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EXHIBIT 5.1
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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
▇▇▇▇▇▇ AUTOMATION, INC.
AND
PROGRESSIVE TECHNOLOGIES INC.
DATED: JUNE 27, 2001
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TABLE OF CONTENTS
1. DEFINITIONS....................................................................1
2. THE MERGER; CLOSING............................................................8
2.1. THE MERGER...............................................................8
2.2. EFFECTIVE TIME...........................................................9
2.3. EFFECTS OF THE MERGER....................................................9
2.4. CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION....................9
2.5. BYLAWS OF SURVIVING CORPORATION..........................................9
2.6. OFFICERS AND DIRECTORS OF SURVIVING CORPORATION..........................9
2.7. CONVERSION OR CANCELLATION OF CAPITAL STOCK OF THE COMPANY..............10
2.8. SURRENDER OF CERTIFICATES...............................................12
2.9. MULTIPLE CERTIFICATES...................................................14
2.10. ESCROW SHARES...........................................................14
2.11. INTENTIONALLY OMITTED...................................................14
2.12. SHAREHOLDER REPRESENTATIVES.............................................14
2.13. STOCK TRANSFER BOOKS....................................................15
2.14. TAX AND ACCOUNTING CONSEQUENCES.........................................16
2.15. RESTRICTED SECURITIES...................................................16
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.........................16
3.1. ORGANIZATION AND GOOD STANDING..........................................16
3.2. AUTHORITY; NO CONFLICT..................................................17
3.3. CAPITALIZATION..........................................................18
3.4. BOOKS, RECORDS AND ACCOUNTS.............................................19
3.5. FINANCIAL STATEMENTS....................................................20
3.6. NO UNDISCLOSED LIABILITIES..............................................20
3.7. NO MATERIAL ADVERSE CHANGE..............................................20
3.8. TAXES...................................................................21
3.9. ACCOUNTS RECEIVABLE.....................................................23
3.10. TITLE TO PROPERTIES; ENCUMBRANCES.......................................24
3.11. CONDITION AND SUFFICIENCY OF ASSETS.....................................25
3.12. COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS.......................25
3.13. LEGAL PROCEEDINGS.......................................................25
3.14. ABSENCE OF CERTAIN CHANGES AND EVENTS...................................26
3.15. CONTRACTS; NO DEFAULTS..................................................28
3.16. INSURANCE...............................................................31
3.17. ENVIRONMENTAL MATTERS...................................................32
3.18. EMPLOYEES...............................................................33
3.19. EMPLOYEE BENEFITS.......................................................33
3.20. LABOR RELATIONS.........................................................37
3.21. INTELLECTUAL PROPERTY...................................................38
3.22. CERTAIN PAYMENTS........................................................41
3.23. RELATIONSHIPS WITH RELATED PERSONS......................................41
3.24. BROKERS OR FINDERS......................................................42
3.25. CUSTOMER RELATIONSHIPS..................................................42
3.26. OUTSTANDING INDEBTEDNESS................................................42
3.27. SUPPLIERS; RAW MATERIALS CONTRACTORS....................................42
3.28. CUSTOMERS...............................................................43
3.29. PAYABLES................................................................43
3.30. INVENTORIES.............................................................43
3.31. PRODUCT WARRANTIES; PRODUCT LIABILITY...................................43
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3.32. FINANCIAL SERVICE RELATIONS AND POWERS OF ATTORNEY....................44
3.33. POOLING...............................................................44
3.34. REGULATORY CORRESPONDENCE.............................................44
3.35. COMPANY ACTION........................................................45
3.36. DISCLOSURE............................................................45
4. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇....................................45
4.1. ORGANIZATION AND GOOD STANDING........................................45
4.2. AUTHORITY; NO CONFLICT................................................46
4.3. CAPITALIZATION; PARENT SHARES.........................................47
4.4. FILINGS WITH THE COMMISSION...........................................47
4.5. NO MATERIAL ADVERSE CHANGE............................................47
4.6. LEGAL PROCEEDINGS.....................................................48
4.7. BROKERS OR FINDERS....................................................48
4.8. DISCLOSURE............................................................48
5. COVENANTS...................................................................48
5.1. NORMAL COURSE.........................................................48
5.2. CONDUCT OF BUSINESS...................................................49
5.3. REGULATION D..........................................................51
5.4. PRIVATE PLACEMENT MEMORANDUM..........................................51
5.5. COMPANY SHAREHOLDER DOCUMENTS.........................................52
5.6. SPECIAL MEETING.......................................................53
5.7. AGREEMENTS WITH RESPECT TO AFFILIATES.................................53
5.8. CERTAIN FILINGS.......................................................53
5.9. NOTIFICATION OF CERTAIN MATTERS.......................................54
5.10. POOLING ACCOUNTING TREATMENT..........................................54
5.11. NO SOLICITATION.......................................................54
5.12. ACCESS TO INFORMATION; CONFIDENTIALITY................................55
5.13. REASONABLE BEST EFFORTS; FURTHER ACTION...............................55
5.14. TAX MATTERS...........................................................56
6. ADDITIONAL COVENANTS OF ▇▇▇▇▇▇..............................................58
6.1. CERTAIN FILINGS.......................................................58
6.2. NOTIFICATION OF CERTAIN MATTERS.......................................58
6.3. EMPLOYMENT MATTERS....................................................58
6.4. REGISTRATION..........................................................59
6.5. NMS LISTING...........................................................62
7. CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇.........................................62
7.1. REPRESENTATIONS AND WARRANTIES........................................62
7.2. PERFORMANCE OF COVENANTS..............................................62
7.3. DISSENTING SHAREHOLDERS...............................................62
7.4. UPDATE CERTIFICATE....................................................62
7.5. NO GOVERNMENTAL OR OTHER PROCEEDING; ILLEGALITY.......................63
7.6. APPROVALS AND CONSENTS................................................63
7.7. OPINION OF COUNSEL....................................................63
7.8. SHAREHOLDER APPROVAL..................................................64
7.9. OPINIONS OF ACCOUNTANTS; POOLING......................................64
7.10. ESCROW AGREEMENT......................................................64
7.11. NONCOMPETITION AND PROPRIETARY INFORMATION AGREEMENTS.................64
7.12. TERMINATION OF RIGHTS AND VOTING AGREEMENTS...........................64
7.13. PATENT ASSIGNMENT.....................................................64
7.14. REPAYMENT OF PROMISSORY NOTES.........................................65
7.15. OTHER DOCUMENTS.......................................................65
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8. CONDITIONS TO OBLIGATIONS OF THE COMPANY...................................65
8.1. REPRESENTATIONS AND WARRANTIES........................................65
8.2. PERFORMANCE OF COVENANTS..............................................65
8.3. UPDATE CERTIFICATE....................................................66
8.4. NO GOVERNMENTAL OR OTHER PROCEEDING; ILLEGALITY.......................66
8.5. OPINION OF COUNSEL....................................................66
8.6. SHAREHOLDER APPROVAL..................................................66
9. INDEMNIFICATION..............................................................67
9.1. DEFINITIONS...........................................................67
9.2. INDEMNIFICATION BY COMPANY SHAREHOLDERS...............................67
9.3. DEFENSE OF THIRD PARTY ACTIONS........................................68
9.4. MISCELLANEOUS.........................................................69
9.5. PAYMENT OF INDEMNIFICATION; SOLE REMEDY...............................70
10. TERMINATION OF AGREEMENT....................................................70
10.1. TERMINATION...........................................................70
10.2. TERMINATION BY ▇▇▇▇▇▇.................................................70
10.3. TERMINATION BY THE COMPANY............................................71
10.4. PROCEDURE FOR TERMINATION.............................................71
10.5. EFFECT OF TERMINATION.................................................71
10.6. RIGHT TO PROCEED......................................................72
11. GENERAL PROVISIONS..........................................................72
11.1. TERMINATION OF REPRESENTATIONS AND WARRANTIES.........................72
11.2. EXPENSES..............................................................72
11.3. PUBLIC ANNOUNCEMENTS..................................................72
11.4. NOTICES...............................................................73
11.5. JURISDICTION; SERVICE OF PROCESS......................................74
11.6. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.................74
11.7. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS....................74
11.8. SEVERABILITY..........................................................75
11.9. GOVERNING LAW.........................................................75
11.10. COUNTERPARTS..........................................................75
11.11. ENTIRE AGREEMENT AND MODIFICATION.....................................75
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is entered into as of
June 27, 2001, between ▇▇▇▇▇▇ Automation, Inc. ("▇▇▇▇▇▇"), a Delaware
corporation, and Progressive Technologies Inc. (the "COMPANY"), a Massachusetts
corporation.
RECITALS:
A. The Boards of Directors of ▇▇▇▇▇▇ and the Company, deeming it advisable
and for the respective benefit of ▇▇▇▇▇▇ and the Company, and their
shareholders, have approved the Merger (as hereinafter defined) of the Company
with and into ▇▇▇▇▇▇ upon the terms and subject to the conditions set forth in
this Agreement, and have approved this Agreement and authorized the transactions
contemplated hereby.
B. The Board of Directors of the Company has determined to recommend to
all of the Company's shareholders that the Merger and this Agreement be
approved.
▇. ▇▇▇▇▇▇ and the Company intend to adopt this Agreement as a plan of
reorganization within the meaning of Section 368 of the Code (as hereinafter
defined) and the regulations promulgated thereunder.
▇. ▇▇▇▇▇▇ and the Company intend that the Merger be accounted for as a
pooling-of-interests for financial reporting and accounting purposes.
E. Pursuant to the Merger, each outstanding share of the Company's capital
stock (the "COMPANY CAPITAL Stock"), shall be automatically converted into the
right to receive the consideration specified in Section 2.7 upon the terms and
subject to the conditions hereinafter set forth.
F. Upon consummation of the Merger, the separate corporate existence of
Company shall cease, and ▇▇▇▇▇▇ shall continue as the surviving corporation.
THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACCOUNTS RECEIVABLE"--as defined in Section 3.9.
"AFFILIATE AGREEMENT"--as defined in Section 3.37.
"AFFILIATE LETTERS"--as defined in Section 5.8.
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"AGREEMENT"--this Agreement, including the Schedules and Exhibits hereto.
"AGREEMENT OF MERGER"--as defined in Section 2.2.
"ALTERNATIVE ACQUISITION"--as defined in Section 5.11.
"BASE BALANCE SHEET"--as defined in Section 3.5(a).
"▇▇▇▇▇▇"--as defined in the first paragraph of this Agreement.
"▇▇▇▇▇▇ COMMON STOCK"--the Common Stock, $0.01 par value per share, of
▇▇▇▇▇▇.
"▇▇▇▇▇▇ PURCHASE RIGHT"--as defined in Section 2.7(g).
"▇▇▇▇▇▇ SEC REPORTS"--as defined in Section 4.4.
"▇▇▇▇▇▇ SHARES"--the shares of ▇▇▇▇▇▇ Common Stock to be issued to the
Company Shareholders in connection with the Merger.
"CERTIFICATES"--as defined in Section 2.8(c).
"CLOSING"--as defined in Section 2.1(b).
"CLOSING DATE"--the date and time as of which the Closing actually takes
place.
"CLOSING EXCHANGE PRICE"-- the average closing price of a share of ▇▇▇▇▇▇
Common Stock for the 10 consecutive Trading Days ending on the Trading Day that
is three Trading Days immediately prior to the Closing Date, as reported on the
Nasdaq National Market (subject to appropriate adjustment for any stock split,
reverse split, stock dividend, reorganization, recapitalization or other like
change with respect to the ▇▇▇▇▇▇ Common Stock occurring after the date hereof
and prior to the Effective Time).
"CODE"--the Internal Revenue Code of 1986, as amended, or any successor
law.
"COMMISSION"--the United States Securities and Exchange Commission.
"COMPANY"--as defined in the first paragraph of this Agreement.
"COMPANY CAPITAL STOCK"--the Company Common Stock and Company Preferred
Stock.
"COMPANY COMMON STOCK"--the Common Stock and Restricted Common Stock, $0.01
par value, of the Company.
"COMPANY PREFERRED STOCK"--the Series A Convertible Redeemable Preferred
Stock of the Company.
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"COMPANY SHAREHOLDERS"--the holders of the Company Common Stock and Company
Preferred Stock.
"COMPANY SHAREHOLDER DOCUMENTS"--as defined in Section 5.5(b).
"COMPANY SHAREHOLDER QUESTIONNAIRE"--as defined in Section 5.5(a).
"COMPANY SUBSIDIARY"--Progressive Technologies Ltd., a company organized
under the laws of the Virgin Islands.
"CONFIDENTIALITY AGREEMENT" --the Confidentiality Agreement, dated March
13, 2001 between the Company and ▇▇▇▇▇▇.
"CONTINUING EMPLOYEE" --as defined in Section 6.3(a).
"CONTRACT"--any agreement, contract, obligation, promise, commitment or
undertaking (whether written or oral), other than those that have been
terminated.
"COPYRIGHTS"--as defined in the definition of "Intellectual Property
Assets".
"CREDIT LINE"--all credit extensions and facilities provided by Silicon
Valley Bank or any of its affiliates.
"CUSTOMERS"--as defined in Section 3.28.
"DGCL"--as defined in Section 2.1(a).
"DISCLOSURE DOCUMENT"--as defined in Section 5.6.
"DISCLOSURE SCHEDULE"--the disclosure schedule delivered by the Company to
▇▇▇▇▇▇ concurrently with the execution and delivery of this Agreement.
"DISSENTING SHAREHOLDERS"--as defined in Section 2.7(b).
"EFFECTIVE TIME"--as defined in Section 2.2.
"EMPLOYEE BENEFIT PLAN"--as defined in Section 3.19(a).
"ENCUMBRANCE"--any mortgage, charge, claim, community property interest,
equitable interest, lien, option, pledge, security interest, right of first
refusal or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership; and
the verb "Encumber" shall be construed accordingly.
"ENVIRONMENTAL CLAIM"--any accusation, allegation, notice of violation,
action, claim, Encumbrance, Lien, demand, abatement or other Order or direction
(conditional or otherwise) by any Governmental Authority or any Person for
personal injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution, contamination
or other adverse effects on the environment, or for fines, penalties or
restrictions
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resulting from or based upon (i) the existence, or the continuation of the
existence, of a Release (including, without limitation, sudden or non-sudden
accidental or non-accidental Releases) of, or exposure to, any Hazardous
Material or other substance, chemical, material, pollutant, contaminant, odor,
audible noise, or other Release in, into or onto the environment (including,
without limitation, the air soil, soil, surface water or groundwater) at, in,
by, from or related to the Facilities or any activities conducted thereon; (ii)
the environmental aspects of the transportation, storage, treatment or disposal
of Hazardous Materials in connection with the operation of the Facilities; or
(iii) the violation, or alleged violation, of any Environmental Laws, Orders or
Governmental Permits of or from any Governmental Authority relating to
environmental matters connected with the Facilities.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damage,
expense, liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to: (a) any environmental, health or safety matter or condition
(including on-site or off-site contamination, generation, handling and disposal
of Hazardous Materials, occupational safety and health, and regulation of
chemical and Hazardous Materials); (b) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses, litigation,
including civil and criminal claims, demands and responses, investigative,
remedial, response or inspection costs and expenses arising under Environmental
Law or Occupational Safety and Health Law; (c) financial responsibility under
Environmental Law or Occupational Safety and Health Law for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment or
other remediation or response actions required by applicable Environmental Law
or Occupational Safety and Health Law and for any natural resource damages; or
(d) any other compliance, corrective, investigative or remedial measures
required under Environmental Law or Occupational Safety and Health Law. The
terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW"--any Law concerning the environment, or activities that
might threaten or result in damage to the environment or human health, or any
Law that is concerned in whole or in part with the environment and with
protecting or improving the quality of the environment and human and employee
health and safety and includes, but is not limited to, CERCLA, the Hazardous
Materials Transportation Act (49 U.S.C.ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 ▇.▇.▇.▇▇. 6901 et seq.), the Clean Water Act
(33 U.S.C.ss.1251 et seq.), the Clean Air Act (33 U.S.C.ss.7401 et seq.), the
Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), and the Federal
Insecticide, Fungicide, and Rodenticide Act (7 ▇.▇.▇.▇▇. 136 et seq.), as such
laws have been amended or supplemented, and the regulations promulgated pursuant
thereto, and any and all analogous state or local statutes, and the regulations
promulgated pursuant thereto.
"ERISA"--the Employee Retirement Income Security Act of 1974, as amended,
or any successor law.
"ERISA AFFILIATE"--as defined in Section 3.19(b).
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"ESCROW AGENT"--as defined in Section 2.10.
"ESCROW AGREEMENT" --as defined in Section 2.10.
"ESCROW SHARES" --as defined in Section 2.10.
"EXCHANGE ACT"--the Securities Exchange Act of 1934, as amended, or any
successor law.
"EXCHANGE AGENT"--as defined in Section 2.8(a).
"EXCHANGE RATIO"--as defined in Section 2.7(a).
"FACILITIES"--any real property, leaseholds or other interests currently or
formerly owned or operated by the Company and any buildings, plants, structures
or equipment (including motor vehicles) currently or formerly owned or operated
by the Company.
"FINANCIAL STATEMENTS"--as defined in Section 3.5(a).
"GAAP"-- United States generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY"--any court, tribunal, authority, agency,
commission, bureau, department, official or other instrumentality of the United
States, any foreign country or any domestic, foreign, state, local, county, city
or other political subdivision.
"GOVERNMENTAL PERMIT"--any license, franchise, permit or other
authorization of any Governmental Authority.
"HAZARDOUS MATERIALS"--any substance, material or waste which is regulated
by Environmental Law, including, without limitation, any material or substance
which is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste" or "restricted hazardous waste,"
"subject waste," "contaminant," "toxic waste" or "toxic substance" under any
provision of Environmental Law, including but not limited to, petroleum
products, asbestos and polychlorinated biphenyls.
"INTELLECTUAL PROPERTY ASSETS" --shall mean all worldwide intellectual
property rights including without limitation: (i) all trademarks, service marks,
trade names, common law trademarks, business names, Internet domain names, trade
dress, slogans, and the goodwill associated therewith, and all registrations or
applications therefor (collectively, "MARKS"); (ii) all patents, patent
applications and inventions and discoveries that may be patentable
(collectively, "PATENTS"); (iii) all copyrights in both published works and
unpublished works, including training manuals, marketing and promotional
materials, internal reports, business plans and any other expressions, mask
works and software and videos, whether registered or unregistered, and all
registrations or applications in connection therewith (collectively,
"COPYRIGHTS"); and (iv) all trade secrets, know-how, confidential information,
customer lists, technical information, proprietary information, technologies,
processes and formulae, source code, algorithms, architecture, structure,
display screens and development tools, data, plans,
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drawings and blue prints, whether tangible or intangible and whether stored,
compiled, or memorialized physically, electronically, photographically, or
otherwise (collectively, "TRADE SECRETS"); owned, used or licensed by the
Company or the Company Subsidiary as licensee or licensor and that are used in
and material to the conduct of the business of the Company or the Company
Subsidiary as it is currently conducted or as proposed to be conducted.
"INTERIM FINANCIAL STATEMENTS"--as defined in Section 3.5(a).
"ISO"--as defined in Section 3.19(i).
"KEY EMPLOYEES"-- ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ .
"LAW"--any federal, state, local or foreign law (including common law),
statute, code, ordinance, rule or regulation.
"LIEN"--any lien, pledge, hypothecation, levy, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
easement, or other real estate declaration, covenant, condition, restriction or
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"MARKS"--as defined in the definition of "Intellectual Property Assets".
"MATERIAL ADVERSE EFFECT"--as defined in Section 3.7.
"MATERIAL PERSONAL PROPERTY"--as defined in Section 3.10.
"MBCL"-- as defined in Section 2.1(a).
"MERGER"--as defined in Section 2.1(a).
"NONCOMPETITION AGREEMENTS"--as defined in Section 7.11.
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any legal or governmental requirement
or obligation relating to safe and healthful working conditions or to reduce
occupational safety and health hazards or designed to provide safe and healthful
working conditions.
"OPTIONS" - as defined in Section 2.7(d).
"ORDER"--any order, consent, consent order, injunction, judgment, decree,
consent decree, ruling, writ, assessment or arbitration award.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the articles or certificate of formation and
operating agreement of a limited liability company; (e) any charter, trust
certificate or document
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or similar document adopted or filed in connection with the creation, formation
or organization of a Person; and (e) any and all currently effective amendments
to any of the foregoing.
"PATENT ASSIGNMENT"--as defined in Section 7.13.
"PATENTS"--as defined in the definition of "Intellectual Property Assets".
"PENSION PLAN"--as defined in Section 3.19(f).
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or governmental body or Governmental Authority.
"PLACEMENT MEMORANDUM/PROXY STATEMENT"--as defined in Section 5.4(a).
"POOLING RULES"--as defined in Section 5.7.
"PROCEEDING"--any pending claim, action, investigation, arbitration,
litigation or other judicial, regulatory or administrative proceeding.
"PURCHASE PRICE" --$31,481,000.
"PURCHASER REPRESENTATIVE AGREEMENT"--as defined in Section 5.5(b).
"REGISTRATION STATEMENT"--the registration statement on Form S-3 to be
filed by ▇▇▇▇▇▇ with the SEC pursuant to Section 6.4.
"REGULATION D"--Regulation D promulgated pursuant to the Securities Act.
"RELATED PERSON"--as defined in Section 3.23.
"RELEASE"--any release, spill, effluent, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration into
the indoor or outdoor environment of any Hazardous Material through or in the
air, soil, surface water or groundwater.
"REMEDIAL ACTION"--all actions, including, without limitation, any
expenditures, required or voluntarily undertaken to (i) clean up, remove, treat,
or in any other way address any Hazardous Material or other substance in the
indoor or outdoor environment; (ii) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous Material or other substance so it
does not migrate or endanger or threaten to endanger public health or welfare of
the indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations or post-remedial monitoring and care; or (iv) bring any Facility
into compliance with all Environmental Laws and Environmental Permits.
"RETURNS"--as defined in Section 3.8(b).
"SECURITIES ACT"--the Securities Act of 1933, as amended, or any successor
law.
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"SHAREHOLDER REPRESENTATIVES"--as defined in Section 2.11.
"SOPHISTICATION CERTIFICATE"--as defined in Section 5.5(b).
"SPECIAL CONSENT"--as defined in Section 5.4(a).
"SPECIAL MEETING"--as defined in Section 5.4(a).
"SUBSIDIARY"--with respect to any Person, any corporation, joint venture,
limited liability company, partnership, association or other business entity of
which more than 50% of the total voting power of stock or other equity entitled
to vote generally in the election of directors or managers or equivalent persons
thereof is owned or controlled, directly or indirectly, by such Person.
