determine that discovery was sought
without substantial justification or that discovery was refused or objected to
without substantial justification. The decision of a majority of the three
arbitrators as to the validity and amount of any claim in such Officer's
Certificate shall be binding and conclusive upon the parties to this Agreement,
and notwithstanding anything in Section 7.2(e) hereof, the Escrow Agent shall be
entitled to act in accordance with such decision and make or withhold payments
out of the Escrow Fund in accordance therewith. Such decision shall be written
and shall be supported by written findings of fact and conclusions which shall
set forth the award, judgment, decree or order awarded by the arbitrators.
(iii) Any such arbitration shall be held in Santa ▇▇▇▇▇ County,
California and shall be conducted by, and under the rules then in effect, of the
Judicial Arbitration and Mediation Services, Inc. For purposes of this Section
7.2(f), in any arbitration hereunder in which any claim or the amount is at
issue, Parent shall be deemed to be the Non-Prevailing Party in the event that
the arbitrators award Parent less than the sum of two-thirds (2/3) of the
disputed amount plus any amounts not in dispute; otherwise, the Company
Shareholders as represented by the Securityholder Agent shall be deemed to be
the Non-Prevailing Party. The Non-Prevailing Party to an arbitration shall pay
its own expenses, the fees of each arbitrator, the administrative costs of the
arbitration, and the expenses, including without limitation, reasonable
attorneys' fees and costs, incurred by the other party to the arbitration.
Judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction. The Securityholder Agent may pay such amounts payable by
Company Shareholders under this Section 7.2(f)(iii) and Section 7.2(i)(ii) or
other
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amounts contemplated in this Section 7.2 (including without limitation
unreimbursed expenses of counsel for the Company Shareholders and Parent,
arbitrator fees and administrative costs) by distributing shares of Parent
Common from the Escrow Fund with respect to which Parent has not made a claim;
provided, however, that no shares of Parent Common may be distributed from the
Escrow Fund prior to the termination of the Escrow Period and such shares may be
distributed only to the extent that such shares are not required to satisfy any
claim for Losses.
(g) Securityholder Agent of the Company Shareholders; Power of
Attorney.
(i) In the event that the Merger is approved by the Company
Shareholders, effective upon such vote, and without further act of any Company
Shareholder, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be appointed as agent and attorney-in-fact
(the "Securityholder Agent") for each Company Shareholder (except such Company
Shareholders, if any, as shall have perfected dissenters' rights under Texas
Law), for and on behalf of Company Shareholders, to give and receive notices and
communications, to authorize delivery to Parent of shares of Parent Common from
the Escrow Fund in satisfaction of claims by Parent, to object to such
deliveries, to agree to, negotiate, enter into settlements and compromises of,
and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions necessary or
appropriate in the judgment of Securityholder Agent for the accomplishment of
the foregoing. Such agency may be changed by the Company Shareholders from time
to time, and the Securityholder Agent may resign, upon not less than thirty (30)
days prior written notice to Parent and Escrow Agent; provided that the
Securityholder Agent may not be removed unless holders of two-thirds in interest
of the Escrow Fund agree to such removal and to the identity of the substituted
agent. Any vacancy in the position of Securityholder Agent may be filled by
approval of the holders of a majority in interest of the Escrow Fund. No bond
shall be required of the Securityholder Agent, and the Securityholder Agent
shall not receive compensation for his or her services. Notices or
communications to or from the Securityholder Agent shall constitute notice to or
from each of the Company Shareholders.
(ii) The Securityholder Agent shall not be liable for any act
done or omitted hereunder as Securityholder Agent while acting in good faith and
in a manner that is not grossly negligent. The Securityholder Agent may resign
at any time upon giving at least thirty (30) days written notice to Parent and
the Company Shareholders.
(h) Actions of the Securityholder Agent. A decision, act, consent or
instruction of the Securityholder Agent shall constitute a decision of all the
Company Shareholders for whom a portion of the Escrow Amount otherwise issuable
to them is deposited in the Escrow Fund and shall be final, binding and
conclusive upon each of such Company Shareholders, and the Escrow Agent and
Parent may rely upon any such decision, act, consent or instruction of the
Securityholder Agent as being the decision, act, consent or instruction of each
and every such Company Shareholder of the Company. The Escrow Agent and Parent
are hereby relieved from any liability to any person for any acts done by them
in accordance with such decision, act, consent or instruction of the
Securityholder Agent.
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(i) Third-Party Claims.
(i) If any third party shall notify Parent or its affiliates
with respect to any matter (hereinafter referred to as a "Third Party Claim"),
which may give rise to a claim by Parent against the Escrow Fund, then Parent
shall give notice to the Securityholder Agent within 15 days of Parent's
becoming aware of any such Third Party Claim or of facts upon which any such
Third Party Claim may be based setting forth such material information with
respect to the Third Party Claim as is reasonably available to Parent; provided,
however, that no delay or failure on the part of Parent in notifying the
Securityholder Agent shall relieve the Securityholder Agent and the Company
Shareholders from any obligation hereunder except to the extent the
Securityholder Agent and the Company Shareholders are thereby prejudiced (and
then solely to the extent of such prejudice). The Securityholder Agent and the
Company Shareholders shall not be liable for any attorneys fees and expenses
incurred by Parent prior to Parent's giving notice to the Securityholder Agent
of a Third Party Claim. The notice from Parent to the Securityholder Agent shall
set forth such material information with respect to the Third Party Claim as is
then reasonably available to Parent.
(ii) In case any Third Party Claim is asserted against Parent or
its affiliates, and Parent notifies the Securityholder Agent thereof pursuant to
Section 7.2(i)(i) hereinabove, the Securityholder Agent and the Company
Shareholders will be entitled, if the Securityholder Agent so elects by written
notice delivered to Parent within 30 days after receiving Parent's notice, to
assume the defense thereof, at the expense of the Company Shareholders
independent of the Escrow Fund, with counsel reasonably satisfactory to Parent
so long as:
(A) Parent has reasonably determined that Losses which may
be incurred as a result of the Third Party Claim do not exceed either
individually, or when aggregated with all other Third Party Claims, the total
dollar value of the Escrow Fund determined in accordance with Section 7.2(d)(ii)
hereof;
(B) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief;
(C) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of Parent, likely to
establish a precedential custom or practice adverse to the continuing business
interests of Parent which could have a material adverse effect on the business
or operations of Parent; and
(D) counsel selected by the Securityholder Agent is
reasonably acceptable to Parent.
If the Securityholder Agent and the Company Shareholders so
assume any such defense, the Securityholder Agent and the Company Shareholders
shall conduct the defense of the Third Party Claim actively and diligently. The
Securityholder Agent and the Company Shareholders shall not compromise or settle
such Third Party Claim or consent to entry of any
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judgment in respect thereof without the prior written consent of Parent and/or
its affiliates, as applicable, which consent will not be unreasonably withheld
or delayed.
(iii) In the event that the Securityholder Agent assumes the
defense of the Third Party Claim in accordance with Section 7.2(i)(ii) above,
Parent or its affiliates may retain separate counsel and participate in the
defense of the Third Party Claim, but the fees and expenses of such counsel
shall be at the expense of Parent unless Parent or its affiliates shall
reasonably determine that there is a material conflict of interest between or
among Parent or its affiliates and the Securityholder Agent and the Company
Shareholders with respect to such Third Party Claim, in which case the
reasonable fees and expenses of such counsel will be borne by the Securityholder
Agent and the Company Shareholders out of the Escrow Fund. Parent or its
affiliates will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Securityholder Agent. Parent will cooperate in the defense of the
Third Party Claim and will provide full access to documents, assets, properties,
books and records reasonably requested by Securityholder Agent and relevant to
the claim and will make available all officers, directors and employees
reasonably requested by Securityholder Agent for investigation, depositions and
trial.
(iv) In the event that the Securityholder Agent fails or elects
not to assume the defense of Parent or its affiliates against such Third Party
Claim, which Securityholder Agent had the right to assume under Section
7.2(i)(ii) above, (a) Parent or its affiliates shall have the right to undertake
the defense and (b) Parent shall not compromise or settle such Third Party Claim
or consent to entry of any judgment in respect thereof without the prior written
consent of Securityholder Agent. In the event that the Securityholder Agent is
not entitled to assume the defense of Parent or its affiliates against such
Third Party Claim pursuant to Section 7.2(i)(ii) above, Parent or its affiliates
shall have the right to undertake the defense, consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim in
any manner it may deem appropriate (and Parent or its affiliates need not
consult with, or obtain any consent from, the Securityholder Agent or the
Company Shareholders in connection therewith); provided, however, that except
with the written consent of the Securityholder Agent, no settlement of any such
claim or consent to the entry of any judgment with respect to such Third Party
Claim shall alone be determinative of the validity of the claim against the
Escrow Fund. In each case, Parent or its affiliates shall conduct the defense of
the Third Party Claim actively and diligently, and the Securityholder Agent and
the Company Shareholders will cooperate with Parent or its affiliates in the
defense of that claim and will provide full access to documents, assets,
properties, books and records reasonably requested by Parent and material to the
claim and will make available all individuals reasonably requested by Parent for
investigation, depositions and trial.
