<\/p>\n 9.12 Fraud………………………………………… 37<\/p>\n
SECTION 10. ADDITIONAL POST-CLOSING OBLIGATIONS………………. 37<\/p>\n
10.1 Repayment of Certain Debt Obligations……………. 37<\/p>\n
10.2 Release of Obligations; Indemnification………….. 37<\/p>\n
10.3 Indemnification of Directors and Officers………… 37<\/p>\n
10.4 Insurance Policies…………………………….. 37<\/p>\n
10.5 S-Corp Dividend……………………………….. 38<\/p>\n
10.6 Access to Records……………………………… 38<\/p>\n
10.7 Built-in Gain Reporting………………………… 38<\/p>\n
SECTION 11. MISCELLANEOUS PROVISIONS………………………… 38<\/p>\n
11.1 Shareholders’ Agent……………………………. 38<\/p>\n
11.2 Further Assurances…………………………….. 39<\/p>\n
11.3 Fees and Expenses……………………………… 39<\/p>\n
11.4 Attorneys’ Fees……………………………….. 40<\/p>\n
11.5 Notices………………………………………. 40<\/p>\n
11.6 Confidentiality……………………………….. 41<\/p>\n
11.7 Time of the Essence……………………………. 41<\/p>\n
11.8 Headings……………………………………… 41<\/p>\n
11.9 Counterparts………………………………….. 41<\/p>\n
11.10 Governing Law…………………………………. 41<\/p>\n
11.11 Successors and Assigns…………………………. 41<\/p>\n
11.12 Remedies Cumulative; Specific Performance………… 41<\/p>\n
11.13 Waiver……………………………………….. 41<\/p>\n
11.14 Amendments……………………………………. 42 <\/p>\n
11.15 Severability………………………………….. 42<\/p>\n
11.16 Parties in Interest……………………………. 42<\/p>\n
11.17 Entire Agreement………………………………. 42<\/p>\n
11.18 Construction………………………………….. 42<\/p>\n
<\/c><\/c><\/caption>\n<\/table>\n
iv.<\/p>\n
STOCK PURCHASE AGREEMENT<\/p>\n
THIS STOCK PURCHASE AGREEMENT (“Agreement”) is made and entered into as of
\nJuly 2, 1998, by and among: ASYST TECHNOLOGIES, INC., a California corporation
\n(“Parent”); HINE DESIGN INCORPORATED a California corporation (the “Company”);
\nand the shareholders of the Company (the “Shareholders”). Certain other
\ncapitalized terms used in this Agreement are defined in Exhibit A.<\/p>\n
RECITALS<\/p>\n
A. The Shareholders own a total of 3,656,800 shares of the common stock of
\nthe Company (“Company Common Stock”) which constitute all of the outstanding
\ncapital stock of the Company.<\/p>\n
B. The Shareholders wish to sell the Company Common Stock to the Parent on
\nthe terms set forth in this Agreement.<\/p>\n
AGREEMENT<\/p>\n
The parties to this Agreement agree as follows:<\/p>\n
SECTION 1. DESCRIPTION OF TRANSACTION<\/p>\n
1.1 SALE AND PURCHASE OF SHARES. At the Closing, each Shareholder shall
\nsell, assign, transfer and deliver such Shareholder’s respective shares of
\nCompany Common Stock to the Parent, and the Parent shall purchase the Company
\nCommon Stock from the Shareholders, on the terms and subject to the conditions
\nset forth in this Agreement (the “Transaction”).<\/p>\n
1.2 PURCHASE PRICE.<\/p>\n
(a) The aggregate purchase price payable by the Parent for the Company
\nCommon Stock (the “Purchase Price”) shall be equal to the shares of Company
\nCommon Stock multiplied by the Applicable Fraction and by the Designated Parent
\nStock Price.<\/p>\n
(b) The Purchase Price shall be paid in cash at the Closing.<\/p>\n
1.3 CLOSING; CLOSING DATE. The consummation of the transactions contemplated
\nby this Agreement (the “Closing”) shall take place at the offices of Cooley
\nGodward llp, Five Palo Alto Square, Palo Alto, California 94306, once all
\nconditions to Closing are satisfied and\/or waived, at such time and date as the
\nparties may designate upon not less than five days’ prior notice to the Company
\n(the “Closing Date.”)<\/p>\n
2.<\/p>\n
(a) At the Closing:<\/p>\n
(i) the Shareholders shall deliver to the Parent the stock
\ncertificates representing the Company Common Stock, duly endorsed (or
\naccompanied by duly executed stock powers), and the Parent shall pay the
\nPurchase Price;<\/p>\n
(ii) the Shareholders, the Company and the Shareholders’ Agent
\nshall execute and deliver to the Parent, the Escrow Agreement, substantially in
\nthe Form of Exhibit B (the “Escrow Agreement”);<\/p>\n
(iii) the Shareholders and certain other executives of the Company
\nshall execute and deliver to the Parent and the Company a Noncompetition
\nAgreement substantially in the form of Exhibit D;<\/p>\n
(iv) the Shareholders shall execute and deliver to the Parent and
\nthe Company a General Release substantially in the form of Exhibit E.<\/p>\n
1.4 DEFINITIONS. For purposes of this Agreement:<\/p>\n
(a) The “Applicable Fraction” shall be the fraction: (A) having a
\nnumerator equal to the sum of (1) $24,000,000 and (2) the Vested DCU\/Option
\nValue (as defined in Section 1.4(b) minus (3) the Debt Payments (as defined in
\nSection 10); and (B) having a denominator equal to the amount determined by
\nmultiplying (1) the Adjusted Company Share Amount (as defined in Section 1.4(c))
\nby (2) the Designated Parent Stock Price (as defined in Section 1.4(d)).<\/p>\n
(b) The “Vested DCU\/Option Value” shall be the sum of (A) the exercise
\nprices of all outstanding Company Options that are vested immediately prior to
\nthe earlier of July 31, 1998 or the Closing Date and (B) the aggregate Fair
\nMarket Value (as defined in the Company’s Incentive Compensation Plan adopted as
\nof March 1, 1996 (the “DCU Plan”) of all outstanding Company DCUs (as defined in
\nSection 1.5) that are vested immediately prior to the earlier of July 31, 1998
\nor the Closing Date.<\/p>\n
(c) The “Adjusted Company Share Amount” shall be the sum of (A) the
\naggregate number of shares of Company Common Stock outstanding immediately prior
\nto the Closing Date, (B) the aggregate number of shares of Company Common Stock
\npurchasable under or otherwise subject to all outstanding Company Options that
\nare vested immediately prior to the earlier of July 31, 1998 or the Closing
\nDate, and (C) the aggregate number of deferred compensation units (as defined in
\nthe DCU Plan) (a “Company DCU”) that are vested immediately prior to the earlier
\nof July 31, 1998 or the Closing Date.<\/p>\n
(d) The “Designated Parent Stock Price” shall be the average of the
\nclosing prices of a share of Parent Common Stock as reported on the Nasdaq
\nNational Market for each of the ten (10) consecutive trading days ending on the
\ndate immediately preceding the date hereof.<\/p>\n
1.5 EMPLOYEE STOCK OPTIONS; DCUS.<\/p>\n
(a) Upon the Closing, each option to purchase shares of Company Common
\nStock that is then outstanding, whether vested or unvested (a “Company Option”),
\nshall, pursuant <\/p>\n
3.<\/p>\n
to the agreement of each holder of the Company Options entered into prior to the
\nClosing, be converted into an option to purchase shares of Parent Common Stock
\n(a “New Parent Option”) granted under Parent’s 1993 Stock Option Plan (“the
\nParent Option Plan”). New Parent Options granted under this Section 1.5(a) shall
\nbe in substitution for and replacement of all Company Options, which shall
\nterminate effective as of the Closing. The number of shares of Parent Common
\nStock subject to each New Parent Option shall be equal to the number of shares
\nof Company Common Stock that were subject to the converted Company Option
\nmultiplied by the Applicable Fraction, rounded to the nearest whole number of
\nshares of Parent Common Stock. The per share exercise price for the Parent
\nCommon Stock issuable upon exercise of each such New Parent Company Option shall
\nbe determined by dividing the exercise price per share of Company Common Stock
\nsubject to such converted Company Option, as in effect immediately prior to the
\nClosing Date, by the Applicable Fraction, and rounding the resulting exercise
\nprice up to the nearest whole cent. The term, exercisability, vesting schedule
\nand other provisions of Options shall be as provided in the Parent Option Plan;
\nprovided, however, that the number of shares of Parent Common Stock as to which
\neach New Parent Option shall be vested as of the Closing Date and at all
\nrelevant times thereafter while the optionee remains employed by the Company or
\nParent, and prior to the termination of such New Parent Option, shall not be
\nless than the proportional number of shares of Company Common Stock that would
\nhave become vested under the vesting schedule applicable to the converted
\nCompany Option.<\/p>\n
(b) Upon the Closing each Company DCU, whether vested or unvested shall,
\npursuant to appropriate action of the Administrative Committee for the DCU Plan
\ntaken prior to the Closing, be converted into a New Parent Option in accordance
\nwith the terms (as in effect as of the date of this Agreement) of the DCU Plan.
\nNew Parent Options granted under this Section 1.5(a) shall be in substitution
\nfor and replacement of all Company DCUs, which shall terminate effective as of
\nthe Closing. The number of shares of Parent Common Stock subject to each New
\nParent Option shall be equal to the number of converted Company DCUs for which
\nthe New Parent Option is substituted and multiplied by the Applicable Fraction,
\nrounded to the nearest whole number of shares of Parent Common Stock. The per
\nshare exercise price for the Parent Common Stock issuable upon exercise of each
\nsuch converted Company DCU shall be determined by dividing the Fair Market Value
\nof such converted Company DCUs, as in effect immediately prior to the Closing
\nDate, by the Applicable Fraction, and rounding the resulting exercise price to
\nthe nearest whole cent. The term, exercisability, vesting schedule and other
\nprovisions of such New Parent Option shall be as provided in the Parent Option
\nPlan; provided, however, that the number of shares of Parent Common Stock as to
\nwhich each New Parent Option shall be vested as of the Closing Date and at all
\nrelevant times thereafter while the optionee remains employed by the Company or
\nParent, and prior to the termination of such New Parent Option, shall not be
\nless than the proportional number of Company DCUs that would have become vested
\nunder the vesting schedule applicable to the converted Company DCUs as set forth
\nin Section 6(a) of the DCU Plan for which the New Parent Option is substituted.<\/p>\n
(c) The Company and Parent shall take all action that may be necessary
\n(under the Company Options, the DCU Plan or otherwise) to effectuate the
\nprovisions of this Section 1.5. Following the Closing, Parent will send to each
\nholder of a converted Company Option and to each holder of a converted Company
\nDCU a copy of the Parent Option Plan and an option agreement substantially in
\nthe form of Exhibit F, setting forth the terms of each New Parent Company Option
\ngranted in substitution for Company Options and Company DCUs,<\/p>\n
4.<\/p>\n
including (i) the number of shares of Parent Common Stock subject to such
\nconverted Company Option or Company DCU, and (ii) the exercise price per share
\nof Parent Common Stock issuable upon exercise of such New Parent Option, or,
\n(iii) the term, exercisability, vesting schedule and other provisions of such
\nNew Parent Option.<\/p>\n
1.6 ESCROW. As more fully described in the Escrow Agreement, an Escrow
\nFund (as defined in the Escrow Agreement) shall be established into which a
\nportion of the Purchase Price shall be deposited at the Closing. The amount to
\nbe withheld from the Shareholders and contributed to the Escrow Fund shall be
\nthe amount obtained by multiplying (i) the sum of (1) $24,000,000 minus (2)
\nthe Debt Payments (other than the payment under Section 10.1(b)) (without
\ndeduction for amounts withheld and contributed to the Escrow Fund) by (ii) 10%
\n(rounded up to the nearest whole cent). The individual Shareholders shall
\ncontribute such amount on a pro rata basis based upon their ownership of
\nCompany Common Stock.<\/p>\n
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS<\/p>\n
The Company and the Shareholders jointly and severally (except that as
\namong the Shareholders liability will be several (in proportion to ownership of
\nCompany Common Stock as of the Closing Date) and not joint and except that the
\nrepresentations and warranties in Section 2.21(f), 2.22, 2.23 and 2.24 are made
\nby each Shareholder severally) represent and warrant subject to Section 9, to
\nand for the benefit of the Indemnitees, as follows, except as set forth in the
\nDisclosure Schedule (references below to particular Parts of the Disclosure
\nSchedule are intended to refer to, in particular, sections in the Disclosure
\nSchedule that reference the relevant Sections of this Section 2):<\/p>\n
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.<\/p>\n
(a) The Company is a corporation duly organized, validly existing and in
\ngood standing under the laws of the State of California and has all necessary
\npower and authority: (i) to conduct its business in the manner in which its
\nbusiness is currently being conducted; (ii) to own and use its assets in the
\nmanner in which its assets are currently owned and used; and (iii) to perform
\nits obligations under all Company Contracts.<\/p>\n
(b) The Company has not conducted any business under or otherwise used,
\nfor any purpose or in any jurisdiction, any fictitious name, assumed name, trade
\nname or other name.<\/p>\n
(c) The Company is not and has not been required to be qualified,
\nauthorized, registered or licensed to do business as a foreign corporation in
\nany jurisdiction, except where the failure to be so qualified, authorized,
\nregistered or licensed has not had and will not have a Material Adverse Effect
\non the Company.<\/p>\n
(d) Part 2.1 of the Disclosure Schedule accurately sets forth (i) the
\nnames of the members of the Company’s board of directors, (ii) the names of the
\nmembers of each committee of the Company’s board of directors, and (iii) the
\nnames and titles of the Company’s officers.<\/p>\n
(e) The Company does not own any controlling interest in any Entity and
\nthe Company has never owned, beneficially or otherwise, any shares or other
\nsecurities of, or any <\/p>\n
5.<\/p>\n
direct or indirect equity interest in, any Entity. The Company has never agreed
\nand is not presently obligated to make any investment in or capital contribution
\nto any Entity. The Company has not guaranteed and is not responsible or liable
\nfor any obligation of any of the Entities in which it owns or has owned any
\nequity interest.<\/p>\n
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. The Company has delivered
\nto Parent accurate and complete copies of: (1) the Company’s articles of
\nincorporation and bylaws, including all amendments thereto; (2) the stock
\nrecords of the Company; and (3) the minutes and other records of the meetings
\nand other proceedings (including any actions taken by written consent or
\notherwise without a meeting) of the Shareholders of the Company, the board of
\ndirectors of the Company and all committees of the board of directors of the
\nCompany. There have been no formal meetings or other proceedings of the
\nShareholders of the Company, the board of directors of the Company or any
\ncommittee of the board of directors of the Company that are not fully reflected
\nin such minutes or other records. There has not been any violation of any of the
\nprovisions of the Company’s articles of incorporation or bylaws, and the Company
\nhas not taken any action that is inconsistent in any material respect with any
\nresolution adopted by the Company’s Shareholders, the Company’s board of
\ndirectors or any committee of the Company’s board of directors. The books of
\naccount, stock records, minute books and other records of the Company are
\naccurate, up-to-date and complete in all material respects, and have been
\nmaintained in accordance with prudent business practices.<\/p>\n
2.3 CAPITALIZATION, ETC.<\/p>\n
(a) The authorized capital stock of the Company consists of 10,000,000
\nshares of Company Common Stock, of which 3,656,800 shares have been issued and
\nare outstanding as of the date of this Agreement. All of the outstanding shares
\nof Company Common Stock have been duly authorized and validly issued, and are
\nfully paid and non-assessable. Part 2.3 of the Disclosure Schedule provides an
\naccurate and complete description of the terms of each repurchase option which
\nis held by the Company and to which any of such shares is subject.<\/p>\n
(b) The Company has outstanding options to purchase 348,540 shares as of
\nthe date of this Agreement. Part 2.3 of the Disclosure Schedule accurately sets
\nforth, with respect to each outstanding Company Option as of the date of this
\nAgreement: (i) the name of the holder of such Company Option; (ii) the total
\nnumber of shares of Company Common Stock that are subject to such Company Option
\nand the number of shares of Company Common Stock with respect to which such
\nCompany Option is immediately exercisable; (iii) the date on which such Company
\nOption was granted and the term of such Company Option; (iv) the vesting
\nschedule for such Company Option; (v) the exercise price per share of Company
\nCommon Stock purchasable under such Company Option; and (vi) whether such
\nCompany Option has been designated an “incentive stock option” as defined in
\nSection 422 of the Code. The Transaction and the other transactions contemplated
\nby this Agreement will not result in the acceleration of vesting of any Company
\nOption.<\/p>\n
(c) The Company has reserved the right to grant 984,660 Company DCUs
\nunder its DCU Plan, of which 321,297 Company DCUs are outstanding as of the date
\nof this Agreement. Part 2.3 of the Disclosure Schedule accurately sets forth,
\nwith respect to each Company DCU that is outstanding as of the date of this
\nAgreement: (i) the name of the holder of <\/p>\n
6.<\/p>\n
such Company DCU; (ii) the total number of shares of deferred compensation units
\nsubject to such Company DCU; (iii) the date on which such Company DCU was
\ngranted and the term of such Company DCU; and (iv) the Fair Market Value (as
\ndefined in the DCU Plan) of such Company DCU. The Transaction and the other
\ntransactions contemplated by this Agreement will not result in the acceleration
\nof vesting of any Company DCU.<\/p>\n
(d) There is no: (i) outstanding subscription, option, call, warrant or
\nright (whether or not currently exercisable) to acquire any shares of the
\ncapital stock or other securities of the Company; (ii) outstanding security,
\ninstrument or obligation that is or may become convertible into or exchangeable
\nfor any shares of the capital stock or other securities of the Company, or any
\nphantom stock or similar rights; (iii) Contract under which the Company is or
\nmay become obligated to sell or otherwise issue any shares of its capital stock
\nor any other securities; or (iv) condition or circumstance that may give rise to
\nor provide a basis for the assertion of a claim by any Person to the effect that
\nsuch Person is entitled to acquire or receive any shares of capital stock or
\nother securities of the Company.<\/p>\n
(e) All outstanding shares of Company Common Stock and all outstanding
\nCompany Options have been issued and granted in compliance with (i) all
\napplicable securities laws and other applicable Legal Requirements, and (ii) all
\nrequirements set forth in applicable Contracts.<\/p>\n
(f) The Company has never repurchased, redeemed or otherwise reacquired
\nany shares of capital stock or other securities of the Company. All securities
\nso reacquired by the Company were reacquired in compliance with (i) the
\napplicable provisions of the California General Corporation Law and all other
\napplicable Legal Requirements, and (ii) all requirements set forth in applicable
\nContracts.<\/p>\n
(g) There are no (i) outstanding Company DCUs, (ii) instruments or
\nobligations that are or may become convertible into or exchangeable for Company
\nDCUs, (iii) Contracts under which the Company may become obligated to sell or
\notherwise issue any Company DCUs, or (iv) conditions or circumstances that may
\ngive rise to or provide a basis for the assertion of a claim by any Person to
\nthe effect that such Person is entitled to acquire or receive any Company DCUs.