"SURVIVING CORPORATION"--as defined in Section 2.1(a).
"SYSTEMS"--as defined in Section 3.29(a).
"TAX AUTHORITY"--as defined in Section 3.8(a).
"TAXES"--as defined in Section 3.8(a).
"TRADE SECRETS"--as defined in the definition of "Intellectual Property
Assets".
"TRADING DAY"-- any day on which the Nasdaq National Market is open for
business.
"TRANSACTION DOCUMENTS"--the Agreement of Merger, the Escrow Agreement and
the Noncompetition Agreements.
"WARN"--as defined in Section 3.18(d).
"WARRANTS" - as defined in Section 2.7(d).
2. THE MERGER; CLOSING
2.1. THE MERGER
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Massachusetts Business Corporation
Law (the "MBCL") and the Delaware General Corporation Law (the "DGCL"), the
Company shall be merged with and into ▇▇▇▇▇▇ at the Effective Time (the
"MERGER"). Following the Merger, the separate corporate existence of the
Company shall cease, and ▇▇▇▇▇▇ shall continue as the surviving corporation
(the "SURVIVING CORPORATION") under the name "▇▇▇▇▇▇ Automation, Inc."
(b) Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to
Article 10 and subject to the satisfaction or waiver of the conditions set
forth in Articles 7 and 8, the consummation
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of the Merger will take place on or as promptly as practicable (and in any
event within two business days) after satisfaction or waiver of the
conditions set forth in Articles 7 and 8 at the offices of Brown, Rudnick,
Freed & Gesmer, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"CLOSING"), unless another date, time or place is agreed to in writing by
the Company and ▇▇▇▇▇▇.
2.2. EFFECTIVE TIME
On the Closing Date, the parties hereto shall cause the Merger to be
consummated by (i) filing an agreement or certificate of merger (the "AGREEMENT
OF MERGER") in such form as is required by and executed in accordance with the
relevant provisions of the MBCL and the DGCL, and (ii) making all other filings
or recordings required under the MBCL and the DGCL. The Merger shall become
effective at such time as the Agreement of Merger shall have been duly filed
with the second of the Secretary of State of the State of Delaware and the
Secretary of State of the Commonwealth of Massachusetts, or at such subsequent
time as the Company and ▇▇▇▇▇▇ shall agree and shall be specified in the
Agreement of Merger (the date and time the Merger becomes effective being the
"EFFECTIVE TIME").
2.3. EFFECTS OF THE MERGER
At and after the Effective Time, the Merger will have the effects set forth
in this Agreement, the Agreement of Merger and the applicable provisions of the
MBCL and the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the assets, property, 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.
2.4. CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION
Unless otherwise determined by ▇▇▇▇▇▇ prior to the Effective Time, at the
Effective Time, the certificate of incorporation of ▇▇▇▇▇▇, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, unless and until thereafter changed
or amended in accordance with applicable law.
2.5. BYLAWS OF SURVIVING CORPORATION
Unless otherwise determined by ▇▇▇▇▇▇ prior to the Effective Time, at the
Effective Time, the bylaws of ▇▇▇▇▇▇, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation, unless and
until thereafter changed or amended in accordance with applicable law.
2.6. OFFICERS AND DIRECTORS OF SURVIVING CORPORATION
The officers of ▇▇▇▇▇▇ immediately prior to the Effective Time (which are
identified in Schedule 2.6 of the Disclosure Schedule) shall be the initial
officers of the Surviving Corporation, in each case until the earliest of their
resignation or removal from office or their otherwise ceasing to be officers or
until their respective successors are duly elected and qualified.
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The directors of ▇▇▇▇▇▇ immediately prior to the Effective Time (which are
identified in Schedule 2.6 of the Disclosure Schedule) shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the certificate of incorporation and bylaws of the Surviving Corporation.
2.7. CONVERSION OR CANCELLATION OF CAPITAL STOCK OF THE COMPANY
At the Effective Time, by virtue of the Merger and without any action on
the part of any party hereto or any holder thereof:
(a) COMPANY CAPITAL STOCK. Subject to the provisions of Sections
2.7(b) and (e), 2.8 and 2.9, each share of Company Common Stock and Company
Preferred Stock issued and outstanding immediately prior to the Effective
Time (except for shares held in the Company's treasury) shall be canceled
and extinguished and automatically converted into the right to receive,
before reduction on a pro rata basis with all the Company Capital Stock for
the Escrow Shares, the number of shares of ▇▇▇▇▇▇ Common Stock rounded up
to the nearest whole number of shares of ▇▇▇▇▇▇ Common Stock as is
determined by multiplying each such share by the applicable Exchange Ratio
set forth below (as applicable with respect to Company Common Stock or
Company Preferred Stock, the "EXCHANGE RATIO") as follows:
Series of Stock Exchange Ratio
Common (Purchase Price - $1,500,030) / Closing Exchange Price
--------------------------------------------------------------------------------------------------
Total Number of Shares of Issued and Outstanding Company Capital Stock on Closing Date
Series A $1,500,030 / Closing Exchange Price + (Purchase Price - $1,500,030) / Closing Exchange Price
------------------------------------- ---------------------------------------------------------
Preferred Total Number of Shares of Issued Total Number of Shares of Issued and Outstanding
and Outstanding Company Preferred Company Capital Stock on Closing Date
Stock on Closing Date
In no event shall the aggregate number of shares of ▇▇▇▇▇▇ Common
Stock determined pursuant to this Section 2.7(a) exceed the number
determined by dividing (i) the Purchase Price by (ii) the Closing Exchange
Price (except as a result of rounding up to whole shares for each record
holder).
(b) DISSENTERS. Shares of Company Capital Stock owned by a holder who
(i) shall not have voted in favor of the Merger, and (ii) with respect to
which appraisal rights shall have been properly perfected in accordance
with Sections 85 through 98 of the MBCL (collectively, the "DISSENTING
SHAREHOLDER") shall not be canceled, extinguished and converted as provided
in Section 2.7(a), but shall be entitled to receive such consideration as
shall be provided in such sections of the MBCL, except that shares of any
Dissenting Shareholder who shall thereafter cease to be a "dissenting
stockholder" as provided in such sections of the MBCL shall thereupon be
deemed to have been canceled, extinguished and converted, as of the
Effective Time, into ▇▇▇▇▇▇ Common
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Stock, as provided in Section 2.7(a). The Company shall notify ▇▇▇▇▇▇ in
writing of the details of the Dissenting Shareholders and the number of
shares of Company Capital Stock that they own. The Company shall not enter
into any agreement or settlement with any Dissenting Shareholder without
the prior written consent of ▇▇▇▇▇▇.
(c) TREASURY SHARES AND UNISSUED SHARES. Each share of Company Capital
Stock held in the Company's treasury and each authorized but unissued share
of Company Capital Stock shall cease to exist without payment of any
consideration therefor.
(d) WARRANTS AND OPTIONS. As of the Effective Time, all (i)
outstanding options to purchase Company Common Stock granted by the Company
pursuant to its stock option plans or otherwise ("OPTIONS") and (ii)
warrants to purchase Company Preferred Stock or Company Common Stock
("WARRANTS"), whether vested or unvested, whether or not exercisable, shall
be assumed by ▇▇▇▇▇▇. Immediately after the Effective Time, each Option and
Warrant outstanding immediately prior to the Effective Time shall be deemed
to constitute an option or warrant to acquire, on the same terms and
conditions as were applicable under such Option or Warrant at the Effective
Time (without giving effect to the Merger), that number of shares of ▇▇▇▇▇▇
Common Stock (rounded to the nearest whole share) as is equal to the number
of shares of Company Common Stock or Company Preferred Stock subject to the
unexercised portion of such Option or Warrant, as applicable, multiplied by
the applicable Exchange Ratio. The exercise price per share of each such
assumed Option and Warrant shall be equal to the exercise price of such
Option and Warrant immediately prior to the Effective Time, divided by the
applicable Exchange Ratio (rounded up to the nearest whole cent). The
terms, exercisability, vesting schedule, status as an "incentive stock
option" under Section 422 of the Code, if applicable, and all of the other
terms of the Options and Warrants shall otherwise remain unchanged. As soon
as practicable after the Effective Time, ▇▇▇▇▇▇ shall deliver to the
holders of Options and Warrants appropriate notices setting forth such
holders' rights pursuant to such Options and Warrants, as amended by this
Section 2.7, and the agreements evidencing such Options and Warrants shall
continue in effect on the same terms and conditions (subject to the
amendments provided for in this Section 2.7.) The Board of Directors of the
Company (or, if appropriate, a committee thereof) shall adopt such
resolutions and take such actions as may be required to cause each Option
and Warrant outstanding at the Effective Time to be assumed by ▇▇▇▇▇▇ in
accordance with this Section 2.7(d). ▇▇▇▇▇▇ shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of ▇▇▇▇▇▇
Common Stock for delivery upon exercise of the Options and Warrants assumed
in accordance with this Section 2.7. As soon as practicable after the
Effective Time and for so long as any of the assumed Options shall remain
outstanding, ▇▇▇▇▇▇ will use all commercially reasonable efforts to cause
the shares of ▇▇▇▇▇▇ Common Stock issuable upon exercise of the assumed
Options to be registered under the Securities Act (but in any event within
thirty (30) calendar days following the Effective Time) and to comply with
the requirements of Securities Act Rule 428 and Form S-8 with respect
thereto; provided, however, that the Buyer shall have no obligation to
register such shares unless Form S-8 is available for such registration
pursuant to the provisions of the Securities Act.
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(e) ADJUSTMENTS TO EXCHANGE RATIO COMPUTATION. The Exchange Ratio
computation pursuant to Section 2.7(a) shall be appropriately adjusted for
any stock split, reverse split, stock dividend, reorganization,
recapitalization or other like change with respect to the ▇▇▇▇▇▇ Common
Stock occurring after the date hereof and prior to the Effective Time.
(f) ▇▇▇▇▇▇ PURCHASE RIGHTS. Holders of shares of Company Capital Stock
shall also receive, together with each share of ▇▇▇▇▇▇ Common Stock issued
in the Merger pursuant to this Section 2.7, an associated preferred stock
purchase right ("▇▇▇▇▇▇ PURCHASE RIGHT") pursuant to the Rights Agreement,
as amended, between ▇▇▇▇▇▇ and the Rights Agent named therein. References
herein to ▇▇▇▇▇▇ Common Stock shall be deemed to include the associated
▇▇▇▇▇▇ Purchase Rights.
2.8. SURRENDER OF CERTIFICATES
(a) EXCHANGE AGENT. The transfer agent for the ▇▇▇▇▇▇ Common Stock, or
a bank or trust company designated by ▇▇▇▇▇▇ prior to the Effective Time,
shall act as exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) ▇▇▇▇▇▇ TO PROVIDE COMMON STOCK. Promptly after the Effective Time,
▇▇▇▇▇▇ shall make available to the Exchange Agent, for exchange in
accordance with this Section 2.8, the aggregate number of shares of ▇▇▇▇▇▇
Common Stock issuable pursuant to Section 2.7 in exchange for the issued
and outstanding shares of Company Capital Stock. At any time following six
months after the Effective Time, ▇▇▇▇▇▇ shall be entitled to require the
Exchange Agent to deliver to ▇▇▇▇▇▇ any ▇▇▇▇▇▇ Common Stock which had been
made available to the Exchange Agent by or on behalf of ▇▇▇▇▇▇ and which
has not been disbursed to holders of Certificates, and if it elects to do
so, thereafter such holders shall be entitled to look to ▇▇▇▇▇▇ with
respect to, and ▇▇▇▇▇▇ shall be obligated to deliver to such holders, such
▇▇▇▇▇▇ Common Stock payable upon due surrender of their Certificates.
(c) EXCHANGE PROCEDURES. Within five business days after the Effective
Time, the Exchange Agent shall cause to be delivered to each holder of
record of a certificate or certificates (the "CERTIFICATES") which
immediately prior to the Effective Time evidenced outstanding shares of
Company Capital Stock whose shares were converted into the right to receive
shares of ▇▇▇▇▇▇ Common Stock pursuant to Section 2.7 (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as ▇▇▇▇▇▇ may reasonably specify) and (ii)
instructions to effect the surrender of the Certificates in exchange for
certificates evidencing shares of ▇▇▇▇▇▇ Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such
letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
by such instructions, the holder of such Certificates shall be entitled to
receive in exchange therefor a certificate evidencing the number of whole
shares of ▇▇▇▇▇▇ Common Stock into which such shares of
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Company Capital Stock were converted, and the Certificate so surrendered
shall forthwith be canceled. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, evidenced shares of Company
Capital Stock will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of dividends or other
distributions, to evidence the ownership of the number of whole shares of
▇▇▇▇▇▇ Common Stock into which such shares of Company Capital Stock shall
have been so converted.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect
to shares of ▇▇▇▇▇▇ Common Stock with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of ▇▇▇▇▇▇ Common Stock evidenced thereby until the
holder of record of such Certificate shall surrender such Certificate
pursuant to Section 2.8(c). Subject to applicable Law, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates evidencing whole shares of ▇▇▇▇▇▇ Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the
aggregate amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares
of ▇▇▇▇▇▇ Common Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of ▇▇▇▇▇▇
Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer, accompanied
by all documents required to evidence and effect such transfer pursuant to
this Section 2.8(e), and that the Person requesting such transfer will have
paid to ▇▇▇▇▇▇ or any agent designated by it any transfer or other Taxes
required by reason of the issuance of a certificate for shares of ▇▇▇▇▇▇
Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or established to the satisfaction of ▇▇▇▇▇▇ or
any agent designated by it that such Taxes have been paid or are not
payable.
(f) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 2.8, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to any holder of shares of Company Capital
Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
(g) NO FURTHER OWNERSHIP RIGHTS IN COMPANY CAPITAL STOCK. From and
after the Effective Time, no shares of Company Capital Stock shall be
deemed to be outstanding, and holders of Certificates shall cease to have
any rights with respect thereto, other than the right to receive ▇▇▇▇▇▇
Common Stock and cash in accordance with Sections 2.7, 2.8 and 2.9 hereof.
All shares of ▇▇▇▇▇▇ Common Stock issued upon the surrender for exchange of
shares of Company Capital Stock in accordance with the terms hereof shall
be deemed to have been issued in full satisfaction of all rights pertaining
to such shares of Company Capital Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of
shares of Company Common
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Stock 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 canceled and exchanged as
provided in this Section 2.8.
(h) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates evidencing shares of Company Capital Stock shall have been
lost, stolen or destroyed, the Exchange Agent may require, before issuing
certificates in respect of the shares of ▇▇▇▇▇▇ Common Stock evidenced
thereby, such affidavits and indemnities in support thereof, as it may
reasonably require with respect to such loss, theft or destruction.
2.9. MULTIPLE CERTIFICATES
If more than one Certificate shall be surrendered for the account of
the same Company Shareholder, the number of whole shares of ▇▇▇▇▇▇ Common Stock
for which such Certificates shall be exchanged pursuant to Section 2.8 shall be
computed on the basis of the aggregate number of shares of Company Capital Stock
evidenced by such Certificates.
2.10. ESCROW SHARES
At the Effective Time, ▇▇▇▇▇▇ shall deliver to State Street Bank and Trust
Company or any successor escrow agent ("ESCROW AGENT") appointed pursuant to the
escrow agreement (the "ESCROW AGREEMENT"), ▇▇▇▇▇▇ Shares based upon the Closing
Exchange Price in an amount equal to 10% of the Purchase Price, such shares (the
"ESCROW SHARES") to be held for until the earlier of (i) one (1) year after the
Closing Date and (ii) the date of release of ▇▇▇▇▇▇' audited financial
statements for the fiscal year ended September 30, 2001, and applied in
accordance with the terms of the Escrow Agreement substantially in the form
attached hereto as Exhibit 2.10.
2.11. INTENTIONALLY OMITTED
2.12. SHAREHOLDER REPRESENTATIVES
(a) Each Company Shareholder will be deemed to have irrevocably
constituted and appointed, effective as of the Effective Time, each of
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and R, ▇▇▇▇▇ ▇▇▇▇▇ (together with their
permitted successors, the "SHAREHOLDER REPRESENTATIVES"), as his true and
lawful agent and attorney-in-fact to enter into any agreement in connection
with the transactions contemplated by this Agreement and any transactions
contemplated by the Escrow Agreement, to exercise all or any of the powers,
authority and discretion conferred on him under any such agreement, to
waive any terms and conditions of any such agreement (other than the ▇▇▇▇▇▇
Common Stock and cash issuable in accordance with Sections 2.7, 2.8 and
2.9), to give and receive notices on his behalf and to be his exclusive
representatives with respect to any matter, suit, claim, action or
Proceeding arising with respect to any transaction contemplated by any such
agreement, including, without limitation, the defense, settlement or
compromise of any claim, action or proceeding for which ▇▇▇▇▇▇ or the
Surviving Corporation may be entitled to indemnification and the
Shareholder
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Representatives agree to act as, and to undertake the duties and
responsibilities of, such agent and attorney-in-fact. This power of
attorney is coupled with an interest and is irrevocable.
(b) The Shareholder Representatives shall not be liable to anyone for
any action taken or not taken by them in good faith or for any mistake of
fact or law for anything that they may do or refrain from doing in
connection with their obligations under this Agreement (i) with the consent
of stockholders who, as of the date of this Agreement, owned a majority in
number of the outstanding shares of Company Common Stock (treating the
Company Preferred Stock on an as-converted basis) or (ii) in the absence of
his own gross negligence or willful misconduct. Any action taken or not
taken pursuant to the advice of counsel shall be conclusive evidence of
such good faith. The Company Shareholders and ▇▇▇▇▇▇ shall, jointly and
severally, indemnify and hold the Shareholder Representatives, and each
successor thereof, harmless from any and all liability and expenses
(including, without limitation, counsel fees) which may arise out of any
action taken or omitted by them as Shareholder Representatives in
accordance with this Agreement, as the same may be amended, modified or
supplemented, except such liability and expense as may result from the
gross negligence or willful misconduct of the Shareholder Representatives.
(c) The Shareholder Representatives may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed to
be genuine and to have been signed or presented by the proper party or
parties. The Shareholder Representatives shall not be liable for other
parties' forgeries, fraud or false presentations.
(d) The Shareholder Representatives shall have reasonable access to
information about the Company and the reasonable assistance of the
Company's officers and employees for purposes of performing their duties
and exercising their rights hereunder, provided that the Shareholder
Representatives shall treat confidentially and not disclose any nonpublic
information from or about the Company to anyone (except on a need to know
basis to individuals who agree to treat such information confidentially).
(e) If a Shareholder Representative shall be unable or unwilling to
serve in such capacity, his successor shall be named by those persons
holding a majority of the shares of Company Common Stock outstanding
(treating the Company Preferred Stock on an as-converted basis) at the
Effective Time, and such successors shall serve and exercise the powers of
a Shareholder Representative hereunder.
2.13. STOCK TRANSFER BOOKS
At the close of business on the day prior to the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of Company Capital
Stock shall thereafter be made on such stock transfer books.
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2.14. TAX AND ACCOUNTING CONSEQUENCES
It is intended by the parties hereto that the Merger shall (i) constitute a
tax-free reorganization within the meaning of Section 368(a)(i)(A) of the Code,
and (ii) subject to applicable accounting standards, qualify for accounting
treatment as a pooling-of-interests. The parties hereto adopt this Agreement as
a "plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
2.15. RESTRICTED SECURITIES
All ▇▇▇▇▇▇ Shares issued pursuant to this Agreement will be "restricted
securities" subject to certain resale restrictions pursuant to the Securities
Act and/or pursuant to the requirements relating to pooling-of-interests
accounting treatment for merger transactions and all certificates representing
such ▇▇▇▇▇▇ Shares shall bear a restrictive legend.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
The Company represents and warrants to ▇▇▇▇▇▇ as follows, except as set
forth on the disclosure schedule attached hereto (the "Disclosure Schedule").
The Disclosure Schedule shall be arranged in sections and paragraphs
corresponding to the numbered and lettered sections and paragraphs contained in
this Article 3 and the disclosure in any section or paragraph shall qualify
other sections and paragraphs in this Article 3 only to the extent that it is
reasonably apparent from a reading of such disclosure that it also qualifies or
applies to such other sections or paragraphs. The Company shall in good faith
attempt to list each representation and warranty to which any item disclosed on
the Disclosure Schedule applies,
3.1. ORGANIZATION AND GOOD STANDING
(a) Schedule 3.1 of the Disclosure Schedule contains a complete and
accurate list of the jurisdictions in which the Company and the Company
Subsidiary is authorized to do business. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full corporate power and authority to
conduct its business as it is now being conducted and where it is now being
conducted and to own or use the assets and properties that it purports to
own or use. The Company Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the Virgin Islands, with
full corporate power and authority to conduct its business as it is now
being conducted and where it is now being conducted and to own or use the
assets and properties that it purports to own or use. Neither the Company
nor the Company Subsidiary is qualified to do business as a foreign
corporation under the Laws of any jurisdiction or is required to be
licensed or qualified in any other state or jurisdiction by either its
ownership or use of assets or properties, or the nature of the activities
conducted by it, except where the failure to be so qualified would not have
a Material Adverse Effect on the Company and the Company Subsidiary, taken
as a whole. The Company does not have, and has never had, any Subsidiaries,
except for the Company Subsidiary.
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(b) The Company has attached as Schedule 3.1(b) of the Disclosure
Schedule correct and complete copies of the Organizational Documents of the
Company and the Company Subsidiary.
3.2. AUTHORITY; NO CONFLICT
(a) The Company has the corporate power and authority to execute and
deliver this Agreement and the Transaction Documents to which it is a party
and to perform its obligations under this Agreement and the Transaction
Documents to which it is a party. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms. At the Closing, upon the authorization and
approval, execution and delivery by the Company of the Transaction
Documents to which it is a party, each Transaction Document will constitute
a legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its respective terms except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, and (ii) that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. Pursuant to the
MBCL and the Company's Organizational Documents, the affirmative vote of
(i) at least two-thirds of the Company Preferred Stock, voting separately
as a class; and (ii) at least two-thirds of the voting Company Common Stock
and the Company Preferred Stock, voting together as a single class, are
required for the due authorization of the Company to execute and deliver
this Agreement and the other agreements contemplated hereby and to perform
its obligations hereunder or thereunder.