(j) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth in this Article VII, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of
Parent and the Securityholder Agent and approved by the Escrow Agent, and may
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rely and shall be protected in relying or refraining from acting on any
Officer's Certificate, memorandum, instruction or other instrument reasonably
believed to be genuine and to have been signed or presented by the proper party
or parties. The Escrow Agent shall not be liable for any act done or omitted
hereunder as Escrow Agent while acting in good faith and in the exercise of
reasonable judgment, and any act done or omitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree of any court, the Escrow Agent shall not be liable to any of the
parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the expiration of
any rights under any statute of limitations with respect to this Agreement or
any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement, the Escrow
Agent shall not be liable to any party for damages, losses, or expenses, except
for gross negligence or willful misconduct on the part of the Escrow Agent. The
Escrow Agent shall not incur any such liability for (A) any act or failure to
act made or omitted in good faith, or (B) any action taken or omitted in
reliance upon any instrument, including any written statement or affidavit
provided for in this Agreement that the Escrow Agent shall in good faith believe
to be genuine, nor will the Escrow Agent be liable or responsible for forgeries,
fraud, impersonations, or determining the scope of any representative authority.
In addition, the Escrow Agent may consult with legal counsel in connection with
Escrow Agent's duties under this Agreement and shall be fully protected in any
act taken, suffered, or permitted by him/her in good faith in accordance with
the advice of counsel. The Escrow Agent is not responsible for determining and
verifying the authority of any person acting or purporting to act on behalf of
any party to this Agreement.
(vi) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and shares of Parent Common and may wait for settlement
of any such controversy by final appropriate legal proceedings or other means
as, in the Escrow Agent's discretion, may be required, despite what may be set
forth elsewhere in this Agreement. In such event, the Escrow Agent will not be
liable for damages.
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Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and shares of Parent Common held in escrow, except all
costs, expenses, charges and reasonable attorney fees incurred by the Escrow
Agent due to the interpleader. The parties jointly and severally agree to
immediately pay the Escrow Agent, to the extent not previously reimbursed, such
amounts so incurred by the Escrow Agent upon the Escrow Agent's demand therefor,
which demand may be made at any time before or after completion of such action
of interpleader. Upon initiating such action, the Escrow Agent shall be fully
released and discharged of and from all obligations and liability imposed by the
terms of this Agreement.
(vii) Parent and the Surviving Corporation agree jointly and
severally to indemnify and hold the Escrow Agent harmless against any and all
losses, claims, damages, liabilities, and expenses, including reasonable costs
of investigation, counsel fees, and disbursements that may be imposed on Escrow
Agent or incurred by Escrow Agent in connection with the performance of his/her
duties under this Agreement, including but not limited to any litigation arising
from this Agreement or involving its subject matter; provided, however, that in
the event a Company Shareholder or Company Shareholders shall be the
Non-Prevailing Party in connection with any claim or action initiated by such
Company Shareholder or Company Shareholders, then such Company Shareholder or
Company Shareholders shall be responsible for the indemnification of the Escrow
Agent to the full extent provided by this paragraph.
(viii) The Escrow Agent may resign at any time upon giving at
least thirty (30) days written notice to Parent and the Securityholder Agent;
provided, however, that no such resignation shall become effective until the
appointment of a successor escrow agent which shall be accomplished as follows:
Parent and the Securityholder Agent shall use their best efforts to mutually
agree on a successor escrow agent within thirty (30) days after receiving such
notice. If Parent and the Securityholder Agent fail to agree upon a successor
escrow agent within such time, the Escrow Agent shall have the right to appoint
a successor escrow agent authorized to do business in the state of California.
The successor escrow agent shall execute and deliver an instrument accepting
such appointment and it shall, without further acts, be vested with all the
estates, properties, rights, powers, and duties of the predecessor escrow agent
as if originally named as escrow agent. Thereafter, the predecessor escrow agent
shall be discharged from any further duties and liability under this Agreement.
(ix) Any company into which the Escrow Agent may be merged or
converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company
to which the Escrow Agent may sell or transfer all or substantially all of its
escrow/custody business, provided such company shall be eligible to serve as
Escrow Agent hereunder, shall be the successor hereunder to the Escrow Agent
without the execution or filing of any paper or any further act.
(k) Fees. All fees of the Escrow Agent for performance of its duties
hereunder shall be paid by Parent. It is understood that the fees and usual
charges agreed upon for services of
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the Escrow Agent shall be considered compensation for ordinary services as
contemplated by this Agreement. In the event that the conditions of this
Agreement are not promptly fulfilled, or if the Escrow Agent renders any service
not provided for in this Agreement, or if the parties request a substantial
modification of its terms, or if any controversy arises, or if the Escrow Agent
is made a party to, or intervenes in, any litigation pertaining to this escrow
or its subject matter, the Escrow Agent shall be reasonably compensated for such
extraordinary services and reimbursed for all costs, attorney's fees, and
expenses occasioned thereby. Parent promises to pay these sums upon demand.
(l) Consequential Damages. In no event shall the Escrow Agent be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Escrow Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of action.
ARTICLE VIII
LIMITATION OF LIABILITY
8.1 Limitation. The maximum liability of the Company Shareholders for
Losses incurred by Parent and its affiliates (including the Surviving
Corporation) shall be limited to the Escrow Fund (the "Maximum Liability for
Losses") and resort to the Escrow Fund shall be the exclusive right and remedy
of Parent for any Losses. Any claim by Parent or its affiliates (including the
Surviving Corporation) against any or all of the Company Shareholders must be
made on or before the termination of the Escrow Period and may only be made
pursuant to the procedures set forth in Article VII. The maximum liability of
each Company Shareholder for any Losses incurred by Parent and/or the Surviving
Corporation shall be an amount equal to the product obtained by multiplying (x)
the lesser of the Maximum Liability for Losses or the amount of such Losses
actually incurred by Parent or the Surviving Corporation by (y) the ratio of (a)
the total number of shares of Parent Common received by such person at the
Closing to (b) the aggregate number of shares of Parent Common issued at the
Effective Time to the Company Shareholders and shall only be payable out of the
Escrow Fund in shares. Parent agrees (and agrees to cause any affiliate
(including the Surviving Corporation)) to present any claims for Losses solely
against the Escrow Fund established under Article VII.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Shareholder Approval; Dissenters. This Agreement and the Merger
and other transactions contemplated hereby (including, without limitation, the
Employment Agreements) shall have been approved and adopted by the vote or
consent of holders of not less than two-thirds (2/3) of
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the outstanding voting securities of the Company. All rights of shareholders to
exercise dissenters' rights shall have expired on or before Closing.
(b) Government Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
transactions contemplated by this Agreement including, but not limited to, the
Merger Articles with the Secretary of State of the State of Texas and such
requirements under applicable state securities laws, shall have been filed,
occurred or been obtained, other than filings with and approvals by foreign
governments relating to the Merger if failure to make such filings or obtain
such approvals would not be materially adverse to the Company or Parent and its
subsidiaries, taken as a whole.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.
(d) Securities Act Exemption. Parent and the Company shall have
determined, in consultation with their legal advisors, that the issuance of
Parent Common pursuant to this Agreement is exempt from the registration
requirements of Section 5 of the Securities Act.
(e) Pooling Letter. Parent shall have received a letter from Ernst &
Young LLP, independent public accountants to Parent, that the transaction may be
accounted for on a pooling-of-interests basis.
9.2 Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, by the Company:
(a) Representations, Warranties and Covenants. The representations
and warranties of Parent in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though such representations
and warranties were made on and as of such date, and Parent shall have performed
and complied in all material respects with all covenants, obligations, and
conditions of this Agreement required to be performed and complied with by it as
of the Closing Date.
(b) Certificate of Parent. The Company shall have been provided with
a certificate executed on behalf of Parent by its President and its Chief
Financial Officer to the effect that as of the Closing Date:
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(i) all representations and warranties made by Parent under this
Agreement are true and complete in all material respects; and
(ii) all covenants, obligations, and conditions of this
Agreement to be performed by Parent on or before such date have been so
performed in all material respects.
(c) Secretary's Certificate. The Company shall have been provided
with a certificate of Parent's Secretary certifying Parent's Articles of
Incorporation and Bylaws.