\nAll outstanding Company DCUs have been issued in compliance with applicable
\nLegal Requirements and all requirements set forth in applicable Contracts.<\/p>\n
2.4 FINANCIAL STATEMENTS.<\/p>\n
(a) The Company has delivered to Parent the following financial
\nstatements and notes (collectively, the “Company Financial Statements”):<\/p>\n
(i) The unaudited balance sheets of the Company as of December 31,
\n1997, December 31, 1996 and December 31, 1995, and the related unaudited income
\nstatements of the Company for the years then ended; and<\/p>\n
(ii) the unaudited balance sheet of the Company as of April 30, 1998
\n(the “Unaudited Interim Balance Sheet”), and the related unaudited income
\nstatement of the Company for the four months then ended.<\/p>\n
7.<\/p>\n
(b) The Company Financial Statements are accurate and complete in all
\nmaterial respects and present fairly the financial position of the Company as of
\nthe respective dates thereof and the results of operations for the periods
\ncovered thereby.<\/p>\n
(c) The Company Financial Statements contain adequate reserves for all
\nexisting and reasonably foreseeable warranty claims.<\/p>\n
2.5 ABSENCE OF CHANGES. Since April 30, 1998:<\/p>\n
(a) there has not been any material adverse change in the Company’s
\nbusiness, condition, assets, liabilities, operations, financial performance or
\nprospects, and, to the best of the knowledge of the Company, no event has
\noccurred that will, or could reasonably be expected to, have a Material Adverse
\nEffect on the Company;<\/p>\n
(b) there has not been any material loss, damage or destruction to, or
\nany material interruption in the use of, any of the Company’s assets (whether or
\nnot covered by insurance);<\/p>\n
(c) the Company has not declared, accrued, set aside or paid any
\ndividend or made any other distribution in respect of any shares of capital
\nstock, and has not repurchased, redeemed or otherwise reacquired any shares of
\ncapital stock or other securities;<\/p>\n
(d) the Company has not sold, issued or authorized the issuance of (i)
\nany capital stock or other security (except for Company Common Stock issued upon
\nthe exercise of outstanding Company Options), (ii) any option or right to
\nacquire any capital stock or any other security (except for Company Options
\ndescribed in Part 2.3 of the Disclosure Schedule), or (iii) any instrument
\nconvertible into or exchangeable for any capital stock or other security;<\/p>\n
(e) the Company has not amended or waived any of its rights under, or
\npermitted the acceleration of vesting under, (i) any provision of its DCU Plan,
\n(ii) any provision of any agreement evidencing any outstanding Company Option or
\nany outstanding Company DCU, or (iii) any restricted stock purchase agreement;<\/p>\n
(f) the Company has not sold, issued or authorized the issuance of (i)
\nany Company DCU, (ii) any option or right to acquire any Company DCU, or (iii)
\nany instrument convertible into or exchangeable for any Company DCU;<\/p>\n
(g) there has been no amendment to the Company’s articles of
\nincorporation or bylaws, and the Company has not effected or been a party to any
\nAcquisition Transaction, recapitalization, reclassification of shares, stock
\nsplit, reverse stock split or similar transaction;<\/p>\n
(h) the Company has not formed any subsidiary or acquired any equity
\ninterest or other interest in any other Entity;<\/p>\n
(i) the Company has not made any capital expenditure which, when added
\nto all other capital expenditures made on behalf of the Company since April 30,
\n1998, exceeds $100,000;<\/p>\n
8.<\/p>\n
(j) the Company has not (i) entered into or permitted any of the assets
\nowned or used by it to become bound by any Contract that is or would constitute
\na Material Contract (as defined in Section 2.10(a)), or (ii) amended or
\nprematurely terminated, or waived any material right or remedy under, any such
\nContract;<\/p>\n
(k) the Company has not (i) acquired, leased or licensed any right or
\nother asset from any other Person, (ii) sold or otherwise disposed of, or leased
\nor licensed, any right or other asset to any other Person, or (iii) waived or
\nrelinquished any right, in each case except for immaterial rights or other
\nimmaterial assets acquired, leased, licensed or disposed of in the ordinary
\ncourse of business and consistent with the Company’s past practices;<\/p>\n
(l) the Company has not written off as uncollectible, or established any
\nextraordinary reserve with respect to, any account receivable or other
\nindebtedness (except for accounts receivable or other indebtedness not exceeding
\n$10,000 individually or $50,000 in the aggregate);<\/p>\n
(m) the Company has not made any pledge of any of its assets or
\notherwise permitted any of its assets to become subject to any Encumbrance,
\nexcept for pledges of immaterial assets made in the ordinary course of business
\nand consistent with the Company’s past practices;<\/p>\n
(n) the Company has not (i) lent money to any Person (other than
\npursuant to routine travel advances made to employees in the ordinary course of
\nbusiness), or (ii) incurred or guaranteed any indebtedness for borrowed money;<\/p>\n
(o) the Company has not (i) established or adopted any Plans (as defined
\nin Section 2.15), (ii) paid any bonus or made any profit-sharing or similar
\npayment to, or increased the amount of the wages, salary, commissions, fringe
\nbenefits or other compensation or remuneration payable to, any of its directors,
\nofficers or employees, or (iii) hired any new employee;<\/p>\n
(p) the Company has not changed any of its methods of accounting or
\naccounting practices in any respect;<\/p>\n
(q) the Company has not made any Tax election;<\/p>\n
(r) the Company has not commenced or settled any Legal Proceeding;<\/p>\n
(s) the Company has not entered into any material transaction or taken
\nany other material action outside the ordinary course of business or
\ninconsistent with its past practices; and<\/p>\n
(t) the Company has not agreed or committed to take any of the actions
\nreferred to in clauses “(c)” through “(s)” above.<\/p>\n
9.<\/p>\n
2.6 TITLE TO ASSETS<\/p>\n
(a) The Company owns, and has good, valid and marketable title to, all
\nassets purported to be owned by it, including: (i) all assets reflected on the
\nUnaudited Interim Balance Sheet; (ii) all assets referred to in Section 2.1(e),
\n2.7(b) and 2.9 and all of the Company’s rights under the Material Contracts (as
\ndefined in Section 2.10) and (iii) all other assets reflected in the Company’s
\nbooks and records as being owned by the Company. All of said assets are owned by
\nthe Company free and clear of any liens or other Encumbrances, except for (x)
\nany lien for current taxes not yet due and payable, and (y) minor liens that
\nhave arisen in the ordinary course of business and that do not (in any case or
\nin the aggregate) materially detract from the value of the assets subject
\nthereto or materially impair the operations of the Company.<\/p>\n
(b) The Company has good title to all assets that are material to the
\nbusiness of the Company and that are being leased or licensed to the Company.<\/p>\n
(c) All material items of equipment and other tangible assets owned by
\nor leased to the Company are adequate for the uses to which they are being put,
\nare in good condition and repair (ordinary wear and tear excepted) and are
\nadequate for the conduct of the Company’s business in the manner in which such
\nbusiness is currently being conducted.<\/p>\n
(d) The Company does not own any real property or any interest in real
\nproperty.<\/p>\n
2.7 BANK ACCOUNTS; RECEIVABLES.<\/p>\n
(a) Part 2.7(a) of the Disclosure Schedule provides accurate information
\nwith respect to each account maintained by or for the benefit of the Company at
\nany bank or other financial institution.<\/p>\n
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
\ncomplete breakdown and aging of all accounts receivable, notes receivable and
\nother receivables of the Company as of April 30, 1998. All existing accounts
\nreceivable of the Company (including those accounts receivable reflected on the
\nUnaudited Interim Balance Sheet that have not yet been collected and those
\naccounts receivable that have arisen since April 30, 1998 and have not yet been
\ncollected) (i) represent valid obligations of customers of the Company arising
\nfrom bona fide transactions entered into in the ordinary course of business,
\n(ii) are current and are currently expected to be collected in full when due,
\nwithout any counterclaim or set off (net of an allowance for doubtful accounts
\nnot to exceed $50,000 in the aggregate).<\/p>\n
2.8 FULL DISCLOSURE. This Agreement (including the Disclosure Schedule) does
\nnot, and the Closing Certificate will not, (i) contain any representation,
\nwarranty or information that is false or misleading with respect to any material
\nfact, or (ii) omit to state any material fact or necessary in order to make the
\nrepresentations, warranties and information contained and to be contained herein
\nand therein (in the light of the circumstances under which such representations,
\nwarranties and information were or will be made or provided) not false or
\nmisleading.<\/p>\n
10.<\/p>\n
2.9 PROPRIETARY ASSETS.<\/p>\n
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with respect
\nto each Company Proprietary Asset registered with any Governmental Body or for
\nwhich an application has been filed with any Governmental Body, (i) the title of
\nsuch Proprietary Asset, and (ii) the names of the jurisdictions covered by the
\napplicable registration or application. Section 2.9(a)(ii) of the Disclosure
\nSchedule identifies each Proprietary Asset licensed to the Company by any Person
\n(except for any Proprietary Asset that is licensed to the Company under any
\nthird party software license generally available to the public at a cost of less
\nthan $10,000), and identifies the license agreement under which such Proprietary
\nAsset is being licensed to the Company. The Company has good, valid and
\nmarketable title to all of the Company Proprietary Assets identified in Parts
\n2.9(a)(i) of the Disclosure Schedule, free and clear of all liens and other
\nEncumbrances, and has a valid right to use all Proprietary Assets identified in
\nPart 2.9(a)(iii) of the Disclosure Schedule. To the best of the Company’s
\nknowledge after reasonable investigation, except for copyrights, for which such
\nrepresentation is made without limitation by the Company’s knowledge, the
\nCompany is not obligated to make any payment to any Person for the use of any
\nCompany Proprietary Asset. The Company has not developed jointly with any other
\nPerson any Company Proprietary Asset with respect to which such other Person has
\nany rights.<\/p>\n
(b) The Company has taken all measures and precautions reasonably
\nnecessary to protect and maintain the confidentiality and secrecy of all Company
\nProprietary Assets (except Company Proprietary Assets whose value would be
\nunimpaired by public disclosure) and otherwise to maintain and protect the value
\nof all Company Proprietary Assets. The Company has not (other than pursuant to
\nlicense agreements identified in Part 2.10 of the Disclosure Schedule) disclosed
\nor delivered to any Person, or permitted the disclosure or delivery to any
\nPerson of, (i) the source code, or any portion or aspect of the source code, of
\nany Company Proprietary Asset, or (ii) the object code, or any portion or aspect
\nof the object code, of any Company Proprietary Asset.<\/p>\n
(c) To the best of the Company’s knowledge after reasonable
\ninvestigation, none of the Company Proprietary Assets infringes or conflicts
\nwith any Proprietary Asset owned or used by any other Person; except for
\ncopyrights, for which such representation is made without limitation by the
\nCompany’s knowledge. To the best of the Company’s knowledge after reasonable
\ninvestigation, the Company is not infringing, misappropriating or making any
\nunlawful use of, and the Company has not at any time infringed, misappropriated
\nor made any unlawful use of, or received any notice or other communication (in
\nwriting or otherwise) of any actual, alleged, possible or potential
\ninfringement, misappropriation or unlawful use of, any Proprietary Asset owned
\nor used by any other Person; except for copyrights, for which such
\nrepresentation is made without limitation by the Company’s knowledge. To the
\nbest of the knowledge of the Company, no other Person is infringing,
\nmisappropriating or making any unlawful use of, and no Proprietary Asset owned
\nor used by any other Person infringes or conflicts with, any Company Proprietary
\nAsset.<\/p>\n
(d) Each Company Proprietary Asset conforms in all material respects
\nwith any specification, documentation, performance standard, representation or
\nstatement made or provided with respect thereto by or on behalf of the Company.