(b) Except as set forth in Schedule 3.2(b) of the Disclosure Schedule,
neither the execution and delivery of this Agreement or any Transaction
Document by the Company, nor the consummation or performance by the Company
of the Merger or any of the other transactions contemplated hereby or
thereby will, directly or indirectly (with or without notice or lapse of
time or both):
(i) violate or conflict with (A) any provision of the
Organizational Documents of the Company or the Company Subsidiary, (B)
any resolution adopted by the board of directors or the shareholders
of the Company or the Company Subsidiary, (C) any legal requirement or
any legal Order, award, decision, settlement or process to which the
Company or the Company Subsidiary or any of the assets or properties
owned or used by the Company or the Company Subsidiary is subject, or
(D) any Governmental Permit which is held or used by the Company or
the Company Subsidiary, excluding from clauses (C) and (D) any
violation or conflict which would not, either individually or in the
aggregate, materially, adversely affect the Company or materially
impair or preclude the Company's ability to consummate the Merger or
the transactions contemplated hereby;
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(ii) result in a breach of or constitute a default, give rise to
a right of termination, cancellation or acceleration, create any
entitlement to any payment or benefit, or require the consent,
authorization or approval of or any notice to or filing with any third
Person under any material Contract or any debt instrument to which the
Company or the Company Subsidiary is a party or to which its or their
assets or properties are bound, or require the consent, authorization
or approval of or any notice to or filing with any Governmental
Authority to which the Company or the Company Subsidiary or its or
their assets or properties is subject except for any breaches,
defaults, rights of termination, cancellation or acceleration,
entitlements, consents, approvals, notices or filings which would not,
either individually or in the aggregate, materially, adversely affect
the Company or materially impair or preclude the Company's ability to
consummate the Merger or the transactions contemplated hereby; or
(iii) result in the imposition or creation of any Encumbrance or
Lien upon or with respect to any of the assets or properties owned or
used by the Company or the Company Subsidiary.
3.3. CAPITALIZATION
(a) The authorized equity securities of the Company consist of (i)
300,000 shares of voting Common Stock; (ii) 100,000 shares of Restricted
Common Stock; and (iii) 90,000 shares of Preferred Stock. At the date
hereof and immediately prior to Closing, 110,000 shares of voting Common
Stock, 9,208 shares of Restricted Common Stock and 90,000 shares of Series
A Preferred Stock are and shall be issued and outstanding. Options to
purchase 32,018 shares of Common Stock and warrants to purchase 10,000
shares of Common Stock are and shall be issued and outstanding at the date
hereof and immediately prior to Closing. No equity securities of the
Company are held in the treasury of the Company. The Company has never
declared, set aside, made or paid any dividend or other distribution or
repurchase or repayment in respect of shares of the Company Capital Stock.
The conversion price for the Company Preferred Stock is $16.667 per share.
All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable.
Schedule 3.3 of the Disclosure Schedule sets forth a complete and correct
list of all of the Company Shareholders and the number of shares of Company
Capital Stock owned, of record and beneficially, by each such Company
Shareholder. Schedule 3.3(a) of the Disclosure Schedule sets forth a
complete and correct list of all warrants, options or similar rights,
including as to each holder thereof, the name of such holder, the number of
shares of Company Capital Stock subject thereto and the exercisability,
exercise price or conversion rate and termination date thereof. Schedule
3.3(b) of the Disclosure Schedule sets forth all outstanding securities of
the Company and the Company Subsidiary not otherwise disclosed on Schedule
3.3 or 3.3(a), including but not limited to all debt securities outstanding
or authorized for issuance and all securities or rights convertible or
exercisable into, or exchangeable for, capital stock. No "phantom" stock,
stock appreciation rights or agreements or similar rights or agreements
exist which are intended to confer on any person rights similar to any
rights accruing to Company Shareholders.
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Except as set forth on Schedule 3.3(c) of the Disclosure Schedule, there
are no voting trusts or other Contracts or understandings to which the
Company, the Company Subsidiary or any Company Shareholder is a party with
respect to the transfer, voting or registration of the capital stock of the
Company or the Company Subsidiary. Except as set forth on Schedule 3.3(c)
of the Disclosure Schedule, there are no Contracts relating to the
issuance, sale or transfer of any equity securities or other securities of
the Company or the Company Subsidiary. Except as set forth in Schedule
3.3(c) of the Disclosure Schedule, neither the Company nor the Company
Subsidiary owns or has any Contract to acquire any equity securities or
other securities of any Person or any, direct or indirect, equity or
ownership interest in any other business, except for the Company Subsidiary
(with respect to the Company). Except as set forth on Schedule 3.3(c) of
the Disclosure Schedule, no Person has any preemptive rights with respect
to any security of the Company or the Company Subsidiary.
(b) The Company directly owns, of record and beneficially, and has
good, valid and indefeasible title to and the right to transfer all of the
issued and outstanding capital stock of the Company Subsidiary, free and
clear of any and all Encumbrances and Liens of any kind or nature
whatsoever. There are no voting trusts, shareholder agreements or any other
Contracts or understandings to which the Company or the Company Subsidiary
is a party with respect to the capital stock of the Company Subsidiary. All
of the outstanding capital stock of the Company Subsidiary has been duly
authorized and validly issued and is fully paid and nonassessable.
3.4. BOOKS, RECORDS AND ACCOUNTS
(a) The books of account and other records of the Company and the
Company Subsidiary, all of which have been made available to ▇▇▇▇▇▇, are
true, complete and correct in all material respects. The minute books of
the Company and the Company Subsidiary contain, in all material respects,
true, accurate and complete records of all meetings held of, and corporate
action taken by, the shareholders, the board of directors, and committees
of the board of directors of the Company and the Company Subsidiary,
respectively. The stock books of the Company and the Company Subsidiary are
true, complete and correct.
(b) The Company's books, records and accounts fairly and accurately
reflect transactions and dispositions of assets by the Company, and the
system of internal accounting controls of the Company is sufficient to
assure that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(c) At the Closing, all of such books, records and accounts will be in
the possession of the Company.
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3.5. FINANCIAL STATEMENTS
(a) For purposes of this Agreement: "FINANCIAL STATEMENTS" shall mean
(i) the audited consolidated balance sheets of the Company as of December
31, 2000, and the related consolidated and consolidating income statements
and statements of cash flows for the year ended December 31, 2000, and (ii)
the unaudited interim consolidated and consolidating balance sheet of the
Company as of April 30, 2001 (the "BASE BALANCE SHEET") and the related
unaudited income statement for the four (4) months ended on such date (the
"INTERIM FINANCIAL STATEMENTS"). True and complete copies of such Financial
Statements and Interim Financial Statements are attached as Schedule 3.5(a)
to the Disclosure Schedule.
(b) The Financial Statements and the Interim Financial Statements (i)
have been prepared from the books and records of the Company in accordance
with GAAP consistently applied during the periods covered thereby, (ii)
fully reflect all liabilities and contingent liabilities of the Company (on
a consolidated basis) required to be reflected therein on such basis as at
the date thereof, and (iii) fairly present the financial position of the
Company (on a consolidated basis) as of the date of the Base Balance Sheet
and the results of its operations (on a consolidated basis) for the period
covered thereby; provided, however, the Interim Financial Statements (x)
are subject to normal year-end adjustments and (y) do not include
footnotes. The Company has not received any auditor's letters to management
for fiscal years 2000, 1999 or 1998.
3.6. NO UNDISCLOSED LIABILITIES
Except as set forth on Schedule 3.6 of the Disclosure Schedule, the Company
and the Company Subsidiary do not have any material liabilities or obligations
of any nature (whether known or unknown, absolute, accrued, contingent or
otherwise, and whether due or to become due), except for (i) liabilities or
obligations reflected or reserved against in the Financial Statements and (ii)
current liabilities incurred in the ordinary course of business since the date
of the Base Balance Sheet, consistent with past practices (none of which is a
claim for breach of contract, breach of duty, breach of warranty, tort or
infringement of an intellectual property right).
3.7. NO MATERIAL ADVERSE CHANGE
Since December 31, 2000, there has not been any change which has had a
material adverse effect on the business, operations, properties, assets,
liabilities, results of operations or condition (financial or otherwise) (a
"MATERIAL ADVERSE EFFECT") of the Company and the Company Subsidiary, and no
event has occurred or circumstance exists that would reasonably be expected to
result in a Material Adverse Effect on the Company and the Company Subsidiary,
taken as a whole other than any event or circumstance resulting from the
consummation of the transaction contemplated hereby and provided that the
Company makes no representation as to the condition of the economy in general or
the condition of the Company's industry generally. To the knowledge of the
Company and except as set forth on Schedule 3.7 of the Disclosure Schedule,
there is no fact that would be reasonably likely to result in a Material Adverse
Effect
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on the Company and the Company Subsidiary which has not been specifically
disclosed herein or in a schedule hereto.
3.8. TAXES
(a) "TAXES" (including, with correlative meaning, the terms "Tax" and
"Taxable") shall mean all income, profit, franchise, gross receipts, sales,
use, real property, personal property, ad valorem, excise, value added,
alternative minimum, employment, payroll, social security and withholding
taxes, severance, stamp, gains, transfer, license, documentary, customs,
occupation, environmental, windfall, and other taxes, duties, or
assessments of any kind whatsoever, and any interest or fines, and any and
all penalties and additions relating to such amounts, imposed by any
Governmental Authority (a "TAX Authority").
(b) (i) Each of the Company and the Company Subsidiary has filed or
caused to be filed with the appropriate Tax Authorities in a timely manner
all Tax returns, reports and forms, statements, declarations, claims for
refund, and other documents and information with respect to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof ("RETURNS") required to be filed by them with a Tax Authority
except where the failure to file a Return would not have a Material Adverse
Effect; (ii) the liability for Taxes reported on such Returns is complete
and accurate; (iii) each of the Company and the Company Subsidiary has paid
in full on a timely basis all Taxes or made adequate provision in the
Financial Statements for all Taxes (whether or not shown on any Return)
required to be paid by them; (iv) there are no Encumbrances or Liens for
Taxes upon the assets or properties of the Company or the Company
Subsidiary other than for Taxes not yet due and payable; (v) no
deficiencies for Taxes have been claimed, proposed, or assessed in writing
or otherwise to the Company's knowledge by any Tax Authority or other
Governmental Authority with respect to the Company or the Company
Subsidiary, and there are no pending or, to the Company's knowledge,
threatened audits, investigations or claims for or relating to any
liability in respect of Taxes of the Company or the Company Subsidiary;
(vi) the Company has delivered or made available to ▇▇▇▇▇▇ correct and
complete copies of all income tax returns filed by the Company and the
Company Subsidiary since December 31, 1997, and (vii) the Company has no
examination reports and statements or notices of deficiency asserted,
proposed, or assessed against or agreed to by the Company or the Company
Subsidiary.
(c) There are no outstanding Contracts or written waivers with respect
to the Company or the Company Subsidiary extending the statutory period of
limitation applicable to any Taxes, and neither the Company nor the Company
Subsidiary has requested any extension of time within which to file any
Return, which has not yet been filed.
(d) (i) Except as set forth in Schedule 3.8, the unpaid Taxes of the
Company and the Company Subsidiary (A) did not, as of April 30, 2001,
exceed the reserve for Tax liability (other than any reserve for deferred
Taxes established to reflect timing
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differences between book and Tax income) set forth on the face of the Base
Balance Sheet, and (B) will not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom
and practice of the Company and the Company Subsidiary; (ii) Schedule
3.8(d) hereto sets forth the Company's and the Company Subsidiary's
adjusted basis in its assets, excess loss accounts, and deferred
intercompany transactions for income tax purposes, and sets forth the
Company's and the Company Subsidiary's net operating losses and net
operating loss carryovers, net capital losses and net capital loss
carryovers, unused investment or other Tax credits, and excess charitable
contributions as of December 31, 2000, and since December 31, 2000, there
has been no change in the business activity or assets of the Company or the
Company Subsidiary that could jeopardize or limit the ability to utilize
any such losses, carryovers, or credits as an offset against taxable
income; (iii) each of the Company and the Company Subsidiary has withheld
and timely paid to the appropriate Tax Authority all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third
Person; (iv) all material elections within the last three years with
respect to Taxes made by the Company or the Company Subsidiary as of the
date hereof are set forth in Schedule 3.8 of the Disclosure Schedule; (v)
the Company has not requested any private letter rulings in respect of any
Tax between the Company or the Company Subsidiary and any Tax Authority;
(vi) neither the Company nor the Company Subsidiary has ever been a member
of an affiliated group within the meaning of Section 1504 of the Code, or
filed or been included in a combined, consolidated or unitary return of any
Person (other than with respect to the Company and the Company Subsidiary);
(vii) neither the Company nor the Company Subsidiary has any liability for
the Taxes of any other Person under Treasury Regulation section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee
or successor, by contract or otherwise, neither the Company nor the Company
Subsidiary is otherwise liable for Taxes of any other Person except with
respect to sales taxes, and neither the Company nor the Company Subsidiary
is currently under any contractual obligation to indemnify any Person with
respect to Taxes, or a party to or bound by any tax sharing or allocation
agreement or any other agreement providing for payments by the Company or
the Company Subsidiary with respect to Taxes (other than between the
Company and the Company Subsidiary); (viii) neither the Company nor the
Company Subsidiary is, or has been, a United States real property holding
corporation (as defined in Section 897(c)(2) of the Code), during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code, (ix)
neither the Company nor the Company Subsidiary has filed a consent under
Section 341 of the Code concerning "collapsible corporations"; (x) neither
the Company nor the Company Subsidiary is a personal holding company within
the meaning of Section 542 of the Code; (xi) neither the Company nor the
Company Subsidiary is a party to any joint venture, partnership or other
arrangement or Contract which could be treated as a partnership for Tax
purposes; (xii) neither the Company nor the Company Subsidiary has agreed
to or is required, as a result of a change in method of accounting or
otherwise, to include any adjustment under Section 481 of the Code (or any
corresponding provision of state, local or foreign Law) in Taxable income;
(xiii) neither the Company nor the Company Subsidiary has made any
payments, is obligated to make any payments, or is a party to any agreement
that could obligate it to
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make any payments, the deductibility of which would be disallowed (in whole
or in part) under Section 162(m), 280G, or 404 of the Code (taking into
account, among other things, the transactions contemplated by this
Agreement); (xiv) Schedule 3.8(d) of the Disclosure Schedule contains a
list of all jurisdictions to which, to the Company's knowledge, any Tax is
properly payable or in which any Return is required to be filed by the
Company or the Company Subsidiary, and no written claim has ever been made
by any Tax Authority in any other jurisdiction that the Company or the
Company Subsidiary is subject to taxation in such jurisdiction; (xv) no
written claim has ever been made by a Tax Authority in a jurisdiction where
the Company or the Company Subsidiary does not file Returns that they are
or may be subject to taxation by that jurisdiction, and Schedule 3.8(d)
attached hereto lists all of the jurisdictions in which the Company and the
Company Subsidiary are subject to taxation or required to file Returns;
(xvi) neither the Company nor the Company Subsidiary has executed or
entered into any closing agreement pursuant to Section 7121 of the Code, or
any predecessor provision thereof, or any similar provision of state or
local law; (xvii) neither the Company nor the Company Subsidiary has
distributed the stock of any corporation, and neither the Company's nor the
Company Subsidiary's stock has been distributed, in a transaction
satisfying the requirements of Section 355 of the Code since April 16,
1997; (xviii) the Company and the Company Subsidiary have disclosed on
their federal income tax returns all positions taken therein that could
give rise to a substantial understatement of federal income tax within the
meaning of Section 6662 of the Code; and (xix) none of the assets owned by
the Company or the Company Subsidiary is property that is required to be
treated as owned by any other person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, as in effect immediately prior
to the enactment of the Tax Reform Act of 1986, or is "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
3.9. ACCOUNTS RECEIVABLE
Except as set forth on Schedule 3.9, all accounts receivable, notes
receivable, contracts receivable, unbilled invoices and other receivables of the
Company that are reflected on the Financial Statements or on the accounts
receivable ledger of the Company or the Company Subsidiary as of the Closing
Date (collectively, the "ACCOUNTS RECEIVABLE") represent or will represent valid
and enforceable obligations (i) arising from sales actually made or services
actually performed in the ordinary course of business, (ii) arising out of
transactions with unaffiliated parties and (iii) subject to no setoff, defense
or counterclaim. All of the Accounts Receivable are or will be collectible at
the full recorded amount thereof within ninety (90) days, or with respect to
Accounts Receivable of companies organized in Asia, one hundred eighty (180)
days, of invoice date through normal means of collection, less any applicable
reserves established in accordance with GAAP. An accurate summary of the aging
of the Accounts Receivable on April 30, 2001 is attached as Schedule 3.9 to the
Disclosure Schedule. Since December 31, 2000, there has not been a material
change in the Company's receivables aging practice.
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3.10. TITLE TO PROPERTIES; ENCUMBRANCES
(a) Neither the Company nor the Company Subsidiary owns, or has ever
owned, any real property. Schedule 3.10 of the Disclosure Schedule contains
a complete and accurate list of all leaseholds or other interests in real
property held by the Company or the Company Subsidiary. Schedule 3.10 of
the Disclosure Schedule sets forth for each such property, the owner
thereof, a brief description thereof (including approximate square
footage), the use made of such property and the approximate annual costs,
fees and taxes associated with such property The Company has delivered or
made available to ▇▇▇▇▇▇ true, correct and complete copies of the real
property leases to which the Company or the Company Subsidiary is party or
pursuant to which they use or occupy any real property,
(b) Also set forth on Schedule 3.10 of the Disclosure Schedule is a
listing of the machinery, equipment and other tangible personal property
with an original cost in excess of $25,000 used or owned by the Company and
the Company Subsidiary and a listing of all leases under which the Company
or the Company Subsidiary leases any personal property as of the Closing
Date requiring annual rental payments in excess of $10,000, together with a
description of such property (collectively, the "MATERIAL PERSONAL
PROPERTY"). All Material Personal Property is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇. Except as set forth on Schedule 3.10 of
the Disclosure Schedule, all of the assets and properties of the Company
are reflected on the Financial Statements (except to the extent not
required to be so reflected by GAAP). The only intangible assets and
properties owned by the Company or used in the conduct of its business are
the Intellectual Property Assets.
(c) All of the foregoing leases set forth on Schedule 3.10 of the
Disclosure Schedule are valid and enforceable in accordance with their
terms against the parties thereto. Each of the Company and the Company
Subsidiary is in compliance with all material terms and conditions of such
leases and no event has occurred nor does any circumstance exist that (with
or without notice or the passage of time or both) would constitute a
material violation or default under any such leases and neither the Company
nor the Company Subsidiary has given or received written notice of any
alleged violation or of any default under any such leases.
(d) Each of the Company and the Company Subsidiary has good and
marketable title to, or a valid leasehold, license or other interest in,
all of the assets and properties, real and personal, tangible and
intangible, it owns or purports to own, and the legal right to use all
other material assets it otherwise uses in its business, including those
reflected on its books and records and in the Financial Statements (except
for Accounts Receivable collected and inventories, materials and supplies
disposed of in the ordinary course of business consistent with past
practice after the date of the most recent Financial Statements). Except as
set forth on Schedule 3.10 of the Disclosure Schedule, all assets and
properties owned, leased or used by the Company or the Company Subsidiary
are free and clear of all Encumbrances, except for (a) liens for current
Taxes not yet due, (b) worker's, common carrier and other similar liens
arising in the ordinary course of
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business, none of which materially detracts from the value or impairs the
use of the asset or property subject thereto, or materially impairs the
operations of the Company or the Company Subsidiary, and (c) Encumbrances
or Liens disclosed in the Financial Statements.
(e) To the best of the Company's knowledge, there are no condemnation,
environmental, zoning or other land use regulation proceedings, either
instituted or planned to be instituted, that would detrimentally affect the
use and operation of the Company's leased real property for its intended
purpose.
3.11. CONDITION AND SUFFICIENCY OF ASSETS
The Facilities and other assets and property owned or used by the Company
or the Company Subsidiary are, to the Company's knowledge, structurally sound,
are in good operating condition and repair (normal wear and tear excepted), and
are adequate for the uses to which they are being put, and none of such
Facilities or other property and assets owned or used by the Company or the
Company Subsidiary is in need of maintenance or repairs except for ordinary,
routine maintenance and repairs that are not material in nature or cost. The
Facilities and other assets and property owned or used by the Company and the
Company Subsidiary are sufficient for the continued conduct of its business
after the Closing in substantially the same manner as conducted prior to the
Closing.
3.12. COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
(a) Each of the Company and the Company Subsidiary is in compliance in
all material respects with all applicable Laws, licenses and Orders
affecting the assets or properties owned or used by the Company or the
Company Subsidiary or the business or operations of the Company or the
Company Subsidiary. Neither the Company nor the Company Subsidiary has been
charged with violating, or to the knowledge of the Company, threatened with
a charge of violating, nor, to the Company's knowledge, is the Company or
the Company Subsidiary under investigation with respect to a possible
violation of, any applicable Law or Order relating to any of its or their
assets or properties or any aspect of its or their business.
(b) Schedule 3.12 of the Disclosure Schedule contains a complete and
accurate list of each Governmental Permit that is held by the Company or
the Company Subsidiary or that otherwise relates to the business of, or to
any of the assets or properties owned or used by, the Company or the
Company Subsidiary. Each Governmental Permit listed or required to be
listed in Schedule 3.12 of the Disclosure Schedule is valid and in full
force and effect and is not the subject of any Proceedings for suspension,
modification or revocation.
3.13. LEGAL PROCEEDINGS
(a) Except as set forth on Schedule 3.13(a), the Company has not
received notice of, nor to the knowledge of the Company does there exist,
any Proceeding or
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threatened Proceeding that has been commenced by or against the Company,
the Company Subsidiary or any of the officers, directors, former officers
or directors, employees, shareholders or agents of the Company or the
Company Subsidiary (in their capacities as such) or that otherwise relates
to any of the assets or properties owned or used by, the Company or the
Company Subsidiary; or
(b) There is no Proceeding pending or, to the Company's knowledge,
threatened that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated hereby.