(d) Satisfactory Form of Legal and Accounting Matters. The form,
scope and substance of all legal matters and accounting matters contemplated
hereby and all closing documents and other papers delivered hereunder shall be
reasonably acceptable to counsel to the Company.
(e) Legal Opinion. The Company shall have received a legal opinion
from Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to Parent, substantially
in the form of Exhibit H hereto.
9.3 Additional Conditions to the Obligations of Parent. The obligations
of Parent to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions, any of which may be waived, in
writing, exclusively by Parent:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Company in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though such representations
and warranties were made on and as of such date, and the Company shall have
performed and complied in all material respects with all covenants, obligations,
and conditions of this Agreement required to be performed and complied with by
it as of the Closing Date.
(b) Certificate of the Company. Parent shall have been provided with
a certificate executed on behalf of the Company by its Chief Executive Officer
and Chief Financial Officer to the effect that as of the Closing Date:
(i) all representations and warranties made by the Company under
this Agreement are true and complete in all material respects; and
(ii) all covenants, obligations and conditions of this Agreement
to be performed by the Company on or before such date have been so performed in
all material respects.
(c) Secretary's Certificate. Parent shall have been provided with a
certificate executed by the Company's Secretary certifying the Articles and
Bylaws.
(d) Financial Statements. The Company shall have delivered to Parent
unaudited financial statements of the Company for the years ending September 30,
1998, 1997, 1996, and unaudited year-to-date financial statements, each prepared
in accordance with GAAP.
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(e) Balance Sheet Audit. The Company shall have delivered to Parent
an audited balance sheet for the period ended April 30, 1999.
(f) Quarterly Revenues and Operating Income. The Company shall have
delivered to Parent a statement of income indicating total revenues of at least
$1,500,000 and operating income of at least $200,000 (exclusive of non-recurring
one time charges that are agreed to in writing between the Company and the
Parent) for the quarter ended June 30, 1999. Such income statement shall be
acceptable to Parent, in its reasonable discretion.
(g) Forecast. The Company shall have delivered to Parent a forecast
statement of income for the quarter ending September 30, 1999 indicating total
revenues of at least $1,800,000 and operating income of at least $300,000. Such
forecast shall be acceptable to Parent, in its reasonable discretion.
(h) Third Party Consents. Any and all consents, waivers and
approvals required from third parties relating to the contracts, licenses,
leases, and other agreements and instruments of the Company so that the Merger
and other transactions contemplated hereby do not adversely affect the rights
of, and benefits to, the Company thereunder shall have been obtained.
(i) Satisfactory Form of Legal and Accounting Matters. The form,
scope, and substance of all legal matters contemplated hereby and all closing
documents and other papers delivered hereunder shall be reasonably acceptable to
Parent's counsel, and the form, scope, and substance of all accounting matters
(including the valuation of employee stock and option grants by the Company)
shall be reasonably acceptable to Parent's accountants.
(j) Legal Opinion. Parent shall have received a legal opinion from
Graves, Dougherty, ▇▇▇▇▇▇ & ▇▇▇▇▇, Professional Corporation, legal counsel to
the Company, in substantially the form of Exhibit I hereto.
(k) Affiliate Agreement. Parent shall have received from each of the
Company Affiliates of the Company an executed Affiliate Agreement which shall be
in full force and effect.
(l) Employment Agreements. The Employment Agreements shall have been
duly executed and delivered and shall be in full force and effect.
(m) Noncompetition Agreements. The Non-competition Agreements shall
have been duly executed and delivered and shall be in full force and effect.
(n) Invention Assignment/Nondisclosure Agreement. Each employee of
the Company shall have executed and delivered an Invention Assignment and
Nondisclosure Agreement in a form satisfactory to Parent.
(o) Due Diligence. Parent shall have completed all diligence with
respect to intellectual property matters that it reasonably deems to be
necessary.
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. Except as provided in Section 10.2 below, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual consent of the Company and Parent;
(b) by Parent or the Company if: (i) the Effective Time has not
occurred by September 30, 1999 (provided that the right to terminate this
Agreement under this clause 10.1(b)(i) shall not be available to any party whose
willful failure to fulfill any obligation hereunder has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date);
(ii) there shall be a final nonappealable order of a federal or state court in
effect preventing consummation of the Merger; or (iii) there shall be any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity that would make consummation
of the Merger illegal;
(c) by Parent if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable to
the Merger, by any Governmental Entity, which would: (i) prohibit Parent's or
the Company's ownership or operation of any portion of the business of the
Company or (ii) compel Parent or the Company to dispose of or hold separate, as
a result of the Merger, any portion of the business or assets of the Company or
Parent; in either case, the unavailability of which assets or business would
have a Material Adverse Effect on Parent or would reasonably be expected to have
a Material Adverse Effect on Parent's ability to realize the benefits expected
from the Merger.
(d) by Parent if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of the
Company and as a result of such breach the conditions set forth in Section
9.3(a) or 9.3(b), as the case may be, would not then be satisfied; provided,
however, that if such breach is curable by the Company within thirty (30) days
through the exercise of its reasonable best efforts, then for so long as the
Company continues to exercise such reasonable best efforts Parent may not
terminate this Agreement under this Section 10.1(d) unless such breach is not
cured within thirty (30) days (but no cure period shall be required for a breach
which by its nature cannot be cured);
(e) by Parent if for the quarter ended June 30, 1999, the Company
has not provided satisfactory evidence, in Parent's reasonable discretion and on
or before July 15, 1999, that its total revenues were at least $1,500,000 and
its operating profits were at least $200,000 (exclusive of non-recurring one
time charges that are agreed to in writing between the Company and the Parent).
-51-
(f) by Parent if for the quarter ended September 30, 1999, the
Company has not provided satisfactory evidence, in Parent's reasonable
discretion and on or before July 31, 1999, that its reasonable forecast of
revenues is at least $1,800,000 and operating profits are at least $300,000.
(g) by the Company if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Parent and as a result of such breach the conditions set forth in
Section 9.2(a) or 9.2(b), as the case may be, would not then be satisfied;
provided, however, that if such breach is curable by Parent within thirty (30)
days through the exercise of its reasonable best efforts, then for so long as
Parent continues to exercise such reasonable best efforts the Company may not
terminate this Agreement under this Section 10.1(g) unless such breach is not
cured within thirty (30) days (but no cure period shall be required for a breach
which by its nature cannot be cured);
Where action is taken to terminate this Agreement pursuant to Section
10.1, it shall be sufficient for such action to be authorized by the Board of
Directors (as applicable) of the party taking such action.
10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement shall forthwith become
void and, there shall be no liability or obligation on the part of Parent or the
Company, or their respective officers, directors or stockholders, provided that
(i) the provisions of Section 6.3 (Confidentiality) and this Article X shall
remain in full force and effect and survive any termination of this Agreement,
and (ii) the termination of this Agreement shall not relieve any party from any
liability for any willful and knowing breach of this Agreement.
10.3 Amendment. Except as is otherwise required by applicable law,
prior to the Closing, this Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed by Parent and the Company,
and, in respect of matters under this Agreement that expressly relate to the
Escrow Agent or Securityholder Agent, the Escrow Agent and the Securityholder
Agent. Except as is otherwise required by applicable law, after the Closing,
this Agreement may be amended by the parties hereto at any time by execution of
an instrument in writing signed by Parent and by Company Shareholders who
receive more than two-thirds of the Parent Common issued or to be issued
pursuant to Section 1.6, or by all of the Company Shareholders in the case of an
amendment to Articles VII or VIII.
10.4 Extension; Waiver. At any time prior to the Effective Time, Parent
on the one hand, and the Company, on the other, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations of
the other party hereto, (ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
-52-
ARTICLE XI
GENERAL
11.1 Notices. Any request, communication, or other notice required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if sent by facsimile or delivered by recognized overnight or international
courier service or personal delivery (as the situation may require) at the
respective address or facsimile number of the party receiving notice as set
forth below. Any party hereto may by notice so given change its address or
facsimile number for future notice hereunder. All such notices and other
communications hereunder shall be deemed given (i) upon confirmation of
delivery, if sent by facsimile and (ii) upon delivery, if sent by recognized
overnight or international courier service or personal delivery.