\nThere has not been any claim by <\/p>\n
11.<\/p>\n
any customer or other Person alleging that any Company Proprietary Asset
\n(including each version thereof that has ever been licensed or otherwise made
\navailable by the Company to any Person) does not conform in all material
\nrespects with any specification, documentation, performance standard,
\nrepresentation or statement made or provided by or on behalf of the Company,
\nand, to the best of the knowledge of the Company, there is no basis for any such
\nclaim. The Company has established adequate reserves on the Unaudited Interim
\nBalance Sheet to cover costs associated with any obligations that the Company
\nmay have with respect to the correction or repair of programming errors or other
\ndefects in the Company Proprietary Assets.<\/p>\n
(e) To the best of the Company’s knowledge after reasonable
\ninvestigation, except for copyrights, for which such representation is made
\nwithout limitation by the Company’s knowledge, the Company Proprietary Assets
\nconstitute all the Proprietary Assets necessary to enable the Company to conduct
\nits business in the manner in which such business has been and is being
\nconducted. The Company has not licensed any of the Company Proprietary Assets to
\nany Person on an exclusive basis, and the Company has not entered into any
\ncovenant not to compete or Contract limiting its ability to exploit fully any of
\nits Proprietary Assets or to transact business in any market or geographical
\narea or with any Person.<\/p>\n
(f) All current and former employees of the Company have executed and
\ndelivered to the Company an agreement (containing no exceptions to or exclusions
\nfrom the scope of its coverage) that is substantially identical to the form of
\nConfidential Information and Invention Assignment Agreement previously delivered
\nto Parent, and all current and former consultants and independent contractors to
\nthe Company have executed and delivered to the Company an agreement (containing
\nno exceptions to or exclusions from the scope of its coverage) that is
\nsubstantially identical to the form of Consultant Confidential Information and
\nInvention Assignment Agreement previously delivered to Parent.<\/p>\n
2.10 CONTRACTS.<\/p>\n
(a) Part 2.10 of the Disclosure Schedule identifies the following
\ncompany contracts, each of which, except for the Company contracts listed in
\n(i), (ii) and (iii) below, has a value in excess of $50,000 (collectively, the
\n“Material Contracts”):<\/p>\n
(i) each Company Contract relating to the employment of, or the
\nperformance of services by, any employee, consultant or independent contractor;<\/p>\n
(ii) each Company Contract relating to the acquisition, transfer,
\nuse, development, sharing or license of any technology or any Proprietary Asset
\nexcept for licenses for off the shelf software;<\/p>\n
(iii) each Company Contract imposing any restriction on the
\nCompany’s right or ability (A) to compete with any other Person, (B) to acquire
\nany product or other asset or any services from any other Person, to sell any
\nproduct or other asset to or perform any services for any other Person or to
\ntransact business or deal in any other manner with any other Person, or (C) to
\ndevelop or distribute any technology;<\/p>\n
(iv) each Company Contract creating or involving any agency
\nrelationship, distribution arrangement or franchise relationship;<\/p>\n
12.<\/p>\n
(v) each Company Contract relating to the acquisition, issuance or
\ntransfer of any securities;<\/p>\n
(vi) each Company Contract relating to the creation of any
\nEncumbrance with respect to any material asset of the Company;<\/p>\n
(vii) each Company Contract involving or incorporating any guaranty,
\nany pledge, any performance or completion bond, any indemnity or any surety
\narrangement;<\/p>\n
(viii) each Company Contract creating or relating to any partnership
\nor joint venture or any sharing of revenues, profits, losses, costs or
\nliabilities;<\/p>\n
(ix) each Company Contract relating to the purchase or sale of any
\nproduct or other asset by or to, or the performance of any services by or for,
\nany Related Party (as defined in Section 2.18);<\/p>\n
(x) each Company Contract constituting or relating to a Government
\nContract or Government Bid;<\/p>\n
(xi) any other material Company Contract that was entered into
\noutside the ordinary course of business or was inconsistent with the Company’s
\npast practices;<\/p>\n
(xii) any other Company Contract that has a term of more than 60
\ndays and that may not be terminated by the Company (without penalty) within 60
\ndays after the delivery of a termination notice by the Company; and<\/p>\n
(xiii) any other Company Contract that contemplates or involves (A)
\nthe payment or delivery of cash or other consideration in an amount or having a
\nvalue in excess of $50,000 in the aggregate, or (B) the performance of services
\nhaving a value in excess of $50,000 in the aggregate.<\/p>\n
(b) The Company has delivered to Parent accurate and complete copies of
\nall written Contracts identified in Part 2.10 of the Disclosure Schedule,
\nincluding all amendments thereto. Part 2.10 of the Disclosure Schedule provides
\nan accurate description of the terms of each Company Contract that is not in
\nwritten form. Each Contract identified in Part 2.10 of the Disclosure Schedule
\nis valid and in full force and effect and is enforceable by the Company in
\naccordance with its terms, subject to (i) laws of general application relating
\nto bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
\ngoverning specific performance, injunctive relief and other equitable remedies.<\/p>\n
(c) The Company has not violated or breached, or committed any default
\nunder, any Company Contract, and, to the best of the knowledge of the Company,
\nno other Person has violated or breached, or committed any default under, any
\nCompany Contract.<\/p>\n
(d) To the best of the knowledge of the Company, no event has occurred,
\nand no circumstance or condition exists, that (with or without notice or lapse
\nof time) will, or could reasonably be expected to, (A) result in a violation or
\nbreach of any of the provisions of any Company Contract, (B) give any Person the
\nright to declare a default or exercise any remedy <\/p>\n
13.<\/p>\n
under any Company Contract, (C) give any Person the right to accelerate the
\nmaturity or performance of any Company Contract, or (D) give any Person the
\nright to cancel, terminate or modify any Company Contract.<\/p>\n
(e) Since December 31, 1997, the Company has not received any notice
\nor other communication regarding any actual or possible violation or breach of,
\nor default under, any Company Contract.<\/p>\n
(f) The Company has not waived any of its material rights under any
\nMaterial Contract.<\/p>\n
(g) No Person is renegotiating any amount paid or payable to the Company
\nunder any Material Contract or any other material term or provision of any
\nMaterial Contract.<\/p>\n
(h) The Contracts identified in Part 2.10 of the Disclosure Schedule
\ncollectively constitute all of the Contracts necessary to enable the Company to
\nconduct its business in the manner in which its business is currently being
\nconducted.<\/p>\n
2.11 LIABILITIES. The Company has no accrued, contingent or other liabilities
\nof any nature, either matured or unmatured (whether or not required to be
\nreflected in financial statements in accordance with generally accepted
\naccounting principles, and whether due or to become due), except for: (a)
\nliabilities identified as such in the “liabilities” column of the Unaudited
\nInterim Balance Sheet; (b) accounts payable or accrued salaries that have been
\nincurred by the Company since April 30, 1998 in the ordinary course of business
\nand consistent with the Company’s past practices; (c) liabilities under the
\nCompany Contracts identified in Part 2.10 of the Disclosure Schedule, to the
\nextent the nature and magnitude of such liabilities can be specifically
\nascertained by reference to the text of such Company Contracts.<\/p>\n
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and has at all times
\nsince December 31, 1995 been, in compliance with all applicable Legal
\nRequirements, except where the failure to comply with such Legal Requirements
\nhas not had and will not have a Material Adverse Effect on the Company. Since
\nDecember 31, 1995, the Company has not received any notice or other
\ncommunication from any Governmental Body regarding any actual or possible
\nviolation of, or failure to comply with, any Legal Requirement.<\/p>\n
2.13 GOVERNMENTAL AUTHORIZATIONS. The Governmental Authorizations held by the
\nCompany are valid and in full force and effect, and collectively constitute all
\nGovernmental Authorizations necessary to enable the Company to conduct its
\nbusiness in the manner in which its business is currently being conducted. The
\nCompany is, and at all times since December 31, 1995 has been, in compliance
\nwith the terms and requirements of the respective Governmental Authorizations
\nheld by the Company. Since December 31, 1995, the Company has not received any
\nnotice or other communication from any Governmental Body regarding (a) any
\nactual or possible violation of or failure to comply with any term or
\nrequirement of any Governmental Authorization, or (b) any actual or possible
\nrevocation, withdrawal, suspension, cancellation, termination or modification of
\nany Governmental Authorization.<\/p>\n
14.<\/p>\n
2.14 TAX MATTERS.<\/p>\n
(a) All Tax Returns required to be filed by or on behalf of the Company
\nwith any Governmental Body with respect to any taxable period ending on or
\nbefore the Closing Date (the “Company Returns”) (i) have been or will be filed
\non or before the applicable due date (including any extensions of such due
\ndate), and (ii) have been, or will be when filed, accurately and completely
\nprepared in all material respects in compliance with all applicable Legal
\nRequirements. All amounts shown on the Company Returns to be due on or before
\nthe Closing Date have been or will be paid on or before the Closing Date, and no
\nother Taxes are payable by the Company with respect to items or periods covered
\nby such Tax Returns (whether or not shown on or reportable on such Tax Returns)
\nor with respect to any period prior to the date of this Agreement. The Company
\nhas withheld and paid over all Taxes required to have been withheld and paid
\nover, and complied with all information reporting and backup withholding
\nrequirements, including maintenance of required records with respect thereto, in
\nconnection with amounts paid or owing to any employee, creditor, independent
\ncontractor, or other third party. There are no liens on any of the assets of the
\nCompany with respect to Taxes, other than liens for Taxes, not yet due and
\npayable. The Company has delivered to Parent accurate and complete copies of all
\nCompany Returns that are open to review by the Internal Revenue Service or other
\nGovernmental Body. The amount of the Company’s liability for unpaid Taxes for
\nall periods ending on or before April 30, 1998 does not, in the aggregate,
\nexceed the amount of the current liability accruals for Taxes reflected on the
\nUnaudited Interim Balance Sheet, and the amount of the Company’s liability for
\nunpaid Taxes for all periods ending on or before the Closing Date shall not, in
\nthe aggregate exceed the amount of the current liability accruals for Taxes as
\nsuch accruals are reflected on the Unaudited Interim Balance Sheet, as adjusted
\nfor operations and transactions in the ordinary course of business of the
\nCompany since the date of the Unaudited Interim Balance Sheet in accordance with
\npast custom and practice.<\/p>\n
(b) No Company Return relating to income Taxes has ever been examined or
\naudited by any Governmental Body. There have been no examinations or audits of
\nany Company Return. The Company has delivered to Parent accurate and complete
\ncopies of all audit reports and similar documents (to which the Company has
\naccess) relating to the Company Returns. No extension or waiver of the
\nlimitation period applicable to any of the Company Returns has been granted (by
\nthe Company or any other Person), and no such extension or waiver has been
\nrequested from the Company.<\/p>\n
(c) No claim or Proceeding is pending or has been threatened against or
\nwith respect to the Company in respect of any Tax. There are no unsatisfied
\nliabilities for Taxes (including liabilities for interest, additions to tax and
\npenalties thereon and related expenses) with respect to any notice of deficiency
\nor similar document received by the Company with respect to any Tax (other than
\nliabilities for Taxes asserted under any such notice of deficiency or similar
\ndocument which are being contested in good faith by the Company and with respect
\nto which adequate reserves for payment have been established). There are no
\nliens for Taxes upon any of the assets of the Company except liens for current
\nTaxes not yet due and payable. The Company has not entered into or become bound
\nby any agreement or consent pursuant to Section 341(f) of the Code. The Company
\nhas not been, and the Company will not be, required to include any adjustment in
\ntaxable income for any tax period (or portion thereof) pursuant to Section 481
\nor <\/p>\n
15.<\/p>\n
263A of the Code or any comparable provision under state or foreign Tax laws
\nas a result of transactions or events occurring, or accounting methods employed,
\nprior to the Closing.<\/p>\n
(d) There is no agreement, plan, arrangement or other Contract covering
\nany employee or independent contractor or former employee or independent
\ncontractor of the Company that, considered individually or considered
\ncollectively with any other such Contracts, will, or could reasonably be
\nexpected to, give rise directly or indirectly to the payment of any amount that
\nwould not be deductible pursuant to Section 280G or Section 162 of the Code. The
\nCompany is not, and has never been, a party to or bound by any tax indemnity
\nagreement, tax sharing agreement, tax allocation agreement or similar Contract.<\/p>\n
(e) Since October 1, 1989 the Company has always been, and will be
\nthrough the Closing Date, an S Corporation (or any similar, available California
\ntax treatment) for United States and California income tax purposes.<\/p>\n
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.<\/p>\n
(a) Part 2.15(a) of the Disclosure Schedule identifies each salary,
\nbonus, deferred compensation, incentive compensation, stock purchase, stock
\noption, severance pay, termination pay, hospitalization, medical, life or other
\ninsurance, supplemental unemployment benefits, profit-sharing, pension or
\nretirement plan, program or agreement (collectively, the “Plans”) sponsored,
\nmaintained, contributed to or required to be contributed to by the Company for
\nthe benefit of any employee of the Company (“Employee”), except for Plans which
\nwould not require the Company to make payments or provide benefits having a
\nvalue in excess of $25,000 in the aggregate.<\/p>\n
(b) The Company does not maintain, sponsor or contribute to, and, to the
\nbest of the knowledge of the Company, has not at any time in the past
\nmaintained, sponsored or contributed to, any employee pension benefit plan (as
\ndefined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
\nas amended (“ERISA”), whether or not excluded from coverage under specific
\nTitles or Subtitles of ERISA) for the benefit of Employees or former Employees
\n(a “Pension Plan”).<\/p>\n
(c) The Company maintains, sponsors or contributes only to those
\nemployee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
\nnot excluded from coverage under specific Titles or Subtitles of ERISA) for the
\nbenefit of Employees or former Employees which are described in Part 2.15(c) of
\nthe Disclosure Schedule (the “Welfare Plans”), none of which is a multi-employer
\nplan (within the meaning of Section 3(37) of ERISA).<\/p>\n
(d) With respect to each Plan, the Company has delivered to Parent:<\/p>\n
(i) an accurate and complete copy of such Plan (including all
\namendments thereto);<\/p>\n
(ii) an accurate and complete copy of the annual report, if required
\nunder ERISA, with respect to such Plan for the last two years;<\/p>\n
16.<\/p>\n
(iii) an accurate and complete copy of the most recent summary plan
\ndescription, together with each Summary of Material Modifications, if required
\nunder ERISA, with respect to such Plan, and all material employee communications
\nrelating to such Plan;<\/p>\n
(iv) if such Plan is funded through a trust or any third party
\nfunding vehicle, an accurate and complete copy of the trust or other funding
\nagreement (including all amendments thereto) and accurate and complete copies
\nthe most recent financial statements thereof;<\/p>\n
(v) accurate and complete copies of all Contracts relating to such
\nPlan, including service provider agreements, insurance contracts, minimum
\npremium contracts, stop-loss agreements, investment management agreements,
\nsubscription and participation agreements and recordkeeping agreements; and<\/p>\n
(vi) an accurate and complete copy of the most recent determination
\nletter received from the Internal Revenue Service with respect to such Plan (if
\nsuch Plan is intended to be qualified under Section 401(a) of the Code).<\/p>\n
(e) The Company is not required to be, and, to the best of the knowledge of
\nthe Company, has never been required to be, treated as a single employer with
\nany other Person under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m)
\nor (o) of the Code. The Company has never been a member of an “affiliated
\nservice group” within the meaning of Section 414(m) of the Code. To the best of
\nthe knowledge of the Company, the Company has never made a complete or partial
\nwithdrawal from a multi-employer plan, as such term is defined in Section 3(37)
\nof ERISA, resulting in “withdrawal liability,” as such term is defined in
\nSection 4201 of ERISA (without regard to subsequent reduction or waiver of such
\nliability under either Section 4207 or 4208 of ERISA).<\/p>\n
(f) The Company does not have any plan or commitment to create any
\nadditional Welfare Plan or any Pension Plan, or to modify or change any existing
\nWelfare Plan or Pension Plan (other than to comply with applicable law) in a
\nmanner that would affect any Employee.<\/p>\n
(g) No Welfare Plan provides death, medical or health benefits (whether or
\nnot insured) with respect to any current or former Employee after any such
\nEmployee’s termination of service (other than (i) benefit coverage mandated by
\napplicable law, including coverage provided pursuant to Section 4980B of the
\nCode, (ii) deferred compensation benefits accrued as liabilities on the
\nUnaudited Interim Balance Sheet, and (iii) benefits the full cost of which are
\nborne by current or former Employees (or the Employees’ beneficiaries)).<\/p>\n
(h) With respect to each of the Welfare Plans constituting a group health
\nplan within the meaning of Section 4980B(g)(2) of the Code, the provisions of
\nSection 4980B of the Code (“COBRA”) have been complied with in all material
\nrespects.<\/p>\n
(i) Each of the Plans has been operated and administered in all material
\nrespects in accordance with applicable Legal Requirements, including but not
\nlimited to ERISA and the Code.<\/p>\n
17.<\/p>\n
(j) Each of the Plans intended to be qualified under Section 401(a) of the
\nCode has received a favorable determination from the Internal Revenue Service,
\nand the Company is not aware of any reason why any such determination letter
\nshould be revoked.<\/p>\n
(k) Neither the execution, delivery or performance of this Agreement, nor
\nthe consummation of the Transaction or any of the other transactions
\ncontemplated by this Agreement, will result in any payment (including any bonus,
\ngolden parachute or severance payment) to any current or former Employee or
\ndirector of the Company (whether or not under any Plan), or materially increase
\nthe benefits payable under any Plan, or result in any acceleration of the time
\nof payment or vesting of any such benefits.<\/p>\n
(l) Part 2.15(l) of the Disclosure Schedule contains a list of all salaried
\nemployees of the Company as of the date of this Agreement, and correctly
\nreflects, in all material respects, their salaries, any other compensation
\npayable to them (including compensation payable pursuant to bonus, deferred
\ncompensation or commission arrangements), their dates of employment and their
\npositions. The Company is not a party to any collective bargaining contract or
\nother Contract with a labor union involving any of its Employees. All of the
\nCompany’s employees are “at will” employees.<\/p>\n
(m) The Company is in compliance in all material respects with all
\napplicable Legal Requirements and Contracts relating to employment, employment
\npractices, wages, bonuses and terms and conditions of employment, including
\nemployee compensation matters.<\/p>\n
(n) The Company has good labor relations, and the Company has no reason to
\nbelieve that (i) the consummation of the Transaction or any of the other