3.14. ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Schedule 3.14 of the Disclosure Schedule, since
April 30, 2001, each of the Company and the Company Subsidiary has conducted its
business only in the ordinary course, consistent with past practice, and there
has not been any:
(a) contingent liability incurred by the Company or the Company
Subsidiary as guarantor or otherwise with respect to the obligations of
others;
(b) declaration, setting aside, making or payment of any dividend or
other distribution or repurchase or payment in respect of shares of capital
stock;
(c) issuance, sale, disposition or Encumbrance of, or authorization
for issuance, sale, disposition or Encumbrance of, or grant or issue of any
options, warrants or rights to acquire with respect to, any shares of its
capital stock or any other of its securities or any security convertible or
exercisable into or exchangeable for any such shares or securities, or any
change in its outstanding securities or shares of capital stock or its
capitalization, whether by reason of a reclassification, recapitalization,
stock split, combination, exchange or readjustment of shares, stock
dividend or otherwise;
(d) obligation or liability incurred by the Company or the Company
Subsidiary other than obligations and liabilities incurred in the ordinary
course of business consistent with past practice (none of which is a claim
for breach of contract, breach of duty, breach of warranty, tort or
infringement of an intellectual property right);
(e) Encumbrance of its assets or properties;
(f) payment of any bonuses, salaries or other compensation to any
shareholder, director, officer, consultant, agent or sales representative
or (except in the ordinary course of business consistent with past
practice) employee, increase of any bonuses, salaries or other compensation
to any shareholder, director, officer, consultant, agent, sales
representative or employee, or entry into or variation of any employment,
severance or similar Contract with any director, officer or employee;
(g) adoption of, or increase in the payments to or benefits under, any
Employee Benefit Plan;
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(h) damage to or destruction of any asset or property, whether or not
covered by insurance, or loss of any Customer, which would have a Material
Adverse Effect on the Company and the Company Subsidiary, taken as a whole;
(i) entry into, termination of, or receipt of notice of termination of
any Contract or transaction involving a total remaining commitment by or to
the Company or the Company Subsidiary of at least $25,000 including the
entry into (i) any document evidencing any indebtedness; (ii) any capital
or other lease; or (iii) any guaranty;
(j) sale, lease or other disposition (other than in the ordinary
course of business consistent with past practice) of any asset or property
with a value individually or in the aggregate in excess of $25,000;
(k) cancellation, compromise, release or waiver of any debt, claim or
right with a value to the Company or the Company Subsidiary in excess of
$10,000;
(l) creation, incurrence or assumption of any indebtedness for
borrowed money or guarantee of any obligation in an aggregate amount in
excess of $10,000, except for endorsements of negotiable instruments for
collection in the ordinary course of business;
(m) discharge or satisfaction of any material Encumbrance or Lien
other than those which are required to be discharged or satisfied during
such period in accordance with their original terms;
(n) payment, discharge or satisfaction of any material obligation or
liability, absolute, accrued, contingent or otherwise, whether due or to
become due, except for any current liabilities, and the current portion of
any long term liabilities, shown on the Financial Statements (or not
required as of the date thereof to be shown thereon in accordance with
GAAP) or incurred since the date of the Base Balance Sheet in the ordinary
course of business consistent with past practice;
(o) loan or advance to any Person other than travel and other similar
routine advances in the ordinary course of business consistent with past
practice, or acquisition of any capital stock or other securities of or any
ownership interest in, or a significant portion of the assets of, any other
business enterprise;
(p) capital investment or capital expenditure or capital improvement,
addition or betterment in amounts which exceed $10,000 in the aggregate or
lease or agreement to lease assets with an annual rental which exceeds
$10,000 in the aggregate;
(q) institution or settlement of any Proceeding before any
Governmental Authority relating to it or its assets or properties;
(r) except in the ordinary course of business consistent with past
practice, commitment to provide services or goods for an indefinite period
or a period of more than six (6) months;
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(s) change in the method of accounting or the accounting principles or
practices used by the Company in the preparation of the Financial
Statements except as required by GAAP;
(t) entry into other Contracts, except Contracts made in the ordinary
course of business consistent with past practice;
(u) amendment or other modification of any of the Organizational
Documents of the Company or the Company Subsidiary;
(v) transfer or grant of any rights or licenses under, or entry into
any settlement regarding the infringement of, any Intellectual Property
Assets, or entry into any licensing or similar agreements or arrangements;
(w) agreement, whether oral or written, by the Company or the Company
Subsidiary to do any of the foregoing;
(x) change in the management or supervisory personnel of the Company
or the Company Subsidiary; or
(y) claim of unfair labor practices involving the Company or the
Company Subsidiary.
3.15. CONTRACTS; NO DEFAULTS
(a) Schedule 3.15(a) of the Disclosure Schedule contains a complete
and accurate list, and the Company has delivered to ▇▇▇▇▇▇ true, correct
and complete copies, of:
(i) each Contract involving payments of at least $25,000 that
involves performance of services or delivery of goods or materials by
the Company or the Company Subsidiary;
(ii) each Contract involving payments of at least $25,000 that
involves performance of services or delivery of goods or materials to
the Company or the Company Subsidiary;
(iii) each Contract providing for the purchase of all or
substantially all of its requirements of a particular product from a
supplier;
(iv) each Contract or plan, including, without limitation, any
stock option plan, stock appreciation right 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;
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(v) each Contract for joint marketing, teaming or development;
(vi) each Contract with any dealer, franchiser, original
equipment manufacturer, value-added reseller, or manufacturer's
representative;
(vii) each Contract pertaining to the Company's or the Company
Subsidiary's maintenance or support of its products, services or
supplies;
(viii) each Contract for the sale of its products not made in the
ordinary course of business;
(ix) each Contract with any sales agent or distributor of
products of the Company or the Company Subsidiary;
(x) each Contract for a license (other than off-the-shelf, fully
paid up, shrink wrap software licenses) or franchise (as licensor or
licensee or franchisor or franchisee);
(xi) each Contract involving any arrangement or obligation with
respect to the return of products other than on account of a defect in
condition, or failure to conform to the applicable Contract;
(xii) each Contract with the United States government;
(xiii) each Contract which is material to the assets or business
of the Company and the Company Subsidiary considered as one
enterprise;
(xiv) each lease, license and other Contract affecting any
leasehold or other interest in any real or Material Personal Property
to which the Company or the Company Subsidiary is a party;
(xv) each licensing agreement or other Contract to which the
Company or the Company Subsidiary is a party with respect to patents,
trademarks, copyrights, trade secrets or other intellectual property,
including agreements with current or former employees, consultants or
contractors regarding the use or disclosure of any intellectual
property;
(xvi) each collective bargaining agreement and other Contract to
or with any labor union or other employee representative of a group of
employees involving or affecting the Company or the Company
Subsidiary;
(xvii) each joint venture, partnership and other Contract
involving a sharing of profits, losses, costs or liabilities by the
Company or the Company Subsidiary with any other Person or requiring
the Company or the Company Subsidiary to make a capital contribution;
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(xviii) each Contract to which the Company or the Company
Subsidiary is a party containing covenants that in any way purport to
restrict the business activity of the Company or the Company
Subsidiary or any of the employees of the Company or the Company
Subsidiary or limit the freedom of the Company or the Company
Subsidiary or any of the employees to engage in any line of business
or to compete with any Person or hire any Person;
(xix) each employment or consulting agreement between the Company
or the Company Subsidiary and its employees and consultants (other
than agreements that are terminable on 30 days notice or less without
penalty);
(xx) each agreement between the Company or the Company Subsidiary
and an officer or director of the Company or the Company Subsidiary or
any affiliate of any of the foregoing;
(xxi) each power of attorney granted by the Company or the
Company Subsidiary that is currently effective and outstanding;
(xxii) each Contract for capital expenditures by the Company or
the Company Subsidiary in excess of $25,000;
(xxiii) each agreement of the Company or the Company Subsidiary
under which any money has been or may be borrowed or loaned or any
note, bond, factoring agreement, indenture or other evidence of
indebtedness has been issued or assumed (other than those under which
there remain no ongoing obligations of the Company or the Company
Subsidiary), and each guaranty by the Company or the Company
Subsidiary of any evidence of indebtedness or other obligation, or of
the net worth, of any Person (other than endorsements for the purpose
of collection in the ordinary course of business);
(xxiv) each agreement of the Company or the Company Subsidiary
containing restrictions with respect to the payment of dividends or
other distributions in respect of its capital stock;
(xxv) each stock purchase, merger or other similar agreement
pursuant to which the Company or the Company Subsidiary acquired any
material amount of assets (other than capital expenditures), and all
relevant documents and agreements delivered in connection therewith;
(xxvi) each material agreement to which the Company or the
Company Subsidiary is a party containing a change of control provision
applicable to the Merger;
(xxvii) each other agreement to which the Company or the Company
Subsidiary is a party having an indefinite term or a fixed term of
more than one (1) year (other than those that are terminable at will
or upon not more than thirty (30) days' notice by the Company or the
Company Subsidiary without penalty) or
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requiring payments by the Company or the Company Subsidiary of more
than $25,000 per year; and
(xxviii) each standard form of agreement pursuant to which the
Company provides services or goods to customers.
(b) Each Contract required to be identified in Schedule 3.15(a) of the
Disclosure Schedule is in full force and effect and is valid and
enforceable against the Company or such Company Subsidiary except as noted
therein and, to the knowledge of the Company, against the other parties
thereto in accordance with its terms.
(c) Each of the Company and the Company Subsidiary is in full
compliance in all material respects with all applicable terms and
requirements of each Contract under which the Company or the Company
Subsidiary has any obligation or liability or by which the Company or the
Company Subsidiary or any of the assets or properties owned or used by the
Company or such Company Subsidiary is bound;
(i) to the knowledge of the Company, each other Person that has
or had any obligation or liability under any Contract under which the
Company or the Company Subsidiary has any rights is in full compliance
in all material respects with all applicable terms and requirements of
such Contract; and
(ii) to the knowledge of the Company, no event has occurred and
no circumstance exists that (with or without notice or lapse of time
or both) is likely to result in a violation or breach of any Contract.
3.16. INSURANCE
(a) Schedule 3.16 of the Disclosure Schedule sets forth the premium
payments and describes all the insurance policies of the Company and the
Company Subsidiary (except policies relating to Employee Benefit Plans
listed on Schedule 3.19 of the Disclosure Schedule), which policies are now
in full force and effect in accordance with their terms and expire on the
dates shown on Schedule 3.16 of the Disclosure Schedule. There has been no
default in the payment of premiums on any of such policies, and, to the
Company's knowledge, there is no ground for cancellation or avoidance of
any such policies, or any increase in the premiums thereof, or for
reduction of the coverage provided thereby. True, correct and complete
copies of all insurance policies listed in Schedule 3.16 of the Disclosure
Schedule have been previously furnished to ▇▇▇▇▇▇.
(b) The policies listed on Schedule 3.16 of the Disclosure Schedule
(i) are sufficient to enable the Company and the Company Subsidiary to
comply with all requirements of Laws and all agreements to which it is
subject, and (ii) will not be adversely affected by, or terminate or lapse
by reason of, the transactions contemplated by this Agreement. Schedule
3.16 of the Disclosure Schedule also sets forth all other insurance
policies in effect at any time during the 3 year period ended May 31, 2001
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under which the Company currently may be entitled to give notice or
otherwise assert a claim.
(c) Except for amounts deductible under the policies of insurance
described on Schedule 3.16 of the Disclosure Schedule or with respect to
risks assumed as a self-insurer and described on such Schedule, neither the
Company nor the Company Subsidiary is, nor has the Company or the Company
Subsidiary at any time been subject to any material liability as a
self-insurer of the business or assets of the Company or the Company
Subsidiary.
(d) Except as set forth on Schedule 3.16 of the Disclosure Schedule,
there are no claims, by or with respect to the Company, pending under any
of said policies, or disputes with insurers (other than claims under
employee benefit policies made in the ordinary course of business). No
notice of cancellation or termination has been received with respect to any
such policy. Except as set forth on Schedule 3.16 of the Disclosure
Schedule, the Company has not been refused any insurance with respect to
assets or operations, nor has its coverage been limited by any insurance
carrier with which it has applied for any such insurance or with which it
has carried insurance. The Company has no knowledge of any insurance
carrier's insolvency or inability to perform its obligations or pay any
claims pursuant to any of the insurance policies maintained by the Company.
(e) Except as set forth on Schedule 3.16 of the Disclosure Schedule,
neither the Company nor the Company Subsidiary has any current or prior
insurance policy which remains subject to a retrospective adjustment of the
premiums payable thereunder.
3.17. ENVIRONMENTAL MATTERS
(a) Each of the Company and the Company Subsidiary is in compliance in
material respects with all applicable Environmental Laws which compliance
includes, but is not limited to, the possession by the Company and the
Company Subsidiary of all Governmental Permits required under applicable
Environmental Laws, and compliance, in all material respects, with the
terms and conditions thereof. Neither the Company nor the Company
Subsidiary has received notice of, and neither the Company nor the Company
Subsidiary, nor any predecessor of any of them is the subject of, any
Environmental Claim or Remedial Action. The Company and the Company
Subsidiary have no material Environmental, Health and Safety Liabilities.
(b) There are no Environmental Claims that are pending or, to the
knowledge of the Company, threatened against the Company or the Company
Subsidiary, the Company's or the Company Subsidiary's Facilities or against
any Person whose liability for any Environmental Claim the Company or the
Company Subsidiary has retained or assumed either contractually or by
operation of Law.
(c) Neither the Company, nor the Company Subsidiary, nor any other
Person acting on behalf of the Company or the Company Subsidiary (solely
with respect to any such other Person, with the Company's, the Company
Subsidiary's knowledge) has
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disposed of, transported, stored, or arranged for the disposal of any
Hazardous Materials to, at or upon: (i) any location other than a site
lawfully permitted to receive such Hazardous Materials, (ii) any Facilities
or (iii) any site which, pursuant to CERCLA or any similar state Law, has
been placed on the National Priorities List, CERCLIS or their state
equivalents. Neither has there occurred during the period the Company or
the Company Subsidiary operated or possessed any Facility nor is there
presently occurring a Release, of any Hazardous Materials on, into or
beneath the surface of, or adjacent to, any Facilities caused by the
Company's activities. To the Company's knowledge, neither has there
occurred during the period the Company or the Company Subsidiary operated
or possessed any Facility nor is there presently occurring a Release, of
any Hazardous Materials on, into or beneath the surface of, or adjacent to,
any Facilities.
3.18. EMPLOYEES
(a) Schedule 3.18 of the Disclosure Schedule contains a complete and
accurate list of the following information for each employee of the
Company: name; job title; base salary; bonus; vacation accrued; service
credited for purposes of vesting and eligibility to participate under any
employee benefit plan of any nature. No Company Subsidiary has any
employees.
(b) To the knowledge of the Company, no officer or employee of the
Company or the Company Subsidiary is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such officer or
employee and any other Person that could adversely affect (i) the
performance of his duties as an officer or employee of the Company or the
Company Subsidiary, or (ii) the ability of the Company or the Company
Subsidiary to conduct its business.
(c) Neither the Company nor the Company Subsidiary has had a "Plant
Closing" or a "Mass Layoff" within the meaning of the federal Workers
Adjustment and Retraining Notification Act of 1988 ("WARN").
(d) The Company has delivered to ▇▇▇▇▇▇ or its counsel prior to the
date hereof true and complete copies of any employment agreements and any
procedures and policies relating to the employment of employees of the
Company and the use of temporary employees and independent contractors by
the Company (including summaries of any procedures and policies that are
unwritten).
3.19. EMPLOYEE BENEFITS
(a) Except for the Employee Benefit Plans listed on Schedule 3.19 of
the Disclosure Schedule, neither the Company and nor the Company Subsidiary
(either individually or collectively) maintain, have an obligation to
contribute to or have any actual or contingent liability with respect to
any Employee Benefit Plan. "EMPLOYEE BENEFIT PLAN" means any "employee
benefit plan" as defined in Section 3(3) of ERISA and any other plan,
policy, program, practice, agreement, understanding or arrangement
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(whether written or oral) providing compensation or other benefits (other
than ordinary cash compensation) to any current or former director,
officer, employee or consultant (or to any dependent or beneficiary
thereof), of the Company or the Company Subsidiary, which are now, or were
within the past three years, maintained by the Company or the Company
Subsidiary, or under which the Company or the Company Subsidiary has or
could have any obligation or liability, whether actual or contingent,
including, without limitation, all incentive, bonus, deferred compensation,
vacation, holiday, cafeteria, medical, disability, stock purchase, stock
option, stock appreciation, phantom stock, restricted stock or other
stock-based compensation plans, policies, programs, practices or
arrangements. The Company has delivered to ▇▇▇▇▇▇ or its counsel prior to
the date hereof true and complete copies of (i) plan instruments and
amendments thereto for all Employee Benefit Plans (or written summaries of
any Employee Benefit Plans that are unwritten) and, if applicable, related
trust agreements, insurance and other contracts, summary plan descriptions,
and summaries of material modifications, and material communications
distributed to the participants of each Plan, (ii) to the extent annual
reports on Form 5500 are required with respect to any Employee Benefit
Plan, the three most recent annual reports and attached schedules for each
Employee Benefit Plan as to which such report is required to be filed and
(iii) where applicable, the most recent (A) opinion, notification and
determination letters, (B) audited financial statements, (C) actuarial
valuation reports and (D) nondiscrimination tests performed under the Code
(including 401(k) and 401(m) tests) for each Employee Benefit Plan.
(b) Neither the Company nor the Company Subsidiary has or have never
had an ERISA Affiliate. "ERISA AFFILIATE" means any entity (whether or not
incorporated) other than the Company or a Company Subsidiary that, together
with the Company and the Company Subsidiary, is a member of (i) a
controlled group of corporations within the meaning of Section 414(b) of
the Code; (ii) a group of trades or businesses under common control within
the meaning of Section 414(c) of the Code; or (iii) an affiliated service
group within the meaning of Section 414(m) of the Code.
(c) Neither the Company nor the Company Subsidiary maintains or has
ever maintained or contributes to or has ever contributed to an Employee
Benefit Plan subject to Title IV of ERISA (including a multiemployer plan)
and no facts exist under which the Company or the Company Subsidiary could
incur any liability under Title IV of ERISA.
(d) With respect to each Employee Benefit Plan, to the knowledge of
the Company (i) no party in interest or disqualified person (as defined in
Section 3(14) of ERISA and Section 4975 of the Code, respectively) has at
any time engaged in a transaction which could subject ▇▇▇▇▇▇ or the Company
or the Company Subsidiary, directly or indirectly, to a tax, penalty or
liability for prohibited transactions imposed by ERISA or the Code and (ii)
no fiduciary (as defined in Section 3(21) of ERISA) with respect to any
Employee Benefit Plan, for whose conduct the Company or the Company
Subsidiary could have any liability (by reason of indemnities or
otherwise), has breached any of the responsibilities or obligations imposed
upon the fiduciary under Title I of ERISA.
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(e) Each Employee Benefit Plan which is a "welfare plan" within the
meaning of Section 3(1) of ERISA and which provides health, disability or
death benefits is fully insured; neither the Company nor the Company
Subsidiary is obligated to directly pay any such benefits or to reimburse
any third Person payor for the payment of such benefits.
(f) Each Employee Benefit Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "PENSION PLAN") and
which is subject to Sections 201, 301 or 401 of ERISA has received a
favorable determination letter from the Internal Revenue Service covering
all amendments required by the Tax Reform Act of 1986 and prior legislation
and there are no circumstances that are likely to result in revocation of
any such favorable determination letter. Except as noted on Schedule 3.19
of the Disclosure Schedule, no Pension Plan has assets other than
securities listed on a public exchange, mutual fund shares registered under
federal law, publicly traded debt or government debt instruments, or
participant loans extended in accordance with Plan Terms. Each Employee
Benefit Plan is and has been operated in material compliance with its terms
and all applicable Laws, Orders or governmental rules and regulations
currently in effect with respect thereto, and by its terms can be amended
and/or terminated at any time. As of and including the Closing Date, the
Company and the Company Subsidiary (i) shall have performed all material
obligations required to be performed by it under, and shall not be in
material default under or in material violation of any Employee Benefit
Plan and (ii) shall have made all contributions or payments required to be
made by it up to and including the Closing Date with respect to each
Employee Benefit Plan, or adequate accruals (including accruals for 401(k)
match, if any) therefor will have been provided for and will be reflected
on the Financial Statements provided to ▇▇▇▇▇▇ by the Company. All notices,
filings and disclosures required by ERISA or the Code (including notices
under Section 4980B of the Code and certifications under the Health
Insurance Portability and Accountability Act) have been timely made.
(g) Neither the Company nor the Company Subsidiary has received or is
aware of any Proceeding (other than routine claims for benefits) pending
or, to the knowledge of the Company, threatened with respect to any
Employee Benefit Plan or against any fiduciary of any Employee Benefit
Plan, and there are no facts that could give rise to any such Proceeding.
To the knowledge of the Company, there has not occurred any circumstances
by reason of which the Company or the Company Subsidiary may be liable for
an act, or a failure to act, by a fiduciary with respect to any Employee
Benefit Plan.
(h) There are no complaints, charges or claims against the Company or
the Company Subsidiary pending or, to the Company's knowledge, threatened
to be brought by or filed with any Governmental Authority and no facts
exist as a result of which the Company or the Company Subsidiary could have
any liability based on, arising out of, in connection with or otherwise
relating to the classification of any individual by the Company or the
Company Subsidiary as an independent contractor or "leased employee"
(within the meaning of Section 414(n) of the Code) rather than as an
employee.
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(i) Schedule 3.19(i) of the Disclosure Schedule sets forth a true and
complete list of each current or former employee, officer or director of
the Company or the Company Subsidiary who holds (i) any option to purchase
Company Common Stock, together with the number of shares of Company Common
Stock subject to such option, the option price of such option (to the
extent determinable), whether such option is intended to qualify as an
incentive stock option within the meaning of Section 422(b) of the Code (an
"ISO"), and the expiration date of such option; (ii) any shares of Company
Common Stock that are restricted as a result of an agreement with the
Company or the stock plan of the Company; and (iii) any other right,
directly or indirectly, to receive Company Common Stock or any other
compensation based in whole or in part on the value of Company Common
Stock, together with the number of shares of Company Common Stock subject
to such right.
(j) Schedule 3.19(j) of the Disclosure Schedule sets forth a true and
complete list of (i) all agreements with consultants who are individuals
obligating the Company or the Company Subsidiary to make annual cash
payments in an amount exceeding $25,000; and (ii) all agreements with
respect to the services of independent contractors or leased employees who
are individuals or individuals doing business in a corporate form whether
or not they participate in any of the Employee Benefit Plans.
(k) (i) No Employee Benefit Plan is an employee stock ownership plan
(within the meaning of Section 4975(e)(7) of the Code) or otherwise invests
in Company Common Stock; and (ii) the consummation of the transactions
contemplated by this Agreement will not, alone or together with any other
event, (A) entitle any employee or former employee of the Company or the
Company Subsidiary to any payment, (B) result in an increase in the amount
of compensation or benefits or accelerate the vesting or timing of payment
of any benefits or compensation payable in respect of any employee or
former employee or (C) result in any parachute payment under Section 280G
of the Code, whether or not such payment is considered reasonable
compensation for services rendered.