(a) if to Parent or the Escrow Agent, to:
Adept Technology, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
BYE/OASIS Engineering, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy (which shall not constitute notice) to:
Graves, Dougherty, ▇▇▇▇▇▇ & ▇▇▇▇▇, a
Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Shareholder Agent, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
11.2 Expenses. In the event the Merger is not consummated, all fees and
expenses incurred in connection with the Merger including, without limitation,
all legal, accounting, financial advisory, investment banking, consulting and
all other fees and expenses of third parties ("Third Party Expenses") incurred
by a party in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby, shall be
the obligation of the respective party incurring such fees and expenses. In the
event the Merger is consummated, the Surviving Corporation shall be responsible
for the payment of all Third Party Expenses, including Third Party Expenses
incurred by the Company. For purposes of this Agreement, the phrase "Third Party
Expenses incurred by the Company" shall include all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred
by the Company in connection with the transactions contemplated by this
Agreement (the existence of which would not otherwise violate any representation
or warranty hereunder).
11.3 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The words "to the knowledge of the Company" shall refer to
the actual knowledge (after reasonable inquiry) of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇▇▇. The word "agreement" when used herein shall be deemed in each case to
mean any contract, commitment or other agreement, whether oral or written, that
is legally binding. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
-54-
11.5 Entire Agreement; Assignment. This Agreement, the schedules and
exhibits hereto, and the documents and instruments and other agreements among
the parties hereto referenced herein: (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof; (b) are not intended to confer upon any
other person any rights or remedies hereunder; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
11.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
11.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
11.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof. Each of the parties hereto agrees that process may be served upon them
in any manner authorized by the laws of the State of California for such persons
and waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
11.9 Rules of Construction. The Company and Parent hereto agree that
they have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
11.10 Specific Performance. The parties hereto agree that irreparable
damage will occur in the event that any of the provisions of this Agreement are
not performed in accordance with their specific terms or are otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
[Remainder of Page Intentionally Left Blank]
-55-
IN WITNESS WHEREOF, Parent, the Company, the Securityholder Agent, and
the Escrow Agent have caused this Agreement of Merger and Plan of Reorganization
to be signed as of the date first written above.
ADEPT TECHNOLOGY, INC. BYE/OASIS ENGINEERING, INC.
a California Corporation a Texas Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------- ----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive Officer Chief Executive Officer
SECURITYHOLDER AGENT:
(as to the provisions of Article VII only)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ESCROW AGENT
(as to the provisions of Article VII only)
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
---------------------------------
Title: Assistant Vice President
---------------------------------
[Signature Page to Agreement and Plan of Reorganization]
-56-
EXHIBIT A
FORM OF ARTICLES OF MERGER
Pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act, BYE/OASIS Engineering, Inc. ("BYE/OASIS"), a business
corporation organized under the laws of the State of Texas, and Adept
Technology, Inc. ("Adept"), a California corporation, hereby execute the
following articles of merger, resulting in Adept being the surviving
corporation.
1. The names of the corporations participating in the merger and the
State under the laws of which they are respectively organized are:
NAME OF CORPORATION STATE OF INCORPORATION
BYE/OASIS Engineering, Inc. : Texas
Adept Technology, Inc. : California
2. The number of outstanding shares of Adept is 8,679,917 shares of
Common Stock. No approval of the shareholders of Adept is required.
3. The number of outstanding shares of BYE/OASIS and the number of
shares voting for and against the merger are:
Common Stock Outstanding : 1,026,013
For : 1,026,013
Against : 0
4. The laws of the State under which Adept is organized permit such
merger.
5. The approval of the Agreement and Plan of Reorganization by and
among Adept Technology, Inc., BYE/OASIS Engineering, Inc., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇ Manhattan Bank and Trust Company, N.A., was duly authorized by all action
required by the law under which Adept Technology and BYE/OASIS Engineering, Inc.
were incorporated or organized and by each of their constituent documents.
6. The name of the surviving corporation is Adept Technology, Inc., a
California corporation, and it is to be governed by the laws of the State of
California, and BYE/OASIS shall cease to exist.
7. Adept, the surviving corporation, will assume and be responsible for
the payment of any fees and franchise taxes of BYE/OASIS.
8. A copy of the resolutions approving the merger adopted by the
Shareholders and Board of Directors of BYE/OASIS are attached hereto as Exhibit
A and Exhibit B.
9. The address of the surviving corporation's registered office and the
jurisdiction under whose laws it is governed:
Adept Technology, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The surviving corporation will be governed by California law.
10. The Articles of Incorporation of Adept shall be the Articles of
Incorporation of the surviving corporation, and no amendments to such Articles
of Incorporation are desired to be effected by the merger.
11. An executed Agreement of Merger is on file at the principal place
of business of the surviving foreign corporation, at the address set forth
below:
Adept Technology, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
12. A copy of the Agreement of Merger will be furnished by the
surviving corporation, upon written request and without cost, to each
shareholder of either corporation that is a party to the Agreement of Merger.
DATED as of the 14th day of July, 1999.
BYE/OASIS Engineering, Inc.,
A Texas Corporation
By:________________________________
Title:_____________________________
Adept Technology, Inc.,
A California Corporation
By:________________________________
Title:_____________________________
2
EXHIBIT B
FORM OF INVESTMENT REPRESENTATION STATEMENT
PURCHASER :
COMPANY : ADEPT TECHNOLOGY, INC.
SECURITY : COMMON STOCK
DATE : July 14, 1999
In connection with the purchase of the above-listed Securities, the
undersigned Purchaser represents to Adept Technology, Inc. (the "Company") the
following:
(a) Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities.
Purchaser is acquiring these Securities for investment for Purchaser's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Purchaser acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Purchaser's investment intent as expressed herein. In this connection,
Purchaser understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Purchaser's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Purchaser further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Purchaser understands
that the certificate evidencing the Securities will be imprinted with a legend
which prohibits the transfer of the Securities unless they are registered or
such registration is not required in the opinion of counsel satisfactory to the
Company.
(c) Purchaser is familiar with the provisions of Rule 144,
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. The Securities may be resold in certain limited circumstances
subject to the provisions of Rule 144, which requires the resale to occur not
less than one (1) year after the later of the date the Securities were sold by
the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions by Rule 144, including: (1) the resale being made through a broker in
an unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, (3) the amount of Securities being sold during any three (3)
month period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
(d) Purchaser further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Purchaser understands that no assurances can be given that
any such other registration exemption will be available in such event.
Signature:________________________
Print Name:_______________________
Title:____________________________
Date:_____________________________
-2-
EXHIBIT D
FORM OF AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT (the "Agreement") is made and entered into as
of July 14, 1999, between Adept Technology, Inc., a California corporation (the
"Parent"), and the undersigned shareholder (the "Affiliate") of BYE/OASIS
Engineering, Inc., a Texas corporation (the "Company").
Recitals
A. The Parent and the Company have entered into an Agreement and Plan
of Reorganization (the "Merger Agreement") dated as of June 28, 1999 pursuant to
which the Company will merge with and into the Parent (the "Merger")
(capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Merger Agreement);
B. Pursuant to the Merger, at the Effective Time, each outstanding
share of Company Common, including any shares owned by Affiliate, will be
converted into the right to receive shares of Parent Common in accordance with
the Merger Agreement;
C. The execution and delivery of this Agreement by the Affiliate is a
material inducement to Parent to enter into the Merger Agreement;
D. The Affiliate has been advised that Affiliate may be deemed to be an
"affiliate" of the Company, as the term "affiliate" is used for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission"), as
amended, provided that contained herein shall be construed as an admission by
Affiliate that Affiliate is in fact an "affiliate" of the Company.
Agreement
NOW, THEREFORE, intending to be legally bound, the parties hereby agree
as follows:
1. Investment Representation Statement. The Affiliate agrees to sign
the form of Investment Representation Statement, attached as Exhibit A to this
Agreement.
2. Share Ownership. The Affiliate is the beneficial owner of that
number of shares of Company Common (including shares issuable upon exercise of
stock options and warrants) as set forth on the signature page hereto (the
"Company Securities"). Except for the Company Securities, the Affiliate does not
beneficially own any shares of Company Common or any other equity securities of
the Company or any options, warrants, or other rights to acquire any equity
securities of the Company.
3. Covenants Related to Pooling of Interests. During the period
beginning from the date hereof and ending on the third business day after the
date that Parent publicly announces financial results covering at least 30 days
of combined operations of Parent and the Company, Affiliate will not sell,
exchange, transfer, pledge, distribute, or otherwise dispose of or grant any
option, establish any "short" or put-equivalent position with respect to or
enter
into any similar transaction (through derivatives or otherwise) intended or
having the effect, directly or indirectly, to reduce its risk relative to any
securities, or shares of Parent Common Stock received by Affiliate in connection
with the Merger. Parent may, in its discretion, cause a restrictive legend to
the foregoing effect to be placed on Parent Common certificates issued to
Affiliate in the Merger and place a stock transfer notice consistent with the
foregoing with its transfer agent with respect to the certificates.