\ntransactions contemplated by this Agreement will have a material adverse effect
\non the Company’s labor relations, or (ii) any of the Company’s employees intends
\nto terminate his or her employment with the Company.<\/p>\n
2.16 ENVIRONMENTAL MATTERS. The Company is in compliance in all material
\nrespects with all applicable Environmental Laws, which compliance includes the
\npossession by the Company of all permits and other Governmental Authorizations
\nrequired under applicable Environmental Laws, and compliance with the terms and
\nconditions thereof. The Company has not received any notice or other
\ncommunication (in writing or otherwise), whether from a Governmental Body,
\ncitizens group, employee or otherwise, that alleges that the Company is not in
\ncompliance with any Environmental Law, and, to the best of the knowledge of the
\nCompany and Shareholders, there are no circumstances that may prevent or
\ninterfere with the Company’s compliance with any Environmental Law in the
\nfuture. To the best of the knowledge of the Company, no current or prior owner
\nof any property leased or controlled by the Company has received any notice or
\nother communication (in writing or otherwise), whether from a Government Body,
\ncitizens group, employee or otherwise, that alleges that such current or prior
\nowner or the Company is not in compliance with any Environmental Law. (For
\npurposes of this Section 2.16: (i) “Environmental Law” means any federal, state,
\nlocal or foreign Legal Requirement relating to pollution or protection of human
\nhealth or the environment (including ambient air, surface water, ground water,
\nland surface or subsurface strata), including any law or regulation relating to
\nemissions, discharges, releases or threatened releases of Materials of
\nEnvironmental Concern, or otherwise relating to the manufacture, processing,
\ndistribution, use, <\/p>\n
18.<\/p>\n
treatment, storage, disposal, transport or handling of Materials of
\nEnvironmental Concern; and (ii) “Materials of Environmental Concern” include
\nchemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
\npetroleum products and any other substance that is now or hereafter regulated by
\nany Environmental Law or that is otherwise a danger to health, reproduction or
\nthe environment.)<\/p>\n
2.17 INSURANCE. Part 2.17 of the Disclosure Schedule identifies all insurance
\npolicies maintained by, at the expense of or for the benefit of the Company and
\nidentifies any material claims made thereunder, and the Company has delivered to
\nParent accurate and complete copies of the insurance policies identified on Part
\n2.17 of the Disclosure Schedule. Each of the insurance policies identified in
\nPart 2.17 of the Disclosure Schedule is in full force and effect. Since December
\n31, 1995, the Company has not received any notice or other communication
\nregarding any actual or possible (a) cancellation or invalidation of any
\ninsurance policy, (b) refusal of any coverage or rejection of any claim under
\nany insurance policy, or (c) material adjustment in the amount of the premiums
\npayable with respect to any insurance policy.<\/p>\n
2.18 RELATED PARTY TRANSACTIONS. Since December 31, 1994, no Related Party:
\n(a) has had any direct or indirect interest in any material asset used in or
\notherwise relating to the business of the Company; (b) has been indebted to the
\nCompany; (c) has entered into, or has had any direct or indirect financial
\ninterest in, any Contract, transaction or business dealing involving the
\nCompany; (d) has competed, directly or indirectly, with the Company; and (e) has
\nany claim or right against the Company (other than rights under company Options
\nand rights to receive compensation for services performed as an employee of the
\nCompany). (For purposes of the Section 2.18 each of the following shall be
\ndeemed to be a “Related Party”: (i) each of the Shareholders; (ii) each holder
\nof Company Options or Company DCUs; (iii) each individual who is, or who has at
\nany time since December 31, 1994 been, an officer or director of the Company;
\n(iv) each member of the immediate family of each of the individuals referred to
\nin clauses “(i)” through “(iii)” above; and (v) any trust or other Entity (other
\nthan the Company) in which any one of the individuals referred to in clauses
\n“(i)” through “(iv)” above holds (or in which more than one of such individuals
\ncollectively hold), beneficially or otherwise, a material voting, proprietary or
\nequity interest.)<\/p>\n
2.19 LEGAL PROCEEDINGS; ORDERS.<\/p>\n
(a) There is no pending Legal Proceeding, and (to the best of the
\nknowledge of the Company) no Person has threatened to commence any Legal
\nProceeding: (i) that involves the Company or any of the assets owned or used by
\nthe Company or any Person whose liability the Company has or may have retained
\nor assumed, either contractually or by operation of law; or (ii) that
\nchallenges, or that may have the effect of preventing, delaying, making illegal
\nor otherwise interfering with, the Transaction or any of the other transactions
\ncontemplated by this Agreement. To the best of the knowledge of the Company, no
\nevent has occurred, and no claim, dispute or other condition or circumstance
\nexists, that will, or that could reasonably be expected to, give rise to or
\nserve as a basis for the commencement of any such Legal Proceeding.<\/p>\n
(b) No Legal Proceeding has ever been commenced by or has ever been
\npending against the Company.<\/p>\n
19.<\/p>\n
(c) There is no order, writ, injunction, judgment or decree to which the
\nCompany, or any of the assets owned or used by the Company, is subject. None of
\nthe Shareholders is subject to any order, writ, injunction, judgment or decree
\nthat relates to the Company’s business or to any of the assets owned or used by
\nthe Company. To the best of the knowledge of the Company, no officer or other
\nemployee of the Company is subject to any order, writ, injunction, judgment or
\ndecree that prohibits such officer or other employee from engaging in or
\ncontinuing any conduct, activity or practice relating to the Company’s business.<\/p>\n
2.20 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the absolute
\nand unrestricted right, power and authority to enter into and to perform its
\nobligations under this Agreement and the Escrow Agreement; and the execution,
\ndelivery and performance by the Company of this Agreement and the Escrow
\nAgreement have been duly authorized by all necessary action on the part of the
\nCompany and its board of directors. This Agreement and the Escrow Agreement
\nconstitutes the legal, valid and binding obligation of the Company, enforceable
\nagainst the Company in accordance with its terms, subject to (i) laws of general
\napplication relating to bankruptcy, insolvency and the relief of debtors, and
\n(ii) rules of law governing specific performance, injunctive relief and other
\nequitable remedies.<\/p>\n
2.21 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution, delivery or
\nperformance of this Agreement or any of the other agreements referred to in
\nthis Agreement, nor (2) the consummation of the Transaction or any of the
\nother transactions contemplated by this Agreement, will directly or indirectly
\n(with or without notice or lapse of time):<\/p>\n
(a) contravene, conflict with or result in a violation of (i) any of the
\nprovisions of the Company’s articles of incorporation or bylaws, or (ii) any
\nresolution adopted by the Company’s Shareholders, the Company’s board of
\ndirectors or any committee of the Company’s board of directors;<\/p>\n
(b) contravene, conflict with or result in a violation of, or give any
\nGovernmental Body or other Person the right to challenge any of the transactions
\ncontemplated by this Agreement or to exercise any remedy or obtain any relief
\nunder, any Legal Requirement or any order, writ, injunction, judgment or decree
\nto which the Company, or any of the assets owned or used by the Company, is
\nsubject;<\/p>\n
(c) contravene, conflict with or result in a violation of any of the
\nterms or requirements of, or give any Governmental Body the right to revoke,
\nwithdraw, suspend, cancel, terminate or modify, any Governmental Authorization
\nthat is held by the Company or that otherwise relates to the Company’s business
\nor to any of the assets owned or used by the Company;<\/p>\n
(d) contravene, conflict with or result in a violation or breach of, or
\nresult in a default under, any provision of any Company Contract that is or
\nwould constitute a Material Contract, or give any Person the right to (i)
\ndeclare a default or exercise any remedy under any such Company Contract, (ii)
\naccelerate the maturity or performance of any such Company Contract, or (iii)
\ncancel, terminate or modify any such Company Contract;<\/p>\n
20.<\/p>\n
(e) result in the imposition or creation of any lien or other
\nEncumbrance upon or with respect to any asset owned or used by the Company
\n(except for minor liens that will not, in any case or in the aggregate,
\nmaterially detract from the value of the assets subject thereto or materially
\nimpair the operations of the Company); or<\/p>\n
(f) result in the imposition or creation of any lien or other
\nEncumbrance upon or with respect to the Company Common Stock (except for minor
\nliens that will not, in any case or in the aggregate, materially detract from
\nthe value thereof).<\/p>\n
The Company is not and will not be required to make any filing with or give any
\nnotice to, or to obtain any Consent from, any Person in connection with (x) the
\nexecution, delivery or performance of this Agreement or any of the other
\nagreements referred to in this Agreement, or (y) the consummation of the
\nTransaction or any of the other transactions contemplated by this Agreement.<\/p>\n
2.22 TITLE TO SECURITIES. The sale and delivery of the shares of Company
\nCommon Stock as contemplated by this Agreement are not subject to any preemptive
\nright, right of first refusal, right of first offer or similar right. Upon such
\nsale, Parent will acquire the Company Common Stock free and clear of any
\nEncumbrance (other than restrictions on transferability expressly set forth in
\napplicable Federal or state securities laws).<\/p>\n
2.23 SHAREHOLDER AUTHORITY; BINDING NATURE OF AGREEMENT. Each of the
\nShareholders has the absolute and unrestricted right, power and authority to
\nenter, into execute and deliver and to perform its obligations under this
\nAgreement and the Escrow Agreement. This Agreement and the Escrow Agreement
\nconstitutes the legal, valid and binding obligation of each of the Shareholders
\nenforceable against each of the Shareholders in accordance with its terms,
\nsubject to (i) laws of general application relating to bankruptcy, insolvency
\nand the relief of debtors, and (ii) rules of law governing specific performance,
\ninjunctive relief and other equitable remedies.<\/p>\n
2.24 SHAREHOLDER LEGAL PROCEEDING. There is no action, proceeding or
\ninvestigation pending or overtly threatened against any of the Shareholders
\nbefore any court or administrative agency that questions the validity of the
\nAgreement or the Escrow Agreement.<\/p>\n
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT<\/p>\n
Parent represents and warrants to the Company and the Shareholders as
\nfollows:<\/p>\n
3.1 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent has the absolute and
\nunrestricted right, power and authority to perform its obligations under this
\nAgreement; and the execution, delivery and performance by Parent of this
\nAgreement have been duly authorized by all necessary action by Parent and its
\nboards of directors. No vote of Parent’s shareholders is needed to approve the
\nTransaction. This Agreement constitutes the legal, valid and binding obligation
\nof Parent, enforceable against it in accordance with its terms, subject to (i)
\nlaws of general application relating to bankruptcy, insolvency and the relief of
\ndebtors, and (ii) rules of law governing specific performance, injunctive relief
\nand other equitable remedies.<\/p>\n
21.<\/p>\n
3.2 ACQUISITION OF COMPANY COMMON STOCK. Parent is not acquiring the Company
\nCommon Stock with the current intention of making a public distribution thereof.<\/p>\n
3.3 REGISTRATION OF FORM S-8. Parent has registered the shares of Parent
\nCommon Stock reserved under the Parent’s Stock Option Plan with the Securities
\nand Exchange Commission pursuant to a Registration Statement on Form S-8 and
\nsuch registration statement is currently effective.<\/p>\n
SECTION 4. CERTAIN COVENANTS OF THE COMPANY AND THE SHAREHOLDERS<\/p>\n
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
\nAgreement through the Closing Date (the “Pre-Closing Period”), the Company
\nshall, and shall cause its Representatives to: (a) provide Parent and Parent’s
\nRepresentatives with reasonable access to the Company’s Representatives,
\nofficers, and assets and to all existing books, records, Tax Returns, work
\npapers and other documents and information relating to the Company; and (b)
\nprovide Parent and Parent’s Representatives with copies of such existing books,
\nrecords, Tax Returns, work papers and other documents and information relating
\nto the Company, and with such additional financial, operating and other data and
\ninformation regarding the Company, as Parent may reasonably request.<\/p>\n
4.2 OPERATION OF THE COMPANY’S BUSINESS. During the Pre-Closing Period:<\/p>\n
(a) the Company shall conduct its business and operations in the
\nordinary course and in substantially the same manner as such business and
\noperations have been conducted prior to the date of this Agreement;<\/p>\n
(b) the Company shall use reasonable efforts to preserve intact its
\ncurrent business organization, keep available the services of its current
\nofficers and employees and maintain its relations and good will with all
\nsuppliers, customers, landlords, creditors, employees and other Persons having
\nbusiness relationships with the Company;<\/p>\n
(c) the Company shall keep in full force all insurance policies
\nidentified in Part 2.17 of the Disclosure Schedule;<\/p>\n
(d) the Company shall cause its officers to report regularly (but in no
\nevent less frequently than weekly) to Parent concerning the status of the
\nCompany’s business;<\/p>\n
(e) the Company shall not declare, accrue, set aside or pay any dividend
\nor make any other distribution in respect of any shares of capital stock, and
\nshall not repurchase, redeem or otherwise reacquire any shares of capital stock
\nor other securities (except that the Company may repurchase Company Common Stock
\nfrom former employees pursuant to the terms of existing restricted stock
\npurchase agreements); provided, however, that, subject to Section 5.5 and to
\nprior review by Parent or its Representative, the Company may pay a cash
\ndividend to the Company’s Shareholders for the sole purpose of allowing such
\nShareholders to pay federal and state taxes directly associated with and arising
\nout of the Company’s operations for the period beginning on January 1, 1998 and
\nending on the Closing Date;<\/p>\n
22.<\/p>\n
(f) the Company shall not sell, issue or authorize the issuance of (i)
\nany capital stock or other security, (ii) any option or right to acquire any
\ncapital stock or other security, or (iii) any instrument convertible into or
\nexchangeable for any capital stock or other security;<\/p>\n
(g) the Company shall not amend or waive any of its rights under, or
\npermit the acceleration of vesting under, (i) any provision of its DCU Plan,
\n(ii) any provision of any agreement evidencing any outstanding Company Option or
\nCompany DCU, or (iii) any provision of any restricted stock purchase agreement;<\/p>\n
(h) the Company shall not sell, issue or authorize the issuance of any
\nCompany DCU, any option or right to acquire any Company DCU or any instrument
\nconvertible into or exchangeable for any Company DCU.<\/p>\n
(i) neither the Company nor any of the Shareholders shall amend or
\npermit the adoption of any amendment to the Company’s articles of incorporation
\nor bylaws, or effect or permit the Company to become a party to any Acquisition
\nTransaction, recapitalization, reclassification of shares, stock split, reverse
\nstock split or similar transaction;<\/p>\n
(j) the Company shall not form any subsidiary or acquire any equity
\ninterest or other interest in any other Entity;<\/p>\n
(k) the Company shall not make any capital expenditure, except for
\ncapital expenditures that, when added to all other capital expenditures made on
\nbehalf of the Company during the Pre-Closing Period, do not exceed $100,000 per
\nmonth;<\/p>\n
(l) the Company shall not (i) enter into, or permit any of the assets
\nowned or used by it to become bound by, any Contract that is or would constitute
\na Material Contract, or (ii) amend or prematurely terminate, or waive any
\nmaterial right or remedy under, any such Contract; in each case outside of the
\nCompany’s ordinary course of business;<\/p>\n
(m) the Company shall not (i) acquire, lease or license any right or
\nother asset from any other Person, (ii) sell or otherwise dispose of, or lease
\nor license, any right or other asset to any other Person, or (iii) waive or
\nrelinquish any right, except for assets acquired, leased, licensed or disposed
\nof by the Company pursuant to Contracts that are not Material Contracts;<\/p>\n
(n) the Company shall not (i) lend money to any Person (except that the
\nCompany may make routine travel advances to employees in the ordinary course of
\nbusiness and may, consistent with its past practices, allow employees to acquire
\nCompany Common Stock in exchange for promissory notes upon exercise of Company
\nOptions), (ii) incur or guarantee any indebtedness for borrowed money (except
\nthat the Company may make routine borrowings in the ordinary course of business
\nunder its line of credit with Union Bank), or (iii) repay or forgive any
\nindebtedness owed to any Related Party;<\/p>\n
(o) the Company shall not (i) establish, adopt or amend any Plans, (ii)
\npay any bonus or make any profit-sharing payment, cash incentive payment or
\nsimilar payment to, or increase the amount of the wages, salary, commissions,
\nfringe benefits or other compensation or <\/p>\n
23.<\/p>\n
remuneration payable to, any of its directors, officers or employees, or (iii)
\nhire any new employee whose aggregate annual compensation is expected to
\nexceed $100,000;<\/p>\n
(p) the Company shall not change any of its methods of accounting or
\naccounting practices in any material respect;<\/p>\n
(q) the Company shall not make any Tax election;<\/p>\n
(r) the Company shall not commence or settle any material Legal
\nProceeding;<\/p>\n
(s) the Company shall not agree or commit to take any of the actions
\ndescribed in clauses “(e)” through “(r)” above.<\/p>\n
Notwithstanding the foregoing, the Company may take any action described in
\nclauses “(e)” through “(r)” above if Parent gives its prior written consent to
\nthe taking of such action by the Company, which consent will not be unreasonably
\nwithheld (it being understood that Parent’s withholding of consent to any action
\nwill not be deemed unreasonable if Parent determines in good faith that the
\ntaking of such action would not be in the best interests of Parent or would not
\nbe in the best interests of the Company).<\/p>\n
4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.<\/p>\n
(a) During the Pre-Closing Period, the Company shall promptly notify
\nParent in writing of:<\/p>\n
(i) the discovery by the Company of any event, condition, fact or
\ncircumstance that occurred or existed on or prior to the date of this Agreement
\nand that caused or constitutes an inaccuracy in or breach of any representation
\nor warranty made by the Company or any of the Shareholders in this Agreement;<\/p>\n
(ii) any event, condition, fact or circumstance that occurs, arises
\nor exists after the date of this Agreement and that would cause or constitute an
\ninaccuracy in or breach of any representation or warranty made by the Company or
\nany of the Shareholders in this Agreement if (A) such representation or warranty
\nhad been made as of the time of the occurrence, existence or discovery of such
\nevent, condition, fact or circumstance, or (B) such event, condition, fact or
\ncircumstance had occurred, arisen or existed on or prior to the date of this
\nAgreement;<\/p>\n
(iii) any breach of any covenant or obligation of the Company or any
\nof the Shareholders; and<\/p>\n
(iv) any event, condition, fact or circumstance that would make the
\ntimely satisfaction of any of the conditions set forth in Section 6 or Section 7
\nimpossible or unlikely.<\/p>\n
(b) If any event, condition, fact or circumstance that is required to be
\ndisclosed pursuant to Section 4.3(a) requires any change in the Disclosure
\nSchedule, or if any such event, condition, fact or circumstance would require
\nsuch a change assuming the Disclosure <\/p>\n
24.<\/p>\n
Schedule were dated as of the date of the occurrence, existence or discovery of
\nsuch event, condition, fact or circumstance, then the Company shall promptly
\ndeliver to Parent an update to the Disclosure Schedule specifying such change.