(l) No Employee Benefit Plan listed on Schedule 3.19 provides
benefits, including, without limitation, death or medical benefits (through
insurance or otherwise) with respect to any employee or former employee of
the Company or the Company Subsidiary beyond their retirement or other
termination of service other than (i) coverage mandated by applicable Law,
(ii) retirement or death benefits under any Pension Plan, (iii) disability
benefits under any welfare plan that have been fully provided for by
insurance or otherwise, (iv) deferred compensation benefits accrued as
liabilities on the consolidated books of the Company or (v) benefits in the
nature of severance pay.
(m) No Employee Benefit Plan is a "multiple employer plan" as
described in Section 3(40) of ERISA or Section 413(c) of the Code.
(n) No Employee Benefit Plan listed on Schedule 3.19, other than a
Pension Plan, is funded through a trust intended to be exempt from tax
pursuant to Section 501 of the Code.
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(o) Except as set forth on Schedule 3.19(o), neither the Company nor
the Company Subsidiary has proposed, agreed to or announced any changes to
any Employee Benefit Plan listed on Schedule 3.19 that would cause an
increase in benefits under any such Employee Benefit Plan (or the creation
of new benefits or plans) or to change any employee coverage which would
cause an increase in the expense of maintaining any such plan.
3.20. LABOR RELATIONS
(a) To the Company's knowledge and except as set forth in Schedule
3.20(a) of the Disclosure Schedule, no condition or state of facts or
circumstances exists which could materially adversely affect the Company's
or the Company Subsidiary's relations with its employees, including the
consummation of the transactions contemplated by this Agreement.
(b) Each of the Company and the Company Subsidiary is in compliance in
all material respects with all applicable Laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours and none of them is engaged in any unfair labor practice.
(c) No collective bargaining agreement with respect to the business of
the Company or the Company Subsidiary is currently in effect or being
negotiated. Neither the Company nor the Company Subsidiary has encountered
any labor union or collective bargaining organizing activity with respect
to its employees. Neither the Company nor the Company Subsidiary has any
obligation to negotiate any such collective bargaining agreement, and, to
the knowledge of the Company, there is no indication that the employees of
the Company desire to be covered by a collective bargaining agreement.
(d) There are no strikes, slowdowns, work stoppages or other labor
trouble pending or, to the knowledge of the Company, threatened with
respect to the employees of the Company, nor has any of the above occurred
or, to the knowledge of the Company, been threatened.
(e) There is no representation claim or petition pending before the
National Labor Relations Board or any state or local labor agency and, to
the knowledge of the Company, no question concerning representation has
been raised or threatened respecting the employees of the Company.
(f) There are no complaints or charges against the Company or the
Company Subsidiary pending before the National Labor Relations Board or any
state or local labor agency and, to the knowledge of the Company, no
complaints or charges have been filed or threatened to be filed against the
Company or the Company Subsidiary with any such board or agency.
(g) To the knowledge of the Company, no charges with respect to or
relating to the business of the Company or the Company Subsidiary are
pending before the Equal
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Employment Opportunity Commission or any state or local agency responsible
for the prevention of unlawful employment practices.
(h) Schedule 3.20 of the Disclosure Schedule accurately sets forth all
unpaid severance which, as of the date hereof, is due or claimed, in
writing, to be due from the Company or the Company Subsidiary to any Person
whose employment with the Company or the Company Subsidiary was terminated.
(i) Neither the Company nor the Company Subsidiary has received, in
writing or otherwise to the Company's knowledge, notice of the intent of
any government body or Governmental Authority responsible for the
enforcement of labor or employment Laws to conduct an investigation of the
Company or the Company Subsidiary and no such investigation is in progress.
(j) Neither the Company nor the Company Subsidiary is and, to the
knowledge of the Company, no employee of the Company is, in violation in
any material respect of any employment agreement, non-disclosure agreement,
non-compete agreement or any other agreement regarding an employee's
employment with the Company or the Company Subsidiary.
(k) Each of the Company and the Company Subsidiary has paid all wages
which are due and payable to each of its employees and each of its
independent contractors.
(l) Except as set forth on Schedule 3.19(l), neither the Company nor
the Company Subsidiary have and will not have at the date of Closing, any
contingent liabilities for sick leave, vacation, holiday pay, severance pay
or similar items not set forth in the Financial Statements except for such
obligations incurred in the ordinary course of business and consistent with
past practices.
(m) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not trigger any
severance pay obligation of the Company or the Company Subsidiary under any
Contract.
3.21. INTELLECTUAL PROPERTY
(a) RIGHTS. The Company or the Company Subsidiary, as applicable, (i)
owns all right, title and interest in and to each of the Intellectual
Property Assets, free and clear of all Encumbrances and Liens, or (ii)
licenses or otherwise possesses legally valid and enforceable rights to use
each of the Intellectual Property Assets, and, in each case of clause (i)
or (ii), the Company and/or the Company Subsidiary may transfer such rights
as contemplated by this Agreement. Each of the Company and the Company
Subsidiary has made all necessary filings and recordations to protect and
maintain its interest in the Intellectual Property Assets except where the
failure to so protect or maintain does not relate to a material
Intellectual Property Asset.
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(b) AGREEMENTS. Schedule 3.21(b) of the Disclosure Schedule contains a
true, correct and complete list and summary description, including any
royalties paid or received by the Company or the Company Subsidiary, of all
Contracts relating to the Intellectual Property Assets to which the Company
or the Company Subsidiary is a party or by which the Company or the Company
Subsidiary is bound. Other than as set forth on Schedule 3.21(b) of the
Disclosure Schedule, neither the Company nor the Company Subsidiary is, nor
will it be as a result of the execution and delivery of this Agreement or
the performance of its obligations hereunder, in breach or violation of any
agreement described on Schedule 3.21(b) of the Disclosure Schedule. Each
license of Intellectual Property Assets listed in Schedule 3.21(b) is
valid, subsisting, and enforceable, and shall continue in effect on its
current terms upon consummation of the transactions contemplated by this
Agreement.
(c) PATENTS. (i) Schedule 3.21(c) of the Disclosure Schedule contains
a true, correct and complete list of all Patents; (ii) all Patents are
valid and subsisting and all maintenance fees, annuities and the like have
been paid; (iii) to the knowledge of the Company and the Company
Subsidiary, none of the Patents is infringed; (iv) none of the patents has
been challenged or threatened in any way by any Person; and (v) no other
Person (including, but not limited to, any of the Company's or the Company
Subsidiary's current or former customers) has any claim of ownership rights
to the Patents.
(d) TRADEMARKS, (i) Schedule 3.21(d) of the Disclosure Schedule
contains a true, correct and complete list of all Marks; (ii) all Marks are
valid and subsisting; (iii) to the knowledge of the Company, none of the
Marks is infringed, (iv) none of the Marks has been challenged or
threatened in any way by any Person, and no claims exist against the use by
the Company or the Company Subsidiary of any trademarks, service marks,
trade names, or trade dress used in the business of the Company or the
Company Subsidiary as currently conducted or as proposed to be conducted;
(v) all materials encompassed by the Marks have been marked with
appropriate trademark and registration notices; and (vi) all uses of
registered Marks are in conformance with applicable statutory and common
law so as not to compromise the strength and integrity of the Marks.
(e) COPYRIGHTS, (i) Schedule 3.21(e) of the Disclosure Schedule
contains a true, correct and complete list of all Copyrights; (ii) all the
Copyrights owned by the Company or the Company Subsidiary, whether or not
registered, are valid and enforceable; (iii) to the knowledge of the
Company, none of the Copyrights is infringed or has been challenged or
threatened in any way; (iv) no claims exist against the use by the Company
or the Company Subsidiary of any writings or other expressions used in the
business of the Company or the Company Subsidiary as currently conducted or
as proposed to be conducted; and (v) all works encompassed by the
Copyrights have been marked with appropriate copyright notices.
(f) TRADE SECRETS. Except as set forth on Schedule 3.13(a), each of
the Company and the Company Subsidiary has taken reasonable precautions to
protect the secrecy, confidentiality and value of its Trade Secrets. To the
knowledge of the Company and except as set forth on Schedule 3.13(a), the
Trade Secrets have not been used,
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divulged or appropriated either for the benefit of any Person (other than
the Company or the Company Subsidiary) or to the detriment of the Company
or the Company Subsidiary. None of the Trade Secrets is subject to any
material adverse claim or, to the knowledge of the Company, has been
challenged or threatened in any way. Appropriate policies are in place to
ensure the continued secrecy, confidentiality and value of its Trade
Secrets, including but not limited to appropriate marking of Trade Secrets
as "proprietary" and/or "confidential;" appropriate limiting of access to
Trade Secrets by employees on a "need-to-know" basis; and appropriate
confidentiality provisions in agreements executed by employees,
contractors, joint venturers and any and all Persons potentially or
actually having access to Trade Secrets.
(g) NO INFRINGEMENT. None of the products or technology used, sold,
offered for sale or licensed or proposed for use, sale, offer for sale or
license by the Company or the Company Subsidiary conflicts with or
infringes or is alleged to conflict with or infringe any proprietary rights
owned, possessed or used by any Person.
(h) NO RESTRICTIONS. To the knowledge of the Company, no Intellectual
Property Asset is subject to any outstanding Order, Proceeding (other than
pending applications for patent, trademark registration or copyright
registration) or stipulation restricting in any manner the licensing
thereof by the Company or Company Subsidiary. Except for the Company's
distribution agreement listed in Schedule 3.15(a)(v) of the Disclosure
Schedule, neither the Company nor the Company Subsidiary has entered into
any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property Asset.
(i) NONDISCLOSURE. All employees, contractors, agents and consultants
of the Company and the Company Subsidiary have executed a nondisclosure and
assignment of inventions agreement in the form attached as Schedule 3.21(i)
of the Disclosure Schedule to protect the confidentiality and to vest in
the Company and the Company Subsidiary exclusive ownership of such
Intellectual Property Assets. To the knowledge of the Company and the
Company Subsidiary, no employee, contractor, agent or consultant of the
Company or the Company Subsidiary has used any Trade Secrets or other
confidential information of any other person in the course of their work
for the Company or the Company Subsidiary. Neither the Company nor the
Company Subsidiary has written or oral agreements with employees,
contractors agents or consultants with respect to the ownership of
inventions, trade secrets or other works created by them as a result of
which any such employee, contractor, agent or consultant may have rights to
the portions of the Intellectual Property Assets so created by such
individual.
(j) AGENCY CONFLICTS. To the knowledge of the Company, no officer,
employee, contractor, agent or consultant of the Company or the Company
Subsidiary is, or is now expected to be, in violation of any term of any
employment contract, patent disclosure agreement, proprietary information
agreement, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, or any other similar contract or agreement or
any restrictive covenant relating to the right of any such officer,
employee, contractor, agent or consultant to be employed or engaged by the
Company or the
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Company Subsidiary because of the nature of the business conducted or to be
conducted by the Company or the Company Subsidiary or relating to the use
of Trade Secrets or proprietary information of others, and to the Company's
knowledge and belief, the continued employment or retention of its
officers, employees, contractors, agents or consultants does not subject
the Company or the Company Subsidiary to any liability with respect to any
of the foregoing matters.
(k) SOURCE CODE ESCROW. Neither the Company nor the Company Subsidiary
has deposited, or is obligated to deposit, any source code regarding its
products into any source code escrows or similar arrangements and neither
the Company nor the Company Subsidiary is under any contractual or other
obligation to disclose the source code or any other material proprietary
information included in or relating to its products.
3.22. CERTAIN PAYMENTS
Neither the Company nor the Company Subsidiary nor any shareholder,
director, officer, agent or employee of the Company or the Company Subsidiary,
or to the knowledge of the Company, any other Person associated with or acting
for or on behalf of the Company or the Company Subsidiary, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback or other payment to any Person, private or public, regardless
of form, whether in money, property or services in violation of the Foreign
Corrupt Practices Act or any similar Law (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured, or
(iii) to obtain special concessions, or for special concessions already
obtained, for or in respect of the Company or the Company Subsidiary or any
affiliate of the Company or the Company Subsidiary, (b) established or
maintained any fund or asset of the Company or the Company Subsidiary that has
not been recorded in the consolidated books and records of the Company.
3.23. RELATIONSHIPS WITH RELATED PERSONS
Except as set forth on Schedule 3.23, no shareholder, affiliate, officer,
director or employee of the Company or the Company Subsidiary, nor any spouse or
child of any of them or any Person associated with any of them ("RELATED
PERSON"), has, in a capacity other than as shareholder, affiliate, officer,
director or employee, any interest in any assets or properties used in or
pertaining to the business of the Company or the Company Subsidiary. None of the
shareholders, affiliates, officers or directors of the Company or the Company
Subsidiary nor, to the Company's knowledge, any employee of the Company or any
Related Person has owned, directly or indirectly, and whether on an individual,
joint or other basis, any equity interest or any other financial or profit
interest in a Person (other than less than two percent (2%) of the outstanding
capital stock of a Person subject to the reporting requirements of the Exchange
Act) that has (i) had business dealings with the Company or the Company
Subsidiary, or (ii) engaged in competition with the Company or the Company
Subsidiary. None of the shareholders, affiliates, officers or directors of the
Company or the Company Subsidiary nor any Related Person has owned, directly or
indirectly, and whether on an individual, joint or other basis, any equity
interest or any other financial or profit interest in excess of 10% of the
aggregate equity interest or any other financial or profit interest in a Person
that has (i) had business dealings with
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the Company or the Company Subsidiary, or (ii) engaged in competition with the
Company or the Company Subsidiary. Except as set forth on Schedule 3.23, no
shareholder, affiliate, officer, director or employee of the Company or the
Company Subsidiary nor, to the Company's knowledge, any Related Person is a
party to any Contract with, or has any claim or right against, or owes any
amounts to, the Company or the Company Subsidiary.
3.24. BROKERS OR FINDERS
Neither the Company nor the Company Subsidiary or any of their agents has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or financial advisory services or other
similar payment in connection with this Agreement or the Transaction Documents
or the transactions contemplated hereby or thereby except for fees owed to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated pursuant to a financial advisor agreement between
the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated, dated March 23, 2001, a copy of
which is attached as Schedule 3.24 of the Disclosure Schedule.
3.25. CUSTOMER RELATIONSHIPS
To the knowledge of the Company, there are no facts or circumstances,
including the consummation of the transactions contemplated by this Agreement,
that are reasonably likely to result in the loss of any material Customer of the
Company or the Company Subsidiary or a material change in the relationship of
the Company or the Company Subsidiary with such a material Customer.
3.26. OUTSTANDING INDEBTEDNESS
Schedule 3.26 of the Disclosure Schedule sets forth as of April 30, 2001
(a) the amount of all indebtedness for borrowed money of the Company or the
Company Subsidiary then outstanding (including (i) the interest rate applicable
thereto, (ii) any Encumbrances or Liens which relate to such indebtedness and
(iii) the name of the lender or the other payee of each such indebtedness), (b)
the amount of all lending and commitments to lend and (c) the amount of all
guarantees or sureties of the Company with respect to the obligations of any
Person. Complete and accurate copies of all such agreements have been delivered
to ▇▇▇▇▇▇.
3.27. SUPPLIERS; RAW MATERIALS CONTRACTORS
Schedule 3.27 of the Disclosure Schedule sets forth for the year ended
December 31, 2000 and the four months ended April 30, 2001, (i) the names of the
ten largest suppliers, contractors and subcontractors of the Company and the
Company Subsidiary based on the aggregate value of raw materials, supplies,
merchandise and other goods and services ordered by the Company and the Company
Subsidiary from such suppliers, contractors and subcontractors during such
period and (ii) the amount for which each such supplier, contractor or
subcontractor invoiced the Company or the Company Subsidiary during such period.
Neither the Company nor the Company Subsidiary has received any notice or have
no reason to believe that there has been any material adverse change in the
price of such raw materials, supplies, merchandise or other goods or services,
or that any such supplier, contractor or subcontractor will not sell raw
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materials, supplies, merchandise and other goods and services to the Company or
the Company Subsidiary at any time after the Closing Date on terms and
conditions substantially the same as those used in its current sales to the
Company or the Company Subsidiary subject to general and customary price
increases.
3.28. CUSTOMERS
Schedule 3.28 of the Disclosure Schedule sets forth (a) a true, complete
and correct listing of the ten largest customers (the "CUSTOMERS") of the
Company and the Company Subsidiary (based upon the amounts for which each such
Customer was invoiced during the year ended December 31, 2000 and the four
months ended April 30, 2001).
3.29. PAYABLES
There has been no material adverse change since the date of the Base
Balance Sheet in the amount or delinquency of accounts payable of the Company or
the Company Subsidiary (either individually or in the aggregate).
3.30. INVENTORIES
(a) All inventories of raw materials, supplies, work in progress and
finished goods of each of the Company and the Company Subsidiary are of
good, usable and merchantable quality in all material respects and do not
include obsolete or discontinued items. All such inventories are of such
quality as to meet the quality control standards of the Company and the
Company Subsidiary and any applicable governmental quality control
standards, (b) all such finished goods are saleable as current inventories
at the current prices of the Company and the Company Subsidiary in the
ordinary course of business, (c) all such inventories are recorded on the
books at the lower of cost or market value determined in accordance with
GAAP and (d) no write-down in inventory has been made or should have been
made except pursuant to GAAP during the past two years.
(b) Purchase commitments for raw materials and parts are not in excess
of normal requirements and none are at prices in excess of current market
prices. Since April 30, 2001, no inventory items have been sold or disposed
of except through sales in the ordinary of business at prices no less than
prevailing market prices.
(c) The value of the finished goods inventory on April 30, 2001, and
on the Closing, when added to the cost of the variable expenses of freight,
commissions and discounts, shall not exceed the market price.
3.31. PRODUCT WARRANTIES; PRODUCT LIABILITY
Attached to Schedule 3.31 of the Disclosure Schedule are complete and
correct copies of the standard terms and conditions of sale or lease for each of
the products or services of the Company and the Company Subsidiary (containing
applicable guaranty, warranty and indemnity provisions). Except as required by
Law or as set forth in such standard terms and conditions, no product
manufactured, sold, leased or delivered by, or service rendered by or on behalf
of, the
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Company or the Company Subsidiary is subject to any guaranty, warranty or other
indemnity, express or implied, beyond such standard terms and conditions.
Schedule 3.31 of the Disclosure Schedule sets forth the aggregate expenses
incurred by the Company's customer support and service center in fulfilling its
obligations under its guaranty, warranty and right of return provisions during
the periods covered by the Financial Statements and the Interim Financial
Statements and the Company knows of no reason why such expenses should
significantly increase as a percentage of sales in the future. Except as set
forth in Schedule 3.31 of the Disclosure Schedule, there are no existing or, to
the knowledge of the Company threatened claims, against the Company or the
Company Subsidiary for services or merchandise which are defective or fail to
meet any service or product warranties other than in the ordinary course of
business consistent with past experience. Except as set forth in Schedule 3.31
of the Disclosure Schedule, no claim has been asserted against the Company or
the Company Subsidiary since January 1, 2000 for renegotiation or price
redetermination of any completed business transaction. The Company's and the
Company Subsidiary's products are free from known significant defects and, to
the knowledge of the Company, conform in all material respects to the
specifications, documentation and sample demonstration furnished to the
Company's and the Company Subsidiary's customers and made available to ▇▇▇▇▇▇.
3.32. FINANCIAL SERVICE RELATIONS AND POWERS OF ATTORNEY
All of the arrangements that the Company or the Company Subsidiary has with
any bank depository institution or other financial services entity, whether or
not in the Company's or the Company Subsidiary's name, are completely and
accurately described on Schedule 3.32 of the Disclosure Schedule, indicating
with respect to each of such arrangements the type of arrangement maintained
(such as checking account, borrowing arrangements, safe deposit box, etc.) and
the current balance as of the date reported, banking institution and person or
persons authorized in respect thereof. Neither the Company nor the Company
Subsidiary has any outstanding power of attorney.
3.33. POOLING
To the knowledge of the Company, neither the Company nor the Company
Subsidiary nor any of the Company's "affiliates" (as defined in Opinion No. 16,
as amended, of the Accounting Principles Board of the American Institute of
Certified Public Accountants and the interpretive rulings issued thereunder) has
taken or agreed to take any action that would affect the ability of ▇▇▇▇▇▇ to
account for the business combination to be effected by the Merger as a pooling
of interests under GAAP and applicable Securities and Exchange Commission
("SEC") interpretations.
3.34. REGULATORY CORRESPONDENCE
The Company has made available to ▇▇▇▇▇▇ true and correct copies of any and
all material correspondence from and to any federal, governmental or regulatory
agencies or bodies since January 1, 2000.
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3.35. COMPANY ACTION
(a) The Board of Directors of the Company, at a meeting duly called
and held, or through an action by written consent, unanimously has (i)
determined that the Merger is fair and in the best interests of the Company
and its stockholders, (ii) approved the Merger in accordance with the
provisions of the MBCL, (iii) approved this Agreement, the Agreement of
Merger and the Transaction Documents to which it is a party, (iv)
authorized the execution and delivery of this Agreement, the Agreement of
Merger and the Transaction Documents to which it is a party and (v)
directed that this Agreement and the Merger be submitted to the Company
Shareholders for their approval and resolved to recommend that Company
Shareholders vote in favor of the approval of this Agreement and the
Merger.
(b) The Company has obtained and delivered to ▇▇▇▇▇▇ the written
agreement of each of the Company's affiliates substantially in the form
attached hereto as Exhibit 3.35 (an "AFFILIATE AGREEMENT") pursuant to
which among other things each such person has agreed to vote all shares of
Company Capital Stock owned by him or over which he has voting control, in
favor of the Merger and this Agreement and irrevocably granted a proxy,
coupled with an interest, to ▇▇▇▇▇▇ or its designee to vote such Company
Capital Stock in favor of this Agreement and the Merger.
3.36. DISCLOSURE
No representation or warranty of the Company in this Agreement as modified
by statements in the Disclosure Schedule is inaccurate in any material respect
or omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
4. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
▇▇▇▇▇▇ hereby represents and warrants to the Company and the Company
Shareholders as follows:
4.1. ORGANIZATION AND GOOD STANDING
▇▇▇▇▇▇ is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. ▇▇▇▇▇▇ has full corporate
power and authority to conduct its business as it is now being conducted and to
own or use the assets and properties that it purports to own or use. ▇▇▇▇▇▇ is
duly qualified to do business as a foreign corporation and is in good standing
under the Laws of each state or other jurisdiction in which either the ownership
or use of the assets or properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have a Material
Adverse Effect on ▇▇▇▇▇▇ and its Subsidiaries, taken as a whole.