Notwithstanding the foregoing, Affiliate will not be prohibited by the foregoing
from selling or disposing of shares so long as such sale or disposition is in
accordance with the "de minimis" test set forth in SEC Staff Accounting Bulletin
No. 76 and so long as Affiliate has obtained Parent's prior written approval of
such sale or disposition.
4. Miscellaneous.
(a) For the convenience of the parties hereto, this Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
(b) This Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns" shall
mean, where the context so permits, heirs, executors, administrators, trustees
and successor trustees, and personal and other representatives.
(c) This Agreement shall be governed by and construed, interpreted
and enforced in accordance with the laws of the State of California, without
reference to the conflicts of law provisions thereof.
(d) If a court of competent jurisdiction determines that any
provision of this Agreement is not enforceable or enforceable only if limited in
time or scope, this Agreement shall continue in full force and effect with such
provision stricken or so limited.
(e) Counsel to the parties to the Merger Agreement shall be entitled
to rely upon this Agreement as appropriate.
(f) This Agreement shall not be modified or amended, or any right
hereunder waived or any obligation excused, except by a written agreement signed
by both parties.
[Remainder of this page intentionally left blank]
-2-
IN WITNESS WHEREOF, the parties have executed this Affiliate Agreement
as of the date set forth on the first page of this Affiliate Agreement.
ADEPT TECHNOLOGY, INC.
By:_________________________________________
Name:
Title: President and Chief Executive Officer
AFFILIATE
____________________________________________
Name:
Title:
Company shares beneficially owned:
_______________ shares of Common Stock
Company shares subject to outstanding options:
_______________ shares of Common Stock
Company shares subject to outstanding options:
______________ shares of Common Stock
***SIGNATURE PAGE TO AFFILIATE AGREEMENT***
-3-
EXHIBIT E
FORM OF EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of July 14, 1999 (the
"Effective Date"), by and between Adept Technology, a California corporation
(the "Company"), and _______(the "Employee").
WHEREAS, the Company has acquired BYE/OASIS Engineering, Inc. pursuant
to an Agreement and Plan of Reorganization dated June 28, 1999 (the "Merger").
WHEREAS, the Company desires to employ the Employee as of the Effective
Date and the Employee desires to accept employment with the Company on the terms
and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing recital and the
respective covenants and agreements of the parties contained in this document,
the Company and the Employee agree as follows:
1. Employment and Duties. During the Employment Period (as defined in
paragraph 2 below), the Employee will serve as of the Company, reporting to
__________. Employee will assume and discharge such responsibilities as are
commensurate with such position and as ____________ may direct.
2. At-Will Employment. Employment under this Agreement is for an
unspecified duration that constitutes at-will employment that either Employee or
the Company can terminate at any time, with or without cause and with or without
notice.
3. Place of Employment. The Employee's services shall be performed at
the Company's principal Employee offices in ______________, California. The
parties acknowledge, however, that the Employee may be required to travel in
connection with the performance of his duties hereunder.
4. Compensation Salary.
(a) Base Salary. For all services to be rendered by the Employee
pursuant to this Agreement, the Company agrees to pay the Employee during the
Employment Period a base salary (the "Base Salary") at an annual rate of not
less than $________. The Base Salary shall be paid in periodic installments in
accordance with the Company's regular payroll practices.
(b) In addition to Base Salary, Employee may be entitled to
participate in such incentive compensation plan which may be adopted by Company
in its sole discretion. Employee understands that the adoption of any such plan,
the eligibility and measurement criteria and all other terms shall be at the
sole discretion of Company.
(c) Severance.
(i) Involuntary or Constructive Termination.
a) If the Employee's employment terminates within twelve
(12) months after the date of the Merger as a result of Involuntary or
Constructive Termination other than for Cause, then the Employee shall be
entitled to receive severance pay in an amount equal to six months of Base
Salary.
b) If the Employee's employment terminates within
twenty-four (24) months after the date of the Merger as a result of Involuntary
or Constructive Termination other than for Cause, then the Employee shall be
entitled to receive severance pay in an amount equal to four months of Base
Salary.
c) If the Employee's employment terminates within thirty-six
(36) months after the date of the Merger as a result of Involuntary or
Constructive Termination other than for Cause, then the Employee shall be
entitled to receive severance pay in an amount equal to two months of Base
Salary.
d) Any severance payments to which the Employee is entitled
pursuant to this Section shall be paid in a lump sum within thirty (30) days of
the Employee's termination.
(ii) Voluntary Resignation. If the Employee voluntarily resigns
from the Company (other than as an Involuntary or Constructive Termination
described in subsection 4(d), then the Employee shall be entitled to receive
severance and other benefits, if any, as may then be established under the
Company's then existing benefit plans at the time of such termination.
(iii) Disability; Death. If the Company terminates the
Employee's employment as a result of the Employee's Disability, or such
Employee's employment is terminated due to the death of the Employee, then the
Employee or the Employee's estate, as the case may be, shall be entitled to
receive severance and other benefits, if any, as may then be established under
the Company's then existing benefit plans at the time of such termination.
(iv) Termination for Cause. If the Company terminates the
Employee's employment for Cause, then the Employee shall not be entitled to
receive any severance or benefits.
(d) Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(i) Cause. "Cause" shall mean (i) any material act of personal
dishonesty taken by the Employee in connection with his responsibilities as an
employee, intended to result in substantial personal enrichment of the Employee,
and which affects the Company (ii) committing a felony or an act of fraud
against the Company or its affiliates, (iii) acts by the Employee which
constitute gross misconduct, are injurious to the Company, and (iv) continued
willful violations by the Employee of the Employee's obligations to the Company
after there has been delivered to the Employee a written demand for performance
from the Company which describes the basis for the Company's belief that the
Employee has not substantially performed his duties.
-2-
(ii) Involuntary or Constructive Termination. "Involuntary or
Constructive Termination" shall mean (i) without the Employee's express written
consent, the assignment to the Employee of any duties or the significant
reduction of the Employee's duties, either of which is substantially
inconsistent with the Employee's position with the Company and responsibilities
in effect immediately prior to such assignment, or the removal of the Employee
from such position and responsibilities; (ii) without the Employee's express
written consent, a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to
the Employee immediately prior to such reduction; (iii) a reduction by the
Company in the Base Compensation of the Employee as in effect immediately prior
to such reduction; (iv) a material reduction by the Company in the kind or level
of employee benefits to which the Employee is entitled immediately prior to such
reduction with the result that the Employee's overall benefits package is
significantly reduced; or (v) any purported termination of the Employee by the
Company which is not effected for Disability or for Cause, or any purported
termination for which the grounds relied upon are not valid.
(iii) Disability. "Disability" shall mean that the Employee has
been unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least six
months after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the Employee
or the Employee's legal representative (such agreement as to acceptability not
to be unreasonably withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the Company of its intention
to terminate the Employee's employment. In the event that the Employee resumes
the performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
5. Stock Option. Pursuant to Board approval and under the terms and
conditions of the Company's ___ Stock Plan (including the stock vesting
provisions contained therein), the Company shall grant an option to purchase
_____ Shares of common stock of Company.
6. Expenses. Company shall reimburse Employee for all reasonable
expenses actually incurred or paid by Employee in the performance of services on
behalf of the Company, upon prior authorization and approval in accordance with
the Company's expense reimbursement policy as from time to time in effect.
7. Other Benefits. During the Employment Period, the Employee shall be
entitled to participate in employee benefit plans or programs of the Company, if
any, to the extent that his position, tenure, salary, age, health and other
qualifications make him eligible to participate, subject to the rules and
regulations applicable thereto. Participation in any such plan shall be
consistent with Employee's rate of compensation to the extent that compensation
is a determinative factor with respect to coverage under any such plan.
8. Vacations and Holidays. The Employee shall be entitled to ________
weeks paid vacation and Company holidays in accordance with the Company's
policies in effect from time.
-3-
9. Other Activities. The Employee shall devote substantially all of his
working time and efforts during the Company's normal business hours to the
business and affairs of the Company and its subsidiaries and to the diligent and
faithful performance of the duties and responsibilities duly assigned to him
pursuant to this Agreement, except for vacations, holidays and sickness.
10. Proprietary Information. During the Employment Period and
thereafter, the Employee shall not, without the prior written consent of the
Board of Directors, disclose or use for any purpose (except in the course of his
employment under this Agreement and in furtherance of the business of the
Company or any of its affiliates or subsidiaries) any confidential information
or proprietary data of the Company. As an express condition of the Employee's
employment with the Company, the Employee agrees to execute confidentiality
agreements as requested by the Company, including but not limited to the
Company's form of Employee Agreement, which is attached hereto as Exhibit A and
incorporated herein by reference.