\nAt Closing, if Parent agrees to close this Transaction after receiving the
\nupdates in this Section 4.3, then Parent shall be deemed to have waived the
\nclosing condition in Section 6.1 as to the updates in this Section 4.3.<\/p>\n
4.4 NO NEGOTIATION. During the Pre-Closing Period, neither the Company nor
\nany of the Shareholders shall, and the Company shall cause its Representatives
\nnot to, directly or indirectly:<\/p>\n
(a) solicit or encourage the initiation of any inquiry, proposal or
\noffer from any Person (other than Parent) relating to a possible Acquisition
\nTransaction;<\/p>\n
(b) participate in any discussions or negotiations or enter into any
\nagreement with, or provide any non-public information to, any Person (other than
\nParent) relating to or in connection with a possible Acquisition Transaction; or<\/p>\n
(c) consider, entertain or accept any proposal or offer from any Person
\n(other than Parent) relating to a possible Acquisition Transaction.<\/p>\n
4.5 CODE SECTION 338<\/p>\n
(a) (i) The parties agree that, for federal tax purposes, the purchase
\nof the Company Common Stock shall be treated as a purchase and sale of the
\nassets of the Company in accordance with the provisions of Code Section 338(a)
\nand 338(h)(10). The Shareholders agree to make timely elections pursuant to Code
\nSections 338(g) and 338(h)(10) in accordance with all applicable law and
\nregulations and in accordance with the provisions of this Section 4.5.<\/p>\n
(ii) The parties agree that, for state income tax purposes, the purchase of
\nthe Company Common Stock shall be treated as a purchase and sale of the assets
\nof the Company to the extent permitted by applicable state statutes
\nsubstantially similar to the provisions of Code Sections 338(g) and 338(h)(10).
\nThe Shareholders agree to make timely elections pursuant to the statutory
\nprovisions referred to in the preceding sentence in accordance with all
\napplicable law and regulations and in accordance with the provisions of this
\nSection 4.5.<\/p>\n
(b) Subject to Section 9, Parent shall pay any and all Taxes up to
\n$75,000 assessed against the Company attributable to the recognition of income
\n(including, without limitation, taxes associated with the Company’s “built-in
\ngain” under Code Section 1374) from the treatment, pursuant to the elections
\ndescribed in Sections 4.5(a)(i) and (ii), of the purchase of the Company Common
\nStock as a purchase and sale of the assets of the Company.<\/p>\n
(c) For purposes of this Agreement, references to elections under state
\nstatutes substantially similar to Code Sections 338(g) and 338(h)(10) include
\nany elections deemed to have been made for state Tax purposes by virtue of
\nhaving made elections under Code Sections 338(g) and\/or 338(h)(10).<\/p>\n
(d) Parent shall prepare Internal Revenue Service Form 8023, the
\nrequired schedules thereto, and all requisite State forms and schedules (the
\n“Forms”) providing for the <\/p>\n
25.<\/p>\n
elections described in Section 4.5(a)(i) and\/or (ii) with respect to the
\nCompany. Parent shall request from the Shareholders all information necessary to
\ncomplete the Forms and the Shareholders shall provide Parent any such
\ninformation no later than twenty (20) days following such request. Each Form
\nshall be provided to the Shareholders at least thirty (30) days prior to the
\ndate it is to be filed by Parent. If the Shareholders reasonably determine that
\nchanges or supplements are required to a Form, the Shareholders and Parent shall
\nendeavor promptly to agree on any such changes. The Shareholders shall execute
\nany requisite Forms and deliver such Forms to Parent within thirty (30) days
\nafter the receipt of such Forms by the Shareholders.<\/p>\n
(e) If, as a result of the elections referred to in this Section 4.5,
\nthe Taxes (excluding Taxes associated with the Company’s “built-in gain”)
\npayable by the Shareholders resulting from the payment of the Purchase Price
\nincrease from that which they otherwise would have been, then Parent will make
\nan additional payment for the Shares such that the amount received by the
\nShareholders as Purchase Price and under this Section 4.5(e), less all Taxes
\nthereon (computed at the highest relevant marginal income tax rates applicable
\nto individuals), equals the amount of the Purchase Price, less all Taxes
\n(computed at such marginal tax rates) that would have been paid in the absence
\nof such elections, and less $75,000.<\/p>\n
4.6 BRIDGE FINANCING. At the request of the Company, the Parent shall loan
\nthe Company up to $400,000 for one year at an annual interest rate equal to the
\nrate of interest publicly announced by Bank of America, N.T. & S.A. as its
\nprime, base or reference rate (as adjusted quarterly) plus 2%. Interest payments
\nshall be paid by the Company to the Parent monthly.<\/p>\n
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES<\/p>\n
5.1 FILINGS AND CONSENTS. As promptly as practicable after the execution of
\nthis Agreement, each party to this Agreement (a) shall make all filings (if any)
\nand give all notices (if any) required to be made and given by such party in
\nconnection with the Transaction and the other transactions contemplated by this
\nAgreement, and (b) shall use all commercially reasonable efforts to obtain all
\nConsents (if any) required to be obtained (pursuant to any applicable Legal
\nRequirement or Contract, or otherwise) by such party in connection with the
\nTransaction and the other transactions contemplated by this Agreement. Without
\nlimiting the generality of the foregoing, the Company and Parent shall, promptly
\nafter the date of this Agreement, prepare and file the notifications required
\nunder the HSR Act in connection with the Transaction. The Company and Parent
\nshall respond as promptly as practicable to (i) any inquiries or requests
\nreceived from the Federal Trade Commission or the Department of Justice for
\nadditional information or documentation and (ii) any inquiries or requests
\nreceived from any state attorney general or other Governmental Body in
\nconnection with antitrust or related matters. Each of the Company and Parent
\nshall (1) give the other party prompt notice of the commencement of any Legal
\nProceeding by or before any Governmental Body with respect to the Transaction or
\nany of the other transactions contemplated by this Agreement, (2) keep the other
\nparty informed as to the status of any such Legal Proceeding, and (3) promptly
\ninform the other party of any communication to or from the Federal Trade
\nCommission, the Department of Justice or any other Governmental Body regarding
\nthe Transaction. The Company and Parent will consult and cooperate with one
\nanother, and will consider in good faith the views of one another, in connection
\nwith any analysis, appearance, presentation, memorandum, brief, argument,
\nopinion <\/p>\n
26.<\/p>\n
or proposal made or submitted in connection with any Legal Proceeding under or
\nrelating to the HSR Act or any other federal or state antitrust or fair trade
\nlaw. In addition, except as may be prohibited by any Governmental Body or by any
\nLegal Requirement, in connection with any Legal Proceeding under or relating to
\nthe HSR Act or any other federal or state antitrust or fair trade law or any
\nother similar Legal Proceeding, each of the Company and Parent agrees to permit
\nauthorized Representatives of the other party to be present at each meeting or
\nconference relating to any such Legal Proceeding and to have access to and be
\nconsulted in connection with any document, opinion or proposal made or submitted
\nto any Governmental Body in connection with any such Legal Proceeding. The
\nCompany shall (upon request) promptly deliver to Parent a copy of each such
\nfiling made, each such notice given and each such Consent obtained by the
\nCompany.<\/p>\n
5.2 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) neither party
\nshall (and neither party shall permit any of its Representatives to) issue any
\npress release or make any public statement regarding this Agreement or the
\nTransaction, or regarding any of the other transactions contemplated by this
\nAgreement, without the other parties’ prior written consent, and (b) each party
\nwill consult with the other party prior to issuing any press release or making
\nany public statement regarding the Transaction.<\/p>\n
5.3 BEST EFFORTS. During the Pre-Closing Period, (a) the Company and the
\nShareholders shall use their best efforts to cause the conditions set forth in
\nSection 6 to be satisfied on a timely basis, and (b) Parent shall use their best
\nefforts to cause the conditions set forth in Section 7 to be satisfied on a
\ntimely basis.<\/p>\n
5.4 NONCOMPETITION AGREEMENTS. At or prior to the Closing, each of the
\nShareholders identified on Exhibit C shall execute and deliver to the Company
\nand Parent a Noncompetition Agreement in substantially the form of Exhibit D.
\nThe Company shall use all commercially reasonable efforts to cause each of the
\nother individuals identified on Exhibit C to execute and deliver to the Company
\nand Parent, at the Closing, a Noncompetition Agreement substantially in the form
\nof Exhibit D.<\/p>\n
5.5 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to Parent a
\nstatement (in such form as may be reasonably requested by counsel to Parent)
\nconforming to the requirements of Section 1.897 – 2(h)(1)(i) of the United
\nStates Treasure Regulations, and (b) the Company shall deliver to the Internal
\nRevenue Service the notification required under Section 1.897 – 2(h)(2) of the
\nUnited States Treasury Regulations.<\/p>\n
5.6 GENERAL RELEASE. At the Closing, each of the Shareholders shall execute
\nand deliver to the Company a General Release in the form of Exhibit E. <\/p>\n
5.7 TERMINATION OF 401(K) PLAN. Prior to the Closing, the Company shall
\nterminate its 401(k) plan.<\/p>\n
5.8 COMPANY OPTIONS. The Company shall use all commercially reasonable
\nefforts to cause each holder of Company Options to agree to convert such Company
\nOptions into New Parent Options in Section 1.5(a).<\/p>\n
27.<\/p>\n
5.9 COMPANY DCU PLAN. Prior to the Closing, the Company shall terminate the
\nDCU Plan and shall use all commercially reasonable efforts to cause the
\nAdministrative Committee for the DCU Plan to take appropriate action to convert
\noutstanding Company DCUs into New Parent Options based on the Applicable
\nFraction, in the manner described in Section 1.5(b), which action shall include
\n(without limitation) a determination by the Administrative Committee that such
\nNew Parent Options constitute “equivalent or better value in entitlements” from
\nParent (within the meaning of the DCU Plan).<\/p>\n
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT<\/p>\n
The obligations of Parent to effect the Transaction and otherwise
\nconsummate the transactions contemplated by this Agreement are subject to the
\nsatisfaction or waiver, at or prior to the Closing, of each of the following
\nconditions:<\/p>\n
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and warranties
\nmade by the Company and the Shareholders in this Agreement and in each of the
\nother agreements and instruments delivered to Parent in connection with the
\ntransactions contemplated by this Agreement shall have been accurate in all
\nmaterial respects as of the date of this Agreement (without giving effect to any
\n“Material Adverse Effect” or other materiality qualifications, or any similar
\nqualifications, contained or incorporated directly or indirectly in such
\nrepresentations and warranties), and shall be accurate in all material respects
\nas of the Closing Date as if made at the Closing Date (without giving effect to
\nany update to the Disclosure Schedule and without giving effect to any “Material
\nAdverse Effect” or other materiality qualifications, or any similar
\nqualifications, contained or incorporated directly or indirectly in such
\nrepresentations and warranties).<\/p>\n
6.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that the
\nCompany and the Shareholders are required to comply with or to perform at or
\nprior to the Closing shall have been complied with and performed in all material
\nrespects.<\/p>\n
6.3 CONSENTS. All Consents required to be obtained in connection with the
\nTransaction and the other transactions contemplated by this Agreement (including
\nthe Consents identified in Part 2.21 of the Disclosure Schedule) shall have been
\nobtained and shall be in full force and effect.<\/p>\n
6.4 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have received the
\nfollowing agreements and documents, each of which shall be in full force and
\neffect:<\/p>\n
(a) Noncompetition Agreements substantially in the form of Exhibit D,
\nexecuted by the individuals identified on Exhibit C;<\/p>\n
(b) a Release substantially in the form of Exhibit E, executed by each
\nof the Shareholders;<\/p>\n
(c) the Escrow Agreement substantially in the form of Exhibit B,
\nexecuted by the Shareholders and the Shareholders’ Representative;<\/p>\n
28.<\/p>\n
(d) confidential invention and assignment agreements, reasonably
\nsatisfactory in form and content to Parent, executed by all employees and former
\nemployees of the Company and by all consultants and independent contractors and
\nformer consultants and former independent contractors to the Company who have
\nnot already signed such agreements (including the individuals identified in Part
\n2.9(f) of the Disclosure Schedule);<\/p>\n
(e) a legal opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
\nA Professional Corporation, and of Robin Faisant dated as of the Closing Date,
\nas set forth in Exhibit G;<\/p>\n
(f) a certificate executed by the chief executive officer of the Company
\ncertifying that each of the representations and warranties set forth in Section
\n2 is accurate in all respects as of the Closing Date as if made on the Closing
\nDate and that the conditions set forth in Sections 6.1, 6.2 and 6.3 have been
\nduly satisfied (the “Closing Certificate”); and<\/p>\n
(g) written resignations of all directors of the Company, effective as
\nof the Closing Date.<\/p>\n
6.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
\nchange not disclosed in the Disclosure Schedule in the business, condition,
\nassets, liabilities, operations or financial performance of the Company since
\nthe date of this Agreement other than any loss of revenue (and any corresponding
\nchange in margins and profitability of business) resulting from the public
\nannouncement or pendency of the Transaction.<\/p>\n
6.6 FIRPTA COMPLIANCE. The Company shall have filed with the Internal Revenue
\nService the notification referred to in Section 5.5(b).<\/p>\n
6.7 NO RESTRAINTS. No temporary restraining order, preliminary or permanent
\ninjunction or other order preventing the consummation of the Transaction shall
\nhave been issued by any court of competent jurisdiction and remain in effect,
\nand there shall not be any Legal Requirement enacted or deemed applicable to the
\nTransaction that makes consummation of the Transaction illegal.<\/p>\n
6.8 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened to
\ncommence any Legal Proceeding challenging or seeking the recovery of a material
\namount of damages in connection with the Transaction or seeking to prohibit or
\nlimit the exercise by Parent of any material right pertaining to its ownership
\nof stock of the Surviving Corporation.<\/p>\n
6.9 TERMINATION OF 401(K) PLAN. The Company shall have provided Parent with
\nevidence, reasonably satisfactory to Parent, as to the termination of the
\nCompany’s 401(k) plan.<\/p>\n
6.10 SECTION 3.38(H)(10) ELECTION. The Parent shall have received an election
\nby each of the Shareholders under Section 338(h)(10) of the Code.<\/p>\n
6.11 CONVERSION OF COMPANY OPTIONS. Each holder of Company Options shall
\nhave agreed to convert such Company Option into a New Parent Option per Section
\n1.5(a).<\/p>\n
29.<\/p>\n
6.12 DCU PLAN. The Administration Committee for the DCU Plan shall have
\ndetermined that New Parent Options based on the Applicable Fraction constitute
\n“equivalent or better value in entitlements” from the Parent (within the meaning
\nof the DCU Plan) and have approved the conversion of all Company DCUs into New
\nParent Options as described in Section 1.5(b).<\/p>\n
6.13 HSR ACT. The waiting period applicable to the consummation of the
\nTransaction under the HSR Act shall have expired or been terminated.<\/p>\n
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY<\/p>\n
The obligations of the Company to effect the Transaction and otherwise
\nconsummate the transactions contemplated by this Agreement are subject to the
\nsatisfaction or waiver, at or prior to the Closing, of the following conditions:<\/p>\n
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and warranties
\nmade by Parent in this Agreement shall have been accurate in all material
\nrespects as of the date of this Agreement (without giving effect to any
\nmateriality or similar qualifications contained in such representations and
\nwarranties), and shall be accurate in all material respects as of the Closing
\nDate as if made at the Closing Date (without giving effect to any materiality or
\nsimilar qualifications contained in such representations and warranties).<\/p>\n
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
\nParent is required to comply with or to perform at or prior to the Closing shall
\nhave been complied with and performed in all material respects.<\/p>\n
7.3 NO RESTRAINTS. No temporary restraining order, preliminary or permanent
\ninjunction or other order preventing the consummation of the Transaction shall
\nhave been issued by any court of competent jurisdiction and remain in effect,
\nand there shall not be any Legal Requirement enacted or deemed applicable to the
\nTransaction that makes consummation of the Transaction illegal.<\/p>\n
7.4 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened to
\ncommence any Legal Proceeding challenging or seeking the recovery of a material
\namount of damages in connection with the Transaction or seeking to prohibit or
\nlimit the exercise by the Shareholders of any material right pertaining to the
\nTransaction.<\/p>\n
7.5 HSR ACT. The waiting period applicable to the consummation of the
\nTransaction under the HSR Act shall have expired or been terminated.<\/p>\n
7.6 LEGAL OPINION. The receipt by the Shareholders of a legal opinion of
\nCooley Godward LLP, dated as of the Closing Date, in the form of Exhibit I.<\/p>\n
SECTION 8. TERMINATION<\/p>\n
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
\nClosing:<\/p>\n
30.<\/p>\n
(a) by Parent if Parent reasonably determines that the timely
\nsatisfaction of any condition set forth in Section 6 has become impossible
\n(other than as a result of any failure on the part of Parent to comply with or
\nperform any covenant or obligation of Parent set forth in this Agreement);<\/p>\n
(b) by the Company if the Company reasonably determines that the timely
\nsatisfaction of any condition set forth in Section 7 has become impossible
\n(other than as a result of any failure on the part of the Company or any of the
\nShareholders to comply with or perform any covenant or obligation set forth in
\nthis Agreement or in any other agreement or instrument delivered to Parent);<\/p>\n
(c) by Parent at or after the Closing Date if any condition set forth in
\nSection 6 has not been satisfied by the Closing Date;<\/p>\n
(d) by the Company at or after the Closing Date if any condition set
\nforth in Section 7 has not been satisfied by the Closing Date;<\/p>\n
(e) by Parent if the Closing has not taken place on or before August 31,
\n1998 (other than as a result of any failure on the part of Parent to comply with
\nor perform any covenant or obligation of Parent set forth in this Agreement);<\/p>\n
(f) by the Company if the Closing has not taken place on or before
\nAugust 31, 1998 (other than as a result of the failure on the part of the
\nCompany or any of the Shareholders to comply with or perform any covenant or
\nobligation set forth in this Agreement or in any other agreement or instrument
\ndelivered to Parent); or<\/p>\n
(g) by the mutual consent of Parent and the Company.<\/p>\n
8.2 TERMINATION PROCEDURES. If Parent wishes to terminate this Agreement
\npursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), Parent shall
\ndeliver to the Company a written notice stating that Parent is terminating this
\nAgreement and setting forth a brief description of the basis on which Parent is
\nterminating this Agreement. If the Company wishes to terminate this Agreement
\npursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(f), the Company shall
\ndeliver to Parent a written notice stating that the Company is terminating this
\nAgreement and setting forth a brief description of the basis on which the
\nCompany is terminating this Agreement.<\/p>\n
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
\nSection 8.1, all further obligations of the parties under this Agreement shall
\nterminate; provided, however, that: (a) neither the Company nor Parent shall be
\nrelieved of any obligation or liability arising from any prior breach by such
\nparty of any provision of this Agreement; (b) the parties shall, in all events,
\nremain bound by and continue to be subject to the provisions set forth in
\nSection 11 and (c) the parties shall, in all events, remain bound by and
\ncontinue to be subject to Section 5.4.<\/p>\n
31.<\/p>\n
SECTION 9. INDEMNIFICATION<\/p>\n
9.1 SURVIVAL OF REPRESENTATIONS, ETC.<\/p>\n
(a) The representations and warranties made by the Company and the
\nShareholders (including the representations and warranties set forth in Section
\n2 and the representations and warranties set forth in the Closing Certificate)
\nshall survive the Closing and shall expire on the first anniversary of the
\nClosing Date; provided, however, that if, at any time prior to the first
\nanniversary of the Closing Date, any Indemnitee (acting in good faith) delivers
\nto the Shareholders’ Agent (as defined in Section 11.1 below) a written notice
\nalleging the existence of an inaccuracy in or a breach of any of the
\nrepresentations and warranties made by the Company and the Shareholders (and
\nsetting forth in reasonable detail the basis for such Indemnitee’s belief that
\nsuch an inaccuracy or breach may exist) and asserting a claim for recovery under
\nSection 9.2 based on such alleged inaccuracy or breach, then the claim asserted
\nin such notice shall survive the first anniversary of the Closing until such
\ntime as such claim is fully and finally resolved. All representations and
\nwarranties made by Parent shall survive the Closing and shall expire on the
\nfirst anniversary of the Closing Date, provided, however, that if, at any time
\nprior to the first anniversary of the Closing Date, any Shareholder (acting in
\ngood faith) delivers to the Parent a written notice alleging the existence of an
\ninaccuracy in or a breach of any of the representations and warranties made by
\nthe Parent (and setting forth in reasonable detail the basis for such
\nShareholder’s belief that such an inaccuracy or breach may exist) and asserting
\na claim for recovery under Section 9.2 based on such alleged inaccuracy or
\nbreach, then the claim asserted in such notice shall survive the first
\nanniversary of the Closing until such time as such claim is fully and finally
\nresolved.<\/p>\n
(b) The representations, warranties, covenants and obligations of the
\nCompany and the Shareholders, and the rights and remedies that may be exercised
\nby the Indemnitees, shall not be limited or otherwise affected by or as a result
\nof any information furnished to, or any investigation made by or knowledge of,
\nany of the Indemnitees or any of their Representatives, except as otherwise
\nprovided herein.<\/p>\n
(c) For purposes of this Agreement, each statement or other item of
\ninformation set forth in the Disclosure Schedule or in any update to the
\nDisclosure Schedule shall be deemed to be a representation and warranty made by
\nthe Company and the Shareholders in this Agreement.<\/p>\n
9.2 INDEMNIFICATION BY SHAREHOLDERS.<\/p>\n
(a) From and after the Closing Date (but subject to Section 9.1(a)), the
\nShareholders, severally but not jointly, shall hold harmless and indemnify each
\nof the Indemnitees from and against, and shall compensate and reimburse each of
\nthe Indemnitees for, any Damages which are directly or indirectly suffered or
\nincurred by any of the Indemnitees or to which any of the Indemnitees may
\notherwise become subject (regardless of whether or not such Damages relate to
\nany third-party claim) and which arise from or as a result of, or are directly
\nor indirectly connected with: (i) any inaccuracy in or breach of any
\nrepresentation or warranty set forth in Section 2 or in the Closing Certificate
\n(after giving effect to any update to the Disclosure Schedule delivered by the
\nCompany to Parent prior to the Closing); (ii) any breach of any <\/p>\n
32.<\/p>\n
covenant or obligation of the Company or any of the Shareholders (including the
\ncovenants set forth in Sections 4 and 5); (iii) any Taxes paid by the Company
\nrelating to the “built-in gain” referred to in Section 4.5 to the extent the
\nTaxes exceed $75,000 or (iv) any Legal Proceeding relating to any inaccuracy or
\nbreach of the type referred to in clause “(i)” or “(ii)” above (including any
\nLegal Proceeding commenced by any Indemnitee for the purpose of enforcing any of
\nits rights under this Section 9).<\/p>\n
(b) The Company and the Shareholders acknowledge and agree that, if the
\nCompany suffers, incurs or otherwise becomes subject to any Damages as a result
\nof or in connection with any inaccuracy in or breach of any representation,
\nwarranty, covenant or obligation, then (without limiting any of the rights of
\nthe Company as an Indemnitee) Parent shall also be deemed, by virtue of its
\nownership of the stock of the Company, to have incurred Damages as a result of
\nand in connection with such inaccuracy or breach.<\/p>\n
9.3 THRESHOLD. Except for matters relating to Taxes relating to the “built-in
\ngain,” the Shareholders shall not be required to make any indemnification
\npayment pursuant to Section 9.2(a) for any inaccuracy in or breach of any of
\ntheir representations and warranties set forth in Section 2 until such time as
\nthe total amount of all Damages (including the Damages arising from such
\ninaccuracy or breach and all other Damages arising from any other inaccuracies
\nin or breaches of any representations or warranties) that have been directly or
\nindirectly suffered or incurred by any one or more of the Indemnitees, or to
\nwhich any one or more of the Indemnitees has or have otherwise become subject,
\nexceeds $100,000 in the aggregate. If the total amount of such Damages exceeds
\n$100,000, then the Indemnitees shall be entitled to be indemnified against and
\ncompensated and reimbursed for the full amount of such damages (and not merely
\nthe portion of such damages exceeding $100,000).<\/p>\n
9.4 ESCROW FUND.<\/p>\n
(a) Notwithstanding anything else herein, indemnification under this
\nSection 9 shall be satisfied solely from the Escrow Fund (described in Section
\n9.4(b) below). Except as provided in Section 9.12, indemnification under this
\nSection 9, other than pursuant to Taxes relating to the “built-in gain” referred
\nto in Section 4.5, shall be the sole and exclusive remedy of the Indemnitees for
\nany and all breaches of representations and warranties contained in Section 2
\nhereof and for any other breach hereof except for breaches of Section 2.22.<\/p>\n
(b) Each Shareholder, Parent, the Company and a banking institution
\nselected by Parent as escrow agent (“Escrow Agent”) shall enter into an Escrow
\nAgreement in substantially the form attached hereto as Exhibit B (modified as
\nrequested by the Escrow Agent), under which, on the terms and conditions set
\nforth therein, a portion of the amounts to be paid to the Shareholders hereunder
\nwill be escrowed to pay amounts payable to Parent or the Company under this
\nSection 9.<\/p>\n
The Escrow Fund shall consist of the amount set forth in Section 1.6. The
\namount remaining in the Escrow Fund less the sum of any amounts payable from the
\nEscrow Fund that are subject to a claim made by Parent or the Company under this
\nSection 9 not yet resolved shall be distributed to the Shareholders on the first
\nanniversary of the Closing Date.<\/p>\n
33.<\/p>\n
9.5 CLAIM PROCEDURE. Upon delivery to the Escrow Agent and the
\nShareholders’ Agent in accordance with Section 11.5 on or before the last day
\nof the period set forth in Section 9.1(a) above of a certificate signed by any
\nofficer of Parent (an “Officer’s Certificate”)<\/p>\n
(a) stating that Parent or the Company has paid or properly accrued or
\nreasonably anticipates that Parent or the Company will have to pay or accrue
\nDamages in an aggregate stated amount, and stating that Parent or the Company is
\nentitled to indemnity pursuant to this Agreement with respect to such amount,
\nand<\/p>\n
(b) specifying the individual items of Damages included in the amount so
\nstated, the date each such item was paid or properly accrued, or the basis for
\nsuch anticipated liability;<\/p>\n
The Escrow Agent shall, subject to the provisions of Section 9.6 hereof, deliver
\nto Parent as promptly as practicable, an amount from the Escrow Fund sufficient
\nto fully indemnify Parent or the Company against such Damages.<\/p>\n
9.6 OBJECTIONS TO CLAIMS. At the time of delivery of any Officer’s
\nCertificate to the Escrow Agent, a duplicate copy of such certificate shall be
\ndelivered to the Shareholders’ Agent and for a period of thirty (30) days after
\nsuch delivery, the Escrow Agent shall make no delivery of cash pursuant to
\nSection 9.5 hereof unless the Escrow Agent shall have received written
\nauthorization from the Shareholders’ Agent to make such delivery. After the
\nexpiration of such 30-day period, the Escrow Agent shall make delivery of the
\namount requested in the Officer’s Certificate in accordance with Section 9.5
\nhereof, provided that no such payment or delivery need be made if the
\nShareholders’ Agent shall object in a written statement to the claim made in the
\nOfficer’s Certificate, and such statement shall have been delivered to Parent
\n(with a copy to the Escrow Agent) prior to the expiration of such 30-day period.<\/p>\n
9.7 RESOLUTION OF CONFLICTS.<\/p>\n
(a) In case the Shareholders’ Agent shall so object in writing to the
\nindemnity of Parent or the Company in respect of any claim or claims made in any
\nOfficer’s Certificate, the Shareholders’ Agent and Parent (acting on its own
\nbehalf or on behalf of the Company) shall attempt in good faith to agree upon
\nthe rights of the respective parties with respect to each of such claims. If the
\nShareholders’ Agent and Parent should so agree, a memorandum setting forth such
\nagreement shall be prepared and signed by both parties and shall be furnished to
\nthe Escrow Agent who shall thereupon promptly pay the agreed upon amount of the
\nclaim to Parent.<\/p>\n
(b) If no such agreement can be reached after good faith negotiation, the
\nclaim shall be submitted to non-binding mediation under the rules then in effect
\nunder the American Arbitration Association, or such other forum as the parties
\nmay select. Each party shall have in attendance at such mediation persons who
\nhave actual authority to bind the party to any settlement reached. If the matter
\ncannot be settled through mediation, then the claim shall be submitted to
\nbinding arbitration under the following rules:<\/p>\n
(i) Unless otherwise agreed by the parties, all such claims shall be
\ndecided in San Jose, California by a single arbitrator, acting under the
\nCommercial Rules of the American Arbitration Association except as modified
\nherein. Either party may initiate the <\/p>\n
34.<\/p>\n
arbitration following failure of mediation to resolve the issue by filing a
\ndemand for arbitration with the American Arbitration Association, and
\nsimultaneously delivering a copy of such demand to the other party.<\/p>\n
(ii) Unless the parties agree to a mutually acceptable arbitrator within
\nthirty (30) days of a demand for arbitration, the arbitrator shall be selected
\nby the American Arbitration Association.<\/p>\n
(iii) Unless otherwise agreed by the parties, the arbitrator shall be a
\nbusiness attorney in practice for at least 10 years, with substantial experience
\nin the negotiating and drafting of business acquisition agreements.<\/p>\n
(iv) It is the intent of the parties that the arbitration be held in an
\nefficient, economical and expeditious manner. Accordingly, the parties shall
\nmeet in a pre-hearing conference as promptly as practicable after selection of
\nthe arbitrator to establish the scope and extent of all discovery and the
\nschedule of the arbitration. Discovery shall be limited to that necessary to
\nresolve the disputed issues, in the judgment of the arbitrator. If any party
\nwishes to take discovery, including document productions, interrogatories or
\ndepositions, a request to do so must be submitted to the arbitrator in
\naccordance with the procedures determined at the pre-hearing conference. The
\narbitrator in his sole discretion may allow limited discovery, all of which must
\nbe completed within 20 business days of the arbitrator’s directive unless
\nextended for good cause by the arbitrator.<\/p>\n
(v) The arbitrator shall not be bound by rules of evidence or judicial
\nprocedures regarding the conduct of the hearing and shall be obligated to follow
\nCalifornia substantive law.<\/p>\n
(vi) The arbitrator’s authority shall be limited to determining whether
\nthe claim gives rise to a right to indemnification under the provisions of this
\nSection 9 and, if so, the amount of Damages as to such claim. No other issue
\ninvolving interpretation of this Agreement shall be submitted to the arbitrator
\nwithout the consent of both parties.<\/p>\n
(vii) The decision of the arbitrator as to the validity and amount of
\nDamages and the amounts in (c) below shall, subject to the above limitations, be
\nbinding and conclusive upon the parties of this Agreement. The arbitrator shall
\nissue such decision, including a brief statement of the reasons for the award
\nand the calculation of damages awarded, within 25 days after completion of the
\narbitration hearing and deliver such decision to the Escrow Agent.<\/p>\n
(c) Judgment upon any award rendered by the arbitrators may be entered in
\nany court having jurisdiction. The non-prevailing party shall pay the reasonable
\nexpenses (including attorneys’ fees) of the prevailing party and the arbitrator
\nfees and administrative expenses associated with the arbitration (which expenses
\nand fees, in the event the Parent is the prevailing party, shall constitute
\nDamages to be satisfied solely from the Escrow Fund).<\/p>\n
9.8 NO CONTRIBUTION. Each Shareholder waives, and acknowledges and agrees
\nthat he shall not have and shall not exercise or assert (or attempt to exercise
\nor assert), any right of contribution, right of indemnity or other right or
\nremedy against the Company in connection with <\/p>\n
35.<\/p>\n
any indemnification obligation or any other liability to which he may become
\nsubject under or in connection with this Agreement.<\/p>\n
9.9 INTEREST. Any Shareholder who is required to hold harmless, indemnify,
\ncompensate or reimburse any Indemnitee pursuant to this Section 9 with respect
\nto any Damages shall also be liable to such Indemnitee for interest on the
\namount of such Damages (for the period commencing as of the date on which the
\nShareholders’ Agent received the notice in Section 9.1 and ending on the date on
\nwhich the liability of the Shareholder to such Indemnitee is fully satisfied by
\nsuch Shareholder) at a floating rate equal to the rate of interest publicly
\nannounced by Bank of America, N.T. & S.A. from time to time as its prime, base
\nor reference rate.<\/p>\n
9.10 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
\ncommencement by any Person of any claim or Legal Proceeding (whether against the
\nCompany, against Parent or against any other Person) with respect to which any
\nof the Shareholders may become obligated to hold harmless, indemnify, compensate
\nor reimburse any Indemnitee pursuant to this Section 9, Parent shall have the
\nright, at its election, to proceed with the defense of such claim or Legal
\nProceeding on its own. If Parent elects not to proceed with the defense of such
\nclaim or Legal Proceeding, the Shareholders shall defend such claim or legal
\nproceeding on their own; provided, that the Shareholders shall not have the
\nright to settle, adjust or compromise such claim or Legal Proceeding without the
\nconsent of the Parent, such consent not to be unreasonably withheld. If Parent
\nso proceeds with the defense of any such claim or Legal Proceeding:<\/p>\n
(a) all reasonable expenses relating to the defense of such claim or
\nLegal Proceeding shall be Damages to the extent that the Company or the
\nShareholders are determined to have breached this Agreement entitling Parent to
\nindemnification pursuant to Section 9.2.;<\/p>\n
(b) each Shareholder shall make available to Parent any documents and
\nmaterials in his possession or control that may be necessary to the defense of
\nsuch claim or Legal Proceeding; and<\/p>\n
(c) Parent shall not have the right to settle, adjust or compromise such
\nclaim or Legal Proceeding without the consent of the Shareholders’ Agent;
\nprovided, however, that such consent shall not be unreasonably withheld or
\ndelayed.<\/p>\n
Parent shall give the Shareholders’ Agent prompt notice of the commencement of
\nany such Legal Proceeding against Parent or the Company; provided, however, that
\nany failure on the part of Parent to so notify the Shareholders’ Agent shall not
\nlimit any of the obligations of the Shareholders under this Section 9 (except to
\nthe extent such failure materially prejudices the defense of such Legal
\nProceeding).<\/p>\n
9.11 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PARENT. No Indemnitee
\n(other than Parent or any successor thereto or assign thereof) shall be
\npermitted to assert any indemnification claim or exercise any other remedy
\nunder this Agreement unless Parent (or any successor thereto or assign
\nthereof) shall have consented to the assertion of such indemnification claim
\nor the exercise of such other remedy.<\/p>\n
36.<\/p>\n
9.12 FRAUD. Notwithstanding any provision of this Agreement to the contrary,
\nthe liability of Parent, the Company or any Shareholder for common law fraud,
\nintentional misrepresentation or other claim involving intentional misconduct
\nshall not be limited in amount, procedure for dispute resolution or as to the
\ntime during which a claim may be made.<\/p>\n
SECTION 10. ADDITIONAL POST-CLOSING OBLIGATIONS<\/p>\n
10.1 REPAYMENT OF CERTAIN DEBT OBLIGATIONS. Promptly following the Closing
\nDate (at the Closing in the cases of (b) and (c) below), Parent shall:<\/p>\n
(a) pay to Union Bank of California the outstanding principal balance
\n(plus interest accrued through the date of payment), such amount representing
\npayment in full of the amount owed to Union Bank of California by Company under
\nForbearance and Modification Agreement dated April 2, 1998 as represented by the
\nCompany and the Shareholders in part 2.11 of the Disclosure Schedule;<\/p>\n
(b) pay to Derek Hine $6,813,256 (plus interest accrued through the
\nClosing Date), such amount representing payment in full of the amount owed to
\nDerek Hine by the Company under certain notes as represented by the Company and
\nthe Shareholders in part 2.11 of the Disclosure Schedule, in consideration for a
\nrelease in full of such obligation by Derek Hine; and<\/p>\n
(c) pay to Gordon Hine $3,510,200, such amount representing the full
\namount owed to Gordon Hine by the Company as deferred compensation as
\nrepresented by the Company and the Shareholders in part 2.11 of the Disclosure
\nSchedule, in consideration for a release in full of such obligation by Gordon
\nHine.<\/p>\n
The payment of each of the above obligations (excluding interest accrued
\nafter the Closing Date) shall be collectively referred to herein as the “Debt
\nPayments.”<\/p>\n
10.2 RELEASE OF OBLIGATIONS; INDEMNIFICATION. Following the Closing, Parent
\nshall use its commercially reasonable efforts to obtain releases of the Company
\nobligations personally guaranteed by certain Shareholders as set forth on
\nExhibit H hereto (“Guaranteed Obligations”). To the extent that Parent is unable
\nto obtain releases of the Guaranteed Obligations, Parent agrees to indemnify
\nsuch Shareholders against any liability or expense on the part of such
\nShareholders arising from the Guaranteed Obligations.<\/p>\n
10.3 INDEMNIFICATION OF DIRECTORS AND OFFICERS. All rights to
\nindemnification existing in favor of the directors and officers of the Company
\nfor acts and omissions occurring prior to the Closing Date, as provided in the
\nCompany’s articles of incorporation or bylaws (as in effect as of the date of
\nthis Agreement) and as provided in any indemnification agreements between the
\nCompany and said officers and directors (as in effect at the Closing Date),
\nshall survive the Transaction and shall be the obligation of and observed by
\nParent and the Company from and after the Closing Date.<\/p>\n
10.4 INSURANCE POLICIES. To the extent possible without incurring additional
\nmaterial expense (after taking into account any premiums saved as a result of
\nthe discontinuance of the Company’s insurance policies identified in Part 2.17
\nof the Company Disclosure Schedule and in <\/p>\n
37.<\/p>\n
effect for a period of at least six (6) months prior the date of this Agreement
\n(the “Company Policies”)), Parent shall use commercially reasonable efforts to
\ncause its insurance policies in effect on the date of this Agreement to be
\namended to provide a level of coverage for the business and properties of the
\nCompany acquired in the Transaction that is substantially equivalent to the
\nlevel of coverage provided by the Company Policies on the date of this
\nAgreement.<\/p>\n
10.5 S-CORP DIVIDEND. Promptly after the completion of the audit of the
\nCompany for the period ending on the Closing Date, the Parent shall make the
\nfinal S-Corp distribution of income for the period from December 31, 1997
\nthrough the Closing to the Shareholders as determined by the Parent’s auditors.<\/p>\n
10.6 ACCESS TO RECORDS. The Parent shall, and shall cause its
\nRepresentatives to: (a) provide the Shareholders’ Agent and its Representatives
\nwith reasonable access to the Company’s existing books, records, Tax Returns,
\nwork papers and other documents and information relating to the Company; and (b)
\nprovide Parent and Parent’s Representatives with copies of such existing books,
\nrecords, Tax Returns, work papers and other documents and information relating
\nto the Company for the purpose of investigating claims pursuant to Section 9, in
\nconnection with any Tax audit.<\/p>\n
10.7 BUILT-IN GAIN REPORTING. In its Tax Returns, Parent shall report the
\nInternal Revenue Service or any other Governmental Body a “built-in gain” of
\napproximately $160,000. In the even of any audit by the Internal Revenue
\nService or any other Governmental Body of the “built-in gain,” Parent and the
\nCompany shall handle the defense of the “built-in gain” in such audit; provided,
\nhowever, that neither the Parent nor the Company shall settle such audit without
\nthe prior written consent of the Shareholders’ Agent (not to be unreasonably
\nwithheld). Upon written notice to the Parent, the Shareholders’ Agent shall
\nhave the right to take over the defense of the “Built-in Gain” in such audit at
\nthe expense of the Shareholders; provided, however, that neither the
\nShareholders nor the Shareholders’ Agent shall settle such audit without the
\nprior written consent of the Parent or the Company (not to be unreasonably
\nwithheld).<\/p>\n
SECTION 11. MISCELLANEOUS PROVISIONS<\/p>\n
11.1 SHAREHOLDERS’ AGENT.<\/p>\n
(a) The Shareholders hereby irrevocably appoint Derek L. Hine as their
\nagent, proxy and attorney-in-fact for purposes of this Agreement and the Escrow
\nAgreement (the “Shareholders’ Agent”), and Derek L. Hine hereby accepts his
\nappointment as the Shareholders’ Agent. Each of the Shareholders hereby agrees
\nthat such agency and proxy are coupled with an interest and are, therefore,
\nirrevocable and shall survive the death, incapacity, bankruptcy, dissolution or
\nliquidation of any Shareholder. Parent shall be entitled to deal exclusively
\nwith the Shareholders’ Agent for all purposes of this Agreement and the Escrow
\nAgreement, and shall be entitled to rely conclusively (without further evidence
\nof any kind whatsoever) on any document executed or purported to be executed on
\nbehalf of any Shareholder by the Shareholders’ Agent, and on any other action
\ntaken or purported to be taken on behalf of any Shareholder by the Shareholders’
\nAgent, as fully binding upon such Shareholder. If the Shareholders’ Agent shall
\ndie, become disabled or otherwise be unable to fulfill his <\/p>\n
38.<\/p>\n
responsibilities as agent of the Shareholders, then the Shareholders shall,
\nwithin ten days after such death or disability, appoint a successor agent and,
\npromptly thereafter, shall notify Parent of the identity of such successor. Any
\nsuch successor shall become the “Shareholders’ Agent” for purposes of this
\nAgreement. If for any reason there is no Shareholders’ Agent at any time, all
\nreferences herein to the Shareholders’ Agent shall be deemed to refer to the
\nShareholders.<\/p>\n
(b) Neither the Shareholders’ Agent nor any agent employed by it shall
\nbe liable to any Shareholder relating to the performance of its duties under
\nthis Agreement or the Escrow Agreement for any errors in judgment, negligence,
\noversight, breach of duty or otherwise except to the extent it is finally
\ndetermined in a court of competent jurisdiction by clear and convincing evidence
\nthat the actions taken or not taken by the Shareholders’ Agent constituted fraud
\nor were taken or not taken in bad faith. The Shareholders’ Agent shall be
\nindemnified and held harmless by the Shareholders in the amounts determined by
\napplying the procedures specified in the Escrow Agreement against all expenses
\n(including attorneys’ fees), judgments, fines and other amounts paid or incurred
\nin connection with any action, suit, proceeding or claim to which the
\nShareholders’ Agent is made a party by reason of the fact that it was acting as
\nthe Shareholders’ Agent pursuant to this Agreement or the Escrow Agreement;
\nprovided, however, that the Shareholders’ Agent shall not be entitled to
\nindemnification hereunder to the extent it is finally determined in a court of
\njurisdiction by clear and convincing evidence that the actions taken or not
\ntaken by the Shareholders’ Agent constituted fraud or were taken or not taken in
\nbad faith. The Shareholders’ Agent shall be protected in acting upon any notice,
\nstatement or certificate believed by it to be genuine and to have been furnished
\nby the appropriate person and in acting or refusing to act in good faith or any
\nmatter.<\/p>\n
(c) A decision, act, consent or instruction of the Shareholders’ Agent
\nshall be made in writing and shall constitute a decision of all the
\nShareholders, and shall be final, binding and conclusive upon each of the
\nShareholders, and Parent and the Company may rely upon any decision, act,
\nconsent or instruction of the Shareholders’ Agent as being the decision, act,
\nconsent or instruction of each and all of the Shareholders. Parent and the
\nCompany are hereby relieved from any liability to any person for any acts done
\nby them in accordance with such decision, act, consent or instruction of the
\nShareholders’ Agent.<\/p>\n
11.2 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
\ndelivered to each other party hereto such instruments and other documents, and
\nshall take such other actions, as such other party may reasonably request (prior
\nto, at or after the Closing) for the purpose of carrying out or evidencing any
\nof the transactions contemplated by this Agreement.<\/p>\n
11.3 FEES AND EXPENSES. Each party to this Agreement shall bear and pay all
\nfees, costs and expenses (including legal fees and accounting fees) that have
\nbeen incurred or that are incurred by such party in connection with the
\ntransactions contemplated by this Agreement, including all fees, costs and
\nexpenses incurred by such party in connection with or by virtue of (a) the
\ninvestigation and review conducted by Parent and its Representatives with
\nrespect to the Company’s business (and the furnishing of information to Parent
\nand its Representatives in connection with such investigation and review), (b)
\nthe negotiation, preparation and review of this Agreement (including the
\nDisclosure Schedule) and all agreements, certificates, opinions and other
\ninstruments and documents delivered or to be delivered in connection with the
\ntransactions contemplated by this Agreement, (c) the preparation and submission
\nof any filing or <\/p>\n
39.<\/p>\n
notice required to be made or given in connection with any of the transactions
\ncontemplated by this Agreement, and the obtaining of any Consent required to be
\nobtained in connection with any of such transactions, and (d) the consummation
\nof the Transaction; provided, however, that, to the extent the total amount of
\nall such fees, costs and expenses incurred by or for the benefit of the Company
\n(including all such fees, costs and expenses incurred prior to the date of this
\nAgreement) exceeds $100,000 in the aggregate, such fees, costs and expenses
\nshall be borne and paid by the Shareholders and not by the Company.<\/p>\n
11.4 ATTORNEYS’ FEES. If any action or proceeding relating to this Agreement
\nor the enforcement of any provision of this Agreement is brought against any
\nparty hereto, the prevailing party shall be entitled to recover reasonable
\nattorneys’ fees, costs and disbursements (in addition to any other relief to
\nwhich the prevailing party may be entitled).<\/p>\n
11.5 NOTICES. Any notice or other communication required or permitted to be
\ndelivered to any party under this Agreement shall be in writing and shall be
\ndeemed properly delivered, given and received when delivered (by hand, by
\nregistered mail, by courier or express delivery service or by facsimile) to the
\naddress or facsimile telephone number set forth beneath the name of such party
\nbelow (or to such other address or facsimile telephone number as such party
\nshall have specified in a written notice given to the other parties hereto):<\/p>\n
IF TO PARENT:<\/p>\n
Asyst Technologies, Inc
\n 48761 Kato Road
\n Fremont, CA 94538
\n Attention: Douglas J. McCutcheon
\n Senior Vice President and Chief Financial Officer<\/p>\n
WITH A COPY TO:<\/p>\n
Cooley Godward llp
\n Five Palo Alto Square
\n 3000 El Camino Real
\n Palo Alto, CA 94306-2155
\n Attention: James C. Kitch<\/p>\n
IF TO THE COMPANY:<\/p>\n
Hine Design Incorporated
\n 241 Java Drive
\n Sunnyvale, CA 94089<\/p>\n
WITH A COPY TO:<\/p>\n
Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional
\n Corporation
\n 3 Embarcadero Center, Suite 700
\n San Francisco, CA 94111
\n Attention: Ronald Star<\/p>\n
40.<\/p>\n
IF TO THE SHAREHOLDER’S AGENT:<\/p>\n
Derek L. Hine
\n 5 Hawk View
\n Portola Valley, CA 94025<\/p>\n
11.6 CONFIDENTIALITY. On and at all times after the Closing Date, each
\nShareholder shall keep confidential, and shall not use or disclose to any other
\nPerson, any non-public document or other non-public information in such
\nShareholder’s possession that relates to the business of the Company or Parent.<\/p>\n
11.7 TIME OF THE ESSENCE. Time is of the essence of this Agreement.<\/p>\n
11.8 HEADINGS. The underlined headings contained in this Agreement are for
\nconvenience of reference only, shall not be deemed to be a part of this
\nAgreement and shall not be referred to in connection with the construction or
\ninterpretation of this Agreement.<\/p>\n
11.9 COUNTERPARTS. This Agreement may be executed in several counterparts,
\neach of which shall constitute an original and all of which, when taken
\ntogether, shall constitute one agreement.<\/p>\n
11.10 GOVERNING LAW. This Agreement shall be construed in accordance with,
\nand governed in all respects by, the internal laws of the State of California
\n(without giving effect to principles of conflicts of laws).<\/p>\n
11.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
\nCompany and its successors and assigns (if any); the Shareholders and their
\nrespective personal representatives, executors, administrators, estates, heirs,
\nsuccessors and assigns (if any); and Parent and its successors and assigns (if
\nany). This Agreement shall inure to the benefit of: the Company; the
\nShareholders; Parent; the other Indemnitees; and the respective successors and
\nassigns (if any) of the foregoing. Parent may freely assign any or all of its
\nrights under this Agreement (including its indemnification rights under Section
\n9), in whole or in part, to any other Person without obtaining the consent or
\napproval of any other party hereto or of any other Person.<\/p>\n
11.12 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies of
\nthe parties hereto shall be cumulative (and not alternative). The parties to
\nthis Agreement agree that, in the event of any breach or threatened breach by
\nany party to this Agreement of any covenant, obligation or other provision set
\nforth in this Agreement for the benefit of any other party to this Agreement,
\nsuch other party shall be entitled (in addition to any other remedy that may be
\navailable to it) to (a) a decree or order of specific performance or mandamus to
\nenforce the observance and performance of such covenant, obligation or other
\nprovision, and (b) an injunction restraining such breach or threatened breach.<\/p>\n
11.13 WAIVER.<\/p>\n
(a) No failure on the part of any Person to exercise any power, right,
\nprivilege or remedy under this Agreement, and no delay on the part of any Person
\nin exercising any power,<\/p>\n
41.<\/p>\n
right, privilege or remedy under this Agreement, shall operate as a waiver of
\nsuch power, right, privilege or remedy; and no single or partial exercise of any
\nsuch power, right, privilege or remedy shall preclude any other or further
\nexercise thereof or of any other power, right, privilege or remedy.<\/p>\n
(b) No Person shall be deemed to have waived any claim arising out of
\nthis Agreement, or any power, right, privilege or remedy under this Agreement,
\nunless the waiver of such claim, power, right, privilege or remedy is expressly
\nset forth in a written instrument duly executed and delivered on behalf of such
\nPerson; and any such waiver shall not be applicable or have any effect except in
\nthe specific instance in which it is given.<\/p>\n
11.14 AMENDMENTS. This Agreement may not be amended, modified, altered or
\nsupplemented other than by means of a written instrument duly executed and
\ndelivered on behalf of all of the parties hereto.<\/p>\n
11.15 SEVERABILITY. In the event that any provision of this Agreement, or the
\napplication of any such provision to any Person or set of circumstances, shall
\nbe determined to be invalid, unlawful, void or unenforceable to any extent, the
\nremainder of this Agreement, and the application of such provision to Persons or
\ncircumstances other than those as to which it is determined to be invalid,
\nunlawful, void or unenforceable, shall not be impaired or otherwise affected and
\nshall continue to be valid and enforceable to the fullest extent permitted by
\nlaw.<\/p>\n
11.16 PARTIES IN INTEREST. Except for the provisions of Section 9, none of
\nthe provisions of this Agreement is intended to provide any rights or remedies
\nto any Person other than the parties hereto and their respective successors and
\nassigns (if any).<\/p>\n
11.17 ENTIRE AGREEMENT. This Agreement and the other agreements referred to
\nherein set forth the entire understanding of the parties hereto relating to the
\nsubject matter hereof and thereof and supersede all prior agreements and
\nunderstandings among or between any of the parties relating to the subject
\nmatter hereof and thereof; provided, however, that the Confidentiality Agreement
\nexecuted on behalf of Parent on and the Company on October 24, 1997 shall not be
\nsuperseded by this Agreement and shall remain in effect in accordance with its
\nterms until the earlier of (a) the Closing Date, or (b) the date on which such
\nMutual Non-Disclosure Agreement is terminated in accordance with its terms.<\/p>\n
11.18 CONSTRUCTION.<\/p>\n
(a) For purposes of this Agreement, whenever the context requires: the
\nsingular number shall include the plural, and vice versa; the masculine gender
\nshall include the feminine and neuter genders; the feminine gender shall include
\nthe masculine and neuter genders; and the neuter gender shall include the
\nmasculine and feminine genders.<\/p>\n
(b) The parties hereto agree that any rule of construction to the effect
\nthat ambiguities are to be resolved against the drafting party shall not be
\napplied in the construction or interpretation of this Agreement.<\/p>\n
42.<\/p>\n
(c) As used in this Agreement, the words “include” and “including,” and
\nvariations thereof, shall not be deemed to be terms of limitation, but
\n rather shall be deemed to be followed by the words “without limitation.”<\/p>\n
(d) Except as otherwise indicated, all references in this Agreement to
\n“Sections” and “Exhibits” are intended to refer to Sections of this Agreement
\nand Exhibits to this Agreement.<\/p>\n
(e) The Shareholders acknowledge and agree that Howard, Rice,
\nNemerovski, Canady, Falk & Rabkin, A Professional Corporation (“Howard, Rice”)
\nhas been engaged to act as special counsel to the Company in connection with the
\nTransaction. Howard, Rice has not been engaged to represent the Shareholders or
\nany person or party other than the Company. Each of the Shareholders has been
\nadvised to retain, to the extent that he or she so desires, independent counsel
\nto represent his or her interests in connection with the execution of this
\nAgreement and with respect to the Transaction.<\/p>\n
43.<\/p>\n
The parties hereto have caused this Agreement to be executed and delivered
\nas of July 2, 1998.<\/p>\n
ASYST TECHNOLOGIES, INC.
\n a California corporation<\/p>\n
By: \/s\/ Douglas J. McCutcheon
\n ————————-
\n Douglas J. McCutcheon
\n Senior Vice President,
\n Chief Financial Officer<\/p>\n
HINE DESIGN INCORPORATED
\n a California corporation<\/p>\n
By: \/s\/ Derek L. Hine
\n —————–<\/p>\n
Name: Derek L. Hine
\n ————-<\/p>\n
Title: President\/CEO
\n ————-<\/p>\n
SHAREHOLDERS:<\/p>\n
\/s\/ Derek L. Hine \/s\/ Susan Hine
\n ————————————-
\n Derek L. and Susan Hine<\/p>\n
\/s\/ Graham L. Hine
\n ——————
\n Graham L. Hine<\/p>\n
\/s\/ Roger G. Hine
\n —————–
\n Roger G. Hine<\/p>\n
\/s\/ Michael Krolak \/s\/ Laura Krolak
\n —————————————
\n Michael and Laura Krolak<\/p>\n
EXHIBIT A<\/p>\n
CERTAIN DEFINITIONS<\/p>\n
For purposes of the Agreement (including this Exhibit B):<\/p>\n
ACQUISITION TRANSACTION. “Acquisition Transaction” shall mean any
\ntransaction involving:<\/p>\n
(a) the sale, license, disposition or acquisition of all or a material
\nportion of the business or assets of the Company or any direct or indirect
\nsubsidiary or division of the Company;<\/p>\n
(b) the issuance, grant, disposition or acquisition of (i) any capital
\nstock or other equity security of the Company or any direct or indirect
\nsubsidiary of the Company, (ii) any option, call, warrant or right (whether or
\nnot immediately exercisable) to acquire any capital stock or other equity
\nsecurity of the Company or any direct or indirect subsidiary of the Company, or
\n(iii) any security, instrument or obligation that is or may become convertible
\ninto or exchangeable for any capital stock or other equity security of the
\nCompany or any direct or indirect subsidiary of the Company; or<\/p>\n
(c) any merger, consolidation, business combination, share exchange,
\nreorganization or similar transaction involving the Company or any direct or
\nindirect subsidiary of the Company;<\/p>\n
provided, however, that (A) the grant of stock options by the Company to
\nits employees in the ordinary course of business will not be deemed to be an
\n“Acquisition Transaction” if such grant is made pursuant to the Company’s
\nexisting stock option plans and is consistent with the Company’s past practices,
\nand (B) the issuance of stock by the Company to its employees upon the exercise
\nof outstanding stock options will not be deemed to be an “Acquisition
\nTransaction.”<\/p>\n
AGREEMENT. “Agreement” shall mean the Stock Purchase Agreement to which
\nthis Exhibit A is attached (including the Disclosure Schedule), as it may be
\namended from time to time.<\/p>\n
COMPANY CONTRACT. “Company Contract” shall mean any Contract: (a) to
\nwhich the Company is a party; (b) by which the Company or any of its assets is
\nor may become bound or under which the Company has, or may become subject to,
\nany obligation; or (c) under which the Company has or may acquire any right or
\ninterest.<\/p>\n
COMPANY PROPRIETARY ASSET. “Company Proprietary Asset” shall mean any
\nProprietary Asset owned by or licensed to the Company or otherwise used by the
\nCompany.<\/p>\n
CONSENT. “Consent” shall mean any approval, consent, ratification,
\npermission, waiver or authorization (including any Governmental Authorization).<\/p>\n
A-1.<\/p>\n
CONTRACT. “Contract” shall mean any written, oral or other agreement,
\ncontract, subcontract, lease, understanding, instrument, note, warranty,
\ninsurance policy, benefit plan or legally binding commitment or undertaking of
\nany nature.<\/p>\n
DAMAGES. “Damages” shall mean any loss, damage, injury, decline in value,
\nlost opportunity, liability, claim, demand, settlement, judgment, award, fine,
\npenalty, Tax, fee (including reasonable attorneys’ fees), charge, cost
\n(including costs of investigation) or expense of any nature.<\/p>\n
DISCLOSURE SCHEDULE. “Disclosure Schedule” shall mean the schedule (dated
\nas of the date of the Agreement) delivered to Parent on behalf of the Company
\nand the Shareholders.<\/p>\n
ENCUMBRANCE. “Encumbrance” shall mean any lien, pledge, hypothecation,
\ncharge, mortgage, security interest, encumbrance, claim, infringement,
\ninterference, option, right of first refusal, preemptive right, community
\nproperty interest or restriction of any nature (including any restriction on the
\nvoting of any security, any restriction on the transfer of any security or other
\nasset, any restriction on the receipt of any income derived from any asset, any
\nrestriction on the use of any asset and any restriction on the possession,
\nexercise or transfer of any other attribute of ownership of any asset).<\/p>\n
ENTITY. “Entity” shall mean any corporation (including any non-profit
\ncorporation), general partnership, limited partnership, limited liability
\npartnership, joint venture, estate, trust, company (including any limited
\nliability company or joint stock company), firm or other enterprise,
\nassociation, organization or entity.<\/p>\n
EXCHANGE ACT. “Exchange Act” shall mean the Securities Exchange Act of
\n1934, as amended.<\/p>\n
GOVERNMENT BID. “Government Bid” shall mean any quotation, bid or proposal
\nsubmitted to any Governmental Body or any proposed prime contractor or higher-
\ntier subcontractor of any Governmental Body.<\/p>\n
GOVERNMENT CONTRACT. “Government Contract” shall mean any prime contract,
\nsubcontract, letter contract, purchase order or delivery order executed or
\nsubmitted to or on behalf of any Governmental Body or any prime contractor or
\nhigher-tier subcontractor, or under which any Governmental Body or any such
\nprime contractor or subcontractor otherwise has or may acquire any right or
\ninterest.<\/p>\n
GOVERNMENTAL AUTHORIZATION. “Governmental Authorization” shall mean any:
\n(a) permit, license, certificate, franchise, permission, clearance,
\nregistration, qualification or authorization issued, granted, given or otherwise
\nmade available by or under the authority of any Governmental Body or pursuant to
\nany Legal Requirement; or (b) right under any Contract with any Governmental
\nBody.<\/p>\n
GOVERNMENTAL BODY. “Governmental Body” shall mean any: (a) nation, state,
\ncommonwealth, province, territory, county, municipality, district or other
\njurisdiction of any nature; (b) federal, state, local, municipal, foreign or
\nother government; or (c) governmental or quasi-governmental authority of any
\nnature (including any governmental division, department, <\/p>\n
A-2.<\/p>\n
agency, commission, instrumentality, official, organization, unit, body or
\nEntity and any court or other tribunal).<\/p>\n
HSR ACT. “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements
\nAct of 1976, as amended.<\/p>\n
INDEMNITEES. “Indemnitees” shall mean the following Persons: (a) Parent;
\n(b) Parent’s current and future affiliates (including the Surviving
\nCorporation); (c) the respective Representatives of the Persons referred to in
\nclauses “(a)” and “(b)” above; and (d) the respective successors and assigns of
\nthe Persons referred to in clauses “(a)”, “(b)” and “(c)” above; provided,
\nhowever, that the Shareholders shall not be deemed to be “Indemnitees.”<\/p>\n
LEGAL PROCEEDING. “Legal Proceeding” shall mean any action, suit,
\nlitigation, arbitration, proceeding (including any civil, criminal,
\nadministrative, investigative or appellate proceeding), hearing, inquiry, audit,
\nexamination or investigation commenced, brought, conducted or heard by or
\nbefore, or otherwise involving, any court or other Governmental Body or any
\narbitrator or arbitration panel.<\/p>\n
LEGAL REQUIREMENT. “Legal Requirement” shall mean any federal, state,
\nlocal, municipal, foreign or other law, statute, constitution, principle of
\ncommon law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
\nor requirement issued, enacted, adopted, promulgated, implemented or otherwise
\nput into effect by or under the authority of any Governmental Body.<\/p>\n
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
\nhave a “Material Adverse Effect” on the Company if such violation or other
\nmatter (considered together with all other matters that would constitute
\nexceptions to the representations and warranties set forth in the Agreement or
\nin the Closing Certificate but for the presence of “Material Adverse Effect” or
\nother materiality qualifications, or any similar qualifications, in such
\nrepresentations and warranties) would have a material adverse effect on the
\nCompany’s business, condition, assets, liabilities, operations, financial
\nperformance or prospects.<\/p>\n
PARENT COMPANY STOCK. “Parent Company Stock” shall mean the common stock
\nof Parent.<\/p>\n
PERSON. “Person” shall mean any individual, Entity or Governmental Body.<\/p>\n
PROPRIETARY ASSET. “Proprietary Asset” shall mean any: (a) patent, patent
\napplication, trademark (whether registered or unregistered), trademark
\napplication, trade name, fictitious business name, service mark (whether
\nregistered or unregistered), service mark application, copyright (whether
\nregistered or unregistered), copyright application, maskwork, maskwork
\napplication, trade secret, know-how, customer list, franchise, system, computer
\nsoftware, computer program, invention, design, blueprint, engineering drawing,
\nproprietary product, technology, proprietary right or other intellectual
\nproperty right or intangible asset; or (b) right to use or exploit any of the
\nforegoing.<\/p>\n
REPRESENTATIVES. “Representatives” shall mean officers, directors,
\nemployees, agents, attorneys, accountants, advisors and representatives.<\/p>\n
A-3.<\/p>\n
SEC. “SEC” shall mean the United States Securities and Exchange
\nCommission.<\/p>\n
SECURITIES ACT. “Securities Act” shall mean the Securities Act of 1933, as
\namended.<\/p>\n
TAX. “Tax” shall mean any tax (including any income tax, franchise tax,
\ncapital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
\nvalorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
\ntax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
\nany customs duty), deficiency or fee, and any related charge or amount
\n(including any fine, penalty or interest), imposed, assessed or collected by or
\nunder the authority of any Governmental Body.<\/p>\n
TAX RETURN. “Tax Return” shall mean any return (including any information
\nreturn), report, statement, declaration, estimate, schedule, notice,
\nnotification, form, election, certificate or other document or information filed
\nwith or submitted to, or required to be filed with or submitted to, any
\nGovernmental Body in connection with the determination, assessment, collection
\nor payment of any Tax or in connection with the administration, implementation
\nor enforcement of or compliance with any Legal Requirement relating to any Tax.<\/p>\n
A-4.<\/p>\n
EXHIBIT C<\/p>\n
PERSONS TO SIGN NONCOMPETITION AGREEMENTS<\/p>\n
Derek Hine
\nGraham Hine
\nRoger Hine
\nMichael Krolak
\nFred Moreno
\nRichard Dexter
\nJohn Grilly<\/p>\n
C-1.<\/p>\n
EXHIBIT H<\/p>\n
GUARANTEED OBLIGATIONS<\/p>\n
The Company’s obligation to Union Bank is guaranteed by Derek Hine.<\/p>\n
H-1.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6781],"corporate_contracts_industries":[9512],"corporate_contracts_types":[9622,9627],"class_list":["post-43646","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-asyst-technologies-inc","corporate_contracts_industries-technology__semiconductors","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43646"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43646"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43646"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}