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4.2. AUTHORITY; NO CONFLICT
(a) ▇▇▇▇▇▇ has the right, power, authority and capacity to execute and
deliver this Agreement and the Transaction Documents to which ▇▇▇▇▇▇ is a
party, to consummate the Merger and the other transactions contemplated
hereby and thereby and to perform its obligations under this Agreement and
the Transaction Documents to which ▇▇▇▇▇▇ is a party. This Agreement has
been duly authorized and approved, executed and delivered by ▇▇▇▇▇▇ and
constitutes the legal, valid and binding obligation of ▇▇▇▇▇▇, enforceable
against it in accordance with its terms. Upon the execution and delivery by
▇▇▇▇▇▇ of the Transaction Documents to which it is a party, such
Transaction Documents will constitute the legal, valid and binding
obligations of ▇▇▇▇▇▇, enforceable against it in accordance with their
respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, and (ii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) Neither the execution and delivery of this Agreement or any
Transaction Document by ▇▇▇▇▇▇ nor the consummation or performance by
▇▇▇▇▇▇ of the Merger or any of the other transactions contemplated hereby
or thereby, including issuance of the ▇▇▇▇▇▇ Shares pursuant to this
Agreement, will, directly or indirectly (with or without notice or lapse of
time or both):
(i) contravene, conflict with, or result in a violation or breach
of (A) any provision of the Organizational Documents of ▇▇▇▇▇▇, (B)
any resolution adopted by the board of directors or the shareholders
of ▇▇▇▇▇▇, (C) any legal requirement or any Order, award, decision,
settlement or process to which ▇▇▇▇▇▇ or any of the assets or
properties owned or used by it may be subject, or (D) any Governmental
Permit held by ▇▇▇▇▇▇, excluding from clauses (C) and (D) any
contravention, conflict, violation or breach which would not, either
individually or in the aggregate, have a Material Adverse Effect or
materially impair or preclude ▇▇▇▇▇▇' ability to consummate the Merger
or the transactions contemplated hereby;
(ii) result in a breach of or constitute a default, give rise to
a right of termination, cancellation or acceleration, create any
entitlement to any payment or benefit, or require the consent or
approval of or any notice to or filing with any third Person, under
any material Contract to which ▇▇▇▇▇▇ is a party or by which its
assets or properties are bound, or require the consent or approval of
or any notice to or filing with any Governmental Authority to which
either ▇▇▇▇▇▇ or its assets or properties are subject except for any
breaches, defaults, rights of termination, cancellation or
acceleration, entitlements, consents, approvals, notices or filings
which would not, either individually or in the aggregate, have a
Material Adverse Effect or materially impair or preclude ▇▇▇▇▇▇'
ability to consummate the Merger or the transactions contemplated
hereby; or
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(iii) result in the imposition or creation of any Encumbrance or
Lien upon or with respect to any of the assets or properties owned or
used by ▇▇▇▇▇▇ except for any imposition or creation which would not,
either individually or in the aggregate, have a Material Adverse
Effect or materially impair or preclude ▇▇▇▇▇▇' ability to consummate
the Merger or the transactions contemplated hereby.
4.3. CAPITALIZATION; PARENT SHARES
(a) The authorized capital stock of ▇▇▇▇▇▇ consists of 1,000,000
shares of preferred stock, $.01 par value per share, of which as of the
date of this Agreement no shares are issued or outstanding, and 43,000,000
shares of ▇▇▇▇▇▇ Common Stock, of which as of June 26, 2001, 18,053,634
shares were issued and outstanding.
(b) The ▇▇▇▇▇▇ Shares issuable as a result of the Merger have been
duly authorized and upon the Effective Time will be validly issued, fully
paid and nonassessable and approved for listing on the Nasdaq National
Market. Each share of ▇▇▇▇▇▇ Common Stock to be issued at the Effective
Time will be accompanied by one ▇▇▇▇▇▇ Purchase Right.
4.4. FILINGS WITH THE COMMISSION
(a) ▇▇▇▇▇▇ has delivered or made available to the Company a true,
correct and complete copy of its Annual Report on Form 10-K for the year
ended September 30, 2000 and Quarterly Reports on Form 10-Q for the
quarters ended December 31, 2000 and March 31, 2001 (collectively, the
"▇▇▇▇▇▇ SEC REPORTS"). The ▇▇▇▇▇▇ SEC Reports has been timely filed
pursuant to the Exchange Act.
(b) The ▇▇▇▇▇▇ SEC Reports complied as to form in all material
respects with the requirements of the Exchange Act in effect on the date
thereof. The ▇▇▇▇▇▇ SEC Reports, when filed pursuant to the Exchange Act,
did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) Each of ▇▇▇▇▇▇' financial statements (including the related notes)
included in the ▇▇▇▇▇▇ SEC Reports presents fairly, in all material
respects, the consolidated financial position and consolidated results of
operations and cash flows of ▇▇▇▇▇▇ as of the respective dates or for the
respective periods set forth therein, all in conformity with GAAP
consistently applied during the periods involved except as otherwise noted
therein, and subject, in the case of any unaudited interim financial
statements included therein, to normal year-end adjustments and to absence
of complete footnotes.
4.5. NO MATERIAL ADVERSE CHANGE
Since March 31, 2001, there has not been any change which has had a
Material Adverse Effect on the business of ▇▇▇▇▇▇ and its Subsidiaries, taken as
a whole, and no event has
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occurred or circumstance exists that would reasonably be expected to result in a
Material Adverse Effect on ▇▇▇▇▇▇ and its Subsidiaries, taken as a whole, other
than any event or circumstance resulting from the consummation of the
transaction contemplated hereby and provided that ▇▇▇▇▇▇ makes no representation
as to the condition of the economy in general or the condition of ▇▇▇▇▇▇'
industry generally.
4.6. LEGAL PROCEEDINGS
There is no pending Proceeding against ▇▇▇▇▇▇ that challenges, or that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated hereby, or that otherwise
would reasonably be expected to result in a Material Adverse Effect on ▇▇▇▇▇▇
and its Subsidiaries, taken as whole. To the knowledge of ▇▇▇▇▇▇, no such
Proceeding has been threatened.
4.7. BROKERS OR FINDERS
Neither ▇▇▇▇▇▇ nor any of its agents has incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or financial advisory services or other similar payment in
connection with this Agreement or the Transaction Documents or the transactions
contemplated hereby or thereby.
4.8. DISCLOSURE
Except as set forth in Schedule 4.8 of the Disclosure Schedule, no
representation or warranty of ▇▇▇▇▇▇ in this Agreement is inaccurate in any
material respect or omits to state a material fact necessary to make the
statements herein in light of the circumstances under which they were made, not
misleading.
5. COVENANTS
The parties, as applicable, hereby covenant and agree as follows:
5.1. NORMAL COURSE
From the date hereof until the Effective Time, the Company shall, and shall
cause the Company Subsidiary to: (a) maintain its corporate existence in good
standing; (b) maintain the general character of its business; (c) maintain in
effect all of its presently existing insurance coverage (or substantially
equivalent insurance coverage); (d) preserve intact in all material respects its
business organization, preserve its goodwill and the confidentiality of its
business know-how, exercise commercially reasonable efforts to keep available to
the Company or the Company Subsidiary the services of its current officers and
employees and preserve its present material business relationships with its
collaborators, licensor, customers, suppliers and other Persons with which the
Company has material business relations; and (e) in all respects conduct its
business only in the usual and ordinary manner consistent with past practice
including with respect to the performance of all Contracts.
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5.2. CONDUCT OF BUSINESS
From the date hereof until the Effective Time, the Company shall not, and
the Company shall not permit the Company Subsidiary to, except as contemplated
by this Agreement, directly or indirectly, do, or propose to do, any of the
following without the prior written consent of ▇▇▇▇▇▇, which consent shall not
be unreasonably withheld:
(a) amend or otherwise modify its Organizational Documents;
(b) issue, sell, dispose of or Encumber or authorize the issuance,
sale, disposition or Encumbrance of, or grant or issue any option, warrant
or other right to acquire or make any agreement of the type referred to in
Schedule 3.3 with respect to, any shares of its capital stock or any other
of its securities or any security convertible or exercisable into or
exchangeable for any such shares or securities, or alter any term of any of
its outstanding securities or make any change in its outstanding shares of
capital stock or its capitalization, whether by reason of a
reclassification, recapitalization, stock split, combination, exchange or
readjustment of shares, stock dividend or otherwise;
(c) Encumber any material assets or properties of the Company or the
Company Subsidiary;
(d) declare, set aside, make or pay any dividend or other distribution
to any shareholder with respect to its capital stock;
(e) redeem, purchase or otherwise acquire any capital stock or other
securities of the Company or the Company Subsidiary;
(f) increase the compensation or other remuneration or benefits
payable or to become payable to any director or officer of the Company or
the Company Subsidiary, or increase the compensation or other remuneration
or benefits payable or to become payable to any of its other employees or
agents, except, with respect to such other employees or agents only, for
increases in salary and payment of performance bonuses in the manner
described in Schedule 5.2(f) of the Disclosure Schedule in either case in
the ordinary course of business consistent with past practice;
(g) adopt or (except as otherwise required by law) amend or make any
unscheduled contribution to any Employee Benefit Plan for or with
employees, or enter into any collective bargaining agreement;
(h) terminate or modify any Contract requiring future payments to or
from the Company or the Company Subsidiary, individually or in the
aggregate, in excess of $25,000, except for termination of Contracts upon
their expiration during such period in accordance with their terms;
(i) create, incur, assume or otherwise become liable for any
indebtedness in an aggregate amount (among the Company and the Company
Subsidiary) in excess of $50,000, except for draw downs made under the
Credit Line to satisfy working capital
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requirements aggregating up to but not exceeding $341,000 and for blanket
inventory purchases where neither the Company nor the Company Subsidiary
shall make any payment or commitment in an aggregate amount (including the
Company and the Company Subsidiary) in excess of $50,000 (for purposes of
this part of Section 5.2(i), obligations or liabilities that are paid,
discharged or satisfied under Section 5.2(j) shall be included in
determining whether the foregoing basket amounts have been reached), or
guarantee or endorse any obligation or the net worth of any Person, except
for endorsements of negotiable instruments for collection in the ordinary
course of business;
(j) pay, discharge or satisfy any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, in an
aggregate amount (including the Company and the Company Subsidiary) in
excess of $50,000, except for liabilities incurred in the ordinary course
of business prior to the date hereof and blanket inventory purchases where
the Company and the Company Subsidiary shall not make any payment or
commitment in an aggregate amount (including the Company and the Company
Subsidiary) in excess of $50,000 (for purposes of this Section 5.2(j),
indebtedness that is created, incurred, assumed or for which the Company or
the Company Subsidiary is otherwise liable under Section 5.2(i) shall be
included in determining whether the foregoing basket amounts have been
reached);
(k) sell, transfer, lease or otherwise dispose of any of its assets or
properties, except in the ordinary course of business consistent with past
practice and for a cash consideration equal to the fair value thereof at
the time of such sale, transfer, lease or other disposition;
(l) cancel, compromise, release or waive any material debt, claim or
right;
(m) make any loan or advance to any Person other than travel and other
similar routine advances in the ordinary course of business consistent with
past practice, or acquire any capital stock or other securities or any
ownership interest in, or substantially all of the assets of, any other
business enterprise;
(n) make any material capital investment or expenditure or capital
improvement, addition or betterment;
(o) change its method of accounting or the accounting principles or
practices utilized in the preparation of the Financial Statements, other
than as required by GAAP;
(p) institute or settle any Proceeding before any Governmental
Authority relating to it or its assets or properties;
(q) adopt a plan of dissolution or liquidation with respect to the
Company or the Company Subsidiary;
(r) enter into any Contract, except Contracts made in the ordinary
course of business consistent with past practice;
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(s) make any new election with respect to Taxes or any change in
current elections with respect to Taxes, or settle or compromise any
federal, state, local or foreign Tax liability or agree to an extension of
a statute of limitations;
(t) take or omit to take any action that would constitute a material
violation of or material default under, or waive any rights under, any
material Contract; or
(u) enter into any commitment to do any of the foregoing, or any
action which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect in any material
respect (subject to the knowledge and materiality limitations set forth
therein) or cause any covenant, condition or agreement of the Company in
this Agreement not to be complied with or satisfied in any material
respect.
5.3. REGULATION D
Each party shall use all reasonable efforts to cause the ▇▇▇▇▇▇ Shares to
be issued in accordance with the applicable provisions of Regulation D, shall
cooperate in all filings required pursuant to Regulation D and shall not
knowingly take any action which action or failure to act would jeopardize the
issuance of the ▇▇▇▇▇▇ Shares in accordance with Regulation D.
5.4. PRIVATE PLACEMENT MEMORANDUM
(a) Subject to the Company's obligations pursuant to Section 5.5
hereof, ▇▇▇▇▇▇ and the Company shall jointly use commercially reasonable
best efforts to promptly, and in any event within 10 days after the
execution hereof, prepare proxy materials (in accordance with the
disclosure requirements of Regulation D) for the purpose of offering the
▇▇▇▇▇▇ Shares to the Company Shareholders and soliciting (i) proxies from
holders of Company Capital Stock to vote in favor of the adoption of this
Agreement and the approval of the Merger at the special meeting (the
"SPECIAL MEETING") of the Company Shareholders to be called and held for
such purpose or (ii) written consents from Company Shareholders in favor of
the adoption of this Agreement and the approval of the Merger (the "SPECIAL
CONSENT"). Such solicitation materials shall be in the form of a private
placement memorandum/proxy statement (such private placement
memorandum/proxy statement, together with any accompanying letter to
stockholders, notice of meeting, form of proxy and form of written consent,
shall be referred to herein as the "PLACEMENT MEMORANDUM/PROXY STATEMENT").
Each Party shall furnish all information reasonably requested in connection
with the preparation of the Placement Memorandum/Proxy Statement.
(b) ▇▇▇▇▇▇ and the Company shall use commercially reasonable efforts
to comply with all applicable provisions of, and rules under, the federal
securities laws, the DGCL and the MBCL in the preparation and distribution
of the Placement Memorandum/Proxy Statement, the solicitation of proxies or
written consents thereunder, and the calling and holding of the Special
Meeting. Without limiting the foregoing, ▇▇▇▇▇▇ and the Company shall use
commercially reasonable efforts to make sure that the
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Placement Memorandum/Proxy Statement does not, as of the date on which it
is distributed to Company Shareholders, and as of the date of the Special
Meeting, or the effective date of the Special Consent, as applicable,
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading (provided that the
Company shall not be responsible for the accuracy or completeness of any
information relating to ▇▇▇▇▇▇ or any other information furnished by ▇▇▇▇▇▇
in writing for inclusion in the Placement Memorandum/Proxy Statement and
provided further that ▇▇▇▇▇▇ shall not be responsible for the accuracy or
completeness of any information relating to the Company or any other
information furnished by the Company in writing for inclusion in the
Placement Memorandum/Proxy Statement).
(c) The Company, acting through its Board of Directors, shall include
in the Placement Memorandum/Proxy Statement the recommendation of its Board
of Directors that the Company Shareholders vote in favor of the adoption of
this Agreement and the approval of the Merger, and shall otherwise use
commercially reasonable efforts to obtain prompt approval of the Company
Shareholders of the Agreement, the Merger and the transactions contemplated
hereby.
(d) If at any time prior to the Effective Time, any event relating to
the Company or ▇▇▇▇▇▇ or any of their respective affiliates, officers or
directors should be discovered by the Company or ▇▇▇▇▇▇, as applicable,
which should be set forth in an amendment to the Placement Memorandum/Proxy
Statement, the Company or ▇▇▇▇▇▇, as applicable, shall promptly inform the
other party.
5.5. COMPANY SHAREHOLDER DOCUMENTS
The Company shall use its commercially reasonable best efforts to obtain
and deliver the following to ▇▇▇▇▇▇ promptly following the date of this
Agreement and in any event prior to the date of any distribution of the
Placement Memorandum/Proxy Statement (each in form and substance satisfactory to
▇▇▇▇▇▇ in its reasonable discretion):
(a) a questionnaire executed by each Company Shareholder as to
personal wealth and financial sophistication (each a "COMPANY SHAREHOLDER
QUESTIONNAIRE"); and
(b) with respect to each Company Shareholder reasonably deemed by
▇▇▇▇▇▇ not to be an "Accredited Investor" as defined in Rule 501 of
Regulation D, either (i) a written certification that such Company
Shareholder has such knowledge and experience in financial and business
matters that such Company Shareholder is capable of evaluating the merits
and risks of a prospective investment in ▇▇▇▇▇▇ Common Stock (within the
meaning of Rule 506 of Regulation D (each a "SOPHISTICATION CERTIFICATION")
or (ii) a written agreement (each a "PURCHASER REPRESENTATIVE AGREEMENT")
between such Company Shareholder and a purchaser representative (who shall
make written certifications reasonably satisfactory to ▇▇▇▇▇▇ that he or it
is a purchaser representative within the meaning of Regulation D) regarding
the representation of such Company
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Shareholder in connection with this Agreement and the transactions
contemplated hereby, together with such other representations and
agreements pursuant to the provisions of Regulation D as ▇▇▇▇▇▇ shall
reasonably request.
The Company Shareholder Questionnaires, Sophistication Certifications and
Purchaser Representative Agreements are referred to herein together as the
"COMPANY SHAREHOLDER DOCUMENTS."
5.6. SPECIAL MEETING
For the purposes of this Section 5.6, the Placement Memorandum/Proxy
Statement, as appropriate is referred to as the "DISCLOSURE DOCUMENT."
Promptly following completion of the Disclosure Document and subject to the
prior approval of ▇▇▇▇▇▇, the Company shall distribute the Disclosure Document
to its shareholders and, pursuant thereto and subject to the other provisions of
this Agreement, solicit (i) proxies from Company Shareholders to vote in favor
of the adoption of this Agreement and the approval of the Merger at the Special
Meeting, or (ii) written consents from holders of Company Capital Stock in favor
of the adoption of this Agreement and the approval of the Merger. The Company
may elect to call and issue notice of the Special Meeting in accordance with the
MBCL prior to completion and distribution of the Disclosure Document.
5.7. AGREEMENTS WITH RESPECT TO AFFILIATES
The Company shall deliver to ▇▇▇▇▇▇, prior to the Effective Time, letters
(the "AFFILIATE LETTERS") identifying all Persons who are, at the time of the
action by the Company Shareholders or immediately prior to the Effective Time,
anticipated to be "Affiliates" of the Company for purposes of the rules and
regulations of the Commission relating to pooling-of-interests accounting
treatment for merger transactions (the "POOLING RULES"). The Company shall use
commercially reasonable efforts to cause each Person who is identified as an
"affiliate" in the Affiliate Letter to deliver to ▇▇▇▇▇▇ as promptly as
practicable an Affiliate Agreement in connection with restrictions on affiliates
under the Pooling Rules. ▇▇▇▇▇▇ shall be entitled to place appropriate legends
on the certificates evidencing any ▇▇▇▇▇▇ Common Stock to be received by Company
affiliates, and to issue appropriate stop transfer instructions to the transfer
agent for ▇▇▇▇▇▇ Common Stock, consistent with the terms of such Affiliate
Agreements.
5.8. CERTAIN FILINGS
The Company shall cooperate with ▇▇▇▇▇▇ with respect to all filings with
Governmental Authorities that are required to be made by the Company to carry
out the transactions contemplated by this Agreement. The Company shall assist
▇▇▇▇▇▇ in making all such filings, applications and notices as may be necessary
or desirable in order to obtain the authorization, approval or consent of any
Governmental Authority which may be reasonably required or which ▇▇▇▇▇▇ may
reasonably request in connection with the consummation of the transactions
contemplated hereby. Without limiting the generality of the foregoing, if the
Merger and the transactions contemplated hereby are subject to the HSR Act, the
parties hereto shall promptly
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and in good faith file or cause to be filed the appropriate notifications with
respect to the Merger and such transactions, respond to any requests for
additional information and documents and provide the necessary information and
make the necessary filings under such Act.
5.9. NOTIFICATION OF CERTAIN MATTERS
The Company shall promptly notify ▇▇▇▇▇▇ of (i) the occurrence or
non-occurrence of any fact or event of which the Company has knowledge which
would be reasonably likely (A) to cause any representation or warranty of the
Company contained in this Agreement to be untrue or incorrect in any material
respect at any time from the date hereof to the Effective Time or (B) to cause
any covenant, condition or agreement of the Company in this Agreement not to be
complied with or satisfied in any material respect and (ii) any failure of the
Company to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder in any material respect; provided,
however, that no such notification shall affect the representations or
warranties of the Company, or the right of ▇▇▇▇▇▇ to rely thereon, or the
conditions to the obligations of ▇▇▇▇▇▇, or the remedies available hereunder to
▇▇▇▇▇▇. The Company shall give prompt notice to ▇▇▇▇▇▇ of any notice or other
communication from any third Person alleging that the consent of such third
Person is or may be required in connection with the transactions contemplated by
this Agreement.
5.10. POOLING ACCOUNTING TREATMENT
Each party hereto shall use its best efforts to cause the business
combination to be effected by the Merger to be accounted for as a
pooling-of-interests. Each party hereto shall use its reasonable best efforts to
cause its respective employees, officers, directors, shareholders, Subsidiaries
and affiliates not to take any action that would adversely affect the ability of
▇▇▇▇▇▇ to account for the business combination to be effected by the Merger as a
pooling-of-interests. Neither ▇▇▇▇▇▇ nor the Company nor the Company Subsidiary
shall take any action, including the acceleration of vesting of any options,
restricted stock or other rights to acquire shares of the capital stock of the
Company, which reasonably would be expected to (i) interfere with ▇▇▇▇▇▇'
ability to account for the Merger as a pooling-of-interests or (ii) jeopardize
the tax-free nature of the reorganization hereunder.
5.11. NO SOLICITATION
(a) From the date hereof until the earlier of (i) July 31, 2001,
unless all conditions of Closing other than the approval by the Company
Shareholders of the transactions contemplated hereby shall have been
satisfied, in which case the date shall be extended to the earlier of
September 30, 2001 or the date three calendar days after the Company's
receipt of the approval by the Company Shareholders of the transactions
contemplated hereby; (ii) termination of this Agreement by ▇▇▇▇▇▇ or (iii)
the Effective Time, the Company shall not, and or shall not permit any,
officer, director, shareholder, employee, investment banker or other agent
of the Company, or the Company Subsidiary to, directly or indirectly, (A)
solicit, engage in discussions or negotiate with any Person (whether or not
such discussions or negotiations are initiated by the Company), or take any
other action intended or designed to facilitate the efforts of any Person,
other than
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▇▇▇▇▇▇, relating to the possible acquisition of the Company (whether by way
of merger, purchase of capital stock, purchase of assets or otherwise) or
any significant portion of its capital stock or assets (with any such
efforts by any such Person to make such an acquisition referred to as an
"ALTERNATIVE ACQUISITION"), (B) provide information with respect to the
Company to any Person, other than ▇▇▇▇▇▇, relating to a possible
Alternative Acquisition by any Person, other than ▇▇▇▇▇▇, (C) enter into an
agreement with any Person, other than ▇▇▇▇▇▇, providing for a possible
Alternative Acquisition or (D) make or authorize any statement,
recommendation or solicitation in support of any possible Alternative
Acquisition by any Person, other than by ▇▇▇▇▇▇.
5.12. ACCESS TO INFORMATION; CONFIDENTIALITY
Upon reasonable advance written notice, each party shall permit
representatives of the other to have access (at all reasonable times and in a
manner so as not to interfere with the normal business operations of the other
party) to all premises, properties, financial and accounting records, Contracts,
other records and documents, and personnel of or pertaining to such party, all
in accordance with the terms of the Confidentiality Agreement; provided that the
representative of the Company may have the access to ▇▇▇▇▇▇ permitted hereunder
only in order to conduct customary due diligence regarding the completeness of
the ▇▇▇▇▇▇ SEC Reports, the Registration Statement and other information set
forth herein as the Company may reasonably request. No investigation or
examination by either party shall diminish, obviate or constitute a waiver of
the enforcement of any of the representations, warranties, covenants or
agreements of the other party under this Agreement.
5.13. REASONABLE BEST EFFORTS; FURTHER ACTION
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its reasonable best efforts (exercised diligently
and in good faith) to take, or cause to be taken, all actions and to do, or
cause to be done, all other things reasonably necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner
all necessary waivers, consents, authorizations and approvals and to effect
all necessary registrations and filings, and otherwise to satisfy or cause
to be satisfied all conditions precedent to its obligations under this
Agreement.
(b) Notwithstanding any provision of this Agreement to the contrary,
▇▇▇▇▇▇ shall not be obligated to divest, abandon, license, dispose of, hold
separate or take similar action with respect to any portion of the
business, assets or properties (tangible or intangible) of ▇▇▇▇▇▇, any of
its Subsidiaries or the Company in connection with seeking to obtain or
obtaining any waiver, consent, authorization or approval of any Person
associated with the consummation of the transactions contemplated hereby or
otherwise.
(c) 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, the officers and directors of the Company
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immediately prior to the Effective Time are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary or desirable action.
5.14. TAX MATTERS
(a) PREPARATION AND FILING OF RETURNS. The Company shall file or cause
to be filed when due all Returns that are required to be filed by or with
respect to the Company and the Company Subsidiary on or prior to the
Closing Date. ▇▇▇▇▇▇ shall file or cause to be filed when due all Returns
that are required to be filed by or with respect to the Company and the
Company Subsidiary subsequent to the Closing Date. With respect to any
Taxable period ending on or prior to the Closing Date for which a Return is
required to be filed after the Closing Date, ▇▇▇▇▇▇ shall prepare all such
Returns of the Company and the Company Subsidiary and shall provide to the
Shareholder Representatives, at least thirty (30) business days prior to
the due date, including any extensions, for the filing thereof, such
Returns together with such Tax information and material relevant to such
Returns, including schedules and work papers. Following receipt of any
Returns prepared by ▇▇▇▇▇▇, if the Shareholder Representatives dispute any
of the information contained in such Returns, the Shareholder
Representatives shall promptly notify ▇▇▇▇▇▇. The parties shall cooperate
to resolve promptly any such dispute, and Company Shareholders and ▇▇▇▇▇▇
shall be responsible for their respective professional fees and expenses
incurred in connection therewith. In the event that the parties are not
able to promptly resolve any such dispute, the dispute shall be resolved by
the following procedures: ▇▇▇▇▇▇ and the Shareholder Representatives shall
settle such dispute by retaining a nationally-recognized accounting firm
other than any Company Shareholder's, ▇▇▇▇▇▇' or the Company's auditors to
resolve such dispute. The determination of such accounting firm will be set
forth in writing and shall be issued within fifteen (15) days of the date
such accounting firm is retained. Any decision by such accounting firm
shall be final and binding upon the parties, absent fraud or manifest
error, and judgment may be entered thereon, upon the application of either
party, by any court having competent jurisdiction. Each party shall bear
the cost of preparing and presenting its case; and the fees and expenses of
such accounting firm will be shared equally by ▇▇▇▇▇▇ and Company
Shareholders.
(b) CONTEST PROVISIONS. ▇▇▇▇▇▇ shall notify the Shareholder
Representatives in writing within thirty (30) business days after actual
receipt by ▇▇▇▇▇▇ or its affiliates of written notice of any pending or
threatened federal, state, local or foreign Tax audits or assessments that
may affect the Tax liabilities of ▇▇▇▇▇▇ with respect to the Company or the
Company Subsidiary for which Company Shareholders would be required to
indemnify ▇▇▇▇▇▇ or for which Company Shareholders would otherwise be
liable pursuant to this Agreement. The Shareholder Representatives shall be
entitled to participate at its expense in the defense of any claim for
Taxes that may be subject to indemnification by Company Shareholders, or
for which Company Shareholders may otherwise be liable, pursuant to this
Agreement. Neither ▇▇▇▇▇▇ nor the Shareholder Representatives may agree to
settle any Tax claim for the portion of the year or period ending on or
prior to the Closing Date that may be the subject of indemnification by
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Company Shareholders, or for which Company Shareholders may otherwise be
liable, under this Agreement without the prior written consent of Company
Shareholders, which consent shall not be unreasonably withheld. ▇▇▇▇▇▇
shall have the sole right to represent the Company's and the Company
Subsidiary' interests in the defense of any claim for Taxes relating to
Taxable periods beginning on or after the Closing Date.
(c) ASSISTANCE AND COOPERATION. After the Closing Date, each of
Company Shareholders, the Shareholder Representatives, and ▇▇▇▇▇▇ shall:
(i) assist (and cause their respective affiliates and
subsidiaries to assist) the other party in preparing Returns that such
other party is responsible for preparing and filing;
(ii) cooperate fully in preparing for any audits of, or disputes
with Tax authorities regarding, any Returns of the Company and the
Company Subsidiary;
(iii) make available to the other as reasonably requested all
information, records and documents relating to Taxes of the Company
and the Company Subsidiary;
(iv) provide timely notice to the other in writing of any pending
or threatened Tax audits or assessments of the Company and the Company
Subsidiary for Taxable periods for which the other may have a
liability under this Agreement; and
(v) furnish the other with copies of all correspondence received
from any Tax authority in connection with any Tax audit or information
request with respect to any such Taxable period.
(d) INTENTIONALLY OMITTED.
(e) LIABILITY FOR TAXES ARISING OUT OF MERGER. Company Shareholders
shall be solely responsible (severally and not jointly) for transfer,
registration, recordationand stamp or similar taxes, if any, in connection
with their exchange of Company Common Stock and Company Preferred Stock in
the Merger. Company Shareholders shall, at their own expense, properly
complete, sign, and timely file any and all required Returns with respect
to such Taxes ("Transfer Tax Returns") and, if required by applicable law,
▇▇▇▇▇▇ will join in the execution of any such Transfer Tax Returns.
(f) REORGANIZATION COVENANTS.
(i) ▇▇▇▇▇▇ will continue at least one significant historic
business line of the Company, or use at least a significant portion of
the Company's historic
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business assets in a business, in each case, within the meaning of
Treasury Regulations Section 1.368-1(d).
(ii) Neither ▇▇▇▇▇▇ nor the Company nor the Company Subsidiary
will take any action or cease to take any action, as the case may be,
that would cause the Merger to fail to qualify as a tax-free
reorganization under Section 368(a) of the Code.
6. ADDITIONAL COVENANTS OF ▇▇▇▇▇▇
▇▇▇▇▇▇ hereby covenants and agrees as follows:
6.1. CERTAIN FILINGS
▇▇▇▇▇▇ agrees to make or cause to be made all filings with Governmental
Authorities that are required to be made by ▇▇▇▇▇▇ to carry out the transactions
contemplated by this Agreement.
6.2. NOTIFICATION OF CERTAIN MATTERS
▇▇▇▇▇▇ shall promptly notify the Company of (i) the occurrence or
non-occurrence of any fact or event of which ▇▇▇▇▇▇ has knowledge which would be
reasonably likely (A) to cause any representation or warranty of ▇▇▇▇▇▇
contained in this Agreement to be untrue or incorrect in any material respect at
any time from the date hereof to the Effective Time or (B) to cause any
covenant, condition or agreement of ▇▇▇▇▇▇ in this Agreement not to be complied
with or satisfied in any material respect and (ii) any failure of ▇▇▇▇▇▇ to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder in any material respect; provided, however, that no
such notification shall affect the representations or warranties of ▇▇▇▇▇▇, or
the right of the Company to rely thereon, or the conditions to the obligations
of the Company, or the remedies available hereunder to the Company. ▇▇▇▇▇▇ shall
give prompt notice to the Company of any notice or other communication from any
third Person alleging that the consent of such third Person is or may be
required in connection with the transactions contemplated by this Agreement.
6.3. EMPLOYMENT MATTERS
(a) For purposes of eligibility, vesting and, except with respect to
any pension benefit plan, calculation of benefits (except to the extent
crediting such service would result in the duplication of benefits) under
each of ▇▇▇▇▇▇' employee benefit plans, programs and arrangements in which
an employee of the Company who is employed as of the Closing Date and who
becomes an employee of ▇▇▇▇▇▇ immediately following the Closing (each, a
"CONTINUING EMPLOYEE") participates, ▇▇▇▇▇▇ shall grant each Continuing
Employee with credit for all service with the Company.
(b) ▇▇▇▇▇▇ shall provide to each Continuing Employee (and each
Continuing Employee's beneficiaries and dependents) immediate coverage
under a health benefit plan maintained by ▇▇▇▇▇▇ of the type and kind of
plan (and providing substantially
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similar benefits) as the plans available to similarly situated employees of
▇▇▇▇▇▇. ▇▇▇▇▇▇ shall waive any applicable pre-existing condition exclusion
(to the extent such exclusion did not apply to a pre-existing condition
under the Company's plan) under any such health benefit plan.
(c) Each Continuing Employee shall enter into ▇▇▇▇▇▇' standard
agreements for employees relating to confidentiality, proprietary
information, inventions and non-solicitation.
(d) It is expressly agreed that the provisions of this Section 6.3 are
not intended to be for the benefit of or otherwise enforceable by any third
Person, including, without limitation, any employee of the Company, or any
collective bargaining unit or employee organization.
(e) Nothing herein shall prevent ▇▇▇▇▇▇ or the Company from amending
or modifying any employee benefit plan, program or arrangement as permitted
thereby in any respect or terminating or modifying the terms and conditions
of employment or other service of any particular employee or any other
Person. Nothing contained in this Agreement shall create or imply any
obligation on the part of ▇▇▇▇▇▇ or the Company to provide any continuing
employment right to any individual.
6.4. REGISTRATION
(a) As soon as reasonably possible after the Closing Date, ▇▇▇▇▇▇
shall file with the SEC, a Registration Statement on Form S-3 (or any
successor short form registration involving a similar amount of disclosure;
or if then ineligible to use any such form, then any other available form
of registration statement) for a public offering of all the ▇▇▇▇▇▇ Shares
then outstanding and all ▇▇▇▇▇▇ Shares issuable upon exercise of the
Warrants set forth on Schedule 6.4(a) attached hereto to be made on a
continuous basis pursuant to Rule 415 of the Securities Act. ▇▇▇▇▇▇ will
use its commercially reasonable efforts to cause such registration
statement to become effective (subject to review of such Registration
Statement by the SEC) within 90 calendar days after the Closing Date, and
remain continuously effective until the earlier of (i) two years after the
Closing Date or (ii) such time as all of the ▇▇▇▇▇▇ Shares may be sold
pursuant to Rule 144 promulgated under the Securities Act on a single day.
Upon written notice to the selling shareholders listed therein, ▇▇▇▇▇▇ may,
not more often than four times during any fiscal year, suspend use of the
Registration Statement for a period of up to 30 days, provided, that no
more than three such periods may occur consecutively, if, in the good faith
judgment of the Board of Directors of ▇▇▇▇▇▇, there is material nonpublic
information the disclosure of which at that point in time would have a
Material Adverse Effect on ▇▇▇▇▇▇ and its Subsidiaries taken as a whole.
(b) The Company covenants and agrees that it shall provide to ▇▇▇▇▇▇
on a timely basis such consents, representations and information and
executed such documents as may reasonably be required by ▇▇▇▇▇▇ in
connection with such Registration Statement.
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(c) ▇▇▇▇▇▇ shall pay all expenses of registration of the ▇▇▇▇▇▇ Shares
pursuant to Section 6.4(a), except brokerage commissions, legal expenses
and such other expenses as may be required by law to be paid by the Company
Shareholders, shall be paid by the party by which such expenses are
incurred.
(d) To the extent permitted by law, ▇▇▇▇▇▇ will indemnify and hold
harmless each of the Company Shareholders, their respective officers and
directors and each person, if any, who controls the Company Shareholders
within the meaning of the Securities Act, against any costs or expenses
(including attorney's fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement, joint or several, to which any
of them may become subject under the Securities Act or otherwise, insofar
as such costs or expenses (including attorney's fees), judgments, fines,
losses, claims, damages liabilities or amounts paid in settlement (or
actions in respect thereof) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained or expressly
incorporated by reference in any such Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse each of the Company Shareholders and their
respective officers and directors and each such controlling person for any
legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
Section 6.4(d) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of ▇▇▇▇▇▇ (which consent shall not be unreasonably
withheld) nor shall ▇▇▇▇▇▇ be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement thereto
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by the Company
Shareholders or any person controlling the Company Shareholders.
(e) To the extent permitted by law, the Company Shareholders will,
severally and not jointly, indemnify and hold harmless ▇▇▇▇▇▇, its
directors, its officers who have signed such Registration Statement and
each person, if any, who controls ▇▇▇▇▇▇ within the meaning of the
Securities Act against any losses, claims, damages or liabilities to which
▇▇▇▇▇▇ or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of
or are based upon any untrue or alleged untrue statement of any material
fact contained or expressly incorporated by reference in such Registration
Statement, including any preliminary prospectus or final prospectus
contained therein or any amendment or supplement thereto, or arise out of
or based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement
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or omission or alleged omission was made in such Registration Statement,
preliminary prospectus, final prospectus or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished by the Company Shareholders expressly for use in connection with
such registration; and the Company Shareholders will reimburse any legal or
other expenses reasonably incurred by ▇▇▇▇▇▇ or any such director, officer
and controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. It is agreed that the
indemnity agreement contained in this Section 6.4(e) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the
indemnifying party (which consent shall not be unreasonably withheld).
(f) If the indemnification provided for in Sections 6.4(d) and (e)
hereof is unavailable to a person entitled to indemnification hereunder,
then each person that would have been an indemnifying party hereunder will,
in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified person for which indemnification is
provided herein in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and such indemnified party,
respectively, in connection with the statements or omissions which resulted
in the costs or expenses (including attorney's fees), judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement
underlying such indemnification obligations. Relative fault will be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or such indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. ▇▇▇▇▇▇ and the Company Shareholders
agree that it would not be just and equitable if contribution pursuant to
this Section 6.4(f) were determined by PRO RATA allocation or by any other
method of allocation that does not take account of the equitable
considerations referred to above in this Section 6.4(f). No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(g) Promptly after receipt by a party indemnified under this Section
6.4 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 6.4, notify the indemnifying party in writing of
the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided,
however that if the defendants in any such action include both the
indemnified party and the indemnifying party and, under applicable
standards of professional conduct, a conflict on any significant issue
between the positions of the indemnified party and the indemnifying party
exists, the indemnified party or parties shall have the right to select one
separate law firm, at the indemnifying party's or parties' expense, to
assume such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party or parties. The failure to
notify any indemnifying party promptly of the commencement of
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any such action, shall not relieve such indemnifying party of any liability
to the indemnified party under this Section 6.4, except to the extent that
such indemnifying party is actually prejudiced thereby.
6.5. NMS LISTING
▇▇▇▇▇▇ agrees to authorize for listing on the Nasdaq National Market, as of
the Effective Time, the of ▇▇▇▇▇▇ Shares issuable, and those required to be
reserved for issuance, in connection with the Merger, upon official notice of
issuance.
7. CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇
The obligations of ▇▇▇▇▇▇ under this Agreement to consummate the Merger and
the other transactions contemplated hereby shall be subject to the satisfaction,
at or prior to the Effective Time, of each of the following conditions:
7.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained in this
Agreement or in the Disclosure Schedule or any certificate delivered pursuant
hereto shall be complete and correct as of the date when made, shall be deemed
repeated at and as of the Closing Date as if made on the Closing Date and,
without giving effect to any qualification as to materiality (or any variation
of such term) contained in any representation or warranty, shall then be
complete and correct, except, in either case, (i) if such inaccuracies,
individually or in the aggregate, do not cause a Material Adverse Effect, (ii)
for changes permitted or contemplated by this Agreement, and (iii) to the extent
any such representations or warranties speak as of a certain date, in which case
they shall be true and correct as of such date.
7.2. PERFORMANCE OF COVENANTS
The Company shall have taken all necessary corporate or other actions to
consummate the transactions contemplated hereby and shall have performed and
complied in all material respects with each covenant, agreement and condition
required by this Agreement to be performed or complied with by them at or prior
to the Effective Time.
7.3. DISSENTING SHAREHOLDERS
Holders of less than 10% of the outstanding Company Common Stock shall have
exercised dissenters rights pursuant to Section 85 et seq. of the MBCL.
7.4. UPDATE CERTIFICATE
▇▇▇▇▇▇ shall have received a certificate or certificates, dated the Closing
Date, signed by the Company as to the matters set forth in Sections 7.1 through
7.3.
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7.5. NO GOVERNMENTAL OR OTHER PROCEEDING; ILLEGALITY
No Order of any Governmental Authority shall be in effect that restrains or
prohibits any transaction contemplated hereby or that would limit or affect
▇▇▇▇▇▇' ownership or operation of the business or assets of the Company or the
Company Subsidiary; no Proceeding by any Governmental Authority shall be pending
or threatened against ▇▇▇▇▇▇ or the Company or the Company Subsidiary or any
director or officer of any thereof, as such, that challenges the validity or
legality, or that restrains or seeks to restrain the consummation, of the
transactions contemplated hereby, or that limits or otherwise affects or seeks
to limit or otherwise affect ▇▇▇▇▇▇' right to own or operate the business or
assets of the Company or the Company Subsidiary, or that compels or seeks to
compel ▇▇▇▇▇▇ or any of its Subsidiaries to divest, abandon, license, dispose
of, hold separate or take similar action with respect to any portion of the
business, assets or properties (tangible or intangible) of ▇▇▇▇▇▇ or any of its
Subsidiaries (including the Surviving Corporation) or the Company or the Company
Subsidiary; and no written advice shall have been received by ▇▇▇▇▇▇, the
Company or the Company Subsidiary or by any of their respective counsel from any
Governmental Authority, and remain in effect, stating that an action or
Proceeding will, if the Merger is consummated or sought to be consummated, be
filed seeking to invalidate or restrain the Merger or limit or otherwise affect
▇▇▇▇▇▇' ownership or operation of the business or assets of the Company or the
Company Subsidiary. No Law or Order shall be enacted, entered, enforced or
deemed applicable to the Merger or the other transactions contemplated hereby
which makes the consummation of the Merger or the other transactions
contemplated hereby illegal; provided that such illegality shall not have arisen
from any act of ▇▇▇▇▇▇.
7.6. APPROVALS AND CONSENTS
All material waivers, approvals, authorizations or Orders required to be
obtained, and all filings required to be made, by the Company, for the
authorization, execution and delivery of this Agreement, the consummation by it
of the transactions contemplated hereby and the continuation in full force and
effect of any and all material rights, documents, instruments or Contracts of
the Company and the Company Subsidiary shall have been obtained and made,
including, without limitation, all consents or approvals required to be
disclosed on Schedule 3.2(b) and of any other Person which may be required under
any lease for real property to which the Company or the Company Subsidiary is a
party. The Company shall use reasonable commercial efforts to obtain landlord
consents and estoppel certificates reasonably satisfactory in form and substance
to ▇▇▇▇▇▇ from the lessors/owners of all real property leased by the Company or
the Company Subsidiary.
7.7. OPINION OF COUNSEL
The Company shall have delivered to ▇▇▇▇▇▇ an opinion of its legal counsel,
▇▇▇▇▇▇▇ Procter LLP, dated the Closing Date and addressed to ▇▇▇▇▇▇, as to the
matters set forth on Exhibit 7.7 hereto.
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7.8. SHAREHOLDER APPROVAL
This Agreement, the Merger and the other transactions contemplated hereby
shall have been duly approved by Company Shareholders in accordance with the
MBCL.
7.9. OPINIONS OF ACCOUNTANTS; POOLING
(a) ▇▇▇▇▇▇ shall have received a letter from PricewaterhouseCoopers
("PWC"), independent certified public accountants of ▇▇▇▇▇▇, regarding the
appropriateness of pooling-of-interests accounting for the Merger under APB
16 if closed and consummated in accordance with this Agreement. Such letter
shall be in form and substance reasonably satisfactory to ▇▇▇▇▇▇.
(b) ▇▇▇▇▇▇ shall have requested, and the Company shall have received
and delivered to ▇▇▇▇▇▇, a letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent
certified public accountants of the Company, regarding the fact that the
Company is eligible for pooling-of-interests accounting for the
transactions contemplated hereby under APB 16 if closed and consummated in
accordance with this Agreement. Such letter shall be in form and substance
reasonably satisfactory to ▇▇▇▇▇▇.
7.10. ESCROW AGREEMENT
There shall have been executed and delivered to ▇▇▇▇▇▇ an Escrow Agreement
in substantially the form attached hereto as Exhibit 2.10, with such
modifications thereto as may be required by the Escrow Agent and agreed to by
the parties hereto.
7.11. NONCOMPETITION AND PROPRIETARY INFORMATION AGREEMENTS
▇▇▇▇▇▇ shall have received executed noncompetition and proprietary
information agreement substantially in the form of Exhibit 7.11 from each of the
Key Employees (the "NONCOMPETITION AGREEMENTS").
7.12. TERMINATION OF RIGHTS AND VOTING AGREEMENTS
All agreements among the Company and any of its securityholders, or among
any of the Company securityholders, providing for registration rights, rights of
first refusal, rights of co-sale, relating to the voting of the Company
securities or requiring the Company to obtain the consent or approval of any
such securityholders prior to taking or failing to take any action, shall have
been, as of or prior to the Closing Date, terminated in their entirely.
7.13. PATENT ASSIGNMENT
▇▇▇▇▇▇ shall have received a duly executed Patent Assignment substantially
in the form of Exhibit 7.13 (the "Patent Assignment") pursuant to which ▇▇▇▇▇
▇▇▇▇▇▇ shall have assigned all his right, title and interests in and to all
Patents held by him to the Company.
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7.14. REPAYMENT OF PROMISSORY NOTES
The Company shall have paid in full the unpaid principal of, together with
all accrued and unpaid interest on and any fees and expenses relating to, (i)
that certain Promissory Note, dated August 7, 1997, made by the Company and
given to PR Venture Partners, L.P. in the original principal amount of $25,000
and (ii) that certain Promissory Note, dated August 7, 1997, made by the Company
and given to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Fund II, L.P. in the original principal amount of
$25,000 (collectively, the "Notes"). At the Closing, ▇▇▇▇▇▇ shall have received
the original Notes duly cancelled by the holder thereof.
7.15. OTHER DOCUMENTS
At the Closing, ▇▇▇▇▇▇ shall receive such other certificates and documents
as ▇▇▇▇▇▇ shall have reasonably requested.
8. CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement to consummate the
Merger and the other transactions contemplated hereby shall be subject to the
satisfaction, at or prior to the Effective Time, of each of the following
conditions:
8.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties of ▇▇▇▇▇▇ contained in this Agreement or
in the Disclosure Schedule or any certificate delivered pursuant hereto shall be
complete and correct as of the date when made, shall be deemed repeated at and
as of the Closing Date as if made on the Closing Date and, without giving effect
to any qualification as to materiality (or any variation of such term) contained
in any representation or warranty, shall then be complete and correct except, in
either case, if such inaccuracies (i) individually or in the aggregate do not
cause a Material Adverse Effect, (ii) relate to changes permitted or
contemplated by this Agreement; (iii) relate to representations or warranties
that speak as of a certain date, in which case they shall be true and correct as
of such date, or (iv) were disclosed in a press release or in a filing with the
SEC which was released or filed, as the case may be, at least ten Trading Days
prior to the Closing Date, except if the effect of such disclosure is to delay
or prevent the filing of the Registration Statement pursuant to Section 6.4(a)
hereof or to delay or prevent the Registration Statement becoming effective
within 90 days after the Closing Date.
8.2. PERFORMANCE OF COVENANTS
▇▇▇▇▇▇ shall have taken all necessary corporate actions to consummate the
transactions contemplated hereby and shall have performed and complied in all
material respects with each covenant, agreement and condition required by this
Agreement to be performed or complied with by them at or prior to the Effective
Time.
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8.3. UPDATE CERTIFICATE
The Company and the Company Shareholders shall have received a certificate
or certificates, dated the Closing Date, signed by ▇▇▇▇▇▇ as to the matters set
forth in Sections 8.1 and 8.2.
8.4. NO GOVERNMENTAL OR OTHER PROCEEDING; ILLEGALITY
No Order of any Governmental Authority shall be in effect that restrains or
prohibits any transaction contemplated hereby; no Proceeding by any Governmental
Authority shall be pending or threatened against ▇▇▇▇▇▇ or the Company or the
Company Subsidiary or any director or officer of any thereof, as such, that
challenges the validity or legality, or that restrains or seeks to restrain the
consummation, of the transactions contemplated hereby; and no written advice
shall have been received by ▇▇▇▇▇▇, the Company or the Company Subsidiary or by
any of their respective counsel from any Governmental Authority, and remain in
effect, stating that an action or Proceeding will, if the Merger is consummated
or sought to be consummated, be filed seeking to invalidate or restrain the
Merger. No Law or Order shall be enacted, entered, enforced or deemed applicable
to the Merger or the other transactions contemplated hereby which makes the
consummation of the Merger or the other transactions contemplated hereby
illegal.
8.5. OPINION OF COUNSEL
(a) ▇▇▇▇▇▇ shall have delivered to the Company an opinion of Brown,
Rudnick, Freed & Gesmer, dated the Closing Date and addressed to the
Company, as to the matters set forth on Exhibit 8.5 hereto.
(b) The Company shall have received a written opinion from its
counsel, ▇▇▇▇▇▇▇ Procter LLP, dated as of the Closing Date and in form and
substance reasonably satisfactory to it, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code and that ▇▇▇▇▇▇ and the Company each will be a party to such
reorganization within the meaning of Section 368(a) of the Code, provided
that if ▇▇▇▇▇▇▇ Procter LLP does not render such opinion, this condition
shall nonetheless be deemed satisfied if Brown, Rudnick, Freed & Gesmer
renders such opinion to the Company. In connection with such opinion,
▇▇▇▇▇▇ and the Company shall provide such representations as may be
reasonably requested from counsel, which shall be entitled to rely upon
such representations in rendering its opinion.
8.6. SHAREHOLDER APPROVAL
This Agreement, the Merger and the other transactions contemplated hereby
shall have been duly approved by the Company Shareholders in accordance with the
MBCL.
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9. INDEMNIFICATION
9.1. DEFINITIONS
"LOSSES" means all losses, damages (including, without limitation,
consequential damages), fines, penalties, liabilities, payments and
obligations, and all expenses related thereto. Losses shall include any
reasonable legal fees and costs incurred by any of the Indemnified Persons
subsequent to the Closing in defense of or in connection with any alleged
or asserted liability, payment or obligation, whether or not any liability
or payment, obligation or judgment is ultimately imposed against the
Indemnified Persons and whether or not the Indemnified Persons are made or
become parties to any such action.
"▇▇▇▇▇▇' INDEMNIFIED PERSONS" means ▇▇▇▇▇▇, any subsidiary and
affiliated corporations, and their respective directors, officers,
employees, stockholders and agents.
"INDEMNIFIED PERSON" means any person entitled to be indemnified under
this Article 9.
"INDEMNIFYING PERSON" means any person obligated to indemnify another
person under this Article 9.
"THIRD PARTY ACTION" means any written assertion of a claim, or the
commencement of any action, suit, or proceeding, by a third party as to
which any person believes it may be an Indemnified Person hereunder.
9.2. INDEMNIFICATION BY COMPANY SHAREHOLDERS
(a) Subject to the limitations in paragraph (b)-(d) below, each of the
Company Shareholders, severally and not jointly, agrees to defend,
indemnify and hold harmless ▇▇▇▇▇▇' Indemnified Persons from and against
all Losses directly or indirectly incurred by or sought to be imposed upon
any of them:
(i) resulting from or arising out of any breach of any of the
representations or warranties made by the Company in or pursuant to
this Agreement or in any Transaction Document to which the Company is
a party, or document or instrument executed and delivered pursuant
hereto or in connection with the Closing; provided, that for the
purpose of this Section 9.2, any qualification of such representations
and warranties by reference to the materiality of matters stated
therein, and any limitations of such representations and warranties as
being "to the knowledge of" or "known to" or words of similar effect,
shall be disregarded in determining any inaccuracy, untruth,
incompleteness or breach thereof; or
(ii) resulting from or arising out of any breach of any covenant
or agreement made by the Company pursuant to this Agreement.
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(b) (i) The Company Shareholders shall have no liability under Section
9.2(a) unless one or more of ▇▇▇▇▇▇' Indemnified Persons gives written
notice to the Shareholder Representatives asserting a claim for Losses,
including reasonably detailed facts and circumstances pertaining thereto,
before the expiration of the period ending on the earlier of the date one
(1) year after the Closing Date and the date of release of ▇▇▇▇▇▇' audited
financial statements for the fiscal year ended September 30, 2001, except
that, for any claim based upon a covenant or undertaking which by its terms
is to be performed after the Closing, then the period shall commence on the
date when such covenant or agreement should have been performed.
(ii) The maximum amount for which the Company Shareholders may be
liable to all ▇▇▇▇▇▇' Indemnified Persons pursuant to this Article 9
shall not be greater than 20% of the Purchase Price.
(c) Indemnification for claims under paragraph (a) above shall be
payable by the Company Shareholders only if the aggregate amount of all
Losses thereunder by the ▇▇▇▇▇▇' Indemnified Persons shall exceed $380,000,
at which point the Company Shareholders shall be responsible for all Losses
from the first dollar to the full extent of all such Losses.
(d) The gross amount with respect to any claim for indemnification for
which the Company Shareholders may be liable to the ▇▇▇▇▇▇' Indemnified
Persons pursuant to this Article 9 shall be reduced by any insurance
proceeds actually recovered by or on behalf of the ▇▇▇▇▇▇' Indemnified
Persons on account of such indemnifiable Losses net of (x) costs and
expenses and (y) the effect of any increase in insurance premiums payable
by such party making a claim under its policies relating to such Losses
(and no right of subrogation shall accrue to any insurer hereunder). The
▇▇▇▇▇▇' Indemnified Persons shall exert their reasonable efforts to recover
upon any policies of insurance insuring any indemnifiable Losses.
9.3. DEFENSE OF THIRD PARTY ACTIONS
(a) Promptly after receipt of notice of any Third Party Action, any
person who believes he, she or it may be an Indemnified Person will give
notice to the potential Indemnifying Person of such action. The omission to
give such notice to the Indemnifying Person will not relieve the
Indemnifying Person of any liability hereunder unless it was prejudiced
thereby, nor will it relieve it of any liability which it may have other
than under this Article 9.
(b) Upon receipt of a notice of a Third Party Action, the Indemnifying
Person shall have the right, at its option and at its own expense, to
participate in and be present at the defense of such Third Party Action,
but not to control the defense, negotiation or settlement thereof, which
control shall remain with the Indemnified Person, unless the Indemnifying
Person makes the election provided in paragraph (c) below. Notwithstanding
the foregoing, the Indemnified Person will not enter into any settlement
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of any Third Party Action without the consent of the Indemnifying Person,
which consent will not be unreasonably withheld.
(c) By written notice within forty-five (45) days after receipt of a
notice of a Third Party Action, an Indemnifying Person may elect to assume
control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person; provided, however, that
the Indemnifying Person agrees (i) to promptly indemnify the Indemnified
Person for its expenses to date, and (ii) to hold the Indemnified Person
harmless from and against any and all Losses caused by or arising out of
any settlement of the Third Party Action approved by the Indemnifying
Person or any judgment in connection with that Third Party Action. The
Indemnifying Persons shall not in the defense of the Third Party Action
enter into any settlement which does not include as a term thereof the
giving by the third party claimant of an unconditional release of the
Indemnified Person, or consent to entry of any judgment except with the
consent of the Indemnified Person.
(d) Upon assumption of control of the defense of a Third Party Action
under paragraph (c) above, the Indemnifying Person will not be liable to
the Indemnified Person hereunder for any legal or other expenses
subsequently incurred in connection with the defense of the Third Party
Action, other than reasonable expenses of investigation undertaken at the
request of the Indemnifying Person.
(e) If the Indemnifying Person does not elect to control the defense
of a Third Party Action under paragraph (c), the Indemnifying Person shall
promptly reimburse the Indemnified Person for the reasonable expenses
incurred by the Indemnified Person in connection with defense of such Third
Party Action, as and when the same shall be incurred by the Indemnified
Person; provided that such reasonable expenses shall not include the
reasonable fees and expenses of more than one law firm in any given matter
(other than local counsel).
(f) Any person who has not assumed control of the defense of any Third
Party Action shall have the duty to cooperate with the party which assumed
such defense.
9.4. MISCELLANEOUS
(a) ▇▇▇▇▇▇' Indemnified Persons shall be entitled to indemnification
under Section 9.2(a) regardless of whether the matter giving rise to the
applicable Losses may have been previously disclosed to any such person
unless the matter giving rise to such Losses was expressly disclosed on the
Schedules attached to this Agreement.
(b) If any Loss is recoverable under more than one provision hereof,
the Indemnified Person shall be entitled to assert a claim for such Loss
until the expiration of the longest period of time within which to assert a
claim for Loss under any of the provisions which are applicable.
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9.5. PAYMENT OF INDEMNIFICATION; SOLE REMEDY
Except for claims for indemnification provided for in Section 6.4(e), the
indemnification provided for in this Article 9 shall be the exclusive remedy of
the ▇▇▇▇▇▇ Indemnified Parties for breaches of representations, warranties and
covenants contained in this Agreement provided that ▇▇▇▇▇▇ shall not be deemed
to have waived any right of recourse (whether a claim under this Article 9 or
otherwise) arising from fraud or intentional misconduct of any other party
hereto. Any Losses which may become due and payable to any of ▇▇▇▇▇▇'
Indemnified Persons under Section 9.2 shall first be paid or otherwise satisfied
out of the Escrow Shares in accordance with the terms of the Escrow Agreement.
Thereafter, the balance of any additional claims for indemnification under this
Article 9 shall be paid or otherwise satisfied by Indemnifying Persons within
thirty (30) days after notice thereof is given by the Indemnified Person
following final resolution of such claims.
10. TERMINATION OF AGREEMENT
10.1. TERMINATION
This Agreement shall not be terminated, nor the Merger abandoned, except in
accordance with the provisions of this Article 10. This Agreement may be
terminated and the Merger may be abandoned any time prior to the Effective Time,
whether before or after approval by the Company Shareholders:
(a) by mutual written consent of the parties;
(b) by either ▇▇▇▇▇▇ or the Company, if, the Merger shall not have
been consummated on or before September 30, 2001, unless such failure shall
be due to a material breach of any representation or warranty, or the
nonfulfillment in a material respect, and failure to cure such
nonfulfillment, of any covenant or agreement contained herein on the part
of the party or parties seeking to terminate; and
(c) by ▇▇▇▇▇▇ or the Company if a Governmental Authority shall have
issued a nonappealable final Order or taken any other action having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger and the other transactions contemplated hereby (provided that the
right to terminate this Agreement under this paragraph (c) shall not be
available to any party who has not complied with its obligations under this
Agreement if such noncompliance materially contributed to the issuance of
any such Order or the taking of such action).
10.2. TERMINATION BY ▇▇▇▇▇▇
This Agreement may be terminated and the Merger may be abandoned by action
of the Board of Directors of ▇▇▇▇▇▇, at any time prior to the Effective Time,
before or after the approval by the Company Shareholders, if:
(a) the Company shall have failed to comply with any of the covenants
or agreements contained in this Agreement such that the closing condition
set forth in
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Section 7.2 would not be satisfied; provided, however, that if such breach
or breaches are capable of being cured prior to the Effective Time, such
breach or breaches shall not have been cured within 10 days of delivery to
the Company of written notice of such breach;
(b) there exists a breach of any representation or warranty of the
Company contained in this Agreement such that the closing condition set
forth in Section 7.1 would not be satisfied; provided, however, that if
such failure or failures are capable of being cured prior to the Effective
Time, such failure or failures shall not have been cured within 10 days of
delivery to the Company of written notice of such failure; or
(c) the Company engages in any conduct or takes any action concerning
an Alternative Acquisition as provided in Section 5.11 hereof.
10.3. TERMINATION BY THE COMPANY
This Agreement may terminated and the Merger may be abandoned at any time
prior to the Effective Time, before or after the approval by the Company
Shareholders, by action of the Board of Directors of the Company, if:
(a) ▇▇▇▇▇▇ shall have failed to comply with any of the covenants or
agreements contained in this Agreement such that the closing condition set
forth in Section 8.2 would not be satisfied; provided however, that if such
failure or failures are capable of being cured prior to the Effective Time,
such failure or failures shall not have been cured within 10 days of
delivery to ▇▇▇▇▇▇ of written notice of such failure; or
(b) there exists a breach or breaches of any representation or
warranty of ▇▇▇▇▇▇ contained in this Agreement such that the closing
condition set forth in Section 8.1 would not be satisfied; provided
however, that if such breach or breaches are capable of being cured prior
to the Effective Time, such breach or breaches shall not have been cured
within 10 days of delivery to ▇▇▇▇▇▇ of written notice of such breach.
10.4. PROCEDURE FOR TERMINATION
In the event of termination and abandonment of the Merger by ▇▇▇▇▇▇ or the
Company pursuant to this Article 10, written notice thereof shall forthwith be
given to the other party.
10.5. EFFECT OF TERMINATION
(a) In the event of termination of this Agreement in accordance with
the provisions of this Article 10, this Agreement shall forthwith become
void and no party to this Agreement shall have any liability or further
obligation to any other party, except as provided in the Confidentiality
Agreement and in this Section 10.5 and in Sections 11.2 and 11.3 of this
Agreement, which provisions shall survive such termination, and except that
nothing herein shall relieve any party from liability for any breach of
this Agreement.
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(b) In the event of a termination of this Agreement pursuant to
Section 10.2(c), the Company shall pay ▇▇▇▇▇▇ a fee in the amount of
$1,000,000 and all reasonable, actual and documented costs and expenses
(including reasonable attorneys' and accountants' fees and expenses)
incurred by ▇▇▇▇▇▇ in connection with this Agreement and the transactions
contemplated hereby (collectively the "TERMINATION FEE"). Such amounts
payable to ▇▇▇▇▇▇ shall be paid ten business days after ▇▇▇▇▇▇' written
demand therefor.
10.6. RIGHT TO PROCEED
Anything in this Agreement to the contrary notwithstanding, if any of the
conditions specified in Article 7 hereof have not been satisfied, ▇▇▇▇▇▇ shall
have the right to waive the satisfaction of any such condition as provided in
Article 7 and to proceed with the transactions contemplated hereby, however, it
shall be deemed to have waived any claim for indemnification arising out of any
condition which has been so waived. If any of the conditions specified in
Article 8 hereof has not been satisfied, the Shareholder Representatives shall
have the right to waive the satisfaction of any such condition as provided in
Article 8 and to proceed with the transactions contemplated hereby.
11. GENERAL PROVISIONS
11.1. TERMINATION OF REPRESENTATIONS AND WARRANTIES
The parties' representations warranties and covenants in this Agreement or
in any document or instrument delivered pursuant to this Agreement shall survive
until the earlier of (i) one (1) year after the Closing Date and (ii) the date
of release of ▇▇▇▇▇▇' audited financial statements for the fiscal year ended
September 30, 2001.
11.2. EXPENSES
Except as otherwise expressly provided in this Agreement, the Company will
pay on or prior to the Closing the Company's legal, accounting and other
expenses in connection with this Agreement and the transactions contemplated
herein and ▇▇▇▇▇▇ will pay on or prior to the Closing its legal, accounting and
other expenses in connection with this Agreement and the transactions
contemplated herein.
11.3. PUBLIC ANNOUNCEMENTS
Unless required by law, any public announcement or similar publicity with
respect to this Agreement, the Closing, the Merger or the other transactions
contemplated hereby will be issued, if at all, at such time and in such manner
as ▇▇▇▇▇▇ determines with the concurrence of the Company, which concurrence
shall not be unreasonably withheld or delayed by the Company. Unless disclosure
is consented to by ▇▇▇▇▇▇ in advance or required by law or disclosure has
otherwise already been made, the Company shall keep this Agreement and the
transactions contemplated hereby strictly confidential and may not make any
disclosure of this Agreement or
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such transactions to any Person other than its or their directors, officers,
employees or agents who need to know such information to enable the Company to
comply with this Agreement, provided that each such director, officer, employee
or agent shall agree, for the benefit of ▇▇▇▇▇▇, to maintain the confidentiality
of such information as provided in this Section 11.3. The Company and ▇▇▇▇▇▇
will consult with each other concerning the means by which the Company's
employees, customers and suppliers and other Persons having dealings with the
Company or the Company Subsidiary will be informed of this Agreement, the
Closing, the Merger and the other transactions contemplated hereby, and
representatives of ▇▇▇▇▇▇ may at its option be present for any such
communication.
11.4. NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by fax (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses or fax numbers set forth below (or to
such other address, person's attention or fax number as a party may designate by
notice to the other parties given in accordance with this Section 11.4):
(a) If to ▇▇▇▇▇▇:
▇▇▇▇▇▇ Automation, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
With a copy to:
Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
(b) If to the Company:
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Progressive Technologies Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇, Procter LLP
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (617 (▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
11.5. JURISDICTION; SERVICE OF PROCESS
Any Proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in the
courts of the State of Delaware or any United States District Court of the State
of Delaware, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such Proceeding and waives any
objection to venue laid therein. Service of process or any other papers in any
such Proceeding may be made by registered or certified mail, return receipt
requested, pursuant to the provisions of Section 11.4.
11.6. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE
No failure or delay on the part of any party hereto in the exercise of any
right hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
11.7. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights under this Agreement without the
prior written consent of the other parties except that ▇▇▇▇▇▇ may assign any of
its rights, but not its obligations, under this Agreement to any direct
wholly-owned Subsidiary of ▇▇▇▇▇▇. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any
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provision of this Agreement other than the Company Shareholders acting through
the Shareholder Representative.
11.8. SEVERABILITY
(a) If any provision of this Agreement or the application of any such
provision to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement, or the application of such provision to such
party or circumstances other than those to which it is so determined to be
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by law. If the
final judgment of a court of competent jurisdiction declares that any item
or provision hereof is invalid or unenforceable, the parties hereto agree
that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration or area of the term or
provision, to delete specific words or phrases and to replace any invalid
or unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified.
(b) The parties agree that the fees and other amounts provided in
Section 10.5 are fair and reasonable in the circumstances. If a court of
competent jurisdiction shall nonetheless, by a final, non-appealable
judgment, determine that such amounts exceed the maximum amount permitted
by law, then such amounts shall be reduced to the maximum amount permitted
by law in the circumstances, as determined by such court of competent
jurisdiction.
11.9. GOVERNING LAW
This Agreement will be governed by the internal laws of the State of
Delaware without regard to principles of conflict of laws.
11.10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
11.11. ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements (other than the
Confidentiality Agreement), whether written or oral, between or among the
parties with respect to its subject matter and constitutes (along with the
documents referred to in this Agreement) the entire agreement among the parties
with respect to its subject matter. This Agreement may not be amended except by
a written agreement executed by each party hereto.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
▇▇▇▇▇▇ AUTOMATION, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
Senior Vice President Finance
and Administration and Chief
Financial Officer
PROGRESSIVE TECHNOLOGIES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
President
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EXHIBITS
Exhibit 2.10 Form of Escrow Agreement
Exhibit 3.35 Form of Affiliate Agreement
Exhibit 7.7 Matters to be Addressed in Opinion of Company's Counsel
Exhibit 7.11 Noncompetition and Proprietary Information Agreement
Exhibit 7.13 Form of Patent Assignment
Exhibit 8.5 Matters to be Addressed in Opinion of ▇▇▇▇▇▇' Counsel
E-1