11. Non-Solicit. The Employee covenants and agrees with the Company
that during his employment with the Company and for a period expiring one (1)
year after the date of termination of such employment, he will not solicit any
of the Company's then-current employees to terminate their employment with the
Company or to become employed by any firm, company or other business enterprise
with which the Employee may then be connected.
12. Right to Advice of Counsel. The Employee acknowledges that he has
consulted with counsel and is fully aware of his rights and obligations under
this Agreement.
13. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
San Jose, California, in accordance with the rules of the American Arbitration
Association then in effect by an arbitrator selected by both parties within 10
days after either party has notified the other in writing that it desires a
dispute between them to be settled by arbitration. In the event the parties
cannot agree on such arbitrator within such 10-day period, each party shall
select an arbitrator and inform the other party in writing of such arbitrator's
name and address within 5 days after the end of such 10-day period and the two
arbitrators so selected shall select a third arbitrator within 15 days
thereafter; provided, however, that in the event of a failure by either party to
select an arbitrator and notify the other party of such selection within the
time period provided above, the arbitrator selected by the other party shall be
the sole arbitrator of the dispute. Each party shall pay its own expenses
associated with such arbitration, including the expense of any arbitrator
selected by such party and the Company will pay the expenses of the jointly
selected arbitrator. The decision of the arbitrator or a majority of the panel
of arbitrators shall be binding upon the parties and judgment in accordance with
that decision may be entered in any court having jurisdiction thereover.
Punitive damages shall not be awarded.
14. Absence of Conflict. The Employee represents and warrants that his
employment by the Company as described herein shall not conflict with and will
not be constrained by any prior employment or consulting agreement or
relationship.
15. Assignment. This Agreement and all rights under this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective personal
-4-
or legal representatives, executors, administrators, heirs, distributees,
devisees, legatees, successors and assigns. This Agreement is personal in
nature, and neither of the parties to this Agreement shall, without the written
consent of the other, assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity; except that the
Company may assign this Agreement to any of its affiliates or wholly-owned
subsidiaries, provided, that such assignment will not relieve the Company of its
obligations hereunder.
16. Notices. For purposes of this Agreement, notices and other
communications provided for in this Agreement shall be in writing and shall be
delivered personally or sent by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: _______
_______
_______
If to the Company: Adept Technology, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ___________________________
or to such other address or the attention of such other person as the
recipient party has previously furnished to the other party in writing in
accordance with this paragraph. Such notices or other communications shall be
effective upon delivery or, if earlier, three days after they have been mailed
as provided above.
17. Integration. This Agreement and the Exhibit hereto represent the
entire agreement and understanding between the parties as to the subject matter
hereof and supersede all prior or contemporaneous agreements whether written or
oral. No waiver, alteration, or modification of any of the provisions of this
Agreement shall be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
18. Waiver. Failure or delay on the part of either party hereto to
enforce any right, power, or privilege hereunder shall not be deemed to
constitute a waiver thereof. Additionally, a waiver by either party or a breach
of any promise hereof by the other party shall not operate as or be construed to
constitute a waiver of any subsequent waiver by such other party.
19. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
-5-
20. Headings. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.
21. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal substantive laws, and not the choice of law
rules, of the State of California.
22. Counterparts. This Agreement may be executed in one or more
counterparts, none of which need contain the signature of more than one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
ADEPT TECHNOLOGY, INC.
By:____________________________
Title:_________________________
Employee:
_______________________________
-6-
EXHIBIT F
FORM OF NONCOMPETITION AGREEMENT
This NONCOMPETITION Agreement is being executed and delivered as of
July 14, 1999 by ________ (the "Key Employee") in favor of and for the benefit
of Adept Technology, Inc., a California corporation ("Parent"), and BYE/OASIS
Engineering, Inc., a Texas corporation (the "Company").
RECITALS
A. As an employee, shareholder and/or optionholder of the Company, Key
Employee has obtained and will obtain extensive and valuable knowledge and
information concerning the business of the Company (including confidential
information relating to the Company and its operations, assets, contracts,
customers, personnel, intellectual property, plans, procedures and prospects).
B. Contemporaneously with the execution and delivery of this
Noncompetition Agreement, the Company is entering into an Agreement of Merger
and Plan of Reorganization with Parent and a subsidiary of Parent (the
"Reorganization Agreement") pursuant to which the Company will be merged into
the Parent (the "Merger").
C. On the date of the closing of the Merger (the "Effective Date"), Key
Employee will become an employee of Parent and, as such, will obtain extensive
and valuable knowledge and information concerning the business of Parent
(including confidential information relating to the Company and its operations,
assets, contracts, customers, personnel, intellectual property, plans,
procedures and prospects).
D. In connection with the Merger (and as a condition to entering into
the Reorganization Agreement and consummating the Merger), and to more fully
secure unto Parent the benefits of the Merger, Parent has requested that Key
Employee enter into this Noncompetition Agreement; and Key Employee is entering
into this Noncompetition Agreement in order to induce Parent to enter into the
Reorganization Agreement and consummate the Merger.
E. Both Parent and the Company have conducted, are conducting and will
continue to conduct their respective businesses on a worldwide basis.
AGREEMENT
In order to induce Parent to enter into the Reorganization Agreement
and consummate the Merger, and in consideration of the issuance and delivery to
Key Employee of shares of common stock of Parent pursuant to the Reorganization
Agreement, Key Employee agrees as follows:
1. ACKNOWLEDGMENTS BY KEY EMPLOYEE. Key Employee acknowledges that the
promises and restrictive covenants that Key Employee is providing in this
Noncompetition Agreement are reasonable and necessary to the protection of
Parent's business and Parent's legitimate interests in its acquisition of the
Company (including the Company's goodwill) pursuant to the Reorganization
Agreement. Key Employee acknowledges that, in connection with the consummation
of the Acquisition, all of the Key Employee's shares of stock of the Company
will be exchanged for shares of common stock of Parent.
2. NONCOMPETITION. During the Restriction Period (as defined below),
Key Employee shall not (other than in connection with employment with the
Company, Parent, any other subsidiary of Parent or their respective successors
or assigns):
(a) engage in any business that engages in flexible automation for
material handling or contamination control in the semiconductor industry
(collectively, "Restricted Businesses");
(b) be or become an officer, director, shareholder, owner,
affiliate, salesperson, co-owner, partner, trustee, promoter, technician,
engineer, analyst, employee, agent, representative, supplier, consultant,
advisor or manager of or to, or otherwise acquire or hold any interest in, any
person or entity that competes in the market for the Restricted Businesses; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to the market for the
Restricted Businesses;
provided, however, that nothing in this Section 2 shall prevent Key Employee
from owning as a passive investment less than 1% of the outstanding shares of
the capital stock of a publicly-held company if (A) such shares are actively
traded on an established national securities market or dealer quotation system
in the United States and (B) Key Employee is not otherwise associated directly
or indirectly with such corporation or any affiliate of such corporation.
"Restriction Period" as used herein shall mean the period commencing on
the Effective Date and ending on the date that is 36 months from the Effective
Date.
3. NONSOLICITATION. Key Employee further agrees that Key Employee will
not:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Key Employee's own behalf or on behalf
of any other person or entity) during the Restricted Period any employee of the
Company, Parent or any of Parent's subsidiaries to leave his or her employment
with the Company, Parent or any of Parent's subsidiaries;
-2-
(b) employ, or permit any entity over which Key Employee exercises
voting control to employ, during the Restricted Period, any person who shall
have terminated his or her employment with the Company, Parent or any of
Parent's subsidiaries; or
(c) personally or through others, interfere or attempt to interfere
with the relationship or prospective relationship of the Company, Parent or any
of Parent's subsidiaries with any person or entity that is, was or is expected
to become a customer or client of the Company, Parent or any of Parent's
subsidiaries.
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations set forth
in this Noncompetition Agreement shall be construed as independent of any other
agreement or arrangement between Key Employee, on the one hand, and the Company
or Parent on the other.
5. SPECIFIC PERFORMANCE. Each party agrees that in the event of any
breach by the other parties of any covenant, obligation or other provision
contained in this Noncompetition Agreement, each non-breaching party shall be
entitled (in addition to any other remedy that may be available to it or them
including but not limited to a claim for damages based on the stock
consideration paid to Key Employee by Parent) to the extent permitted by
applicable law (a) a decree or order of specific performance to enforce the
observance and performance of such covenant, obligation or other provision, and
(b) an injunction restraining such breach or threatened breach.
6. NON-EXCLUSIVITY. The rights and remedies of Parent, the Company, and
Key Employee hereunder are not exclusive of or limited by any other rights or
remedies which Parent, the Company, or Key Employee may have, whether at law, in
equity, by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights and
remedies of Parent, the Company, and Key Employee hereunder, and the obligations
and liabilities of Key Employee, Parent, and Company hereunder, are in addition
to their respective rights, remedies, obligations and liabilities under the law
of unfair competition, misappropriation of trade secrets and the like and under
other agreements between the parties. This Noncompetition Agreement does not
limit Key Employee's obligations or rights or the rights or obligations of
Parent or the Company (or any affiliate of Parent or the Company) under the
terms of any other agreement between Key Employee and Parent or the Company or
any affiliate of Parent or the Company.
7. NOTICES. Any notice or other communication required or permitted to
be delivered to Key Employee, the Company or Parent under this Noncompetition
Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express
delivery service or by facsimile) to the address or facsimile telephone number
set forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice delivered in accordance with this Section 7):
if to Parent: Adept Technology, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
-3-
if to Key Employee:
8. SEVERABILITY. If any provision of this Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) such
invalidity of enforceability of such provision or part thereof shall not affect
the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
9. GOVERNING LAW. This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
Texas, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
10. WAIVER. No failure on the part of Parent or the Company or the Key
Employee to exercise any power, right, privilege or remedy under this
Noncompetition Agreement, and no delay on the part of Parent or the Company or
the Key Employee in exercising any power, right, privilege or remedy under this
Noncompetition Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy. None of Parent or the Company or
the Key Employee shall be deemed to have waived any claim arising out of this
Noncompetition Agreement, or any power, right, privilege or remedy under this
Noncompetition Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly executed
and delivered on behalf of such party; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
11. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
12. FURTHER ASSURANCES. Key Employee shall execute and/or cause to be
delivered to the Company and Parent such instruments and other documents and
shall take such other actions as Company and Parent may reasonably request to
effectuate the intent and purposes of this Noncompetition Agreement.
13. ENTIRE AGREEMENT. This Noncompetition Agreement, the Employment
Agreement, and the other agreements referred to herein set forth the entire
understanding of Key Employee, the Company and Parent relating to the subject
matter hereof and thereof and supersede all prior
-4-
agreements and understandings between any of such parties relating to the
subject matter hereof and thereof.
14. AMENDMENTS. This Noncompetition Agreement may not be amended,
modified, altered, or supplemented other than by means of a written instrument
duly executed and delivered on behalf of Parent and Key Employee.
15. ASSIGNMENT. This Noncompetition Agreement and all obligations
hereunder are personal to Key Employee and may not be transferred or assigned by
Key Employee at any time. Parent may assign its rights under this Noncompetition
Agreement to any entity in connection with any merger or sale or transfer of all
or substantially all of Parent's assets.
16. BINDING NATURE. Subject to Section 15, this Noncompetition
Agreement will be binding upon Parent, the Company, the Key Employee and their
respective representatives, executors, administrators, estate, heirs, successors
and assigns, and will inure to the benefit of the Key Employee, Parent and the
Company and their respective successors and assigns.
[Remainder of Page Intentionally Left Blank]
-5-
In Witness Whereof, the undersigned has executed this Noncompetition
Agreement as of the date first above written.
"KEY EMPLOYEE" ___________________________________
"PARENT" ADEPT TECHNOLOGY, INC.
By:________________________________
Name:______________________________
Title:_____________________________
"COMPANY" BYE/OASIS ENGINEERING, INC.
By:________________________________
Name:______________________________
Title:_____________________________
-6-
EXHIBIT G
Escrow Fund Allocation
Number of Shares
Name Held in Escrow
---- --------------
▇▇▇▇▇ Survivors' Trust 3,084
▇▇▇▇▇▇, ▇▇▇▇▇▇ 48
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ 24,728
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 48
▇▇▇, ▇▇▇▇▇▇▇ ▇. 992
▇▇▇, ▇▇▇▇▇▇▇ ▇. & June N. 60
Crouzet-▇▇▇▇▇▇, ▇▇▇▇▇▇ 263
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ 8,421
▇▇▇▇, ▇▇▇▇▇▇▇ 526
▇▇▇▇▇, ▇▇▇▇▇▇ 855
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ 1,403
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ 11,929
Lathe Tool Works 519
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ 701
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Jo ▇▇▇ ▇▇▇▇▇▇▇▇▇ 2,960
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇. 827
▇▇▇▇▇▇, ▇▇▇▇ 701
▇▇▇▇▇, ▇▇▇▇▇ ▇. 175
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 81
Weirtel, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ 1,250
▇▇▇▇▇▇, ▇▇▇▇▇▇ & Julianne 12,420
------
TOTAL: 71,991
======
EXHIBIT H
FORM OF
OPINION OF GRAVES, DOUGHERTY, ▇▇▇▇▇▇ & ▇▇▇▇▇
July 13, 1999
Adept Technology, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to BYE/Oasis Engineering, Inc. (the "Company")
in connection with the transactions contemplated by that certain Agreement of
Merger and Plan of Reorganization dated June 28, 1999 (the "Merger Agreement")
between the Company and Adept Technology, Inc. ("Adept"). Except as otherwise
indicated in this opinion letter, capitalized terms used in this opinion are set
forth in the Merger Agreement or in the Accord (as defined below).
This opinion letter is governed by and shall be interpreted in
accordance with the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this opinion
should be read in conjunction therewith. The Law covered herein is limited to
Texas law.
Based upon the foregoing and upon our review of such matters of fact
and law as we have deemed necessary in order to render this opinion, and subject
to the qualifications hereinafter set forth, we advise you that in our opinion:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Texas. The Company has the corporate
power to own its properties and to carry on its business as now conducted. The
Company is duly qualified and in good standing as a foreign corporation in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification necessary, except
where failure to do so would not have a material adverse effect on the Company.
2. The authorized capital stock of the Company consists of 10,000,000
shares of authorized Common Stock, no par value, 1,026,013 of which are issued
and outstanding. The capitalization of the Company is as set forth on Schedule
2.2(a) of the Disclosure Schedule. All outstanding shares of Company Common
Stock are duly authorized, validly issued, fully paid and non-assessable and not
subject to preemptive rights created by statute, the Articles of Incorporation
or Bylaws of the Company or any agreement to which the Company is a party or by
which it is bound. Other than the Company Common Stock, the Company has no other
capital stock authorized, issued or outstanding.
Adept Technology, Inc.
July 13, 1999
Page 2
3. Other than may be set forth in the Merger Agreement or the Schedules
thereto, there are, to our Actual Knowledge, no options, warrants, calls,
rights, commitments or agreements of any character, written or oral, to which
the Company is a party or by which it is bound obligating the Company to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of the Company or
obligating the Company to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. To our Actual Knowledge, there are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or other
similar rights with respect to the Company, and there are no voting trusts,
proxies or other agreements or understandings with respect to the voting stock
of the Company, except proxies solicited in connection with the July 15, 1999
special shareholders' meeting.
4. The Company has all requisite power and authority to enter into the
Merger Agreement. The execution and delivery of the Merger Agreement and the
consummation of the transactions contemplated thereby have been duly authorized
by all necessary corporate action on the part of the Company, and no further
action is required on the part of the Company to authorize the Merger Agreement
and the transactions contemplated thereby. The Merger Agreement has been duly
executed and delivered by the Company. We are of the view that, in an action or
proceeding to enforce the Merger Agreement in a court of the State of Texas, in
a properly presented and argued action or proceeding, a Texas court applying
Texas conflict-of-law principles should, except with respect to matters
described in Subsections 35.51(e) or (f) of the Texas Business and Commerce
Code, enforce the governing law provision of the Merger Agreement, which
provides that the Merger Agreement shall be governed by and construed in
accordance with the laws of the State of California. However, if a Texas court
were to hold that the Merger Agreement is governed by and to be construed in
accordance with the laws of the State of Texas, the Merger Agreement would,
under the laws of the State of Texas, constitute a valid, binding, and
enforceable obligation of the Company, subject to the General Qualifications and
the other matters hereinafter set forth.
5. The execution and delivery by the Company of the Merger Agreement
and the consummation of the transactions contemplated thereby will not violate
or result in a breach or default under (i) any provision of the Articles of
Incorporation and Bylaws of the Company, (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise or
license to which the Company or any of its properties or assets is subject, and
of which we have Actual Knowledge, except as set forth in the Schedules to the
Merger Agreement, or (iii) any judgment, order, decree, statute, law, ordinance,
rule or regulation to the Company or its properties or assets.
6. Except as set forth in Schedules to the Merger Agreement, no
consent, waiver, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity or, to our Actual Knowledge,
any third party is required by or with respect to the Company in connection with
the execution and delivery of the Merger Agreement or the consummation of the
transactions contemplated thereby, except for (i) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws, (ii) filing of Articles of
Merger with the appropriate state authorities in Texas and California
Adept Technology, Inc.
July 13, 1999
Page 3
and (iii) filing of appropriate documentation to effect the withdrawal or
modification of the Company's qualification to do business in the states of
Oregon and Massachusetts.
7. There is no action, suit or proceeding of any nature pending or
threatened against the Company or any of its properties or any of the Company's
officers or directors which challenges or seeks to enjoin, alter or materially
delay any of the transactions contemplated by the Merger Agreement.
Our opinions expressed above are subject to the following additional
qualifications:
I. Our opinions set forth in Paragraph 2 above regarding the issued and
outstanding securities of the Company are based solely (as to factual matters)
on a review of the minutes and stock records of the Company, including
specifically the curative resolutions dated June 25, 1999 adopted by unanimous
consent of the Board of Directors of the Company, and we have assumed the
accuracy of the information therein contained. We have assumed that the
consideration recited in such curative resolutions as having been paid for such
securities was actually paid. We render no opinion as to the date of issuance of
any security of the Company.
II. The opinion expressed in Paragraph 4 above, insofar as it deals
with the law governing the Merger Agreement, is a based on our interpretation of
the plain language of Section 35.51 of the Texas Business and Commerce Code. We
are not aware of any reported decision of any Texas court that interprets
Section 35.51. Therefore, we cannot be certain of the manner in which Texas
courts would interpret that section.
III. In addition to the General Qualifications, our opinion as to
enforceability set forth in Paragraph 4 above is subject to additional
limitations imposed by reason of generally applicable public policy principles
and considerations.
IV. We render no opinion as to the enforceability of (i) indemnity
provisions which provide for the indemnification of a party in the event of that
party's own negligence and (ii) provisions that purport to waive or restrict
access to legal or equitable remedies or which purport to establish evidentiary
standards or to affect the right to trial by jury or jurisdiction as to court.
Adept Technology, Inc.
July 13, 1999
Page 4
This opinion letter may be relied upon by you only in connection with
the Merger Agreement and the transactions contemplated therein and may not be
used or relied upon by you or any other person for any other purpose whatsoever,
except to the extent authorized in the Accord, without in each instance our
prior written consent.
Very truly yours,
Graves, Dougherty, ▇▇▇▇▇▇ & ▇▇▇▇▇,
A Professional Corporation
By:_____________________________________
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EXHIBIT I
FORM OF LEGAL OPINION OF
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
P R O F E S S I O N A L C O R P O R A T I O N
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▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
TELEPHONE ▇▇▇-▇▇▇-▇▇▇▇ FACSIMILE ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇.▇▇▇▇.▇▇▇
July 14, 1999
BYE/OASIS Engineering, Inc. and the
Shareholders of BYE/OASIS Engineering, Inc.
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Adept Technology, Inc., a California
corporation ("Adept"), in connection with the merger (the "Merger") of BYE/OASIS
Engineering, Inc., a Texas corporation ("BYE/OASIS") with and into Adept,
pursuant to the Agreement and Plan of Reorganization dated as of June 28, 1999
among Adept and BYE/OASIS (the "Agreement"). This opinion is furnished to you
pursuant to Section 9.2(e) of the Agreement. Unless otherwise defined herein,
the capitalized terms used in this opinion have the meanings given to them in
the Agreement.
We have acted as counsel for Adept in connection with the negotiation
of the Agreement and the effectuation of the Merger. As such counsel, we have
made such legal and factual examinations and inquiries as we have deemed
advisable or necessary for the purposes of rendering this opinion. We have
relied on the accuracy of the representations and warranties as to factual
matters by all of the parties contained in or made pursuant to the Agreement as
well as the truth and accuracy of all of the representations and warranties as
to factual matters made by Adept or officers of Adept in connection with the
Merger and this opinion. In addition, we have examined originals or copies of
documents, corporate records and other writings which we consider relevant for
the purposes of this opinion. In such examination, we have assumed the
genuineness of all signatures on original documents, the conformity to original
documents of all copies submitted to us and the due execution and delivery of
all documents by any party other than Adept where due execution and delivery are
a prerequisite to the effectiveness thereof.
As used in this opinion, the expressions "to our knowledge," or "known
to us," or similar language with reference to matters of fact means that, after
an examination of documents made available to us by Adept, and after inquiries
of officers of Adept, but without any further independent factual investigation,
we find no reason to believe that the opinions expressed herein are factually
incorrect. Further, the expression "to our knowledge" with reference to matters
of fact
BYE/OASIS Engineering, Inc. and the
Shareholders of BYE/OASIS Engineering, Inc.
July 14, 1999
Page 2
refers to the current actual knowledge of the attorneys of this firm who have
worked on matters for Adept solely in connection with the Agreement and the
transactions contemplated thereby. Except to the extent expressly set forth
herein or as we otherwise believe to be necessary to our opinion, we have not
undertaken any independent investigation to determine the existence or absence
of any fact, and no inference as to our knowledge of the existence or absence of
any fact should be drawn from our representation of Adept or the rendering of
the opinions set forth below.
For purposes of this opinion, we are assuming that you have all
requisite power and authority, and have taken any and all necessary corporate
action, to execute and deliver the Agreement and we assume that the
representations and warranties made by you in the Agreement and pursuant thereto
are true and correct.
The opinions hereinafter expressed are subject to the following
qualifications:
A. We express no opinion as to the effect of rules of law governing
specific performance, ]injunctive relief or other equitable remedies (regardless
of whether any such remedy is considered in a proceeding at law or in equity);
B. We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium and other similar federal or state laws
affecting the rights of creditors;
C. We express no opinion as to the enforceability of the
indemnification and arbitration provisions of the Agreement to the extent the
provisions thereof may be subject to limitations of public policy and the effect
of applicable statutes and judicial decisions;
D. We express no opinion as to compliance with the anti-fraud
provisions of state and federal laws, rules and regulations concerning the
issuance of securities;
E. We express no opinion as to the enforceability of any of the
agreements attached as exhibits to the Agreement;
F. We are members of the Bar of the State of California and we are not
expressing any opinion as to any matter relating to laws of any jurisdiction
other than the federal laws of the United States of America, the Delaware
General Corporation Law and the laws of the State of California.
Based upon and subject to the foregoing, and as except as set forth in
the Agreement, we are of the opinion that:
1. Adept is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. Adept has the corporate
power to own its properties and to carry on its business as now conducted. Adept
is duly qualified or licensed to do business and is in good standing as a
foreign corporation in each jurisdiction where the character of the properties
owned,
BYE/OASIS Engineering, Inc. and the
Shareholders of BYE/OASIS Engineering, Inc.
July 14, 1999
Page 3
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where failure to do so would not
have a material adverse effect on Adept.
2. Adept has all requisite power and authority to enter into the
Agreement and Plan of Reorganization ("Merger Agreement") and any Related
Agreements (as defined below) to which Adept is a party and to consummate the
transactions contemplated thereby. The execution and delivery of the Merger
Agreement and any Related Agreements to which Adept is a party and the
consummation of the transactions contemplated thereby have been duly authorized
by all necessary corporate action on the part of Adept, and no further action is
required on the part of Adept to authorize the Merger Agreement, any Related
Agreements to which it is a party and the transactions contemplated thereby. The
Merger Agreement and the Related Agreements to which Adept is a party have been
duly executed and delivered by Adept, and, assuming due authorization, execution
and delivery by Adept, constitute the valid and binding obligation of Adept,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by principles of public policy and subject to the
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and to rules of law governing specific performance, injunctive relief or
other equitable remedies. For purposes of this opinion, the term "Related
Agreements" shall mean the Registration Rights Agreement, the Escrow Agreement,
the Noncompetition Agreements and the Affiliate Agreements.
3. The execution and delivery by Adept of the Merger Agreement and any
Related Agreement to which Adept is a party and the consummation of the
transactions contemplated thereby will not violate or result in a breach or
default under (i) any provision of the Articles of Incorporation and Bylaws of
Adept, (ii) to our knowledge, any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise or license to which Adept
or any of its properties or assets is subject, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Adept or its
properties or assets.
4. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity or any third
party, is required by or with respect to Adept in connection with the execution
and delivery of the Merger Agreement and any Related Agreement to which Adept,
is a party or the consummation of the transactions contemplated thereby, except
for such consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable securities laws
thereby.
5. There is no action, suit or proceeding of any nature pending or, to
our knowledge, threatened against Adept, or any of their respective properties
or any of Adept's officers or directors which challenges or seeks to enjoin,
alter or materially delay any of the transactions contemplated by the Merger
Agreement.
BYE/OASIS Engineering, Inc. and the
Shareholders of BYE/OASIS Engineering, Inc.
July 14, 1999
Page 4
This opinion is solely for your benefit and is not to be made available
to or relied upon by any other person without our express prior written consent.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation