UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 23, 2000
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NETOPIA, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-28450 94-3033136
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(State or other jurisdiction (Commission File Number) (IRS Employer)
of incorporation) Identification No.)
2470 MARINER SQUARE LOOP, ALAMEDA, CALIFORNIA 94501
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (510) 814-5100
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SAME
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(Former name or Former Address, if Changed Since Last Report.)
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ITEM 2. ACQUISITION OF SECURITIES.
On March 23, 2000, we closed a transaction in which we acquired all the
outstanding common and preferred stock of WebOrder, a California corporation, in
a merger transaction in which WebOrder merged into WO Merger Corporation, our
wholly owned subsidiary formed in connection with the transaction. WebOrder is
an application service provider and a developer of e-commerce infrastructure for
businesses and e-commerce resellers. WebOrder's Smart Commerce System offers
e-commerce solutions to on-line businesses including the ability to manage order
processing, and the ability to maintain records of customer transactions flowing
through a merchant's E-Store.
We will account for the transaction under the purchase method. The aggregate
purchase price of the transaction is approximately $20.5 million, based on the
consideration paid at closing. The final purchase price is dependent on
potential earnout payments as discussed below. The aggregate purchase price
includes:
o $1.6 million in cash paid on the closing date of the transaction;
o 233,119 shares of our common stock issued on the closing date;
o a series of potential earnout payments paid in cash and common stock after
the closing date if certain revenue milestones are achieved. These earnout
opportunities will be included in the purchase price for accounting purposes
when it is deemed probable that the earnouts will be paid;
o an accounting expense of $2.1 million relating to the substitution of stock
options to purchase our common stock in replacement of the WebOrder options
held by WebOrder's former employees, who joined Netopia after the closing;
and
o transaction costs of approximately $750,000 which include legal fees,
accounting fees, and fees for other related professional services.
Approximately 15,695 shares of our common stock will be held in escrow for one
year after the closing to satisfy WebOrder's indemnification obligations.
The shares issued in the merger were not registered under the Securities Act of
1933, as amended, in reliance upon the exemption under Section 4(2) of the Act
for nonpublic offerings.
The excess purchase price over the net book value of the assets acquired was
approximately $19.9 million, which will be allocated to acquired in-process
research and development, intangible assets, and other depreciable assets based
upon a third party valuation which is currently in progress.
The funds used to pay the cash portion of the purchase price were derived from
our existing working capital.
All of WebOrder's former full time employees became employees of Netopia.
WebOrder's founder and one other key shareholder/employee entered into
non-competition agreements in connection with the acquisition.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
It is impracticable for Netopia currently to provide the required
financial statements for WebOrder called for by Item 7(a). Pursuant to paragraph
(a)(4) of Item 7 of Form 8-K, the financial statements of WebOrder required to
be filed under paragraph (a) of this Item 7 will be filed as soon as
practicable, but not later than required by Item 7 of Form 8-K.
(B) PRO FORMA FINANCIAL INFORMATION.
It is impracticable for Netopia currently to provide the pro forma
financial information with respect to the acquisition of WebOrder by Netopia
called for by this Item 7(b). Pursuant to paragraphs (b)(2) and (a)(4) of Item
7, the pro forma financial statements required to be filed under paragraph (b)
of this Item 7 will be filed as soon as practicable, but not later than required
by paragraphs (b)(2) and (a)(4) of Item 7 of Form 8-K.
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(C) EXHIBITS:
EXHIBIT
NUMBER DESCRIPTION
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2.1 Agreement and Plan of Reorganization dated
February 22, 2000 by and between Netopia, Inc., a
Delaware corporation, WO Merger Corporation, a
Delaware corporation that is a wholly-owned
subsidiary of Netopia, and WebOrder, a California
corporation*
2.2 Registration Rights Agreement dated March 23, 2000
* PURSUANT TO ITEM 601(B)(2) OF REGULATION S-K, THE EXHIBITS TO THIS AGREEMENT
AND PLAN OF REORGANIZATION HAVE BEEN OMITTED. OMITTED EXHIBITS INCLUDE THE
CERTIFICATE OF MERGER, ESCROW AGREEMENT, AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF SURVIVING CORPORATION, INVESTMENT REPRESENTATION LETTER, VOTING
AGREEMENTS, FORMS OF LEGAL OPINIONS, NON-COMPETITION AGREEMENTS, EARNOUT PAYMENT
CRITERIA, AND EMPLOYEE INCENTIVE AGREEMENTS. SUCH EXHIBITS WILL BE SUBMITTED TO
THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
NETOPIA, INC.
Date: April 7, 2000 By: /s/ James A. Clark
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James A. Clark
Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2.1 Agreement and Plan of Reorganization dated February 22, 2000 by and
between Netopia, Inc., a Delaware corporation, WO Merger Corporation, a
Delaware corporation that is a wholly-owned subsidiary of Netopia and
WebOrder, a California corporation*
2.2 Registration Rights Agreement dated March 23, 2000
* PURSUANT TO ITEM 601(B)(2) OF REGULATION S-K, THE EXHIBITS TO THIS AGREEMENT
AND PLAN OF REORGANIZATION HAVE BEEN OMITTED. OMITTED EXHIBITS INCLUDE THE
CERTIFICATE OF MERGER, ESCROW AGREEMENT, AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF SURVIVING CORPORATION, INVESTMENT REPRESENTATION LETTER, VOTING
AGREEMENTS, FORMS OF LEGAL OPINIONS, NON-COMPETITION AGREEMENTS, EARNOUT PAYMENT
CRITERIA, AND EMPLOYEE INCENTIVE AGREEMENTS. SUCH EXHIBITS WILL BE SUBMITTED TO
THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
AGREEMENT AND PLAN OF REORGANIZATION
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TABLE OF CONTENTS
PAGE
ARTICLE 1 CERTAIN DEFINITIONS..................................................1
ARTICLE 2 PLAN OF REORGANIZATION...............................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF WEBORDER..........................13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF NETOPIA AND SUB...................33
ARTICLE 5 PRE-CLOSING COVENANTS OF WEBORDER...................................36
ARTICLE 6 NETOPIA COVENANTS...................................................41
ARTICLE 7 CLOSING MATTERS.....................................................42
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF WEBORDER...............................43
ARTICLE 9 CONDITIONS TO OBLIGATIONS OF NETOPIA................................45
ARTICLE 10 TERMINATION OF AGREEMENT...........................................48
ARTICLE 11 SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES,
CONTINUING COVENANTS...............................................48
ARTICLE 12 MISCELLANEOUS......................................................50
<PAGE>
LIST OF EXHIBITS
Exhibit A Certificate of Merger
Exhibit B Escrow Agreement
Exhibit C Amended and Restated Certificate of Incorporation of Surviving
Corporation
Exhibit D Bylaws of Surviving Corporation
Exhibit E Investment Representation Letter
Exhibit F Registration Rights Agreement
Exhibit G Voting Agreement
Exhibit H Matters to be Covered in the Opinion of Fenwick & West, LLP
Exhibit I Matters to be Covered in the Opinion of Venture Law Group, LLP
Exhibit J WebOrder Non-Competition Agreement
Exhibit K WebOrder Earn-Out Performance Milestones
Exhibit L Schedule of Incentive Payments to Certain WebOrder Employees
Section 9.15 Form of Offset Letter Agreement
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made
and entered into as of February 22, 2000 (the "AGREEMENT DATE") by and among
Netopia, Inc., a Delaware corporation ("NETOPIA"), WO Merger Corporation, a
Delaware corporation that is a wholly-owned subsidiary of Netopia ("SUB"), and
WebOrder a California corporation ("WEBORDER").
RECITALS
A. The parties intend that, subject to the terms and conditions of this
Agreement, WebOrder will be merged with and into Sub in a forward triangular
merger, with Sub to be the surviving corporation of such merger, all pursuant to
the terms and conditions of this Agreement and applicable law. The parties also
intend for such merger to be treated as a "reorganization" under Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "CODE"), and to be treated
as a "purchase" transaction for accounting purposes.
B. Upon the effectiveness of the merger, (i) the common stock and
preferred stock of WebOrder that is outstanding immediately before the
effectiveness of the merger will be converted into shares of the common stock of
Netopia and the cash consideration provided for herein, (ii) the stock options
to purchase shares of WebOrder's common stock that are outstanding immediately
before the effectiveness of the Merger will become options to purchase shares of
the common stock of Netopia and (iii) WebOrder will be merged with and into Sub,
all as provided in this Agreement.
C. Concurrently herewith, Netopia and certain stockholders of WebOrder
shall enter into the Voting Agreement and related Irrevocable Proxies (as
defined below).
AGREEMENT
THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
CERTAIN DEFINITIONS
1. DEFINITIONS. As used in this Agreement, the following terms will
have the meanings set forth below or in the Sections referenced below:
1.1 "1933 ACT": Section 2.2.2
1.2 "1934 ACT": Section 2.2.2
1.3 "APPLICABLE LAW": Section 3.14.1
1.4 "BALANCE SHEET": Section 3.8.1
1.5 "BALANCE SHEET DATE" : Section 3.8.1
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1.6 "BUSINESS" means the financial condition, properties, assets,
liabilities, business, operations or results of operations of such entity and
its subsidiaries, taken as a whole. 1.7 "CCSL" means the California Corporate
Securities Law of 1968, and the California Corporations Code, each as amended.
1.8 "CLAIM": Section 3.6.
1.9 The "CLOSING" means the closing of the transactions contemplated by
this Agreement to consummate the Merger.
1.10 The "CLOSING DATE": Section 7.1.
1.11 "COMMON STOCK ALL-STOCK ELECTION" means an irrevocable election,
in form and substance satisfactory to Netopia, made by a holder of WebOrder
Common Stock and delivered to Netopia at least two (2) days before the Closing
Date, to receive, with respect to a share of WebOrder Common Stock held by that
holder, the Common Stock Stock Amount Per Share and Common Stock Cash Amount Per
Share (which is $0.00 for such shares) specified for shares with respect to
which a Common Stock All-Stock Election has been made.
1.12 "COMMON STOCK CASH ELECTION" means an irrevocable election, in
form and substance satisfactory to Netopia, made by a holder of WebOrder Common
Stock and delivered to Netopia at least two (2) days before the Closing Date, to
receive, with respect to a share of WebOrder Common Stock held by that holder,
the Common Stock Stock Amount Per Share and the Common Stock Cash Amount Per
Share specified for shares with respect to which a Common Stock Cash Election
has been made.
1.13 "COMMON STOCK STOCK AMOUNT PER SHARE" means (i) with respect to a
share of WebOrder Common Stock held by a holder of WebOrder Common Stock who has
delivered a Common Stock Cash Election with respect to that share, a fraction of
one share of Netopia Common Stock equal to $4.00 divided by the Netopia Average
Price Per Share, which represents the number of shares of Netopia Common Stock
that each share of WebOrder Common Stock (other than WebOrder Dissenting Shares)
with respect to which a Common Stock Cash Election has been made is entitled to
receive at the Closing of the Merger, and (ii) with respect to a share of
WebOrder Common Stock held by a holder of WebOrder Common Stock who has
delivered a Common Stock All-Stock Election with respect to that share, a
fraction of one share of Netopia Common Stock equal to $5.00 (subject to
reduction as described in Section 2.1.5) divided by the Netopia Average Price
Per Share, which represents the number of shares of Netopia Common Stock that
each share of WebOrder Common Stock (other than WebOrder Dissenting Shares) with
respect to which a Common Stock All-Stock Election has been made is entitled to
receive at the Closing of the Merger; provided, however, that with respect to
shares as to which a Common Stock Cash Election has been made, if the Common
Stock Cash Amount Per Share is reduced by virtue of Section 2.1.2(d) below, then
the Common Stock Stock Amount Per Share shall also include an additional
fraction of one share of Netopia Common Stock equal to (i) the dollar amount by
which the Common Stock Cash Amount Per Share was so reduced, divided by (ii) the
Netopia Average Price Per Share.
1.14 "COMMON STOCK CASH AMOUNT PER SHARE" means (i) with respect to a
share of WebOrder Common Stock held by a holder of WebOrder Common Stock who has
delivered a Common Stock Cash Election with respect to that share, the Total
Cash Consideration minus the Total Preferred Stock Cash Amount, divided by the
total number of shares of WebOrder Common Stock outstanding at the Closing with
respect to which Common Stock Cash Elections have been made (other than WebOrder
Dissenting Shares), up to a maximum amount of $1.00 per share of WebOrder Common
Stock for shares with respect to which a Common Stock Cash Election has been
made, and (ii) with respect to shares of WebOrder Common Stock held by a holder
of WebOrder Common Stock who has delivered a Common Stock All-Stock Election
with respect to that share, no dollars ($0.00).
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1.15 "DGCL" means the Delaware General Corporation Law, as amended.
1.16 "EARN-OUT PAYMENTS": Section 2.1.6.
1.17 The "EFFECTIVE TIME" means the date and time on which the Merger
first becomes legally effective under the laws of the State of Delaware as a
result of the filing with the Delaware Secretary of State of a Certificate of
Merger between Sub and WebOrder in substantially the form of EXHIBIT A (the
"CERTIFICATE OF MERGER") together with any required officers' certificates.
1.18 "ESCROW AGENT": Section 2.4.1.
1.19 "ESCROW PERIOD": Section 2.4.1.
1.20 "ESCROW RELEASE DATE": Section 11.1.
1.21 "ESCROW REPRESENTATIVE": Section 2.4.2.
1.22 "ESCROW SHARES": Section 2.4.1.
1.23 "EXCESS TRANSACTION EXPENSES": Section 12.7.
1.24 "GOVERNMENT AUTHORITY": Section 3.3.2.
1.25 "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the regulations thereunder (the "HSR ACT"). 1.26
"INFORMATION STATEMENT" means an information statement to be provided to
WebOrder's stockholders in connection with the consideration of the approval and
adoption of this Agreement, the Merger and the other transactions contemplated
hereby by WebOrder's stockholders and the offering and issuance of shares of
Netopia Common Stock to WebOrder's stockholders in the Merger.
1.27 "INTELLECTUAL PROPERTY": Section 3.13.1
1.28 "KNOWLEDGE," when used with reference to a party, means the actual
knowledge of the officers, directors and employees of such party who would
reasonably be expected to have knowledge of such matters.
1.29 "MATERIAL ADVERSE CHANGE" when used with reference to any entity
or group of entities, means a material adverse change in the Business of a party
OTHER THAN (a) a change arising or resulting, directly or indirectly, from
general industry, economic or stock market conditions or (b) a change that is
demonstrably shown to have been proximately caused by the public announcement
of, and the response or reaction of customers, vendors, licensors, investors or
employees of such entity or group of entities to, this Agreement, the Merger or
any of the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that
with respect to Netopia, a reduction in the market price of Netopia Common Stock
shall not, in and of itself, constitute a Material Adverse Change with respect
to Netopia.
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1.30 "MATERIAL ADVERSE EFFECT" when used with reference to any entity
or group of related entities, means any event, change or effect that has
occurred and that is (or will with the passage of time will be) materially
adverse to the Business of a party.
1.31 "MERGER" means the statutory merger of WebOrder with and into Sub
to be effected pursuant to this Agreement. 1.32 "MERGER CONSIDERATION" means the
Total Cash Consideration and Total Stock Consideration, considered together,
subject to reduction as provided in Section 2.1.5 below.
1.33 "NETOPIA ANCILLARY AGREEMENTS" means, collectively, each
certificate to be delivered by Netopia or an officer or officers of Netopia at
the Closing pursuant to Article 8 of this Agreement and each agreement (other
than this Agreement) which Netopia is to enter into as a party thereto pursuant
to or in connection with this Agreement.
1.34 "NETOPIA AVERAGE PRICE PER SHARE" means $63.6328, which is the
average of the closing prices per share of Netopia Common Stock as quoted on the
Nasdaq National Market System and reported in THE WALL STREET JOURNAL for the
twenty (20) trading days preceding (but including) February 22, 2000. 1.35
"NETOPIA COMMON STOCK" means Netopia's Common Stock, $0.001 par value per share.
1.36 "NETOPIA DISCLOSURE LETTER": Article 4 preamble. 1.37 "NETOPIA
OPTION": Section 2.2.1 1.38 "PREFERRED STOCK CASH AMOUNT PER SHARE" means the
sum of $3.00, payable in cash or by check, which represents the cash amount that
each share of WebOrder Common Stock (other than WebOrder Dissenting Shares) is
entitled to receive at the Closing of the Merger.
1.39 "PREFERRED STOCK STOCK AMOUNT PER SHARE" means a fraction of one
share of Netopia Common Stock equal to $1.50 divided by the Netopia Average
Price Per Share, which represents the number of shares of Netopia Common Stock
that each share of WebOrder Preferred Stock (other than WebOrder Dissenting
Shares) is entitled to receive at the Closing of the Merger.
1.40 "RECORD DATE": Section 3.23
1.41 "RIGHTS AGREEMENT": Section 2.6.1
1.42 "SEC": Section 2.2.2
1.43 "SHAREHOLDER REPRESENTATION LETTER": Section 9.16.
1.44 "SUB ANCILLARY AGREEMENTS" means, collectively, the Certificate of
Merger, each certificate to be delivered by Sub or an officer or officers of Sub
at the Closing pursuant to Article 8 of this Agreement and each agreement (other
than this Agreement) which Sub is to enter into as a party, pursuant to or in
connection with this Agreement.
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1.45 "SURVIVING CORPORATION": Section 2.5
1.46 "TAX" and "TAXES": Section 3.7.2
1.47 "TERMINATION DATE" means 21 business days following Agreement
Date.
1.48 "TOTAL COMMON STOCK CASH AMOUNT" means the aggregate of all Common
Stock Cash Amount Per Share payments made pursuant to Section 2.1.2 (excluding
payments to holders of WebOrder Dissenting Shares). 1.49 "TOTAL PREFERRED STOCK
CASH AMOUNT" means an amount equal to the aggregate amount of cash payable to
holders of WebOrder Preferred Stock pursuant to Section 2.1.2 (excluding
payments to holders of WebOrder Dissenting Shares).
1.50 "TOTAL CASH CONSIDERATION" means the aggregate of all Common Stock
Cash Amount Per Share and Preferred Stock Cash Amount Per Share payments made
pursuant to Section 2.1.2, but in no event more than Five Million Dollars
($5,000,000), subject in any event to reduction as set forth in Section 2.1.5
below. 1.51 "TOTAL STOCK CONSIDERATION" means the total number of shares of
Netopia Common Stock that are issuable to holders of WebOrder Common Stock and
WebOrder Preferred Stock pursuant to this Agreement. 1.52 "WEBORDER ANCILLARY
AGREEMENTS" means, collectively, the Certificate of Merger, each certificate to
be delivered by WebOrder or an officer or officers of WebOrder at the Closing
pursuant to Article 9 of this Agreement, and each other agreement (other than
this Agreement) which WebOrder is to enter into as a party, pursuant to or in
connection with this Agreement.
1.53 "WEBORDER ARTICLES" means the Articles of Incorporation of
WebOrder, as amended, in effect immediately before the Effective Time.
1.54 "WEBORDER COMMON STOCK" means WebOrder's Common Stock, no par
value per share.
1.55 "WEBORDER DISCLOSURE LETTER": Article 3 preamble.
1.56 "WEBORDER DISSENTING SHARES" means any shares of any capital stock
of WebOrder that (i) are outstanding immediately before the Effective Time and
qualify fully as "dissenting shares" within the meaning of Section 1300 et seq.
of the CCSL or other applicable law and (ii) with respect to which appraisal or
dissenter's rights to require the purchase of such dissenting shares for cash at
their fair value or fair market value in accordance with Section 1300 et seq. of
the CCSL or other applicable law have been duly and properly exercised and
perfected in connection with the Merger in accordance with the CCSL and other
applicable law.
1.57 "WEBORDER FINANCIAL STATEMENTS": Section 3.8.1
1.58 "WEBORDER IP RIGHTS": Section 3.13.1
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1.59 "WEBORDER IP RIGHTS AGREEMENTS": Section 3.13.2
1.60 "WEBORDER KEY EMPLOYEES" means Katie Peterson and Mark
Coopersmith.
1.61 "WEBORDER MATERIAL AGREEMENTS": Section 3.11
1.62 "WEBORDER OPTION EXCHANGE RATIO" means the Common Stock Amount Per
Share plus a fraction of a share of Netopia Common Stock equal to the Common
Stock Cash Amount Per Share, divided by the Netopia Average Price Per Share.
1.63 "WEBORDER OPTIONS" means options to purchase shares of WebOrder
Common Stock granted by WebOrder under WebOrder's 1997 Stock Option Plan (the
"WEBORDER OPTION PLAN"). 1.64 "WEBORDER PREFERRED STOCK" means WebOrder's
Preferred Stock, no par value per share, of any series. "WEBORDER SERIES A
STOCK" means WebOrder's Series A Preferred Stock, no par value per share.
"WEBORDER SERIES B STOCK" means WebOrder's Series B Preferred Stock, no par
value per share.
1.65 "WEBORDER RIGHTS AGREEMENT": Section 3.4.3
1.66 "WEBORDER SHAREHOLDERS" means, collectively, those persons (each
referred to individually as a "WEBORDER SHAREHOLDER") who, immediately before
the Effective Time hold the shares of WebOrder Common Stock or WebOrder
Preferred Stock that are outstanding immediately before the Effective Time;
PROVIDED, HOWEVER, that for purposes of Section 2.4 and Article 11 of this
Agreement, the term "WebOrder Shareholders" means only those WebOrder
Shareholders (as defined above in this Section) who are issued shares of Netopia
Common Stock in the Merger pursuant to Section 2.1.2 of this Agreement and
excludes holders of WebOrder Dissenting Shares who are not issued shares of
Netopia Common Stock in the Merger pursuant to Section 2.1.2 of this Agreement.
Other capitalized terms defined elsewhere in this Agreement and not
defined in this Article I will have the meanings assigned to such terms in this
Agreement.
ARTICLE 2
PLAN OF REORGANIZATION
2.1 CONVERSION OF SHARES.
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2.1.1 CONVERSION OF SUB STOCK. At the Effective Time, each share of the
Common Stock of Sub that is issued and outstanding immediately before the
Effective Time will, by virtue of the Merger and without the need for any
further action on the part of the holder thereof, remain one share of Sub Common
Stock after the Effective Time.
2.1.2 CONVERSION OF WEBORDER STOCK; CANCELLATION OF TREASURY SHARES.
Before the Effective Time, each WebOrder Shareholder (other than holders of
Dissenting Shares) shall deliver to Netopia either a Common Stock Cash Election
or a Common Stock All-Stock Election with respect to each share of WebOrder
Common Stock held by that WebOrder Shareholder. The following shall occur at the
Effective Time (subject to the provisions of Section 2.1.4 regarding the payment
of cash in lieu of fractional shares).
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(a) Each share of WebOrder Common Stock that is issued and
outstanding immediately before the Effective Time (OTHER THAN any WebOrder
Dissenting Shares as provided in Section 2.1.3) will, by virtue of the Merger,
and without the need for any further action on the part of the holder thereof,
be converted into the right to receive: (i) if the holder of such share has
delivered a Common Stock Cash Election with respect to such shares, (A) that
number of shares of Netopia Common Stock equal to the Common Stock Stock Amount
Per Share, (B) an amount of cash equal to the Common Stock Cash Amount Per
Share, and (C) the Earn-Out Payments described in Section 2.1.6 below, if
earned; and (ii) if the holder of such share has delivered a Common Stock
All-Stock Election, (A) that number of shares of Netopia Common Stock equal to
the Common Stock Stock Amount Per Share, (B) an amount of cash equal to the
Common Stock Cash Amount Per Share (which shall be $0.00 with respect to such
share), and (C) the Earn-Out Payments described in Section 2.1.6 below, if
earned.
(b) Each share of WebOrder Preferred Stock that is issued and
outstanding immediately before the Effective Time (OTHER THAN any WebOrder
Dissenting Shares as provided in Section 2.1.3) will, by virtue of the Merger,
and without the need for any further action on the part of the holder thereof,
be converted into the right to receive (i) that number of shares of Netopia
Common Stock equal to the Preferred Stock Stock Amount Per Share and (ii) an
amount of cash equal to the Preferred Stock Cash Amount Per Share.
(c) The sum of the aggregate Total Common Stock Cash Amount and
Total Preferred Stock Cash Amount shall not exceed the Total Cash Consideration.
(d) If, by virtue of the number of shares of WebOrder Preferred
Stock that are outstanding at the Closing, the application of paragraphs (a) and
(b) above would cause the sum of the Total Common Stock Cash Amount and the
Total Preferred Stock Cash Amount to exceed the Total Cash Consideration, then
(A) the Common Stock Cash Amount Per Share shall be reduced, on a pro rata basis
among shares of WebOrder Common Stock with respect to which a Common Stock Cash
Election has been made, until such sum does not exceed the Total Cash
Consideration, and (B) the Common Stock Stock Amount Per Share with respect to
such shares shall be increased to include an additional fraction of one share of
Netopia Common Stock equal to (i) the dollar amount by which the Common Stock
Cash Amount Per Share was so reduced, divided by (ii) the Netopia Average Price
Per Share.
(e) Each outstanding share of capital stock of WebOrder that is held
in the treasury of WebOrder immediately before the Effective Time shall be
canceled and extinguished and no consideration whatsoever shall be paid or
delivered in exchange therefor.
2.1.3 WEBORDER DISSENTING SHARES. Holders of WebOrder Dissenting
Shares (if any) will be entitled to their appraisal rights under Section 1300 et
seq. of the CCSL and other applicable law with respect to such WebOrder
Dissenting Shares and such WebOrder Dissenting Shares will not be converted into
shares of Netopia Common Stock or cash consideration in the Merger; PROVIDED,
HOWEVER, that nothing in this Section is intended to remove, release, waive,
alter or affect any of the conditions to Netopia's and Sub's obligations to
consummate the Merger set forth in Section 9.8 or Section 9.9, or any other
provision of this Agreement relating to the WebOrder Dissenting Shares; and
PROVIDED FURTHER, that shares of the capital stock of WebOrder that are
outstanding immediately before the Effective Time respecting which dissenting
stockholders' rights of appraisal under Section 1300 et seq. of the CCSL or
other applicable law have not been properly perfected will, when such dissenting
stockholders' rights of appraisal can no longer be legally exercised under the
CCSL or other applicable law, be converted into Netopia Common Stock and cash as
provided in Section 2.1.2.
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2.1.4 FRACTIONAL SHARES; ROUNDING OF CASH PAYMENTS. No fractional
shares of Netopia Common Stock will be issued in connection with the Merger. In
lieu thereof, each holder of WebOrder Common Stock and each holder of WebOrder
Preferred Stock who would otherwise be entitled to receive a fraction of a share
of Netopia Common Stock pursuant to Section 2.1.2, computed after aggregating
all shares of Netopia Common Stock to be received by such holder pursuant to
Section 2.1.2, will instead receive from Netopia, within ten (10) business days
after the Effective Time, an amount of cash (rounded to the nearest whole cent)
equal to the product obtained by multiplying (i) the Netopia Average Price Per
Share (as adjusted to reflect any Capital Change (as defined in Section 2.3
below)) by (ii) the fraction of a share of Netopia Common Stock that such holder
would otherwise be entitled to receive. No fractions of a cent will be paid in
connection with the Merger and each holder of WebOrder Common Stock, and each
holder of WebOrder Preferred Stock who would otherwise be entitled to receive a
fraction of a cent pursuant to Section 2.1.2, computed after aggregating all
cash to be received by such holder pursuant to Section 2.1.2, will instead have
such cash amount rounded down to the nearest whole cent.
2.1.5 REDUCTION IN MERGER CONSIDERATION, TOTAL CASH CONSIDERATION AND
TOTAL STOCK CONSIDERATION. The aggregate Merger Consideration, Total Cash
Consideration and Total Stock Consideration shall be reduced by the amount of
any Excess Transaction Expenses and the amount of any liability or debt of any
WebOrder Shareholder to WebOrder (or any subsidiary thereof) that is outstanding
as of the Effective Time, together with any interest accrued thereon as of the
Effective Time, regardless of when such liability or debt, or accrued interest,
is otherwise due and payable to WebOrder or such subsidiary (including without
limitation promissory notes in an aggregate principal amount of $26,500
reflecting the purchase price of shares of WebOrder Common Stock held by certain
WebOrder Shareholders, which promissory notes WebOrder intends to forgive before
the Closing Date). If the aggregate Merger Consideration is reduced as described
in the preceding sentence, then all share and cash amounts payable to WebOrder
Shareholders at the Closing (including without limitation the Total Cash
Consideration, Total Stock Consideration, Preferred Stock Cash Amount Per Share,
Preferred Stock Stock Amount Per Share, Common Stock Cash Amount Per Share and
Common Stock Stock Amount Per Share) shall be reduced proportionately among all
WebOrder Shareholders (with such reductions to be applied to cash payable to
holders of WebOrder Preferred Stock and WebOrder Common Stock with respect to
which Common Stock Cash Elections have been made, and to be applied to stock
payable to holders of WebOrder Common Stock with respect to which Common Stock
All-Stock Elections have been made) on a pro rata, share-for-share basis (with
the amount of any reductions in the number of shares of Netopia Common Stock
receivable being determined based on the Netopia Average Price Per Share), with
all such reductions rounded to the nearest cent and the nearest share
(determined on an aggregate basis for each WebOrder Shareholder). For example,
if at the Closing there are 1,500,000 shares of WebOrder Preferred Stock
outstanding, 1,000,000 shares of WebOrder Common Stock which have made the
Common Stock All-Stock Election, and 1,500,000 shares of WebOrder Common Stock
which have made the Common Stock Cash Election, if the Merger Consideration is
reduced pursuant to this Section by $400,000 ($0.10 per share), each share of
WebOrder Preferred Stock would receive $2.90 cash and $1.50 in Netopia Common
Stock, each share with respect to which Common Stock Stock All-Stock Elections
have been made would receive $4.90 in Netopia Common Stock, and each share with
respect to which Common Stock Cash Elections have been made would receive $0.90
cash and $4.00 in Netopia Common Stock.
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2.1.6 POTENTIAL EARN-OUT PAYMENTS. In addition to the consideration
specified in Section 2.1.2 above, holders of WebOrder Common Stock, but not
holders of WebOrder Preferred Stock, will be eligible to receive additional
shares of Netopia Common Stock (in the case of shares with respect to which a
Common Stock Cash Election was made) or cash (in the case of shares with respect
to which a Common Stock All-Stock Election was made), up to a maximum potential
amount of $1.50 in cash or, as the case may be, a number of additional shares of
Netopia Common Stock per share of WebOrder Common Stock equal to $1.50 divided
by the Netopia Average Price Per Share, upon achievement of specified
performance milestones after the Closing Date (the "EARN-OUT PAYMENTS"), which
milestones and cash payments are specified in Exhibit K. Netopia shall cause the
cash and/or the shares constituting such Earn-Out Payments to be issued within
forty-five (45) days after achievement of each milestone or, if later, after the
end of the fiscal quarter for which such milestone is measured.
2.2 CONVERSION OF WEBORDER OPTIONS.
2.2.1 CONVERSION OF WEBORDER OPTIONS BY NETOPIA. Each WebOrder Option
that is outstanding immediately before the Effective Time will, upon receipt of
any necessary consents from the holders thereof and by virtue of the Merger and
at the Effective Time and without the need for any further action on the part of
any holder thereof, be converted into an option (a "NETOPIA OPTION") under the
Netopia Stock Option Plan to purchase, for each share of WebOrder Common Stock
issuable upon the exercise of such WebOrder Option immediately before the
Effective Time, that number of shares of Netopia Common Stock that is equal to
the WebOrder Option Exchange Ratio, at an exercise price per such share of
WebOrder Common Stock equal to the exercise price per share of WebOrder Common
Stock that was in effect for such WebOrder Option immediately before the
Effective Time divided by the WebOrder Option Exchange Ratio; PROVIDED, HOWEVER,
that if the foregoing calculation would result in an assumed and converted
WebOrder Option being converted into a Netopia Option that, after aggregating
all the shares of Netopia Common Stock issuable upon the exercise of such
Netopia Option, would be exercisable for a fraction of a share of Netopia Common
Stock, then the number of shares of Netopia Common Stock subject to such Netopia
Option will be rounded up to the nearest whole number of shares of Netopia
Common Stock. The terms, exercisability, status as an "incentive stock option"
under Section 422 of the Code (if applicable) or as a nonqualified stock option,
and all other terms and conditions of each WebOrder Option that is converted
into a Netopia Option in the Merger will (except as otherwise expressly provided
in the terms of such WebOrder Options), to the extent permitted by law and
otherwise reasonably practicable, be unchanged and continue in effect after the
Effective Time. The vesting schedule and vesting start dates of such replacement
Netopia Options shall be the same as the WebOrder Options that they replaced.
Upon the Effective Time, WebOrder's repurchase rights (if any) with respect to
any unvested shares of WebOrder Common Stock that have been issued or are
issuable upon the exercise of the WebOrder Options shall be assigned to Netopia
and shall thereafter apply to the unvested shares of Netopia Common Stock issued
or issuable upon exercise of the Netopia Options into which the WebOrder Options
are converted pursuant to this Section. This Section is intended to meet the
requirements of Section 424(a) of the Code and shall be interpreted consistent
with such intent.
2.2.2 REGISTRATION ON FORM S-8. Netopia will, within 45 days after the
Closing, cause the shares of Netopia Common Stock that are subject to issuance
upon exercise of the Netopia Options that are issued upon the substitution,
under Section 2.2.1, of WebOrder Options held by WebOrder employees, directors,
officers and consultants to be covered by Netopia's existing registration
statement on Form S-8 (or successor form) promulgated by the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the
"1933 ACT"), and will use its diligent efforts to maintain the effectiveness of
such Form S-8 registration statement or registration statements for so long as
such Netopia Options remain outstanding and Netopia Common Stock is registered
under the Securities Exchange Act of 1934, as amended (the "1934 ACT").
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2.3 ADJUSTMENTS FOR CAPITAL CHANGES. Notwithstanding the provisions of
Section 2.1 or Section 2.2, if at any time after the Agreement Date and before
the Effective Time, Netopia recapitalizes, either through a subdivision (or
stock split) of any of its outstanding shares of Netopia Common Stock into a
greater number of such shares, or a combination (or reverse stock split) of any
of its outstanding shares of Netopia Common Stock into a lesser number of such
shares, or reorganizes, reclassifies or otherwise changes its outstanding shares
of Netopia Common Stock into the same or a different number of shares of other
classes or series of Netopia capital stock (other than through a subdivision or
combination of shares provided for in the preceding clause), or declares a
dividend on its outstanding shares of Netopia Common Stock that is payable in
shares of Netopia Common Stock or in shares or securities convertible into or
exercisable or exchangeable for, shares of Netopia Common Stock without the
payment of any consideration therefor (each, a "CAPITAL CHANGE"), then the
Netopia Average Price Per Share, the number of shares of Netopia Common Stock
into which each outstanding share of WebOrder Common Stock and each share of
WebOrder Preferred Stock is converted in the Merger, and the number of shares of
Netopia Common Stock issuable under each Netopia Option issued in the Merger
under Section 2.2, will each be proportionally and equitably adjusted to reflect
such Capital Change.
2.4 ESCROW.
------
2.4.1 ESCROW OF SHARES FOR INDEMNIFICATION; ESCROW AGREEMENT.
At the Closing of the Merger, Netopia will withhold from the Total Stock
Consideration that number of shares of Netopia Common Stock (rounded down to the
nearest whole number of shares) obtained by dividing $1,000,000 by the Netopia
Average Price Per Share (such withheld shares of Netopia Common Stock being
hereinafter referred to as the "ESCROW SHARES") and will deliver certificates
representing such Escrow Shares to Greater Bay Trust Company or a similar
institution, as escrow agent (the "ESCROW AGENT"), to be held by the Escrow
Agent under the provisions of this Agreement and an escrow agreement in
substantially the form of EXHIBIT B (the "ESCROW AGREEMENT") to be entered into
at the Closing by Netopia, the Escrow Agent, and the Escrow Representative (as
defined below), as security for the WebOrder Shareholders' indemnification
obligations under Article 11 hereof. The number of Escrow Shares withheld from
each WebOrder Shareholder will be determined pro rata in the same proportion as
the total number of shares of WebOrder Common Stock and WebOrder Preferred Stock
held by such WebOrder Shareholder bears to the total number of shares of
WebOrder Common Stock and WebOrder Preferred Stock at the Closing Date. The
Escrow Shares will be represented by stock certificates (or, in Netopia's
discretion, a single global certificate) issued in the names of each of the
WebOrder Shareholders in proportion to their respective interests in the Escrow
Shares and will be held by the Escrow Agent during that time period commencing
on the Effective Time and one year after the Closing Date (the "ESCROW PERIOD").
2.4.2 EFFECT OF WEBORDER SHAREHOLDER APPROVAL REGARDING ESCROW
SHARES; ESCROW Representative. By their approval of the Merger, the WebOrder
Shareholders will be conclusively deemed to have consented to and approved: (i)
the provisions of Article 11; (ii) the Escrow Agreement; (iii) the appointment
of Katie Peterson as the representative of WebOrder Shareholders (the "ESCROW
REPRESENTATIVE") under the Escrow Agreement and as the attorney-in-fact and
agent for and on behalf of each WebOrder Shareholder as provided in the Escrow
Agreement; and (iv) the taking by the Escrow Representative of any and all
actions and the making of any decisions required or permitted to be taken by the
Escrow Representative under this Agreement and/or the Escrow Agreement,
including, without limitation, the exercise of the power to: (a) authorize
delivery to Netopia of Escrow Consideration in satisfaction of indemnity claims
by Netopia or any other Indemnified Person (as defined herein) pursuant to
Article 11 and/or the Escrow Agreement; (b) agree to, negotiate, enter into
settlements and compromises of, demand arbitration of, and comply with orders of
courts and awards of arbitrators with respect to, such claims or other rights;
(c) arbitrate, resolve, settle or compromise any claim made pursuant to or
rights under Article 11; and (d) take all actions necessary in the judgment of
the Escrow Representative for the accomplishment of the foregoing. Netopia
shall, at its sole option and discretion, be entitled to condition the issuance
of any cash and shares of Netopia Common Stock pursuant to Section 2.1.2 to any
WebOrder Shareholder on its receipt of written stock transfer powers in form and
substance reasonably acceptable to Netopia. The Escrow Representative will have
authority and power to act on behalf of each WebOrder Shareholder with respect
to the Escrow Agreement and the disposition, settlement or other handling of all
claims under or rights under Article 11 hereof or governed by the Escrow
Agreement, and all rights or obligations arising under the Escrow Agreement so
long as all WebOrder Shareholders are treated in the same manner. The WebOrder
Shareholders will be bound by all actions taken and documents executed by the
Escrow Representative in connection with the Escrow Agreement, and Netopia will
be entitled to rely on any action or decision of the Escrow Representative. In
performing the functions specified in this Agreement and the Escrow Agreement,
the Escrow Representative will not be liable to any WebOrder Shareholder in the
absence of gross negligence or willful misconduct on the part of the Escrow
Representative. Any out-of-pocket costs and expenses reasonably incurred by the
Escrow Representative in connection with actions taken by the Escrow
Representative pursuant to the terms of the Escrow Agreement (including without
limitation the hiring of legal counsel and the incurring of legal fees and
costs) will be paid by the WebOrder Shareholders to the Escrow Representative
pro rata in proportion to their respective percentage interests in the Escrow
Consideration.
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2.5 EFFECTS OF THE MERGER. At and upon the Effective Time:
---------------------
(a) the separate existence of WebOrder will cease and WebOrder
will be merged with and into Sub, and Sub will be the surviving corporation of
the Merger (sometimes hereinafter referred to as the "SURVIVING CORPORATION")
pursuant to the terms of this Agreement and the Certificate of Merger;
(b) the Certificate of Incorporation of Sub will be amended
and restated to read as set forth in EXHIBIT C attached hereto, which will be
the Certificate of Incorporation of the Surviving Corporation immediately after
the Effective Time;
(c) the Bylaws of Sub will be amended to read as set forth in
the Bylaws attached as EXHIBIT D hereto, which will be the Bylaws of the
Surviving Corporation immediately after the Effective Time;
(d) each share of WebOrder Common Stock and each share of
WebOrder Preferred Stock that is issued and outstanding immediately before the
Effective Time will be converted into Netopia Common Stock, cash, and the right
to receive a pro rata portion of the Earn-Out Payments, and each WebOrder Option
that is outstanding immediately before the Effective Time, will be converted
into a Netopia Option, in each case, as provided in this Article 2;
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(e) each share of Sub Common Stock that is outstanding
immediately before the Effective Time will continue to represent one share of
Sub Common Stock as provided in Section 2.1.1;
(f) the officers of the Surviving Corporation immediately
after the Effective Time will be the individuals who are the officers of [Sub]
immediately before the Effective Time, and each such individual shall,
immediately after the Effective Time, hold the same office or offices of the
Surviving Corporation as the office or offices that such individual held with
Sub immediately before the Effective Time;
(g) the members of the Board of Directors of the Surviving
Corporation immediately after the Effective Time will be the individuals who are
the members of the Board of Directors of Sub immediately before the Effective
Time; and
(h) the Merger will, from and after the Effective Time, have
all of the effects provided by applicable law.
2.6 SECURITIES LAWS COMPLIANCE; REGISTRATION RIGHTS.
-----------------------------------------------
2.6.1 ISSUANCE OF EXCHANGE SHARES; RESALE OF EXCHANGE SHARES.
------------------------------------------------------
(a) PRIVATE PLACEMENT. The parties to this Agreement intend
that Netopia shall issue the shares of Netopia Common Stock hereunder pursuant
to a private placement under Section 4(2) of the Securities Act and applicable
state securities laws. The Netopia Shares shall constitute "restricted
securities" within the meaning of the Securities Act. The certificates for
Netopia Shares to be issued in the Merger shall bear appropriate legends to
identify such shares as being restricted under the Securities Act, and, if
applicable, to notice the restrictions on transfer set forth in the Rights
Agreement and the Shareholder Representation Letter. WebOrder shall use its best
efforts to furnish Netopia with all information concerning WebOrder and the
WebOrder Shareholders as Netopia may reasonably request in connection with
establishing the availability of federal and state private placement exemptions
for any action contemplated by this Section.
(b) REGISTRATION RIGHTS. At the Closing, Netopia shall grant
to holders of shares of Netopia Common Stock issued hereunder the piggyback
registration rights set forth in the Registration Rights Agreement in
substantially the form attached as Exhibit F (the "RIGHTS AGREEMENT").
2.6.2 INVESTMENT REPRESENTATION LETTER. As a condition
precedent to receiving any share certificates for shares of Netopia Common Stock
issued in the Merger as contemplated by Article 7 and Article 9, each WebOrder
Shareholder shall execute and deliver to Netopia an Investment Representation
Letter in the form and substance of EXHIBIT E attached hereto (the "INVESTMENT
REPRESENTATION LETTER").
2.7 REORGANIZATION. The parties intend to adopt this Agreement as a
plan of reorganization and to consummate the Merger as a reorganization in
accordance with the provisions of Section 368(a) of the Code. However, Netopia
makes no representations or warranty to WebOrder or to any holder of WebOrder
securities, and neither WebOrder nor any such holder makes any representation or
warranty to Netopia, regarding the tax treatment of the Merger or whether the
Merger will qualify as a reorganization under the Code, and WebOrder and Netopia
acknowledge and agree that they and the WebOrder Shareholders are relying on
their own tax advisors in connection with the Merger and the other transactions
contemplated by this Agreement. Notwithstanding the foregoing, neither Netopia
nor WebOrder has taken or will take any action or will fail to take any action,
either before or after the Closing of the Merger (other than those reflected in
the terms of this Agreement), which could reasonably be expected to cause the
Merger to fail to qualify as a reorganization under Section 368(a) of the Code.
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2.8 FURTHER ASSURANCES. If, at any time before or after the Effective
Time, Netopia believes or is advised that any further instruments, deeds,
assignments or assurances are reasonably necessary or desirable to consummate
the Merger or to carry out the purposes and intent of this Agreement at or after
the Effective Time, then Netopia, the Surviving Corporation and their respective
officers and directors may execute and deliver all such proper deeds,
assignments, instruments and assurances and do all other things necessary or
desirable to consummate the Merger and to carry out the purposes and intent of
this Agreement, in the name of WebOrder or otherwise.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF WEBORDER
WebOrder represents and warrants to Netopia that the statements
contained in this Article 3 are correct and complete as of the date hereof, as
qualified in the disclosure schedule delivered by WebOrder to Netopia on the
date hereof (the "WEBORDER DISCLOSURE LETTER").
3.1 ORGANIZATION AND GOOD STANDING. WebOrder is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. WebOrder has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to transact business and is in good
standing, in each jurisdiction in which its failure to be so qualified would
have a Material Adverse Effect on WebOrder's Business. WebOrder has delivered to
Netopia true and correct copies of the currently effective WebOrder Articles and
Bylaws or other charter documents, as applicable, of WebOrder and each of its
subsidiaries (if any), each as amended to date. Neither WebOrder nor any of its
subsidiaries is in violation of its WebOrder Articles, Bylaws or other charter
documents.
3.2 SUBSIDIARIES. WebOrder does not have any subsidiary or any equity
or ownership interest, whether direct or indirect, in any corporation,
partnership, limited liability company, joint venture or other business entity.
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3.3 POWER, AUTHORIZATION AND VALIDITY.
---------------------------------
3.3.1 POWER AND AUTHORITY. WebOrder has all requisite
corporate power, capacity and authority to enter into, execute, deliver, and
perform its obligations under, this Agreement and all WebOrder Ancillary
Agreements, and (subject to the approval of this Agreement, the Merger and any
necessary amendment to the WebOrder Articles by WebOrder's stockholders) to
consummate the Merger. The execution, delivery and performance by WebOrder of
this Agreement and each of the WebOrder Ancillary Agreements have been duly and
validly approved and authorized by all necessary corporate action on the part of
WebOrder's Board of Directors in compliance with applicable law (including
without limitation the CCSL) and WebOrder's Articles and Bylaws, each as
amended.
3.3.2 NO CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency, commission or other governmental authority (each, a
"GOVERNMENTAL AUTHORITY"), or any other person or entity, governmental or
otherwise, is necessary or required to be made or obtained by WebOrder to enable
WebOrder to lawfully execute and deliver, enter into, and to perform its
obligations under, this Agreement and each of the WebOrder Ancillary Agreements
or to consummate the Merger, EXCEPT FOR: (a) the approval of this Agreement and
the Merger by the stockholders of WebOrder in compliance with the requirements
of applicable law (including without limitation the CCSL) and WebOrder's
Articles of Incorporation and Bylaws, each as amended; and (b) the filing of the
Certificate of Merger with the Delaware Secretary of State (and comparable
filings with the California Secretary of State), the receipt of a Tax Clearance
Certificate from the California Franchise Tax Board, and any such further
documents as may be required under the DGCL or CCSL to effect the Merger. No
filing with any Governmental Authority is required under the HSR Act as a result
of the transactions contemplated by this Agreement.
3.3.3 ENFORCEABILITY. This Agreement and each of the WebOrder
Ancillary Agreements are, or when executed by WebOrder will be (assuming due
authorization, execution and delivery of same by Netopia and Sub), valid and
binding obligations of WebOrder, enforceable against WebOrder, the WebOrder
Shareholders and holders of WebOrder Options in accordance with their respective
terms, subject only to the effect of (a) applicable bankruptcy and other similar
laws affecting the rights of creditors generally and (b) rules of law and equity
governing specific performance, injunctive relief and other equitable remedies.
3.4 CAPITALIZATION OF WEBORDER.
--------------------------
3.4.1 OUTSTANDING STOCK. The authorized capital stock of
WebOrder consists entirely of: (i) 17,500,000 shares of Common Stock, no par
value per share, of which a total of 1,377,500 shares are issued and
outstanding, and (ii) 2,500,000 shares of Preferred Stock, no par value per
share, of which (a) 500,000 shares have been designated Series A Preferred
Stock, of which a total of 500,000 are issued and outstanding, and (b) 2,000,000
shares have been designated Series B Preferred Stock, of which a total of
1,138,361 shares are issued and outstanding. Except as expressly described in
the preceding sentence, no other shares of any capital stock of WebOrder are
authorized, issued or outstanding. No fractional shares of WebOrder Common Stock
or WebOrder Preferred Stock are issued or outstanding; and WebOrder holds no
treasury shares.
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As of the Closing Date, there will have been no change in the
authorized and outstanding capital stock of WebOrder as represented in the
foregoing sentences of this Section 3.4.1, other than the following changes if
made in compliance with this Agreement: (i) the issuance of shares of WebOrder
Common Stock pursuant to the exercise of WebOrder Options represented as being
outstanding on the Agreement Date in Section 3.4.2 or duly granted by WebOrder
after the Agreement Date or (ii) the conversion, if any, into Common Stock of
any shares of WebOrder Preferred Stock that are represented as being issued and
outstanding on the Agreement Date in this Section 3.4.1. All issued and
outstanding shares of WebOrder's capital stock have been duly authorized and
validly issued, are fully paid and nonassessable, are not subject to any claim,
lien, preemptive right, right of first refusal, right of first offer or right of
rescission, and have been offered, issued, sold and delivered by WebOrder in
compliance with all registration or qualification requirements (or applicable
exemptions therefrom) of all applicable federal and state securities laws. A
list of all holders of WebOrder's outstanding capital stock, and the total
number of shares of WebOrder Common Stock and WebOrder Preferred Stock (and the
number of shares of each series of WebOrder Preferred Stock) owned by each such
holder is set forth in SCHEDULE 3.4.1 to the WebOrder Disclosure Letter. No
stockholder of WebOrder owes WebOrder any money or other consideration
representing any part of the purchase price of any outstanding shares of
WebOrder's capital stock, including without limitation any money due under a
promissory note payable to WebOrder. WebOrder has no liability to any
stockholder for any dividends that have been declared or accrued.
3.4.2 OPTIONS, WARRANTS OR RIGHTS. Except for WebOrder Options
to purchase an aggregate total of [__________] shares of WebOrder Common Stock
that are outstanding on the Agreement Date (all of which WebOrder Options were
granted under the WebOrder Option Plan), there are no options, warrants,
convertible securities or other securities, calls, commitments, conversion
privileges, preemptive rights, rights of first refusal, rights of first offer or
other rights or agreements outstanding to purchase or otherwise acquire (whether
directly or indirectly) any shares of WebOrder's authorized but unissued capital
stock or any securities convertible into or exchangeable for any shares of
WebOrder's capital stock or obligating WebOrder to grant, issue, extend, or
enter into any such option, warrant, convertible security or other security,
call, commitment, conversion privilege, preemptive right, right of first
refusal, right of first offer or other right or agreement. No person or entity
holds, or has any option, warrant or other right to acquire, any issued and
outstanding shares of the capital stock of WebOrder from any holder of shares of
the capital stock of WebOrder.
A total of 994,000 shares of WebOrder Common Stock are reserved for
issuance under the WebOrder Option Plan. As of the Agreement Date, a total of
[________] shares of WebOrder Common Stock have been issued under the WebOrder
Option Plan. As of the Agreement Date, a total of [_________] shares of WebOrder
Common Stock are potentially issuable upon the exercise of all options granted
under the WebOrder option plan that are outstanding on the Agreement Date.
Attached as SCHEDULE 3.4.2 to the WebOrder Disclosure Letter is a true and
complete list of all holders of all WebOrder Options that are outstanding on the
Agreement Date, the number of WebOrder Options held by each such holder, the
exercise price and vesting schedule (including whether such vesting will be
affected by this Agreement or the Merger) of each WebOrder Option held by each
such person and the name of the WebOrder option plan under which each such
option was granted. The WebOrder Option Plan and any change in (a) the number of
shares reserved under the WebOrder Option Plan or (b) the eligible participants
under the WebOrder Option Plan have each been duly and validly approved by
WebOrder's Board of Directors and by WebOrder's stockholders, and with respect
to the WebOrder Option Plan (or any such change) such stockholder approval was
obtained within one (1) year of the date on which the WebOrder Option Plan (or
such change) was approved by WebOrder's Board of Directors.
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3.4.3 NO VOTING ARRANGEMENTS OR PIGGYBACK REGISTRATION RIGHTS.
There are no voting agreements, voting trusts, proxies, preemptive rights,
rights of first refusal, rights of first offer or other restrictions (other than
normal restrictions on transfer under applicable federal and state securities
laws) applicable to any of WebOrder's or any of its subsidiaries' outstanding
stock or other securities or to the conversion of any shares of WebOrder's
capital stock in the Merger pursuant to any agreement or obligation to which
WebOrder or any of its subsidiaries is a party or is bound or, to WebOrder's
knowledge, pursuant to any other agreement or obligation ("WEBORDER RIGHTS
AGREEMENTS"), except for the Voting Agreements (and related Irrevocable Proxies)
referred to in Section 3.22. Neither WebOrder nor any of its subsidiaries is
under any obligation to register under the 1933 Act any of its presently
outstanding shares of stock or other securities or any stock or other securities
that may be subsequently issued.
3.5 NO CONFLICT. Neither the negotiation, execution and delivery of
this Agreement or any of the WebOrder Ancillary Agreements by WebOrder, nor the
consummation of the Merger or the performance by WebOrder of its obligations
under this Agreement or any WebOrder Ancillary Agreement, has conflicted with or
will conflict with, or result in a termination, breach, impairment or violation
of: (i) any provision of the WebOrder Articles or Bylaws or other charter
documents of WebOrder or any of its subsidiaries (if any) as currently in
effect; (ii) any federal, state, local or foreign judgment, writ, decree, order,
statute, rule or regulation applicable to WebOrder or any of its subsidiaries
(if any) or any of their respective assets or properties; or (iii) any
instrument, agreement, contract, undertaking, understanding, letter of intent,
memorandum of understanding or commitment (whether verbal or in writing) or
confidentiality agreement to which WebOrder or any of its subsidiaries (if any)
is a party or by which WebOrder or any of its subsidiaries (if any) or any of
their respective assets or properties are bound. Neither WebOrder's entering
into this Agreement nor the consummation of the Merger will give rise to, or
trigger the application of, any rights of any third party that would come into
effect upon the effectiveness of the Merger. The consummation of the Merger by
WebOrder will not require the consent, release, waiver or approval of any third
party other than the approval of WebOrder's stockholders.
3.6 LITIGATION. There is no action, claim, suit, arbitration,
mediation, proceeding, claim or investigation (a "CLAIM") pending against
WebOrder or any of its subsidiaries (or, to the WebOrder's knowledge, against
any officer, director, employee or agent of WebOrder or any of its subsidiaries
in their capacity as such or relating to their employment, services or
relationship with WebOrder or such subsidiary) before any court, administrative
agency or arbitrator, and, to WebOrder's knowledge, no such Claim has been
threatened. There is no judgment, decree, injunction, rule or order of any
governmental entity or agency, court or arbitrator outstanding against WebOrder
or any of its subsidiaries.
3.7 TAXES.
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3.7.1 PAYMENT; NO UNPAID TAXES. Each of WebOrder and its
subsidiaries has timely filed all federal, state, local and foreign tax returns
required to be filed by it, has timely paid all taxes required to be paid by it
in respect of all periods for which returns have been filed, has established an
adequate accrual or reserve for the payment of all taxes payable in respect of
the periods subsequent to the periods covered by its most recent applicable tax
returns (which accrual or reserve as of the Balance Sheet Date is fully
reflected on the Balance Sheet and in any more recent balance sheet of WebOrder
provided by WebOrder to Netopia on or before the Agreement Date), has made all
necessary estimated tax payments, and has no liability for taxes in excess of
the amount so paid or accruals or reserves so established. Neither WebOrder nor
any of its subsidiaries is delinquent in the payment of any tax or in the filing
of any tax returns (taking into account extensions of time to file that have
been duly made), and no deficiencies for any tax have been threatened, claimed,
proposed or assessed against WebOrder or any of its subsidiaries. Neither
WebOrder nor any of its subsidiaries has received any notification that any
material issues have been raised by (or are currently pending) before the
Internal Revenue Service or any other taxing authority (including but not
limited to any sales or use tax authority) regarding WebOrder or any of its
subsidiaries and no tax return of WebOrder or any of its subsidiaries has ever
been audited by the Internal Revenue Service or any state or local taxing agency
or authority. No tax liens have been filed against any assets of WebOrder or any
of its subsidiaries. WebOrder has not filed any election under Section 341(f) of
the Code. WebOrder and its subsidiaries have each withheld with respect to each
of its employees and independent contractors all taxes, including but not
limited to federal and state income taxes, FICA, Medicare, FUTA and other taxes,
required to be withheld, and paid such withheld amounts to the appropriate tax
authority within the time prescribed by law.
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3.7.2 DEFINITION. For the purposes of this Agreement, the
terms "TAX" and "TAXES" include all federal, state, local and foreign income,
alternative or add-on minimum income, gains, franchise, excise, property,
property transfer, sales, use, employment, license, payroll, ad valorem,
documentary, stamp, withholding, occupation, recording, value added or transfer
taxes, governmental charges, fees, customs duties, levies or assessments
(whether payable directly or by withholding), and, with respect to any such
taxes, any estimated tax, interest, fines and penalties or additions to tax and
interest on such fines, penalties and additions to tax.
3.8 WEBORDER FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
---------------------------------------------------------
3.8.1 FINANCIAL STATEMENTS.
--------------------
(a) WebOrder has delivered to Netopia (i) WebOrder's
unaudited consolidated balance sheet as of December 31, 1999, and WebOrder's
unaudited consolidated statement of operations, statement of cash flows and
statement of changes in stockholders' equity for the fiscal year ended December
31, 1999, and (ii) WebOrder's unaudited consolidated balance sheet (the "BALANCE
SHEET") as of January 31, 2000 (the "BALANCE SHEET DATE"), and WebOrder's
unaudited consolidated statements of operations for the one month period ended
on the Balance Sheet Date (all such financial statements of WebOrder and the
notes thereto are hereinafter collectively referred to as the "WEBORDER
FINANCIAL STATEMENTS"). The WebOrder Financial Statements (a) are derived from
and in accordance with the books and records of WebOrder, (b) fairly present the
consolidated financial condition of WebOrder at the dates therein indicated and
the results of operations for the periods therein specified and (c) have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior periods (except for the absence of notes to such
unaudited financial statements and except that WebOrder's unaudited financial
statements are subject to normal year-end audit adjustments which will not be
material in amount).
(b) ACCOUNTS RECEIVABLE. The accounts receivable
shown on the WebOrder Balance Sheet arose in the ordinary course of business and
have been collected or are collectible in the book amounts thereof, less the
allowance for doubtful accounts and returns provided for in the Balance Sheet.
Allowances for doubtful accounts and returns are adequate and have been prepared
in accordance with the past practices of WebOrder and generally accepted
accounting principles. The accounts receivable of WebOrder arising after the
date of the WebOrder Balance Sheet and prior to the date hereof arose, and the
accounts receivable arising prior to the Effective Time will arise, in the
ordinary course of business and have been collected or are collectible in the
book amounts thereof, less allowances for doubtful accounts and returns
determined in accordance with the past practices of WebOrder. None of the
accounts receivable are subject to any claim of offset or recoupment, or
counterclaim and WebOrder has no knowledge of any specific facts that would be
reasonably likely to give rise to any such claim. No amount of accounts
receivable are contingent upon the performance by WebOrder of any obligation. No
agreement for deduction or discount has been made with respect to any accounts
receivable.
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(c) INVENTORY. All inventory of WebOrder or any of
its subsidiaries reflected in the WebOrder Balance Sheet or thereafter acquired
by WebOrder or any of its subsidiaries consists of items that are good and
merchantable and of a quality and quantity presently usable and salable in the
ordinary course of business, except to the extent of any allowance for
obsolescence reflected in the WebOrder Balance Sheet. All such inventory is
valued at the lower of cost or market, with cost being determined by using the
first-in, first-out method in accordance with generally accepted accounting
principles consistently applied, and in any case represents and will represent
not less than the estimated net realizable value thereof. Since the Balance
Sheet Date there has not been any revaluation by WebOrder or any of its
subsidiaries of any of its assets, including, without limitation, writing down
the value of capitalized inventory other than in the ordinary course of
business.
3.8.2 NO UNDISCLOSED LIABILITIES. WebOrder has no debt,
liability or obligation of any nature, whether accrued, absolute, or contingent,
and whether due or to become due, except for (i) those shown on the Balance
Sheet as required by GAAP, (ii) those that have been incurred after the Balance
Sheet Date in the ordinary course of WebOrder's business, consistent with its
past practices , and (iii) those incurred in connection with the execution of
this Agreement. All reserves established by WebOrder and set forth in or
reflected in the Balance Sheet are reasonably adequate. At the Balance Sheet
Date, there were no material loss contingencies (as such term is used in
Statement of Financial Accounting Standards No. 5 issued by the Financial
Accounting Standards Board in March 1975) which are not adequately provided for
in the Balance Sheet as required by said Statement No. 5.
3.9 TITLE TO PROPERTIES. WebOrder and each of its subsidiaries have
good and marketable title to all of their respective assets and properties,
including but not limited to those shown on the Balance Sheet (but excluding
those sold or disposed of since the Balance Sheet Date in the ordinary course of
business, none of which are material), free and clear of all mortgages, deeds of
trust, security interests, pledges, liens, title retention devices, collateral
assignments, claims, charges, restrictions or other encumbrances of any kind
(other than (i) liens for current taxes that are not yet due and payable, (ii)
statutory mechanics', materialmens' and similar liens imposed by operation of
law for obligations incurred by WebOrder in the ordinary course of its business
that are not material in amount and are not currently due and payable). The
machinery, vehicles, equipment and other tangible personal property owned or
leased by WebOrder and its subsidiaries or used in its business are in good
condition and repair, normal wear and tear excepted, and all leases of real or
personal property to which WebOrder or any of its subsidiaries is a party are
fully effective and afford WebOrder or its subsidiary, as applicable, peaceful
and undisturbed leasehold possession of the real or personal property that is
the subject of the lease. Neither WebOrder or any of its subsidiaries is in
violation of any zoning, building, safety or environmental ordinance, regulation
or requirement or other law or regulation applicable to the operation of its
owned or leased properties, nor has WebOrder received any notice of violation of
law with which it has not complied. Neither WebOrder nor any of its subsidiaries
owns any real property.
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3.10 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, WebOrder
has conducted its business in the ordinary course consistent with past practice,
and there has not been with respect to WebOrder or any of its subsidiaries any:
(a) Material Adverse Change in the Business of WebOrder or any of its
subsidiaries;
(b) amendment or change in the WebOrder Articles or Bylaws of
WebOrder;
(c) incurrence, creation or assumption by WebOrder or any of its
subsidiaries of (i) any mortgage, deed of trust, security
interest, pledge, lien, title retention device, collateral
assignment, claim, charge, restriction or other encumbrance of any
kind on any of the assets or properties of WebOrder or any of its
subsidiaries; or (ii) any obligation or liability or any
indebtedness for borrowed money;
(d) offer, issuance or sale of any debt or equity securities of
WebOrder or any of its subsidiaries, or any options, warrants or
other rights to acquire from WebOrder or any of its subsidiaries,
directly or indirectly, any debt or equity securities of WebOrder
or any of its subsidiaries (except options granted in the ordinary
course in amounts and with terms consistent with WebOrder's past
practices, and reflected in the option figures set forth in
Section 3.4 above);
(e) payment or discharge by WebOrder or any of its subsidiaries of any
security interest, lien, claim, or encumbrance of any kind on any
asset or property of WebOrder or any of its subsidiaries, or the
payment or discharge of any liability that was not either shown on
the Balance Sheet or incurred in the ordinary course of WebOrder's
business after the Balance Sheet Date in an amount not in excess
of $25,000 for any single liability to a particular creditor;
(f) purchase, license, sale, assignment or other disposition or
transfer, or any agreement or other arrangement for the purchase,
license, sale, assignment or other disposition or transfer, of any
of the assets, properties or goodwill of WebOrder or any of its
subsidiaries other than a purchase, license, sale, assignment or
other disposition or transfer (or agreement therefor) made in the
ordinary course of WebOrder's or such subsidiary's business that
does not involve any transfer of title of, or an exclusive license
to, or the creation of any encumbrance on, any software or other
proprietary technology of WebOrder or such subsidiary;
(g) damage, destruction or loss of any property or asset, whether or
not covered by insurance, having a Material Adverse Effect on
WebOrder;
(h) declaration, setting aside or payment of any dividend on, or the
making of any other distribution in respect of, the capital stock
of WebOrder, any split, combination or recapitalization of the
capital stock of WebOrder or any direct or indirect redemption,
purchase or other acquisition of any capital stock of WebOrder or
any change in any rights, preferences, privileges or restrictions
of any outstanding security of WebOrder;
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(i) change or increase in the compensation payable or to become
payable to any of the officers, directors, or employees of
WebOrder or any of its subsidiaries, or any bonus or pension,
insurance or other benefit payment or arrangement (including
without limitation stock awards, stock option grants, stock
appreciation rights or stock option grants) made to or with any of
such officers, employees or agents except in connection with
normal employee salary or performance reviews or otherwise in the
ordinary course of WebOrder's business;
(j) change with respect to the management, supervisory or other key
personnel of WebOrder or any of its subsidiaries;
(k) obligation or liability incurred by WebOrder or any of its
subsidiaries to any of its officers, directors or stockholders
except for normal and customary compensation and expense
allowances payable to officers in the ordinary course of
WebOrder's business;
(l) making by WebOrder or any of its subsidiaries of any loan, advance
or capital contribution to, or any investment in, any officer,
director or stockholder of WebOrder or any firm or business
enterprise in which any such person had a direct or indirect
material interest at the time of such loan, advance, capital
contribution or investment;
(m) entering into, amendment of, relinquishment, termination or
non-renewal by WebOrder or any of its subsidiaries of any
contract, lease, transaction, commitment or other right or
obligation other than in the ordinary course of its business or
any written or oral indication or assertion by the other party
thereto of any material problems with WebOrder's or any of its
subsidiaries' services or performance under such contract, lease,
transaction, commitment or other right or obligation or its desire
to so amend, relinquish, terminate or not renew any such contract,
lease, transaction, commitment or other right or obligation;
(n) assertion by any subscriber(s) and/or customer(s) of WebOrder or
any of its subsidiaries of any complaint (where the amounts
involved exceed $25,000 either individually or in the aggregate)
regarding WebOrder' or such subsidiary's services or products;
(o) material change in the manner in which WebOrder extends discounts,
credits or warranties to customers or otherwise deals with its
customers;
(p) entering into by WebOrder or any of its subsidiaries of any
transaction, contract or agreement that by its terms requires or
contemplates a current and/or future financial commitment, expense
(inclusive of overhead expense) or obligation on the part of
WebOrder or any of its subsidiaries involving in excess of $25,000
or that is not entered into in the ordinary course of WebOrder's
business, or the conduct of any business or operations other than
in the ordinary course of WebOrder's business;
(q) any license, transfer or grant of a right under any WebOrder IP
Rights (as defined in Section 3.13 below), other than those
licensed, transferred or granted in the ordinary course of
WebOrder's business consistent with its past practices; or
(r) any agreement or arrangement made by WebOrder or any of its
subsidiaries to take any action which, if taken before the
Agreement Date, would have made any representation or warranty of
WebOrder set forth in Article 3 of this Agreement untrue or
incorrect as of the date when made.
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3.11 CONTRACTS AND COMMITMENTS/LICENSES AND PERMITS. For purposes of
this Agreement, "WEBORDER AGREEMENT" means any of the following (i) written or
oral contracts, agreements, commitments or other instruments to which WebOrder
or any of its subsidiaries is a party or to which WebOrder or any of its assets
or properties is bound and (ii) licenses and permits held by WebOrder or any of
its subsidiaries, each of which is set forth in the WebOrder Disclosure Letter:
(a) any website hosting, website linking, content or data
sharing, data feed, information exchange, advertising, fee sharing, lead or
customer referral, commerce, co-branding, framing, service, order or transaction
processing or similar agreement;
(b) any distributor, OEM (Original Equipment Manufacturer),
VAR (Value Added Reseller), sales representative or similar agreement under
which any third party is authorized to sell, sublicense, lease, distribute,
market or take orders for, any product or technology of WebOrder or any of its
subsidiaries;
(c) any continuing contract for the future purchase, sale,
license, provision or manufacture of products, material, supplies, equipment or
services requiring payment to or from WebOrder or any of its subsidiaries in an
amount in excess of $25,000 per annum which is not terminable on ninety (90) or
fewer days' notice without cost or other liability to WebOrder or any of its
subsidiaries;
(d) any contract or commitment in which WebOrder or any of its
subsidiaries has granted or received most favored customer pricing provisions or
exclusive marketing or on-line distribution rights relating to any product or
service, group of products or services, market or geographic territory;
(e) any contract providing for the development of software,
website content or other technology or intellectual property for WebOrder or any
of its subsidiaries, or the license of any software, website content or other
technology or intellectual property to WebOrder, which software, website content
or other technology or intellectual property is used or incorporated (or is
contemplated by WebOrder or any of its subsidiaries to be used or incorporated)
(i) in any product currently sold, licensed, leased, distributed or marketed by
WebOrder or any of its subsidiaries or (ii) to provide any service currently
provided or marketed by WebOrder or any of its subsidiaries (other than software
generally available to the public at a per copy license fee of less than $2,000
per copy);
(f) any joint venture or partnership contract or agreement or
other agreement which has involved or is reasonably expected to involve a
sharing of profits, expenses or losses with any other party;
(g) any contract or commitment for or relating to the
employment of any officer, employee or consultant of WebOrder or any of its
subsidiaries or any other type of contract or understanding with any officer,
employee or consultant of WebOrder or any of its subsidiaries that is not
immediately terminable by WebOrder or any of its subsidiaries without cost or
other liability;
(h) any indenture, mortgage, trust deed, promissory note, loan
agreement, security agreement, guarantee or other agreement or commitment for
the borrowing of money, for a line of credit or for a leasing transaction of a
type required to be capitalized in accordance with Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board;
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(i) any lease or other agreement under which WebOrder or any
of its subsidiaries is lessee of or holds or operates any items of tangible
personal property or real property owned by any third party and under which
payments to such third party exceed $25,000 per annum;
(j) any agreement or arrangement for the sale, licensing or
leasing of any assets, properties, products, services or rights having a value
in excess of $25,000;
(k) any agreement that restricts WebOrder or any of its
subsidiaries from engaging in any aspect of its business, from participating or
competing in any line of business or market or that restricts WebOrder or any of
its subsidiaries from engaging in any business in any market or geographic area;
(l) any WebOrder IP Rights Agreement (as defined in Section
3.13);
(m) any agreement relating to the sale, issuance, grant,
exercise, award, purchase, repurchase or redemption of any shares of capital
stock or other securities of WebOrder or any of its subsidiaries or any options,
warrants or other rights to purchase or otherwise acquire any such shares of
stock, other securities or options, warrants or other rights therefor (or, in
the case of any WebOrder Option, the WebOrder Option Plan, as such may be
amended, and the forms of WebOrder Option agreements used by WebOrder
thereunder);
(n) consulting or similar agreement under which WebOrder or
any of its subsidiaries provides any advice or services to a third party for an
annual compensation to WebOrder or any of its subsidiaries of $25,000 per year
or more;
(o) any contract with or commitment to any labor union;
(p) any contract or arrangement under which WebOrder or any of
its subsidiaries has made any commitment to develop any new technology, to
deliver any software currently under development or to enhance or customize any
software;
(q) any other agreement, contract, commitment or instrument
that is material to the business of WebOrder or any of its subsidiaries or that
involves a future commitment by WebOrder or any of its subsidiaries in excess of
$25,000; and
(r) any Governmental Permit (as defined in Section 3.14.4).
A true and complete copy of each agreement or document
required by subsections (a) through (q) of this Section to be listed on SCHEDULE
3.11 to the WebOrder Disclosure Letter that either are in an amount in excess of
$25,000 or are otherwise material to the Business of WebOrder (such agreements
and documents being hereinafter collectively referred to as the "WEBORDER
MATERIAL AGREEMENTS") and a copy of each Governmental Permit required by
subsection (r) of this Section to be listed on SCHEDULE 3.11 to the WebOrder
Disclosure Letter has been delivered to Netopia's counsel.
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3.12 NO BREACH OR DEFAULT; NO CONSENT REQUIRED; NO RESTRICTIONS. Each
of WebOrder and any of its subsidiaries is not in material breach or violation
of, or in default under: (a) any WebOrder Material Agreement; or (b) any other
contract or agreement (whether written or oral) binding on WebOrder or any of
its subsidiaries or to which WebOrder or any of its subsidiaries is a party, the
breach, violation or default of which by WebOrder or any of its subsidiaries
could (i) materially adversely affect the ability of WebOrder or Netopia to
effect the Merger, (ii) result in liability to WebOrder, any of its
subsidiaries, the Surviving Corporation or Netopia as a result of consummation
of the Merger and/or the performance of their respective obligations under this
Agreement and such party's ancillary agreements or (iii) result in any liability
that would be material to WebOrder or any of its subsidiaries (a "SIGNIFICANT
AGREEMENT"). Each of WebOrder and any of its subsidiaries does not have any
liability for renegotiation of government contracts or subcontracts, if any.
Except as set forth in SCHEDULE 3.12 to the WebOrder Disclosure Letter, no
consent or approval of any third party is required to ensure that, following the
Effective Time, any WebOrder Material Agreement will continue to be in full
force and effect without any breach or violation thereof caused by virtue of the
Merger or by any other transaction called for by this Agreement or any WebOrder
Ancillary Agreement. Neither WebOrder nor any of its subsidiaries is a party to,
and no asset or property of WebOrder or any of its subsidiaries is bound or
affected by, any judgment, injunction, order, decree, contract, covenant or
agreement (noncompete or otherwise) that restricts or prohibits (or purports to
restrict or prohibit) WebOrder or any of its subsidiaries from freely engaging
in any business now conducted by any of them or from competing anywhere in the
world (including without limitation any contracts, covenants or agreements
restricting the geographic area in which WebOrder or any of its subsidiaries may
sell, license, market, distribute or support any products or technology or
provide services, or restricting the markets, customers or industries that
WebOrder or any of its subsidiaries may address in operating their respective
businesses), or includes any grants by WebOrder of exclusive licenses. No event
has occurred, and no circumstance or condition exists, that will (a) result in a
violation or breach of any of the provisions of any WebOrder Material Agreement,
(b) give any third party (i) the right to declare a default or exercise any
remedy under any WebOrder Material Agreement, (ii) the right to a rebate,
chargeback, penalty or change in delivery schedule under any WebOrder Material
Agreement, (iii) the right to accelerate the maturity or performance of any
obligation of WebOrder or any of its subsidiaries under any WebOrder Material
Agreement, or (iv) the right to cancel, terminate or modify any WebOrder
Material Agreement. Neither WebOrder nor any subsidiary of WebOrder has received
any notice or other communication regarding any actual or possible violation or
breach by WebOrder or the other party thereto of, or default by WebOrder or the
other party thereto under, any WebOrder Material Agreement.
3.13 INTELLECTUAL PROPERTY.
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3.13.1 WebOrder and its subsidiaries own, or have the valid
right or license to use, possess, sell or license, all Intellectual Property (as
defined below) necessary or required for or used in the conduct of the business
of WebOrder and its subsidiaries as presently conducted and as presently
proposed to be conducted (such Intellectual Property being hereinafter
collectively referred to as the "WEBORDER IP RIGHTS"), and such rights to use,
possess, sell or license are sufficient for such conduct of such business. As
used herein, the term "INTELLECTUAL PROPERTY" means, collectively, all worldwide
industrial and intellectual property rights, including, without limitation,
patents, patent applications, patent rights, trademarks, trademark registrations
and applications therefor, trade dress rights, trade names, service marks,
service mark registrations and applications therefor, Internet domain names,
Internet and World Wide Web URLs or addresses, copyrights, copyright
registrations and applications therefor, mask work rights, mask work
registrations and applications therefor, franchises, licenses, inventions, trade
secrets, know-how, customer lists, supplier lists, proprietary processes and
formulae, software source code and object code, algorithms, net lists,
architectures, structures, screen displays, layouts, inventions, development
tools, designs, blueprints, specifications, technical drawings (or similar
information in electronic format) and all documentation and media constituting,
describing or relating to the foregoing, including, without limitation, manuals,
programmers' notes, memoranda and records. Schedule 3.13 to the WebOrder
Disclosure Letter lists each item of Intellectual Property owned, and each item
of Intellectual Property licensed by WebOrder.
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3.13.2 Neither the execution, delivery and performance of this
Agreement or the Certificate of Merger, nor the consummation of the Merger and
the other transactions contemplated hereby and/or by WebOrder Ancillary
Agreements will (a) constitute a breach of or default under any instrument,
contract, license or other agreement governing any WebOrder IP Right to which
WebOrder or any of its subsidiaries is a party (collectively, the "WEBORDER IP
RIGHTS AGREEMENTS"), (b) cause the forfeiture or termination of, or give rise to
a right of forfeiture or termination of, any WebOrder IP Right or (c) impair the
right of WebOrder, any of its subsidiaries or the Surviving Corporation to use,
possess, sell or license any WebOrder IP Right or portion thereof. There are no
royalties, honoraria, fees or other payments payable by WebOrder or any of its
subsidiaries to any third person by reason of the ownership, use, possession,
license, sale, marketing, advertising or disposition of any WebOrder IP Rights
by WebOrder or any of its subsidiaries.
3.13.3 Neither the manufacture, marketing, license, sale,
furnishing or intended use of any product or service currently licensed,
utilized, sold, provided or furnished by WebOrder or any of its subsidiaries or
currently under development by WebOrder or any of its subsidiaries violates any
license or agreement between WebOrder and any third party or infringes,
infringes or misappropriates any Intellectual Property Right of any other party;
and there is no pending or, to the knowledge of WebOrder, threatened claim or
litigation contesting the validity, ownership or right of WebOrder or any of its
subsidiaries to use, possess, sell, market, advertise, license or dispose of any
WebOrder IP Right, nor has WebOrder or any of its subsidiaries received any
notice asserting that any WebOrder IP Right or the proposed use, sale, license
or disposition thereof conflicts or will conflict with the rights of any other
party.
3.13.4 To WebOrder's knowledge, no employee, consultant or
independent contractor of WebOrder or any subsidiary of WebOrder: (a) is in
material violation of any term or covenant of any employment contract, patent
disclosure agreement, invention assignment agreement, non-disclosure agreement,
noncompetition agreement or any other contract or agreement with any other party
by virtue of such employee's, consultant's, or independent contractor's being
employed by, or performing services for, WebOrder or such subsidiary or using
trade secrets or proprietary information of others, or that would be likely to
have a Material Adverse Effect on WebOrder; or (b) has developed any technology,
software or other copyrightable, patentable, or otherwise proprietary work for
WebOrder or any of its subsidiaries that is subject to any agreement under which
such employee, consultant or independent contractor has assigned or otherwise
granted to any third party any rights (including without limitation Intellectual
Property) in or to such technology, software or other copyrightable, patentable
or otherwise proprietary work or any Intellectual Property related thereto. The
employment of any employee of WebOrder or any subsidiary of WebOrder or the use
by WebOrder or any subsidiary of WebOrder of the services of any consultant or
independent contractor does not subject WebOrder or any such subsidiary to any
liability to any third party.
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3.13.5 WebOrder and each of its subsidiaries has used its best
efforts to take all necessary and appropriate steps to protect, preserve and
maintain the secrecy and confidentiality of the WebOrder IP Rights and all of
WebOrder's and such subsidiaries' ownership interests and proprietary rights
therein. All officers, employees and consultants of WebOrder and its
subsidiaries having access to proprietary information of WebOrder or its
subsidiaries, its customers or business partners, have executed and delivered to
WebOrder an agreement regarding the protection of such proprietary information
and the assignment of inventions to WebOrder; and copies of the form of all such
agreements have been delivered to Netopia's counsel. WebOrder has secured valid
and enforceable written assignments from all consultants, contractors and
employees who were involved in, or who contributed to, the creation or
development of any WebOrder IP Rights, of the rights to such contributions that
WebOrder does not already own by operation of law. No current or former
employee, officer, director, consultant or independent contractor of WebOrder or
of any subsidiary of WebOrder has any right, license, claim or interest
whatsoever in or with respect to any WebOrder IP Rights.
3.13.6 SCHEDULE 3.13.6 to the WebOrder Disclosure Letter
contains a complete list of (i) all worldwide registrations of any patents,
copyrights, mask works, trademarks, service marks, Internet domain names or
Internet or World Wide Web URLs or addresses with any governmental or
quasi-governmental authority or other body; (ii) all applications,
registrations, filings and other formal actions made or taken pursuant to
federal, state and foreign laws by WebOrder or any of its subsidiaries to
secure, perfect or protect its interest in WebOrder IP Rights, including,
without limitation, all patent applications, copyright applications, and
applications for registration of trademarks and service marks, (iii) all
unregistered copyrights, trademarks and service marks. All patents, and all
registered trademarks, service marks, Internet domain names, Internet or World
Wide Web URLs or addresses and copyrights held by WebOrder or its subsidiaries
are valid, enforceable and subsisting.
3.13.7 SCHEDULE 3.13.7 to the WebOrder Disclosure Letter
contains a complete list of (i) all licenses, sublicenses and other agreements
as to which WebOrder or any of its subsidiaries is a party and pursuant to which
any person or entity is authorized to use any WebOrder IP Rights, and (ii) all
licenses, sublicenses and other agreements as to which WebOrder or any of its
subsidiaries is a party and pursuant to which WebOrder or any of its
subsidiaries is authorized to use any third party patents, trademarks, Internet
domain names, Internet or World Wide Web URLs or addresses, copyrights, or other
Intellectual Property right, including but not limited to software ("THIRD PARTY
IP RIGHTS") which are incorporated in, or form a part of, any product or service
sold, licensed, distributed, provided or marketed by WebOrder or any of its
subsidiaries. Any use by WebOrder or its employees (or any of its subsidiaries)
of any Intellectual Property right of a third party, or any third party
software, is pursuant to valid license or similar agreements (or such software
does not require a license in order to be used without violating any Third Party
IP Rights), and neither WebOrder nor its subsidiaries has any liability for
unauthorized use of third party software.
3.13.8 Neither WebOrder nor any of its subsidiaries, nor any
other party acting on its or their behalf, has disclosed or delivered to any
party, or permitted the disclosure or delivery to any escrow agent or other
party, of any WebOrder Source Code (as defined below). No event has occurred,
and no circumstance or condition exists, that will, or would reasonably be
expected to, result in the disclosure or delivery to any party of any WebOrder
Source Code (as defined below). SCHEDULE 3.13.8 of the WebOrder Disclosure
Letter identifies each contract, agreement and instrument (whether written or
oral) pursuant to which WebOrder or any of its subsidiaries has deposited, or is
or may be required to deposit, with an escrowholder or any other party, any
WebOrder Source Code and further describes whether the execution of this
Agreement or the consummation of the Merger or any of the other transactions
contemplated hereby, in and of itself, would reasonably be expected to result in
the release from escrow of any WebOrder Source Code. As used in this Section
3.13.8, "WEBORDER SOURCE CODE" means, collectively, any software source code, or
any material portion or aspect of the software source code, or any material
proprietary information or algorithm contained in or relating to any software
source code, of any WebOrder IP Rights or any other product marketed by
WebOrder.
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3.13.9 To WebOrder's knowledge, there is no unauthorized use,
disclosure, infringement or misappropriation of any WebOrder IP Rights or any
Intellectual Property Right of WebOrder or any of its subsidiaries by any third
party, including any employee or former employee of WebOrder or any of its
subsidiaries. Neither WebOrder nor any of its subsidiaries has agreed to
indemnify any person for any infringement of any Intellectual Property of any
third party by any product or service that has been sold, licensed, leased,
supplied, marketed, distributed, or provided by WebOrder or any of its
subsidiaries.
3.13.10 All software developed by WebOrder or any of its
subsidiaries and licensed by WebOrder or any of its subsidiaries to customers
and all other products manufactured, sold, licensed, leased or delivered by
WebOrder or any of its subsidiaries to customers and all services provided by
WebOrder or any of its subsidiaries to customers on or before the Closing Date
conform in all material respects to applicable contractual commitments, express
and implied warranties, product specifications and product documentation and to
any representations provided to customers, and neither WebOrder nor any of its
subsidiaries has any liability for replacement or repair thereof or other
damages in connection therewith in excess of any reserves therefor reflected on
the Balance Sheet. Since January 31, 2000, neither WebOrder nor any of its
subsidiaries has had any of its respective products returned by a purchaser
thereof except for normal warranty returns consistent with past history and
those returns that would not result in a reversal of any material amount of
revenue recognized by WebOrder on any of its financial statements from such
purchases. Neither WebOrder nor any of its subsidiaries is under any liability
or obligation, and no such outstanding claim has been made, with respect to the
return of inventory or products in the possession of customers, licensees,
distributors, retailers, or end-users.
3.14 COMPLIANCE WITH LAWS. To WebOrder's knowledge:
--------------------
3.14.1 WebOrder and each of its subsidiaries has complied, and
is now and at the Closing Date will be in compliance with, all applicable
federal, state, local or foreign laws, ordinances, regulations, and rules, and
all orders, writs, injunctions, awards, judgments, and decrees applicable to it
or to its assets, properties, and business (and any regulations promulgated
thereunder) (collectively, "APPLICABLE LAW"), except where non-compliance with
Applicable Laws would result in liability (individually or in the aggregate) of
less than $25,000.
3.14.2 WebOrder and each of its subsidiaries has at all times
made all consumer disclosures required by Applicable Law and none of the
disclosures made to consumers using products or services of WebOrder have been
inaccurate, misleading or deceptive.
3.14.3 WebOrder and each of its subsidiaries has at all times
been in compliance with Applicable Laws relating to the privacy of users of the
products and services of WebOrder and each of its subsidiaries.
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3.14.4 WebOrder and each of its subsidiaries holds all
permits, licenses and approvals from, and has made all filings with, government
(and quasi-governmental) agencies and authorities, that are necessary for
WebOrder to conduct its present business without any violation of Applicable Law
("GOVERNMENTAL PERMITS"), except where any non-compliance with Government
Permits would result in liability (individually or in the aggregate) of less
than $25,000, and all such Governmental Permits are in full force and effect.
Neither WebOrder nor any of its subsidiaries has received any notice or other
communication from any Governmental Authority (or quasi-governmental authority)
regarding (a) any actual or possible violation of law or any Governmental Permit
or any failure to comply with any term or requirement of any Governmental
Permit, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Permit.
3.14.5 Neither WebOrder nor any of its subsidiaries, nor, to
WebOrder's knowledge, any director, officer, agent or employee of WebOrder
and/or any of its subsidiaries, has, for or on behalf of WebOrder or any of its
subsidiaries, (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
3.15 CERTAIN TRANSACTIONS AND AGREEMENTS. To WebOrder's knowledge, none
of the officers, directors, employees or stockholders of WebOrder, nor any
member of their immediate families, has any direct or indirect ownership
interest in any firm or corporation that competes with, or does business with,
or has any contractual arrangement with, WebOrder (except with respect to any
interest in less than one percent (1%) of the stock of any corporation whose
stock is publicly traded). None of said officers, directors, employees or
stockholders or any member of their immediate families, is a party to, or
otherwise directly or indirectly interested in, any contract or informal
arrangement with WebOrder or any of its subsidiaries, except for normal
compensation for services as an officer, director or employee thereof that have
been disclosed to Netopia and except for agreements related to the purchase of
the stock of WebOrder by, or the grant of WebOrder Options to, such persons.
None of said officers, directors, employees, stockholders or family members has
any interest in any property, real or personal, tangible or intangible
(including but not limited to any WebOrder IP Rights or any other Intellectual
Property) that is used in, or that pertains to, the business of WebOrder, except
for the normal rights of a stockholder.
3.16 EMPLOYEES, ERISA AND OTHER COMPLIANCE.
-------------------------------------
3.16.1 To WebOrder's knowledge, WebOrder and its subsidiaries
are in compliance in all material respects with all applicable laws, agreements
and contracts relating to employment, employment practices, immigration, wages,
hours, and terms and conditions of employment, including, but not limited to,
employee compensation matters. A list of all employees, officers and consultants
of WebOrder and its subsidiaries and their current title and/or job description
and compensation is set forth on SCHEDULE 3.16.1 to the WebOrder Disclosure
Letter. WebOrder and its subsidiaries do not have any employment contracts or
consulting agreements or contracts with a professional employer organization or
other entity which provides employee benefits to individuals that provide
services to WebOrder currently in effect that are not terminable at will (other
than agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions).
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3.16.2 Neither WebOrder nor any of its subsidiaries (i) now
is, nor has ever been, subject to a union organizing effort, (ii) is subject to
any collective bargaining agreement with respect to any of its employees, (iii)
is subject to any other contract, written or oral, with any trade or labor
union, employees' association or similar organization or (iv) has any current
labor disputes. WebOrder and its subsidiaries have good labor relations, and
have no knowledge of any facts indicating that the consummation of the Merger or
any of the other transactions contemplated hereby will have a material adverse
effect on such labor relations, and have no knowledge that any of their key
employees intends to leave their employ. All of the employees of WebOrder and
its subsidiaries are legally permitted to be employed by WebOrder or its
subsidiaries in the United States of America in their current job capacities. A
list of all employees of WebOrder is set forth in Section 3.16.2 to the WebOrder
Disclosure Letter which provides, with respect to each employee, information as
to that employee's citizenship and, if not a citizen of the United States, the
status and duration of that employee's visa and/or work permit, if any,
providing a legal basis for employment.
3.16.3 Neither WebOrder nor any of its subsidiaries has any
pension plan which constitutes, or has since the enactment of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") constituted, a
"multiemployer plan" as defined in Section 3(37) of ERISA. To WebOrder's
knowledge, no pension plan of WebOrder or any of its subsidiaries is subject to
Title IV of ERISA.
3.16.4 (a) SCHEDULE 3.16.4 to the WebOrder Disclosure Letter
lists all employment and consulting agreements, all severance agreements,
pension, retirement, disability, medical, dental or other health plans, life
insurance or other death benefit plans, profit sharing, deferred compensation
agreements, stock, option, bonus or other incentive plans, vacation, sick,
holiday or other paid leave plans, severance plans or other similar employee
benefit plans maintained by WebOrder or any subsidiary or trade or business
which is treated as a single employer with WebOrder within the meaning of Code
Section 414(b), (c), (m) or (o) (each an "ERISA AFFILIATE") (the "WEBORDER
BENEFIT ARRANGEMENTS"), including without limitation all "employee benefit
plans" as defined in Section 3(3) of ERISA. Except as disclosed in SCHEDULE
3.16.4 to the WebOrder Disclosure Letter, to WebOrder's knowledge each of the
Employee Plans, and its operation and administration, is in compliance in all
material respects with each of the respective Employee Plans' terms and with all
applicable federal, state, local and other governmental laws and ordinances,
orders, rules and regulations, including the requirements of ERISA and the Code.
Except as disclosed in SCHEDULE 3.16.4 to the WebOrder Disclosure Letter, all
such Employee Plans that are "employee pension benefit plans" (as defined in
Section 3(2) of ERISA) which are intended to qualify under Section 401(a) of the
Code have received favorable determination opinion, notification or advisory
letters with respect to such plans that such plans comply with the Tax Reform
Act of 1986 or have remaining a period of time under applicable Treasury
regulations or IRS pronouncements in which to apply for such a letter and make
any amendments necessary to obtain a favorable determination as to the qualified
status of each such Employee Plan. In addition, neither WebOrder nor any
subsidiary has ever been a participant in any "prohibited transaction," within
the meaning of Section 406 of ERISA with respect to any employee pension benefit
plan (as defined in Section 3(2) of ERISA) which WebOrder or any subsidiary
sponsors as employer or in which WebOrder or any subsidiary participates as an
employer, which would impose a material penalty on WebOrder or which was not
otherwise exempt pursuant to Section 408 of ERISA (including, but not limited
to, any individual exemption granted under Section 408(a) of ERISA), or which
could result in an exercise tax under the Code. Except as disclosed in SCHEDULE
3.16.4 to the WebOrder Disclosure Letter, no employee of WebOrder or any
subsidiary and no person subject to any WebOrder or any subsidiary health plan
has made medical claims through such health plan during the twelve months
preceding the date hereof for more than $25,000 in the aggregate.
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(b) WebOrder has delivered to Netopia or its counsel
a complete and correct copy and description of each WebOrder Benefit
Arrangement.
(c) WebOrder has timely filed and delivered to
Netopia and its counsel the most recent annual report (Form 5500) for each
WebOrder Benefit Arrangement that is an "employee benefit plan" as defined under
ERISA.
(d) All contributions due from WebOrder or any of its
subsidiaries with respect to any of WebOrder Benefit Arrangements have been made
or have been accrued on WebOrder's financial statements, (including without
limitation the WebOrder Financial Statements) and no further contributions will
be due or will have accrued thereunder as of the Closing Date.
3.16.5 There has been no amendment to, written interpretation
or announcement (whether or not written) by WebOrder relating to, or change in
employee participation or coverage under, any WebOrder Benefit Arrangement that
would increase materially the expense of maintaining such WebOrder Benefit
Arrangement above the level of the expense incurred in respect thereof for
WebOrder's fiscal year ended December 31, 1999. Each WebOrder Benefit
Arrangement may be terminated effective immediately, and any benefits
distributed thereunder, without additional liability for premium or other
payments (other than benefit payments in the normal course of administration)
and without causing liquidation, surrender or any other fees or charges to be
imposed on the WebOrder Benefit Arrangement, WebOrder, any WebOrder subsidiary
or any participant or beneficiary of the terminating WebOrder Benefit
Arrangement.
3.16.6 The group health plans (as defined in Section 4980B(g)
of the Code) that benefit employees of WebOrder are in compliance, in all
material respects, with (a) the continuation coverage requirements of Section
4980B of the Code and Sections 601 through 608 of ERISA, (b) the Americans with
Disabilities Act of 1990, as amended, and (c) the Family Medical and Leave Act
of 1993, as amended, and the regulations thereunder, with respect to any of
WebOrder Benefit Arrangements, covered employees, or qualified beneficiaries.
3.16.7 No benefit payable or which may become payable by
WebOrder or any of its subsidiaries pursuant to any WebOrder Benefit Arrangement
or as a result of or arising under this Agreement or the Certificate of Merger
will constitute an "excess parachute payment" (as defined in Section 280G(b)(1)
of the Code) which is subject to the imposition of an excise Tax under Section
4999 of the Code or which would not be deductible by reason of Section 280G of
the Code. Neither WebOrder nor any of its subsidiaries is a party to any: (a)
agreement with any officer or other key employee of WebOrder or any of its
subsidiaries (i) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving WebOrder in
the nature of the Merger or any of the other transactions contemplated by this
Agreement, the Certificate of Merger or any WebOrder Ancillary Agreement, (ii)
providing any term of employment or compensation guarantee, or (iii) providing
severance benefits or other benefits after the termination of employment of such
employee regardless of the reason for such termination of employment; or (b)
agreement or plan, including, without limitation, any stock option plan, stock
appreciation rights plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated, by
the occurrence of the Merger or any of the other transactions contemplated by
this Agreement, the Certificate of Merger or any WebOrder Ancillary Agreement,
or the value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement, the Certificate of
Merger or any WebOrder Ancillary Agreement.
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3.17 CORPORATE DOCUMENTS. WebOrder has made available to Netopia for
examination copies of all documents and information listed in the WebOrder
Disclosure Letter or in any schedule thereto or in any other exhibit or schedule
called for by this Agreement which have been requested by Netopia's legal
counsel, including, without limitation, the following: (a) copies of the
Articles of Incorporation, bylaws or other organizational agreements of WebOrder
and each of its subsidiaries as currently in effect; (b) the minute books
containing all records of all proceedings, consents, actions, and meetings of
the stockholders, board of directors and any committees thereof of WebOrder and
each of its subsidiaries; (c) the stock ledger and journal reflecting all
issuances and transfers of the stock of WebOrder and each of its subsidiaries;
(d) all permits, orders, and consents issued by, and filings by WebOrder and
each of its subsidiaries with, any regulatory agency with respect to WebOrder or
any of its subsidiaries, or any securities of WebOrder or any of its
subsidiaries, and all applications for such permits, orders, and consents; and
(e) all the WebOrder Material Agreements.
3.18 NO BROKERS. Neither WebOrder nor any affiliate of WebOrder is
obligated for the payment of any fees or expenses of any investment banker,
broker, finder or similar party in connection with the origin, negotiation or
execution of this Agreement or the Certificate of Merger or in connection with
the Merger or any other transaction contemplated by this Agreement, and Netopia
will not incur any liability, either directly or indirectly, to any such
investment banker, broker, finder or similar party as a result of, this
Agreement, the Merger or any act or omission of WebOrder, any of its employees,
officers, directors, stockholders, agents or affiliates (except as provided in
Section 12.7).
3.19 BOOKS AND RECORDS.
-----------------
3.19.1 The books, records and accounts of WebOrder and each of
its subsidiaries (a) are in all material respects true, complete and correct,
(b) have been maintained in accordance with reasonable business practices and
customary internal controls procedures on a basis consistent with prior years,
and (c) accurately and fairly reflect the transactions and dispositions of the
assets of WebOrder and each of its subsidiaries.
3.19.2 WebOrder and each of its subsidiaries has devised and
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that: (a) transactions are executed in accordance with
management's general or specific authorization; (b) transactions are recorded as
necessary (i) to permit preparation of financial statements in conformity with
generally accepted accounting principles or any other criteria applicable to
such statements, and (ii) to maintain accountability for assets; and (c) the
amount recorded for assets on the books and records of WebOrder and each of its
subsidiaries is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
3.20 INSURANCE. During the prior two years, WebOrder and its
subsidiaries have maintained, and now maintain, policies of insurance and bonds
of the type and in amounts that are reasonably adequate and are customarily
carried by persons conducting businesses or owning assets similar in type and
size to those of WebOrder and its subsidiaries, including without limitation all
legally required workers' compensation insurance and errors and omissions,
casualty, fire and general liability insurance. There is no material claim
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have been timely
paid and WebOrder and its subsidiaries are otherwise in compliance with the
terms of such policies and bonds. WebOrder has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies. All policies of insurance now held by WebOrder or any of its
subsidiaries are set forth in SCHEDULE 3.20 to WebOrder Disclosure Letter,
together with the name of the insurer under each policy, the type of policy, the
policy coverage amount and any applicable deductible.
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3.21 ENVIRONMENTAL MATTERS.
---------------------
3.21.1 To WebOrder's knowledge, WebOrder and its subsidiaries
are in compliance with all applicable Environmental Laws (as defined below),
which compliance includes the possession by WebOrder and its subsidiaries of all
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof.
Neither WebOrder nor any of its subsidiaries has received any notice or other
communication (in writing or otherwise), whether from a governmental body,
citizens groups, employee or otherwise, that alleges that WebOrder or any of its
subsidiaries is not in compliance with any Environmental Law, and there are no
circumstances that may prevent or interfere with the compliance by WebOrder or
any of its subsidiaries with any current Environmental Law in the future. To
WebOrder's knowledge, no current or prior owner of any property leased or
controlled by WebOrder or any of its subsidiaries has received any notice or
other communication (in writing or otherwise), whether from a government body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or WebOrder or any of its subsidiaries is not in compliance with any
Environmental Law. All governmental authorizations currently held by WebOrder or
any of its subsidiaries pursuant to any Environmental Law (if any) are
identified in SCHEDULE 3.21 of WebOrder Disclosure Letter. To WebOrder's
knowledge, WebOrder does not have any liability under any Environmental Law and
has not handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or any other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against WebOrder
giving rise to any liability for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental Law. To
WebOrder's knowledge, all properties and equipment used in the business of
WebOrder has been free of asbestos, PCB's, methylene chloride, and
trichloroethylene, 1,2-trans-dichloroethylene, dioxins, dibenzofurans and other
Material of Environment Concern.
3.21.2 For purposes of this Section 3.21: (i) "ENVIRONMENTAL
LAW" means any federal, state, local or foreign statute, law regulation or other
legal requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (II) "MATERIAL OF ENVIRONMENTAL CONCERN" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is currently regulated by an
Environmental Law or that is otherwise a danger to health, reproduction or the
environment.
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3.22 VOTING AGREEMENT; IRREVOCABLE PROXIES. Katie Peterson, Mark
Coopersmith, garage.com, Guy Kawasaki, Freedom Communications, Inc., and
Hedgehog Management Partners L.P. have agreed in writing to vote for the
approval and adoption of this Agreement, the Merger and the other transactions
contemplated hereby (and to vote against proposals conflicting or inconsistent
with this Agreement and the Merger) pursuant to the voting agreement attached
hereto in the form of EXHIBIT G ("VOTING AGREEMENT") and pursuant to Irrevocable
Proxies in the form attached as Exhibit A thereto ("IRREVOCABLE
PROXIES").
3.23 VOTE REQUIRED. The affirmative vote of the holders of at least a
majority of the shares of WebOrder Preferred Stock and the holders of at least a
majority of the shares of WebOrder Common Stock and shares of WebOrder Preferred
Stock (on an as-converted to WebOrder Common Stock basis), in each case that are
issued and outstanding on the Record Date (as defined below), are the only votes
of the holders of any of the shares of WebOrder's capital stock necessary to
approve this Agreement, the Merger, the Certificate of Merger, the Escrow
Agreement and the other transactions contemplated by this Agreement. As used in
this Section 3.23, the term "RECORD DATE" means the record date for determining
those stockholders of WebOrder who are entitled to vote at the WebOrder
Shareholder Vote.
3.24 BOARD APPROVAL. The Board of Directors of WebOrder has unanimously
(i) approved and declared advisable this Agreement, the Merger and the other
transactions contemplated hereby, (ii) determined that the Merger is in the best
interests of the stockholders of WebOrder and is on terms that are fair to such
stockholders and (iii) voted to submit this Agreement, the Merger and the other
transactions contemplated hereby to the vote and approval of WebOrder's
stockholders.
3.25 NO EXISTING DISCUSSIONS. Neither WebOrder nor any director,
officer, stockholder, employee or agent of WebOrder is engaged, directly or
indirectly, in any discussions or negotiations with any third party relating to
any Alternative Transaction (as defined in Section 5.11) or in violation of any
agreement to which WebOrder or its assets are bound relating to any Alternative
Transaction.
3.26 DISCLOSURE.
----------
(a) Neither this Agreement, its exhibits and schedules and the
WebOrder Disclosure Letter, nor any of the certificates or documents to be
delivered by WebOrder to Netopia under this Agreement, or any other documents
delivered by WebOrder to Netopia regarding WebOrder's business (past or
present), or activities taken together, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which such statements were made, not misleading.
(b) None of the information supplied or to be supplied by or
on behalf of WebOrder for inclusion in the Information Statement will, as of the
date the Information Statement is first sent to the stockholders of WebOrder,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
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3.27 BANK ACCOUNTS AND INSURANCE. Section 3.27 of the WebOrder
Disclosure Letter sets forth the names and locations of all banks, trusts,
companies, savings and loan associations and other financial institutions at
which WebOrder or any of its subsidiaries maintains deposit account or other
accounts of any nature, the names of all persons then authorized to draw on, or
make withdrawals from, such accounts and the amount of any funds then on deposit
therein and the amount of debt, if any, owing thereto by the Company.
3.28 NO REDUCTION IN WORKING CAPITAL; SHAREHOLDERS EQUITY. Between the
Balance Sheet Date and the Closing Date, there shall be no reduction in the
amount of WebOrder's working capital (which excludes shareholders' equity) from
the amount shown in the Balance Sheet, except for operating losses incurred in
the ordinary course of WebOrder's Business in amounts and nature consistent with
WebOrder's historical business.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF NETOPIA AND SUB
Netopia and Sub hereby represent and warrant to WebOrder that, except
as set forth in the letter addressed to WebOrder from Netopia and dated as of
the Agreement Date which has been delivered by Netopia to WebOrder concurrently
herewith (the "NETOPIA DISCLOSURE LETTER"), each of the following
representations, warranties and statements in this Article 4 are true and
correct as of the Agreement Date and will be true and correct on and as of the
Closing Date:
4.1 ORGANIZATION AND GOOD STANDING. Netopia is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to own, operate and lease
its properties and to carry on its business as now conducted and as proposed to
be conducted. Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the corporate power
and authority to own, operate and lease its properties and to carry on its
business. Netopia owns all of the issued and outstanding stock of Sub.
4.2 POWER, AUTHORIZATION AND VALIDITY.
---------------------------------
4.2.1 POWER AND AUTHORITY. Netopia has all requisite corporate
power, capacity and authority to enter into, execute, deliver and perform its
obligations under, this Agreement and all the Netopia Ancillary Agreements and
to issue the shares of Netopia Common Stock and Netopia Options in the Merger in
accordance with this Agreement. The execution, delivery and performance of this
Agreement and each of the Netopia Ancillary Agreements by Netopia have been duly
and validly approved and authorized by all necessary corporate action of
Netopia's Board of Directors in compliance with applicable law (including
without limitation the DGCL) and Netopia's Certificate of Incorporation and
Bylaws, each as amended. Sub has all requisite corporate power, capacity and
authority to execute, deliver and perform its obligations under, this Agreement
and all the Sub Ancillary Agreements. The execution, delivery and performance of
this Agreement and each of the Sub Ancillary Agreements by Sub have been duly
and validly approved and authorized by all necessary corporate action of Sub's
Board of Directors and sole stockholder Sub in compliance with applicable law
(including without limitation the DGCL) and Sub's Certificate of Incorporation
and Bylaws, each as amended.
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4.2.2 NO CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency, commission or other Governmental Authority or any other
person or entity, governmental or otherwise, is necessary or required to be made
or obtained by Netopia or Sub to enable Netopia and Sub to lawfully execute and
deliver, enter into, and to perform their respective obligations under, this
Agreement, the Netopia Ancillary Agreements or the Sub Ancillary Agreements,
respectively, and for Sub to consummate the Merger, except for: (a) the filing
of the Certificate of Merger with the Delaware Secretary of State and comparable
filings with the California Secretary of State and any such further documents as
may be required under the DGCL or CCSL to effect the Merger; (b) the filing by
Netopia with the SEC or any state securities law authorities of any notices or
filings required in connection with the exemptions from the registration or
qualification requirements of the 1933 Act and/or applicable state securities
laws which Netopia relies on in issuing shares of Netopia Common Stock pursuant
to this Agreement; (c) the filing by Netopia of such reports and information
with the SEC under the 1934 Act and the rules and regulations promulgated by the
SEC thereunder, as may be required in connection with this Agreement, the Merger
and the other transactions contemplated by this Agreement; (d) such other
filings as may be required by the Nasdaq Stock Market with respect to the Merger
and the other transactions contemplated by this Agreement, and the issuance of
the shares of Netopia Common Stock and the Netopia Options to be issued by
Netopia in the Merger; and (e) such other filings, if any, as may be required in
order for Netopia to comply with applicable federal and state securities laws.
4.2.3 ENFORCEABILITY. This Agreement and the Netopia Ancillary
Agreements are, or when executed by Netopia will be, assuming due authorization,
execution and delivery by WebOrder and the WebOrder Shareholders who have
executed such Netopia Ancillary Agreements, valid and binding obligations of
Netopia, enforceable against Netopia in accordance with their respective terms,
except as to the effect, if any, of (a) applicable bankruptcy and other similar
laws affecting the rights of creditors generally and (b) rules of law and equity
governing specific performance, injunctive relief and other equitable remedies.
This Agreement and the Sub Ancillary Agreements are, or when executed by Sub
will be, assuming due authorization, execution and delivery by WebOrder and the
WebOrder Shareholders who have executed such Sub Ancillary Agreements, valid and
binding obligations of Sub, enforceable against Sub in accordance with their
respective terms, except as to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of creditors generally and (b) rules
of law and equity governing specific performance, injunctive relief and other
equitable remedies.
4.3 NO CONFLICT. Neither the execution and delivery of this Agreement
nor any of the Netopia Ancillary Agreements or Sub Ancillary Agreements by
Netopia or Sub, nor the consummation of the transactions contemplated hereby or
thereby, will conflict with, or result in a termination, breach, impairment or
violation of: (i) any provision of the Certificate of Incorporation or Bylaws or
other charter documents of Netopia or Sub as currently in effect; (ii) any
federal, state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to Netopia or Sub or any of their respective assets or
properties; or (iii) any instrument, agreement or contract to which Netopia or
any of its subsidiaries (if any) is a party or by which Netopia or any of its
subsidiaries (if any) or any of their respective assets or properties are bound
that has been filed by the SEC as an exhibit to any Netopia SEC document filed
with the SEC under the 1933 Act or the 1934 Act filed before the Agreement Date.
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4.4 VALIDITY OF SHARES. The shares of Netopia Common Stock to be issued
pursuant to the Merger, when issued in accordance with the terms hereof and the
Certificate of Merger, will be duly authorized, validly issued, fully paid and
non-assessable.
4.5 INFORMATION STATEMENT. Netopia will be solely responsible for any
statement, information or omission in the Information Statement relating to
Netopia to be sent to the stockholders of WebOrder in connection with the
WebOrder Shareholder Vote, and none of the information supplied or to be
supplied by or on behalf of Netopia that relates to Netopia for inclusion in the
Information Statement will, as of the date such Information Statement is first
provided to the stockholders of WebOrder in connection with the WebOrder
Shareholders Vote (provided Netopia has first had an opportunity to review and
revise such Information Statement before it is provided to WebOrder's
stockholders), contain any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading; PROVIDED, that Netopia shall not be responsible for any
statement, information or omission relating to WebOrder or any other information
supplied or to be supplied on behalf of WebOrder.
4.6 SEC FILINGS. Netopia has made available to WebOrder accurate and
complete copies of Netopia's Annual Report on Form 10-K for the year ended
September 30, 1999, each Quarterly Report on Form 10-Q filed by Netopia since
that date, and Netopia's Registration Statement on Form S-3 declared effective
by the SEC on or about January 13, 2000 (the "NETOPIA SEC DOCUMENTS"). As of the
time it was filed with the SEC (or, if amended or superseded by a subsequent
filing before the Agreement Date, then on the date of such subsequent filing):
(i) each of the Netopia SEC Documents complied in all material respects with the
applicable requirements of the 1933 Act and the 1934 Act (as the case may be);
and (ii) none of the Netopia SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
4.7 LITIGATION. There is no Claim pending against Netopia or any of its
subsidiaries (or, to Netopia's knowledge, against any officer, director,
employee or agent of Netopia or any of its subsidiaries in their capacity as
such or relating to their employment, services or relationship with Netopia or
such subsidiary) before any court, administrative agency or arbitrator, that has
or is reasonably likely to have a Material Adverse Effect on Netopia, and to
Netopia's knowledge no such Claim has been threatened. There is no judgment,
decree, injunction, rule or order of any governmental entity or agency, court or
arbitrator outstanding against Netopia or any of its subsidiaries.
4.8 DISCLOSURE.
----------
(a) Neither this Agreement, its exhibits and schedules and the
Netopia Disclosure Letter (if any), nor any of the certificates or documents to
be delivered by Netopia to WebOrder under this Agreement, or any other documents
delivered by Netopia to WebOrder regarding Netopia's business (past or present),
or activities taken together, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which such
statements were made, not misleading.
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(b) None of the information supplied or to be supplied by or
on behalf of Netopia for inclusion in the Information Statement will, as of the
date the Information Statement is first sent to the stockholders of WebOrder,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
ARTICLE 5
PRE-CLOSING COVENANTS OF WEBORDER
WebOrder covenants and agrees with Netopia that during the time period
from the Agreement Date until the earlier to occur of (i) the Effective Time or
(ii) the termination of this Agreement in accordance with Article 10:
5.1 ADVICE OF CHANGES. WebOrder will promptly advise Netopia in writing
(a) of any event occurring after the Agreement Date that would render any
representation or warranty of WebOrder contained in Article 3 of this Agreement,
if made on or as of the date of such event or the Closing Date, untrue or
inaccurate and (b) of any Material Adverse Change in WebOrder's Business.
5.2 MAINTENANCE OF BUSINESS. WebOrder will use its best efforts
consistent with past practices and policies to carry on and preserve its
business and its relationships with customers, advertisers, suppliers,
employees, and others with whom WebOrder has contractual relations in
substantially the same manner as it has before the Agreement Date. If WebOrder
becomes aware of a material deterioration in the relationship with any key
customer, key advertiser, key supplier or key employee, it will promptly bring
such information to the attention of Netopia in writing and, if requested by
Netopia, will exert reasonable commercial efforts to promptly restore the
relationship.
5.3 CONDUCT OF BUSINESS. WebOrder will continue to conduct its business
and maintain its business relationships in the ordinary and usual course, and
neither WebOrder nor any of its subsidiaries will, without the prior written
consent and approval (which may be given verbally to be promptly followed by
written confirmation) of the Chief Executive Officer, Chief Financial Officer or
General Counsel of Netopia:
(a) borrow or lend any money, other than reasonable and normal
advances to employees for bona fide travel expenses that are incurred in the
ordinary course of WebOrder's business consistent with WebOrder's past practices
or borrowings of money from Netopia;
(b) enter into any material transaction or agreement or take
any other action not in the ordinary course of WebOrder's business, or incur any
obligation or make or agree to make any expenditure (capital or otherwise) in
excess of $5,000;
(c) grant any lien, security interest, or other encumbrance on
any of its assets;
(d) sell, transfer or dispose of any of its assets except in
the ordinary course of WebOrder's business consistent with WebOrder's past
practices;
(e) enter into any material lease or contract for the purchase
or sale of any property, whether real or personal, tangible or intangible;
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(f) pay any bonus, increased salary or special remuneration to
any officer, director, employee or consultant (except for normal salary
increases consistent with WebOrder's past practices and not to exceed 5% of such
officer's, employee's or consultant's base annual compensation, and except
pursuant to existing arrangements previously disclosed to and approved in
writing by Netopia) or enter into any new employment or consulting agreement
with any such person;
(g) change any of its accounting methods;
(h) declare, set aside or pay any cash or stock dividend or
other distribution in respect of its capital stock, redeem, repurchase or
otherwise acquire any of its capital stock or other securities (except for the
repurchase of stock from employees, directors, consultants or contractors of
WebOrder in connection with the termination of their services with WebOrder at
the original purchase price of such stock), pay or distribute any cash or
property to any stockholder or security holder of WebOrder or make any other
cash payment to any stockholder or security holder of WebOrder that is unusual,
extraordinary, or not made in the ordinary course of WebOrder's business
consistent with its past practices;
(i) amend or terminate any contract, agreement or license to
which WebOrder or any of its subsidiaries is a party except those amended or
terminated in the ordinary course of WebOrder's business, consistent with its
past practices, and which are not material in amount or effect;
(j) guarantee or act as a surety for any obligation of any
third party;
(k) waive or release any material right or claim except in the
ordinary course of WebOrder's business, consistent with WebOrder's past
practice;
(l) issue, sell, create or authorize any shares of its capital
stock of any class or series or any other of its securities, or issue, grant or
create any warrants, obligations, subscriptions, options, convertible
securities, or other commitments to issue shares of its capital stock or
securities ultimately exchangeable for, or convertible into, shares of its
capital stock; PROVIDED, HOWEVER, that notwithstanding the foregoing, WebOrder
may issue shares of WebOrder Common Stock issuable upon the exercise, conversion
or exchange of WebOrder Options that are outstanding on the Agreement Date in
accordance with their terms as now in effect;
(m) subdivide or split or combine or reverse split the
outstanding shares of its capital stock of any class or series or enter into any
recapitalization affecting the number of outstanding shares of its capital stock
of any class or series or affecting any other of its securities;
(n) merge, consolidate or reorganize with, or acquire, or
enter into any other business combination with, any corporation, partnership,
limited liability company or any other entity or enter into any negotiations,
discussions or agreement for such purpose;
(o) amend its Articles of Incorporation or Bylaws except as
expressly contemplated by this Agreement;
(p) license any of its technology or Intellectual Property, or
acquire any Intellectual Property (or any license thereto) from any third party
except for any such license obtained in the ordinary course of WebOrder's
business;
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(q) materially change any insurance coverage;
(r) agree to any audit assessment by any tax authority or file
any federal or state income or franchise tax return unless copies of such
returns have first been delivered to Netopia for its review at a reasonable time
before filing, provided that approval of any such returns will not be
unreasonably withheld or delayed;
(s) modify or change the exercise or conversion rights or
exercise or purchase prices of any capital stock of WebOrder, any WebOrder stock
options, or accelerate or otherwise modify (i) the right to exercise any option,
warrant or other right to purchase any capital stock or other securities of
WebOrder or (ii) the vesting or release of any shares of capital stock or other
securities of WebOrder from any repurchase options or rights of refusal held by
WebOrder or any other party or any other restrictions; or
(t) agree to do any of the things described in the preceding
clauses 5.3(a) through 5.3(s).
5.4 [RESERVED].
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5.5 INFORMATION FOR PRIVATE PLACEMENT EXEMPTIONS. WebOrder shall use
its diligent efforts to assist Netopia in obtaining and verifying the accuracy
of all information from WebOrder's security holders deemed reasonably necessary
by Netopia and its counsel to establish the availability of an exemption or
exemptions from registration under Section 4(2) of the 1933 Act for the issuance
of Netopia Common Stock and any other Netopia securities to WebOrder security
holders in connection with the Merger.
5.6 APPROVAL OF WEBORDER'S STOCKHOLDERS. WebOrder shall solicit the
written consent of its stockholders at the earliest practicable date to submit
this Agreement the Merger and approval of any related agreements or transactions
for the consideration and approval of the stockholders of WebOrder, which
approval shall be recommended by WebOrder's Board of Directors (the vote taken
by the solicitation of such written consent of the stockholders of WebOrder is
hereinafter referred to as the "WEBORDER SHAREHOLDER VOTE"). Any proxies or
written consents shall be solicited in compliance with WebOrder's Articles of
Incorporation and Bylaws, both as amended, and in compliance with applicable
law. WebOrder will cause the Information Statement to be sent to the
stockholders of WebOrder in connection with a solicitation of a written consent
of WebOrder's stockholders to be delivered to each stockholder of WebOrder.
WebOrder shall use its best efforts to have this Agreement approved by such
percentage of WebOrder's outstanding voting securities as is required by the
terms of Section 280G(b)(5)(B) of the Code to avoid the treatment of any payment
or benefit under any contract, agreement or other arrangement, including those
entered into in connection with this Agreement, the Merger and the transactions
contemplated hereby, as a parachute payment under the federal tax laws, and to
cause such stockholder approval to have been obtained in a manner which
satisfied all applicable requirements of Section 280G(b)(5)(B) of the Code and
the proposed Treasury Regulations thereunder, including (without limitation) Q-7
of Section 1.280G-1 of such proposed regulations.
5.7 INFORMATION STATEMENT. WebOrder will be solely responsible for any
statement, information or omission in the Information Statement relating to
WebOrder to be sent to the stockholders of WebOrder in connection with the
WebOrder Shareholder Vote, and none of the information supplied or to be
supplied by or on behalf of WebOrder that relates to WebOrder for inclusion in
the Information Statement to be provided to the stockholders of WebOrder in
connection with the WebOrder Shareholder Vote will, as of the date such
Information Statement is first provided to the stockholders of WebOrder conform
to the representation made by WebOrder in Section 3.26; PROVIDED, HOWEVER, that
WebOrder shall not be responsible for any statement, information or omission
(including without limitation information relating to Netopia) that was
expressly supplied by Netopia for use in the Information Statement that is
contained in the Information Statement, so long as such statement or information
is not changed from the form in which it was provided by Netopia to WebOrder for
inclusion in the Information Statement (unless Netopia expressly approves such
change in writing).
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5.8 REGULATORY APPROVALS. WebOrder will promptly execute and file, or
join in the execution and filing, of any application, notification or any other
document that may be necessary in order to obtain the authorization, approval or
consent of any Governmental Authority, whether federal, state, local or foreign,
which may be reasonably required, or which Netopia may reasonably request, in
connection with the consummation of the Merger or any other transactions
contemplated by this Agreement or any WebOrder Ancillary Agreement. WebOrder
will use its best efforts to obtain, and to cooperate with Netopia to promptly
obtain, all such authorizations, approvals and consents.
5.9 NECESSARY CONSENTS. WebOrder will use its best efforts to promptly
obtain such written consents and authorizations of third parties, give notices
to third parties and take such other actions as may be necessary or appropriate
in addition to those set forth in the foregoing Sections of this Article 5 in
order to effect the consummation of the Merger and the other transactions
contemplated by this Agreement and to enable Netopia to carry on WebOrder's
business immediately after the Effective Time.
5.10 LITIGATION. WebOrder will notify Netopia in writing promptly after
learning of any Claim by or before any court, arbitrator or arbitration panel,
board or governmental agency, initiated by or against it or any of its
subsidiaries, or known by it to be threatened against WebOrder or any of its
subsidiaries or any of their officers, directors, employees or stockholders in
their capacity as such.
5.11 NO OTHER NEGOTIATIONS. During the time period commencing on the
Agreement Date and ending on the earlier to occur of (a) termination of this
Agreement in accordance with the provisions of Article 10 or (b) consummation of
the Merger, WebOrder will not, and WebOrder will not authorize, encourage or
permit any officer, director, employee, stockholder, affiliate or agent of
WebOrder or any subsidiary of WebOrder or any other person on WebOrder's or
their behalf to, directly or indirectly: (i) solicit, initiate, encourage or
induce the making, submission or announcement of, any offer or proposal from any
party concerning any Alternative Transaction (as defined below) or take any
other action that could reasonably be expected to lead to an Alternative
Transaction or a proposal therefor; (ii) consider any inquiry, offer or proposal
received from any party concerning any Alternative Transaction; (iii) furnish
any information regarding WebOrder to any person or entity in connection with or
in response to any inquiry, offer or proposal for or regarding any Alternative
Transaction; (iv) participate in any discussions or negotiations with any person
or entity with respect to any Alternative Transaction; (v) otherwise cooperate
with, facilitate or encourage any effort or attempt by any person or entity
(other than Netopia) to effect any Alternative Transaction; or (vi) execute,
enter into or become bound by any letter of intent, agreement, commitment or
understanding between WebOrder and any third party that relates to, provides for
or concerns any Alternative Transaction. During the foregoing time period
identified in the preceding sentence, WebOrder will promptly notify Netopia
orally and in writing of any inquiries or proposals received by WebOrder or any
of its subsidiaries, directors, officers, stockholders, employees or agents
regarding any Alternative Transaction and will identify the party making the
inquiry or proposal and the nature and terms of any inquiry or proposal. As used
herein, the term "ALTERNATIVE TRANSACTION" means any commitment, agreement or
transaction involving or providing for (a) the possible disposition of all or
any substantial portion of WebOrder's business, assets or capital stock, whether
by way of merger, consolidation, sale of assets, sale of stock, stock exchange,
tender offer and/or any other form of business combination or (b) any initial
public offering of capital stock or other securities of WebOrder pursuant to a
registration statement filed under the 1933 Act.
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5.12 ACCESS TO INFORMATION. From the Agreement Date until the Closing,
WebOrder will allow Netopia and its agents access during normal business hours
to the files, books, records, technology, contracts, personnel (including
officers and managers) and offices of WebOrder, including, without limitation,
any and all information relating to WebOrder's operations, taxes, commitments,
contracts, leases, licenses, and real, personal and intangible property and
financial condition, as Netopia and its agents shall reasonably request.
WebOrder will use its best efforts to cause its accountants to cooperate with
Netopia and its agents in making available all financial information reasonably
requested by Netopia, including without limitation the right to examine all
working papers pertaining to all financial statements prepared or audited by
such accountants.
5.13 SATISFACTION OF CONDITIONS PRECEDENT. WebOrder will use its best
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Article 9, and WebOrder will use its best efforts to cause the
transactions contemplated by this Agreement to be consummated in accordance with
this Agreement. In particular, WebOrder will use its diligent efforts to cause
the Merger to become effective in accordance with this Agreement within 21
business days of the Agreement Date.
5.14 BLUE SKY LAWS. WebOrder will use its best efforts to assist
Netopia to the extent necessary to comply with the securities and "blue sky"
laws of all jurisdictions which are applicable in connection with the Merger.
5.15 WEBORDER DISSENTING SHARES. As promptly as practicable after the
date of the WebOrder Shareholder Vote and before the Closing Date, WebOrder will
furnish Netopia with the name and address of each holder (or potential holder)
of any WebOrder Dissenting Shares (if any) and the number of WebOrder Dissenting
Shares (or potential WebOrder Dissenting Shares) owned by each such holder.
WebOrder shall not, except with the prior written consent of Netopia, make any
payment with respect to, or settle or offer to settle, any demands made
respecting appraisal or dissenter's rights.
5.16 TERMINATION OF WEBORDER RIGHTS AGREEMENTS. All WebOrder Rights
Agreements (other than the Voting Agreement and the related Irrevocable Proxies)
will be terminated and canceled by no later than immediately before the
Effective Time.
5.17 INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENTS. WebOrder will
use its best efforts to obtain from each employee, contractor and consultant of
WebOrder or any subsidiary of WebOrder who has had access to any software,
technology or copyrightable, patentable or other proprietary works owned or
developed by WebOrder or such subsidiary, or to any other confidential or
proprietary information of WebOrder, its subsidiaries or its clients, an
invention assignment and confidentiality agreement in a form reasonably
acceptable to Netopia, duly executed by such employee, contractor or consultant
and delivered to WebOrder and/or Netopia.
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5.18 WEBORDER EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS. Upon the request
of Netopia, WebOrder shall terminate any WebOrder Benefit Plan immediately
before the Effective Time.
5.19 CLOSING OF MERGER. WebOrder will not refuse to effect the Merger
if, on or before the Closing Date, all the conditions precedent to WebOrder'
obligations to effect the Merger under Article 8 hereof have been satisfied or
waived by WebOrder and Netopia elects to consummate the Merger.
5.20 PAYMENT OF ACCRUED BUT UNPAID SALARY. In connection with its
payroll period ending February 29, 2000, WebOrder shall have paid all accrued
but unpaid compensation amounts for its officers and other employees, so that
after February 20, 2000 WebOrder will not have any accrued but unpaid
compensation obligations with respect to prior periods for any of its officers
or employees.
ARTICLE 6
PRE-CLOSING COVENANTS OF NETOPIA
Netopia covenants and agrees that during the time period from the
Agreement Date until the earlier to occur of (i) the Effective Time or (ii) the
termination of this Agreement in accordance with Article 10:
6.1 ADVICE OF CHANGES. Netopia will promptly advise WebOrder in writing
of any event occurring after the date of this Agreement that would render any
representation or warranty of Netopia or Sub contained in this Agreement, if
made on or as of the date of such event or the Closing Date, to be untrue or
inaccurate in any material respect.
6.2 [RESERVED].
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6.3 REGULATORY APPROVALS. Netopia will execute and file, or join in the
execution and filing, of any application, notification or other document that
may be necessary in order to obtain the authorization, approval or consent of
any governmental body, federal, state, local or foreign, which may be reasonably
required, in connection with the consummation of the Merger and the other
transactions contemplated by this Agreement and the Netopia Ancillary Agreements
and Sub Ancillary Agreements in accordance with the terms of this Agreement.
Netopia will use diligent efforts to obtain all such authorizations, approvals
and consents.
6.4 NECESSARY CONSENTS. Netopia will use its diligent efforts to
promptly obtain such written consents and authorizations of third parties, give
notices to third parties and take such other actions as may be necessary in
addition to those set forth in the foregoing Sections of this Article 6 in order
to effect the consummation of the Merger and the other transactions contemplated
by this Agreement.
6.5 SATISFACTION OF CONDITIONS PRECEDENT. Netopia will use its diligent
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Article 8, and Netopia will use its diligent efforts to cause
the transactions contemplated by this Agreement to be consummated in accordance
with the terms of this Agreement. In particular, Netopia will use its diligent
efforts to cause the Merger to become effective in accordance with this
Agreement within 21 business days of the Agreement Date.
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6.6 ACCESS TO INFORMATION. At WebOrder's request, appropriate Netopia
executive officers will meet with WebOrder executive officers to provide certain
limited due diligence information to WebOrder executive officers, subject to the
compliance by WebOrder and such WebOrder executive officers with the
Confidentiality Agreement and Netopia's insider trading policies.
6.7 LISTING OF ADDITIONAL SHARES. Netopia will use all reasonable
efforts to cause the shares of Netopia Common Stock issuable upon conversion of
WebOrder Common Stock and WebOrder Preferred Stock in the Merger and upon
exercise of the Netopia Options to be issued in the Merger to be approved for
listing (subject to notice of issuance) on the Nasdaq Stock Market.
6.8 NETOPIA EMPLOYEE OPTION PLANS AND BENEFIT ARRANGEMENTS. Netopia
shall use its best efforts to arrange that, as soon as practicable after the
Effective Time, all Netopia benefit arrangements and Netopia employee plans (the
"NETOPIA BENEFITS") provide the same or a comparable benefit or plan to each
employee of WebOrder as is provided to Netopia's employees who are similarly
situated. The Netopia Benefits shall give full credit for each participant's
period of service with WebOrder before the Effective Time for all purposes for
which such service was recognized under WebOrder's employee plans before the
Effective Time. From and after the Effective Time, Netopia and the Surviving
Corporation shall provide all employees of WebOrder with the opportunity to
participate in any employee stock option or other incentive compensation plan of
Netopia on substantially the same terms and subject to substantially the same
conditions as are available to similarly situated employees of Netopia.
ARTICLE 7
CLOSING MATTERS
7.1 THE CLOSING. Subject to termination of this Agreement as provided
in Article 10 below, the closing of the transactions to consummate the Merger
(the "CLOSING") will take place at the offices of Fenwick & West LLP, Two Palo
Alto Square, Palo Alto, California 94306 at 10:00 a.m., Pacific Standard Time as
soon as practicable after all of the conditions to Closing set forth in Articles
8 and 9 hereof have been satisfied and/or waived in accordance with this
Agreement, but in all events no later than the Termination Date, or on such
other day as Netopia and WebOrder may mutually agree on (the "CLOSING DATE").
Concurrently with the Closing, the Certificate of Merger will be filed with the
Delaware Secretary of State.
7.2 EXCHANGE OF CERTIFICATES.
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7.2.1 At the Closing or as soon thereafter as reasonably
practicable, each holder of shares of WebOrder Common Stock and/or WebOrder
Preferred Stock will surrender the certificate(s) for such shares (each a
"WEBORDER CERTIFICATE"), duly endorsed to Netopia for cancellation as of the
Effective Time together with the written instrument contemplated by the second
sentence of Section 2.4.2. Promptly after the Effective Time and subject to the
receipt by Netopia or its transfer agent of such WebOrder Certificates and such
written instrument, Netopia or its transfer agent will issue to each tendering
holder of a WebOrder Certificate a certificate for the number of shares of
Netopia Common Stock (an "NETOPIA CERTIFICATE") to which such holder is entitled
pursuant to Section 2.1.2 (LESS the Escrow Shares of such holder that are to be
withheld and placed in escrow pursuant to Section 2.4 and the Escrow Agreement,
and less any Netopia Certificates to be held in escrow in accordance with
Restricted Stock Agreements) and Netopia or its transfer agent will pay by check
to each tendering holder cash in the amounts payable to such holder in
accordance with the provisions of Sections 2.1.2 and 2.1.4 (less any cash
consideration to be held in escrow). At or about the Closing Date, Netopia will
deliver the cash and Netopia Certificates representing the Escrow Consideration
to the Escrow Agent pursuant to the Escrow Agreement.
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7.2.2 No Netopia Certificates for shares of Netopia Common
Stock issued pursuant to Section 2.1.2 and no cash payable under Section 2.1.2
or Section 2.1.4, and no dividends or distributions payable to holders of record
of Netopia Common Stock after the Effective Time, will be paid to the holder of
any unsurrendered WebOrder Certificate unless and until the holder of such
unsurrendered WebOrder Certificate surrenders such WebOrder Certificate to
Netopia as provided above together with the written instrument contemplated by
the second sentence of Section 2.4.2. Subject to the effect, if any, of
applicable escheat and other laws, following surrender of any WebOrder
Certificate, there will be delivered to the person entitled thereto, without
interest, the amount of any dividends and distributions theretofor paid with
respect to Netopia Common Stock so withheld as of any date after the Effective
Time and before such date of delivery.
7.2.3 After the Effective Time there will be no further
registration of transfers on the stock transfer books of WebOrder or its
transfer agent of any shares of capital stock of WebOrder that were outstanding
immediately before the Effective Time. If, after the Effective Time, WebOrder
Certificates are presented for any reason, they will be canceled and exchanged
as provided in this Section 7.2.
7.2.4 Until WebOrder Certificates representing shares of
WebOrder Common Stock and/or WebOrder Preferred Stock that are outstanding
immediately before the Effective Time are surrendered pursuant to Section 7.2.1
above, such WebOrder Certificates shall, for all purposes, evidence only the
right to receive the number of shares of Netopia Common Stock and cash
consideration into which such shares of WebOrder Common Stock and/or WebOrder
Preferred Stock are convertible pursuant to Section 2.1.2.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF WEBORDER
WebOrder's obligations to consummate the Merger hereunder are subject
to the fulfillment or satisfaction, on and as of the Closing, of each of the
following conditions (any one or more of which may be waived by WebOrder, but
only in a writing signed by WebOrder):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Netopia and Sub set forth in Article 4 (as qualified by the
Netopia Disclosure Letter) (a) that are qualified as to materiality in Article 4
will be true and correct and (b) that are not qualified as to materiality in
Article 4 shall be true and correct in all material respects, in each case on
and as of the Closing with the same force and effect as if they had been made at
the Closing Date (except for any such representations or warranties that, by
their terms, speak only as of a specific date or dates, in which case such
representations and warranties shall be true and correct on and as of such
specified date or dates), and WebOrder will have received a certificate to such
effect executed by an officer of Netopia.
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8.2 COVENANTS. Netopia will have performed and complied in all material
respects with all of its covenants and obligations contained in Article 6 that
are to be performed on or before the Closing (to the extent that such covenants
require performance by Netopia on or before the Closing), and WebOrder will have
received a certificate to such effect signed by an officer of Netopia.
8.3 REQUISITE APPROVALS. This Agreement, the Merger and the other
transactions contemplated hereby shall have been duly and validly approved and
adopted by WebOrder's stockholders, as required by with applicable law and the
WebOrder Articles and Bylaws. This Agreement, the Merger, the Netopia Ancillary
Agreements and the issuance of shares of Netopia Common Stock in the Merger and
the grant of Netopia Options upon conversion of WebOrder Options in the Merger
shall have been duly and validly approved and adopted by Netopia's Board of
Directors as required by applicable law and Netopia's Certificate of
Incorporation and Bylaws. This Agreement, the Merger and the Sub Ancillary
Agreements will have been approved and adopted by Sub's Board of Directors and
sole stockholder as required by applicable law and Sub's Certificate of
Incorporation and Bylaws.
8.4 COMPLIANCE WITH LAW; NO LEGAL RESTRAINTS; NO LITIGATION. No
litigation or proceeding shall have been threatened or pending for the purpose
or with the probable effect of enjoining or preventing the consummation of the
Merger or any of the other material transactions contemplated by this Agreement.
There will not be issued or enacted or adopted, or threatened in writing by any
Governmental Authority any order, decree, temporary, preliminary or permanent
injunction, legislative enactment, statute, regulation, action or proceeding, or
any judgment or ruling by any court, arbitrator or Governmental Authority or any
other fact or circumstance, that, directly or indirectly, challenges, threatens,
prohibits, enjoins, restrains, suspends, delays, conditions or renders illegal
or imposes limitations on (or involves a challenge, threat to, or a prohibition,
injunction, restraint, suspension, delay or illegality of, or to impose
limitations on the Merger or any other material transaction contemplated by this
Agreement.
8.5 GOVERNMENT CONSENTS. There will have been obtained at or before the
Closing Date such permits or authorizations, and there will have been taken all
such other actions, as may be required to consummate the Merger by any
governmental or regulatory authority having jurisdiction over the parties and
the actions herein proposed to be taken.
8.6 SECURITIES LAWS; REGISTRATION. Netopia shall have executed and
delivered the Registration Rights Agreement.
8.7 OPINION OF NETOPIA'S COUNSEL. WebOrder shall have received from
Fenwick & West LLP, counsel to Netopia, a favorable opinion substantially in the
form of EXHIBIT H. 8.8 NASDAQ LISTING. Netopia shall have filed with the Nasdaq
Stock Market a Notice of Listing of Additional Shares form to list for trading
the shares of Netopia Common Stock issuable in the Merger pursuant to Section
2.1.2, and the shares of Netopia Common Stock issuable upon the exercise of
Netopia Options issued in the Merger pursuant to Section 2.2.
8.9 EMPLOYEE INCENTIVE AGREEMENTS. Netopia shall have offered to enter
into an agreement substantially in the form of Exhibit L, with each of the
WebOrder employees identified in Exhibit L.
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8.10 ESCROW AGREEMENT. WebOrder shall have received a fully executed
copy of the Escrow Agreement in the form of Exhibit B executed by Netopia.
8.11 REGISTRATION RIGHTS AGREEMENT. Netopia shall have entered into and
delivered the Rights Agreement.
8.12 NO MATERIAL ADVERSE CHANGE. There shall not have been any Material
Adverse Change since January 13, 2000, in the Business of Netopia and its
subsidiaries, taken as a whole, and WebOrder will have received a certificate to
such effect signed by an officer of Netopia.
8.13 CONTINUED EMPLOYMENT OF WEBORDER EMPLOYEES. Each of WebOrder's
full-time employees, and any other employee customarily working more than 30
hours per week (the "WEBORDER EMPLOYEES") immediately before the Closing Date,
shall have been offered employment with Netopia in positions as mutually agreed
by Netopia and WebOrder, and with salaries, employment benefits, and other terms
of employment consistent with those afforded to Netopia employees at similar
levels of responsibility and authority, and consistent with the terms reflected
in offer letters previously delivered by Netopia to some or all such WebOrder
Employees.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF NETOPIA
Netopia's obligations are subject to the fulfillment or satisfaction,
on and as of the Closing, of each of the following conditions (any one or more
of which may be waived by Netopia, but only in a writing signed by Netopia):
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of WebOrder set forth in Article 3 (as qualified by the WebOrder
Disclosure Letter) (a) that are qualified as to materiality in Article 3 will be
true and correct and (B) that are not qualified as to materiality in Article 3
shall be true and correct in all material respects, in each case on and as of
the Closing with the same force and effect as if they had been made at the
Closing Date (except for any such representations or warranties that, by their
terms, speak only as of a specific date or dates, in which case such
representations and warranties shall be true and correct on and as of such
specified date or dates), and Netopia will have received a certificate to such
effect executed by WebOrder's President or Chief Executive Officer.
9.2 COVENANTS. WebOrder will have performed and complied in all
material respects with all of its covenants and obligations contained in Article
5 that are to be performed on or before the Closing (to the extent that such
covenants require performance by WebOrder on or before the Closing), and Netopia
will have received a certificate to such effect signed by WebOrder's President
or Chief Executive Officer.
9.3 NO MATERIAL ADVERSE CHANGE. There will not have been any Material
Adverse Change since January 31, 2000, in the Business of WebOrder and its
subsidiaries, taken as a whole, and Netopia will have received a certificate to
such effect signed by WebOrder's President and Chief Executive Officer.
9.4 COMPLIANCE WITH LAW; NO LEGAL RESTRAINTS; NO LITIGATION. No
litigation or proceeding shall have been threatened or pending for the purpose
or with the probable effect of enjoining or preventing the consummation of the
Merger or any of the other material transactions contemplated by this Agreement.
There will not be issued or enacted or adopted, or threatened in writing by any
Governmental Authority any order, decree, temporary, preliminary or permanent
injunction, legislative enactment, statute, regulation, action or proceeding, or
any judgment or ruling by any court, arbitrator or Governmental Authority or any
other fact or circumstance, that, directly or indirectly, challenges, threatens,
prohibits, enjoins, restrains, suspends, delays, conditions or renders illegal
or imposes limitations on (or involves a challenge, threat to, or a prohibition,
injunction, restraint, suspension, delay or illegality of, or to impose
limitations on the Merger or any other material transaction contemplated by this
Agreement.
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9.5 GOVERNMENT CONSENTS. There will have been obtained at or before the
Closing Date such permits or authorizations, and there will have been taken all
such other actions, as may be required to consummate the Merger by any
governmental or regulatory authority having jurisdiction over the parties and
the actions herein proposed to be taken.
9.6 OPINION OF WEBORDER'S COUNSEL. Netopia will have received from
Venture Law Group, counsel to WebOrder, a favorable opinion substantially in the
form of EXHIBIT I.
9.7 CONSENTS. Netopia will have received duly executed copies of all
material third-party consents, approvals, assignments, waivers, authorizations
or other certificates that are in form and substance reasonably satisfactory to
Netopia and are: (a) listed on Schedule 9.7 to the WebOrder Disclosure Letter
(including without limitation those set forth in Schedule 3.12 to the WebOrder
Disclosure Letter); (b) reasonably deemed necessary by Netopia's legal counsel
to provide for (i) the continuation in full force and effect immediately after
the Merger, with no breach or violation thereof by WebOrder, of any and all
contracts, agreements and leases of WebOrder and its subsidiaries required to be
listed in Schedule 3.11 to the WebOrder Disclosure Letter, (ii) the preservation
of WebOrder's IP Rights and other assets and properties immediately after the
Merger.
9.8 REQUISITE APPROVALS. This Agreement, the Merger and the WebOrder
Ancillary Agreements will have been duly and validly approved and adopted, as
required by applicable law and WebOrder's Articles of Incorporation and Bylaws,
by (a) WebOrder's Board of Directors and (b) holders of not less than a majority
of the outstanding shares of WebOrder Common Stock and WebOrder Preferred Stock
(on an as-converted to WebOrder Common Stock basis).
9.9 DISSENTING SHARES. Less than 5% of the outstanding shares of
WebOrder Common Stock and WebOrder Preferred Stock (on an as-converted to
WebOrder Common Stock basis) will (a) not have affirmatively voted in favor of
the Merger and (b) accordingly be eligible to exercise or perfect any statutory
appraisal rights of dissenting stockholders under applicable law.
9.10 NON-COMPETITION AGREEMENTS. At the time of the Closing, Netopia
will have received from each of WebOrder's Key Employees a fully executed copy
of a Non-Competition Agreement in the form of Exhibit J-1.
9.11 ESCROW AGREEMENT. Netopia will have received a fully executed copy
of the Escrow Agreement in the form of EXHIBIT B executed by the Escrow Agent,
the Escrow Representative, and each WebOrder Shareholder.
9.12 SECURITIES LAWS. Netopia: (a) shall have received an executed
counterpart of the Investment Representation Letter executed by each WebOrder
Shareholder who, immediately before the Effective Time, owns any shares of
WebOrder Common Stock and/or WebOrder Preferred Stock, each as constituted on
the Agreement Date; (b) shall be reasonably satisfied that there are not more
than thirty-five (35) WebOrder security holders (both on the Record Date and as
of immediately before the Effective Time) who are not "accredited investors"
within the meaning of Regulation D promulgated under the 1933 Act and that, if
any WebOrder Shareholders are not accredited investors, those WebOrder security
holders have a "purchaser representative" as contemplated by, and who meets all
the criteria of, Rule 501 of Regulation D promulgated under the 1933 Act; and
(c) shall be reasonably satisfied that the issuance of shares of Netopia Common
Stock pursuant to Section 2.1.2 of this Agreement is exempt from the
registration requirements of the 1933 Act by virtue of the exemptions provided
by Section 4(2) of the 1933 Act, and any exemptions from the registration and/or
qualification requirements of applicable state "blue sky" securities laws.
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9.13 CONTINUED EMPLOYMENT OF CERTAIN PERSONNEL. Each of the WebOrder
Employees (a) shall have continued to be employed as full-time employees of
WebOrder at all times from the Agreement Date through the Effective Time and (b)
shall have accepted offers of continued employment with WebOrder following the
Effective Time pursuant to written employment offer letters previously delivered
by Netopia to such WebOrder employees.
9.14 CHANGES IN CAPITALIZATION. There shall have been no increase in
the number of outstanding shares of WebOrder Common Stock and WebOrder Preferred
Stock from the numbers set forth in Sections 3.14 above, except for (i)
conversions, if any, before the Closing of shares of WebOrder Preferred Stock
into shares of WebOrder Common Stock, or (ii) shares of WebOrder Common Stock
issued upon the exercise of previously outstanding WebOrder Options.
9.15 REGISTRATION RIGHTS AGREEMENT. Each holder of WebOrder Common
Stock and WebOrder Preferred Stock immediately before the Closing shall have
entered into a Registration Rights Agreement (the "RIGHTS AGREEMENT") with
Netopia, in substantially the form attached as Exhibit F.
9.16 SHAREHOLDER REPRESENTATION LETTER. Each WebOrder Shareholder shall
have executed and delivered to Netopia the Investment Representation Letter.
9.17 TERMINATION OF WEBORDER RIGHTS AGREEMENTS. As of the Closing Date,
all WebOrder Rights Agreements (other than the Voting Agreement and the related
Irrevocable Proxies) shall have been terminated and cancelled.
9.18 NO OUTSTANDING WEBORDER WARRANTS. As of the Closing Date, any
outstanding warrants to purchase any shares of WebOrder Preferred Stock or
WebOrder Common Stock shall have been terminated.
9.19 WEBORDER COMMON STOCK ELECTIONS. Netopia shall have received, from
each holder of WebOrder Common Stock (other than Dissenting Shares), either a
Common Stock Cash Election or a Common Stock All-Stock Election.
9.20 AGREEMENT TO OFFSET. Netopia shall have received the written
agreement of each holder of WebOrder Preferred Stock or WebOrder Common Stock
that shall have any outstanding debt or liability to WebOrder (or any subsidiary
thereof), other than debts or liabilities that reduce the Merger Consideration
as provided in Section 2.1.5, that the amount payable to such holder pursuant to
Section 2.1.2 may be reduced by the amount of such debt or liability outstanding
at the Effective Time (including any interest accrued pursuant to the terms of
such debt or liability), and such debts or liabilities shall be paid as of the
Closing Date by means of such reduction.
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ARTICLE 10
TERMINATION OF AGREEMENT
10.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at
any time before the Effective Time by the mutual written agreement of Netopia
and WebOrder.
10.2 UNILATERAL TERMINATION.
10.2.1 Either Netopia or WebOrder, by giving written notice to
the other, may terminate this Agreement if a court of competent jurisdiction or
other Governmental Authority shall have issued a nonappealable final order,
decree or ruling or taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger.
10.2.2 Either Netopia or WebOrder, by giving written notice to
the other, may terminate this Agreement if the Merger shall not have been
consummated by midnight Pacific Standard Time on the Termination Date; PROVIDED,
HOWEVER, that the right to terminate this Agreement pursuant to this Section
10.2.2 shall not be available to any party whose failure to perform in any
material respect any of its obligations or covenants under this Agreement
results in the failure of any condition set forth in Article 8 or Article 9 or
if the failure of such condition results from facts or circumstances that
constitute a material breach of a representation or warranty made under this
Agreement by such party, if the other party has performed in all material
respects its obligations under this Agreement and if the representations and
warranties of such other party to this Agreement are true and correct in all
material respects as of the Termination Date.
10.2.3 Either Netopia or WebOrder may terminate this Agreement
at any time before the Closing if the other has committed (or, in the case of a
termination by WebOrder, Sub has committed) a material breach of (a) any of its
representations and warranties under Article 3 or Article 4 of this Agreement,
as applicable; or (b) any of its covenants under Article 5 or Article 6 of this
Agreement, as applicable, and has not cured such material breach within three
(3) business days after the party seeking to terminate this Agreement has given
the other party written notice of the material breach and its intention to
terminate this Agreement pursuant to this Section 10.2.3; provided, however,
that the right to termination this Agreement pursuant to this Section 10.2.3
shall not be available if the party seeking to terminate the Agreement is at
that time in breach of this Agreement.
10.3 LIABILITY FOR TERMINATION. Termination of this Agreement by a
party (the "TERMINATING PARTY") in accordance with the provisions of this
Section 10 will not give rise to any obligation or liability on the part of the
Terminating Party on account of such termination.
ARTICLE 11
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION
AND REMEDIES, CONTINUING COVENANTS
11.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
WebOrder contained in this Agreement and the WebOrder Ancillary Agreements will
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of Netopia, until that date which is the earlier of (i) the
termination of this Agreement or (ii) one year after the Closing Date (in any
case, the "ESCROW RELEASE DATE"), PROVIDED, however, that notwithstanding the
foregoing, representations and warranties set forth in Section 3.7, and any
Claim for Damages arising out of or relating to the failure of a WebOrder
Shareholder to have good, valid and marketable title to any issued and
outstanding shares of WebOrder Common Stock or WebOrder Preferred Stock held (or
asserted to have been held) by such WebOrder Shareholder, free and clear of all
liens, claims and encumbrances, or to have the full right, capacity and
authority to vote such person's shares of stock of WebOrder stock in favor of
this Agreement, the Merger and the other transactions contemplated hereby, shall
survive for two years after the Closing Date. Claims based on any fraudulent
conduct or other willful misconduct on the part of WebOrder, any subsidiary of
WebOrder or any officer, director, employee, agent or stockholder of WebOrder or
any subsidiary of WebOrder, in each case relating to this Agreement or the
transactions contemplated hereby, shall be governed by the applicable statutory
limitations periods. No representations or warranties of Netopia contained in
this Agreement, the Netopia Disclosure Letter or any Netopia Ancillary Agreement
shall survive the Closing, and all such representations and warranties shall
expire at the Effective Time. No representations or warranties of Sub contained
in this Agreement, the Sub Disclosure Letter or any Sub Ancillary Agreement
shall survive the Closing, and all such representations and warranties shall
expire at the Effective Time.
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11.2 AGREEMENT TO INDEMNIFY. Subject to the provisions of Sections 11.3
and 11.4, each WebOrder Shareholder will, severally and not jointly, indemnify
and hold harmless Netopia and the Surviving Corporation and their respective
officers, directors, agents, stockholders and employees, and each person, if
any, who controls or may control Netopia or the Surviving Corporation within the
meaning of the 1933 Act or the 1934 Act (each hereinafter referred to
individually as an "INDEMNIFIED PERSON" and collectively as "INDEMNIFIED
PERSONS") from and against any and all claims, demands, suits, actions, causes
of actions, losses, costs, damages, liabilities and expenses including, without
limitation, attorneys' fees and costs, other professionals' and experts' fees
and court or arbitration costs (hereinafter collectively referred to as
"DAMAGES") directly or indirectly incurred, resulting from or and arising out
of: (a) any inaccuracy, misrepresentation, breach of, or default in, any of the
representations, warranties or covenants given or made by WebOrder in this
Agreement, the WebOrder Disclosure Letter or any certificate, document or
instrument delivered by or on behalf of WebOrder or an officer of WebOrder
pursuant hereto; (b) any failure of any information provided by WebOrder or any
WebOrder Shareholder contained in the Information Statement distributed by
WebOrder to its stockholders in connection with the WebOrder Shareholder Vote
(and excluding any information regarding Netopia or Sub that was provided by
Netopia) to be true, correct and complete; (c) any Excess Transaction Expenses
(as defined in Section 12.7) that have not already reduced the aggregate Merger
Consideration ("ADDITIONAL EXCESS TRANSACTION EXPENSES"); or (d) the amount of
any tax savings actually lost as a result of any lost tax deduction by WebOrder
or any of its subsidiaries in respect of any payment made hereunder or with
respect hereto that constitutes an excess parachute payment under Section
280(g)(1) of the Code. To be indemnified, any claim of indemnity made by an
Indemnified Person under this Section 11.2 must be raised in a writing delivered
to the Escrow Agent by no later than the Escrow Release Date, and, if raised by
such date, such claim shall survive the Escrow Release Date until final
resolution of such claim.
11.3 LIMITATION.
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11.3.1 LIMITATIONS ON REMEDIES. No WebOrder Shareholder shall
be required to provide indemnification under this Article 11 in an amount
exceeding ten percent (10%) of the value (with shares of Netopia Common Stock
received by such shareholder valued at the Average Netopia Price Per Share) of
the total consideration received (excluding any Earn-Out Payments) by such
shareholder pursuant to Section 2.1.2; and no WebOrder Shareholder will have any
additional liability to an Indemnified Person under this Article 11. In seeking
indemnification for Damages under Section 11.2, the Indemnified Persons must
exercise their remedies first with respect to the Escrow Shares pursuant to the
Escrow Agreement and by offsetting or withholding some or all of the Earn-Out
Payments specified in attached Exhibit K (if any such payments become payable),
and then against the WebOrder Shareholders, severally and not jointly. Any and
all Escrow Shares used to satisfy indemnification for Damages under Section 11.2
shall be valued at the Netopia Average Price Per Share. In addition, the
indemnification provided for in Section 11.2 shall not apply unless and until
the aggregate Damages for which one or more Indemnified Persons seeks or has
sought indemnification hereunder exceeds a cumulative aggregate amount of
$25,000 (the "BASKET"), in which event WebOrder Shareholders shall, subject to
the foregoing limitations, be liable to indemnify the Indemnified Persons for
all Damages (including all Damages below such $25,000 threshold on a dollar for
dollar basis); PROVIDED, HOWEVER, that the Basket and the foregoing limitations
of this sentence shall not apply to additional Excess Transaction Expenses.
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11.4 NOTICE. Promptly after Netopia becomes aware of the existence of
any potential claim by an Indemnified Person for indemnity from WebOrder
Shareholders under Section 11.2, Netopia will notify the Escrow Representative
of such potential claim in accordance with the Escrow Agreement. The failure of
Netopia to give, or delay by Netopia in giving, such notice will not affect any
rights or remedies of an Indemnified Person hereunder with respect to
indemnification for Damages except to the extent WebOrder Shareholders are
materially prejudiced thereby. Before the settlement of any claim brought by a
third party for which Netopia seeks indemnity from a WebOrder Shareholder,
Netopia will provide the Escrow Representative with the terms of the proposed
settlement and a reasonable opportunity to comment on such terms in accordance
with the Escrow Agreement.
11.5 CLOSING DATE BALANCE SHEET; ADJUSTED WORKING CAPITAL ACCOUNT. As
promptly as reasonably practicable after the Closing Date, Netopia shall (i)
prepare an unaudited balance sheet of WebOrder as of and for the Closing Date
and shall deliver a copy of such balance sheet to the Escrow Representative.
WebOrder's auditors may also review and confirm the calculation of the working
capital accounts included in such balance sheet. The balance sheet shall be
utilized to determine compliance with the representation made in Section 3.28
above.
ARTICLE 12
MISCELLANEOUS
12.1 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by the laws of the State of California except for those provisions
governing conflict of laws, notwithstanding that one or more of the parties to
this Agreement is now, or may hereafter become, a resident or citizen of a
different State. Each party irrevocably consents to the exclusive jurisdiction
and venue of the state and federal courts located in Alameda County, California
in connection with any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default of this Agreement, or
otherwise arising under or by reason of this Agreement, and agrees that service
of process in any such action may be effected by the means provided in this
Agreement for delivery of notices.
12.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. Neither party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other party hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
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12.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, then the remainder of this Agreement and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
12.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all parties reflected hereon as signatories.
12.5 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party hereunder will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy will not preclude the exercise
of any other.
12.6 AMENDMENT AND WAIVERS. Any term or provision of this Agreement may
be amended only by the written consent of Netopia and WebOrder. The observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a writing signed by
the party to be bound by such waiver. The waiver by a party of any breach hereof
or default in the performance hereof will not be deemed to constitute a waiver
of any other default or any succeeding breach or default. This Agreement may be
amended by the parties hereto as provided in this Section at any time before or
after approval of this Agreement by the stockholders of WebOrder, but, after
such approval, no amendment will be made which by applicable law requires the
further approval of the stockholders of WebOrder without obtaining such further
approval. At any time before the Effective Time, each of WebOrder and Netopia,
by action taken by its Board of Directors, may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or other acts
of the other; (ii) waive any inaccuracies in the representations and warranties
made to it contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions for its benefit
contained herein. No such waiver or extension will be effective unless signed in
writing by the party against whom such waiver or extension is asserted. The
failure of any party to enforce any of the provisions hereof will not be
construed to be a waiver of the right of such party thereafter to enforce such
provisions.
12.7 EXPENSES. Each party will bear its respective legal and auditors'
fees and other expenses incurred with respect to this Agreement, the Merger and
the transactions contemplated hereby ("TRANSACTION EXPENSES"); PROVIDED,
HOWEVER, that the portion of WebOrder's legal fees and expenses included in the
Transaction Expenses shall not exceed $25,000 (the "PERMITTED TRANSACTION
EXPENSES"). Any such legal fees and expenses incurred by WebOrder in connection
with this Agreement or the transactions contemplated hereby in excess of
$25,000, plus any amounts paid or payable by WebOrder in excess of $300,000 to
Alliant Partners as an investment banking fee or similar fee or expense incurred
in connection with the transactions contemplated by this Agreement, shall
constitute "EXCESS TRANSACTION EXPENSES" and shall decrease the Merger
Consideration as provided in Section 1.10. WebOrder shall cause its outside
counsel and Alliant Partners to deliver, on or before the Closing Date, an
estimate for their fees and services incurred relating to this Agreement and the
transactions contemplated hereby (which estimate shall be used to calculate any
reduction in the Merger Consideration pursuant to Section 2.1.5). Any additional
Excess Transaction Expenses that do not reduce the Merger Consideration at the
Closing shall be borne by the WebOrder Shareholders by means of withholding of
Escrow Shares, without regard to the Basket.
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12.8 ATTORNEYS' FEES. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party will be entitled to recover, as
an element of the costs of suit and not as damages, reasonable attorneys' fees
to be fixed by the court (including without limitation, costs, expenses and fees
on any appeal). The prevailing party will be entitled to recover its costs of
suit, regardless of whether such suit proceeds to final judgment.
12.9 NOTICES. All notices and other communications required or
permitted under this Agreement will be in writing and will be either hand
delivered in person, sent by telecopier, sent by certified or registered first
class mail, postage pre-paid, or sent by nationally recognized express courier
service. Such notices and other communications will be effective upon receipt if
hand delivered or sent by telecopier, five (5) days after mailing if sent by
mail, and one (l) day after dispatch if sent by express courier, to the
following addresses, or such other addresses as any party may notify the other
parties in accordance with this Section:
If to Netopia:
Netopia, Inc.
2470 Mariner Square Loop
Alameda, CA 94501
(510) 814-5100
Attention: David A. Kadish, Vice President and
General Counsel
Fax Number: (510) 814-5271
with a copy to:
Fenwick & West, LLP
Two Palo Alto Square, Suite 500
Palo Alto, CA 94306
Attention: C. Kevin Kelso, Esq.
Fax Number: (650) 494-1417
If to WebOrder:
WebOrder
370 Distel Circle, Suite A-100
Los Altos, CA 94022
Attention: President
Fax Number: 650-966-8482
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with a copy to:
Venture Law Group
2775 Sand Hill Road
Menlo Park, CA 94025
Attention: Craig Johnson, Esq.
Fax Number: (650) 233-8386
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 12.9.
12.10 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
the respective parties hereto and their attorneys, and the language hereof will
not be construed for or against either party. A reference to a Section or an
exhibit will mean a Section in, or exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for reference purposes
only and will not in any manner limit the construction of this Agreement, which
will be considered as a whole.
12.11 NO PARTNERSHIP. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other and their status
is, and at all times will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other party. No party will hold itself out as having any authority or
relationship in contravention of this Section.
12.12 FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
12.13 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner or any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.
12.14 PUBLIC ANNOUNCEMENT. Upon execution of this Agreement, Netopia
and WebOrder will issue a press release approved by both parties announcing the
Merger. Thereafter, Netopia may issue such press releases, and make such other
disclosures regarding the Merger, as it determines are required under applicable
securities laws or regulatory rules. Before the publication of such initial and
mutually agreed press release, neither party will make any public announcement
relating to this Agreement or the transactions contemplated hereby (except as
may be required by law) and WebOrder will use its reasonable efforts to prevent
any trading in Netopia Common Stock by its officers, directors, employees,
stockholders and agents. Neither Netopia nor WebOrder will make any disclosures
regarding this Agreement or the Merger that would jeopardize Netopia's ability
to timely and lawfully issue the shares of Netopia Common Stock in the Merger
pursuant to the exemptions described in Section 2.6.
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12.15 CONFIDENTIALITY. WebOrder and Netopia each confirm that they have
entered into the Confidentiality Agreement and that they are each bound by, and
will abide by, the provisions of such Confidentiality Agreement (except that
Netopia will cease to be bound by the Confidentiality Agreement after the Merger
becomes effective). If this Agreement is terminated, all copies of documents
containing confidential information of a disclosing party will be returned by
the receiving party to the disclosing party or be destroyed, as provided in the
Confidentiality Agreement.
12.16 ENTIRE AGREEMENT. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto other than the
Confidentiality Agreement. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof.
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54
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NETOPIA, INC. WEBORDER
By: By:
---------------------------------- -----------------------------
David A. Kadish, Vice President Katie Peterson, its President
and General Counsel
WO MERGER CORPORATION
By:
----------------------------------
David A. Kadish, Vice Presdent
and General Counsel
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
55
WEBORDER REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 23, 2000 by and among Netopia, Inc., a Delaware corporation
("Netopia"), and the persons and entities listed on Exhibit A attached hereto
(the "Stockholders," and each individually a "Stockholder"), each of whom
immediately prior to the effective time of the Merger (defined below) was a
stockholder of WebOrder, a California corporation ("WebOrder").
BACKGROUND
A. WebOrder, Netopia and WO Merger Corporation, a Delaware corporation
("Sub") and a wholly-owned subsidiary of Netopia, have entered into an Agreement
and Plan of Reorganization dated as of February 22, 2000 (the "Plan"), pursuant
to which WebOrder shall merge with and into Sub in a forward triangular merger
(the "Merger"), with Sub to be the surviving corporation. The capitalized terms
used in this Agreement and not otherwise defined herein will have the meanings
given them in the Plan.
B. As a condition to the consummation of the Merger, the Plan provides
that each Stockholder who executes and delivers this Agreement shall be granted
certain registration rights with respect to those shares of Common Stock, $0.001
par value of Netopia ("Common Stock") issued to such Stockholders in the Merger,
on the terms, and subject to the conditions and limitations set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
Section 1. Incidental Registration Rights
1.1 Definitions. For the purposes of this Agreement, the following
words shall have the meanings set forth below:
"Company" means Netopia.
"Holder" means any Stockholder owning of record at the time in
question, Registrable Shares and any Person to whom Holder's registration rights
hereunder are validly transferred and assigned pursuant to the provisions of
this Agreement.
"Person" includes an individual, partnership, trust, corporation,
limited liability company, joint venture, association, government, government
bureau or agency or other entity of whatsoever kind or nature.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act.
<PAGE>
"Registrable Stock" means (x) the shares of Common Stock issued
pursuant to the Plan, and (y) any shares issued or issuable with respect to the
securities identified in clause (x) above by reason of a stock dividend or stock
split or in connection with a combination of shares of Common Stock, merger,
consolidation or other reorganization. Each share of Registrable Stock shall
cease to be Registrable Stock when transferred pursuant to a registered public
offering or which is transferred, or which in the reasonable opinion of Netopia
may be transferred without volume restrictions, pursuant to Rule 144 promulgated
by the Securities and Exchange Commission (the "Commission") under the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
1.2 Incidental Registration.
(a) If the Company at any time proposes to register on a firmly
underwritten public offering basis any of its shares of Common Stock to be
offered for cash for its own account pursuant thereto (other than a registration
requested pursuant to registration rights held by other shareholders, a
registration relating to employee benefit plans or agreements or a registration
relating to a transaction described in Rule 145 promulgated under the Securities
Act and excluding any registration involving any convertible debt or equity
securities), it shall give written notice (the "Company's Notice"), at its
expense, to all holders of Registrable Stock of its intention to do so at least
15 days if practicable, but in all events at least 10 days, prior to the filing
of a registration statement with respect to such registration with the
Commission. If any holder of Registrable Stock desires to dispose of all or part
of such stock, it may request registration thereof in connection with the
Company's registration by delivering to the Company, within eight (8) days after
delivery of the Company's Notice, written notice of such request (the "Holder's
Notice") stating the number of shares of Registrable Stock that Holder desired
to be included in the registration. The Company shall use its best efforts to
cause all shares of Registrable Stock specified in the Holder's Notice to be
registered under the Securities Act so as to permit the sale or other
disposition by such holder or holders of the shares so registered, subject
however, to the limitations contained in this Agreement.
(b) Notwithstanding anything to the contrary herein, Netopia shall
have no obligations pursuant to this Section 1 with respect to any shares of
Registrable Stock proposed to be sold by a Holder in a registration pursuant to
Section 1.2 if, in the reasonable opinion of counsel to Netopia, all such shares
of Registrable Stock proposed to be sold by a Holder may be sold without
registration under the Securities Act pursuant to Rule 144 under the Securities
Act (assuming, for this purpose, that if "current public information" (as
defined in Rule 144 (c) of the Commission under the Securities Act) is available
with respect to the Company as of the date of such opinion, it will remain so
available).
1.3 Limitations on Incidental Registration.
(a) The Company shall have the right to limit the aggregate size of
the offering or the number of shares of Registrable Stock to be included therein
by the Holders, if requested to do so in good faith by the managing
underwriter(s) of the offering; provided, however, that in no event shall the
amount of securities of a selling Holder included in the
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<PAGE>
offering be reduced below twenty percent (20%) of the total amount of securities
that the Holder requested to be included in the offering. Only securities which
are to be included in the underwriting may be included in the registration.
(b) Whenever the number of shares of Registrable Stock which may be
registered hereunder is limited by the provisions of paragraph (a) above, the
Company will include in such registration, (i) first, the securities the Company
proposes to sell, and (ii) second, on a pro rata basis (based on the number of
shares held) shares requested to be sold by Holders of Registrable Stock and
other stockholders requesting inclusion of shares in the registration, to the
extent that such treatment is not inconsistent with or does not otherwise
conflict with or require consents or waivers under other contractual
registration rights (in which case shares of Registrable Stock shall first be
excluded).
(c) Notwithstanding anything to the contrary contained in this
Section, the Company may decide, in its sole and absolute discretion, not to
proceed with or to discontinue any registration commenced or proposed to be
commenced hereunder.
1.4 Registration Procedures.
(a) If and when the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of shares of
Registrable Stock, the Company shall:
(1) furnish to each holder of shares of Registrable Stock
selling shares in the registration (a "Prospective Seller") such number of
copies of each prospectus, including preliminary prospectuses, in conformity
with the requirements of the Securities Act, and such other documents, as the
Prospective Seller may reasonably request in order to facilitate the public sale
or other disposition of the shares of Registrable Stock owned by it;
(2) use its best efforts to cause all such Registrable Stock
to be listed on each securities exchange on which similar securities issued by
the Company are then listed.
(b) It will be a condition precedent to the obligations of Netopia
to register any shares of Registrable Stock pursuant to this Agreement that
Holder furnish to Netopia and the underwriters for inclusion in the registration
statement (and prospectus included therein) such information regarding Holder
and the Registrable Shares and the intended method of disposition of such
securities as Netopia or the underwriters may reasonably request.
(c) The Prospective Sellers shall not (until further notice) effect
sales of the shares of Registrable Stock covered by the registration statement
after receipt of telegraphic or written notice from the Company to suspend sales
to permit the Company to correct or update a registration statement or
prospectus.
1.5 Expenses of Registration. The expenses incurred in effecting any
registration requested pursuant to this Agreement, including, without
limitation, all registration and filing fees, printing expenses, expenses of
compliance with blue sky laws, fees and disbursements of counsel for the
Company, and expenses of any audits incidental to or required by any such
registration, and the fees and disbursements up to $15,000 of one counsel for
all of the selling
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<PAGE>
stockholders selected by them with the approval of the Company, which approval
shall not be unreasonably withhheld ("Registration Expenses"), shall be borne by
the Company; provided, however, that each Prospective Seller shall bear its own
legal expenses if it retains separate counsel other than as described in the
preceding clause of the sentence, and all underwriting discounts or brokerage
fees or commissions relating to the sale of its Registrable Stock.
1.6 Indemnification and Contribution. (a) The Company shall indemnify each
Holder who sells Registrable Stock in a registration ("Selling Stockholder")
(and each person, if any, who controls such Selling Stockholder) against all
losses, damages, expenses and liabilities ("Losses") arising out of or based on
any claim, action or proceeding arising out of or based on untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document incident to the offering, or any omission
(or alleged omission) to state a material fact required to be stated or
necessary to make the statements contained in any such document not misleading,
or any violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company (a "Claim"), and shall reimburse such
Selling Stockholder (and each person, if any, who controls such Selling
Stockholder) for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such Claim; provided, however,
that the Company shall not be liable to the extent that any Claim arises out of
or is based on any untrue statement or omission based upon written information
furnished to the Company by such Selling Stockholder specifically for use in
such document.
(b) Each Selling Stockholder shall indemnify the Company and its
officers and directors against all Losses arising out of or based on any Claim,
and shall reimburse the Company and its officers and directors for any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such Claim; provided, however, that such statement or omission was
made in reliance upon and in conformity with information furnished to the
Company in writing by such Selling Stockholder specifically for use in such
document. In no event shall the liability of a Selling Stockholder exceed the
net amount received by such Selling Stockholder upon the sale of Registrable
Stock pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a Claim, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action or
proceeding; provided, however, that the failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless the indemnified party has been advised in writing by counsel that a
conflict of interest between such indemnified and indemnifying parties is
reasonably likely to exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense of the claim, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation unless the
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<PAGE>
indemnified party has been advised in writing by counsel that a conflict of
interest between such indemnified and indemnifying parties arises in respect of
such claim and the indemnified party notifies the indemnifying party of such
advice and the basis therefor. No indemnifying party shall be liable for any
settlement of any Claim effected without its written consent, which consent
shall not be unreasonably withheld. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect of such Claim.
(d) If the indemnification provided for in this Section is held to
be unavailable by a court of competent jurisdiction to an indemnified party in
respect of any Claims, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party in connection with such Claims, in such
proportion as is appropriate to reflect the relative fault of the Company, on
the one hand, and the Selling Stockholder, on the other hand, in connection with
the statements or omissions which resulted in such Claims, as well as any other
relative equitable considerations. The relative fault of the Company, on the one
hand, and of such Selling Stockholder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or by such
Selling Stockholder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
1.7 Market Stand-Off Agreements. Each Holder hereby agrees that, without
the prior written consent of the managing underwriters (the "Underwriters") of a
firm commitment underwritten public offering of securities by Netopia in which
such Holder participates after the date of this Agreement (the "Public
Offering"), and except for any securities sold by the Holder in such Public
Offering, Holder will not, during the period commencing on the date on which
Netopia notifies such Holder of its intention to effect such a Public Offering
(but only if the Holder actually participates as a selling stockholder in the
Public Offering) and ending 90 days after the date of the final prospectus
relating to the Public Offering (the "Prospectus"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall apply only to the first Public
Offering completed after the date hereof and only if the Holder actually
participates as a selling stockholder in the Public Offering, and shall not
apply to (a) the sale of any Shares to the Underwriters pursuant to any
underwriting agreement entered into in connection with the Public Offering, or
(b) transactions relating to shares of Common Stock or other securities acquired
in open market transactions after the completion of the Public Offering. In
addition, Holder agrees that, without the prior written
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consent of the Underwriters, Holder will not, during the period commencing on
the date the registration statement relating to the Public Offering is filed and
ending 90 days after the date of the Prospectus, make any demand for or exercise
any right with respect to, the registration of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock.
Notwithstanding the foregoing, if Holder is an individual, he or she may
transfer any shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock either during his or her lifetime
or on death by will or intestacy to his or her immediate family or to a trust
the beneficiaries of which are exclusively the undersigned and/or a member or
members of his or her immediate family; provided further, if Holder is a
partnership, it may transfer any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock to a partner of
such partnership or a retired partner of such partnership who retires after the
date hereof, or to the estate of any such partner or retired partner, and any
partner who is an individual may transfer such shares of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock
either during his or her lifetime or on death by will or intestacy to his or her
immediate family or to a trust the beneficiaries of which are exclusively the
undersigned and/or a member or members of his or her immediate family; provided,
however, that prior to any transfer pursuant to this paragraph, each transferee
shall execute an agreement, satisfactory to the Underwriters, pursuant to which
each transferee shall agree to receive and hold such shares of Common Stock, or
securities convertible into or exchangeable or exercisable for Common Stock,
subject to the provisions hereof, and there shall be no further transfer except
in accordance with the provisions hereof. For the purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor.
1.8 Limitations on Registrations of Shares of Registrable Stock. The
Company shall not be required to effect any registration of Shares of
Registrable Stock if it shall deliver to each selling Stockholder an opinion of
counsel to the effect that all Shares of Registrable Stock held by such selling
Stockholder may be sold immediately in the public market without registration
under the Securities Act and any applicable state securities laws.
Section 2. Assignment and Amendment.
2.1 Assignment. The rights to cause the Company to register Registrable
Securities pursuant to this Agreement may be assigned (but only with all related
obligations) by a holder to a transferee or assignee of all of such Holder's
Registrable Securities, provided the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee of assignee is
restricted under the Securities Act. Otherwise, the rights of a Holder under
this Agreement may be assigned only with Netopia's express prior written
consent, which may be withheld in Netopia's sole discretion; provided, however,
that the rights of a Holder under this Agreement may be assigned without
Netopia's express prior written consent: (a) to a Permitted Assignee (as defined
below); or (b) (if applicable) by will or by the laws of intestacy, descent or
distribution, provided that any assignee described in this sentence agrees in
writing to be bound by all the obligations of the Holders under this Agreement.
Any attempt to assign any rights of a
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Holder under this Agreement without Netopia's express prior written consent in a
situation in which such consent is required by this Section shall be null and
void and without effect. Subject to the foregoing restrictions, all rights,
covenants and agreements in this Agreement by or on behalf of the parties hereto
will bind and inure to the benefit of the respective permitted successors and
assigns of the parties hereto. Each of the following parties are "Permitted
Assignees" of a Holder for purposes of this Section 2: (a) a trust whose
beneficiaries consist solely of such Holder or such Holder's immediate family;
(b) the personal representative (such as an executor of such Holder's will),
custodian or conservator of such Holder, in the case of the death, bankruptcy or
adjudication of incompetency of such Holder; (c) partners of such Holder (if
such Holder is a partnership); or (d) another Holder or the Permitted Assigns of
another Holder.
2.2 Amendment of Rights. Any provision of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of Netopia and Holders holding a majority of the aggregate number of
outstanding shares of Registrable Stock held by all Holders at the time of such
amendment or waiver. Any amendment or waiver effected in accordance with this
Section 2.2 shall be binding upon each Holder, each Holder, each permitted
successor or assignee of such Holder or Holder and Netopia; provided, however,
that any such amendment or waiver shall not increase the obligation of any
Holder without the specific written consent of such Holder.
Section 3. Miscellaneous
3.1 Notices. All notices and other communications required or permitted
under this Agreement will be in writing and will be either hand delivered in
person, sent by telecopier, sent by certified or registered first class mail,
postage pre-paid, or sent by nationally recognized express courier service. Such
notices and other communications will be effective upon receipt if hand
delivered, one business day after transmission by telecopier with confirmation
of receipt, three (3) days after mailing if sent by mail, and one (1) day after
dispatch if sent by express courier, to the following addresses, or such other
addresses as any party may notify the other parties in accordance with this
Section. Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if deposited in the U.S. mail by registered or certified
mail, return receipt requested, postage prepaid, as follows:
If to Netopia: Netopia, Inc.
2470 Mariner Square Loop
Alameda, CA 94501
Attention: David A. Kadish
Fax Number: (510) 814-5021
With a copy to: Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
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Attention: C. Kevin Kelso
Fax: (650) 494-1417
If to the Representative: Ms. Katie Peterson
160 Wortham Court
Mountain View, CA 94040
With a copy to: Venture Law Group
2775 Sand Hill Road
Menlo Park, CA 94025
Attention: Craig Johnson, Esq.
Fax: (650) 233-8386
If to a Holder, at such Holder's address as set forth on Exhibit A hereto.
3.2 Entire Agreement. This Agreement constitutes and contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties respecting
the subject matter hereof.
3.3 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by the laws of the State of Delaware except for those provisions
governing conflict of laws, notwithstanding that one or more of the parties to
this Agreement is now, or may hereafter become, a resident or citizen of a
different State. Each party irrevocably consents to the exclusive jurisdiction
and venue of the state and federal courts for Alameda County, California in
connection with any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default of this Agreement, or
otherwise arising under or by reason of this Agreement, and agrees that service
of process in any such action may be effected by the means provided in this
Agreement for delivery of notices.
3.4 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms.
3.5 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
3.6 Successors And Assigns. Subject to the provisions of Section 2.1, the
provisions of this Agreement shall inure to the benefit of, and shall be binding
upon, the successors and permitted assigns of the parties hereto.
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3.7 Captions. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
3.8 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3.9 Costs And Attorneys' Fees. In the event that any action, suit or other
proceeding is instituted concerning or arising out of this Agreement or any
transaction contemplated hereunder, the prevailing party shall recover all of
such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.
3.10 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner or employee of any party hereto or any other person
or entity, unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.
3.11 Effectiveness of Agreement. Regardless of when signed, this Agreement
will not become effective or binding unless and until the Effective Time of the
Merger.
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first written above.
NETOPIA, INC.
By:
Name: David A. Kadish
Title: Vice President, General Counsel and Secretary
STOCKHOLDERS
- ----------------------------- -------------------------------
Name: Name:
- ----------------------------- -------------------------------
Name: Name:
- ----------------------------- -------------------------------
Name: Name:
- ----------------------------- -------------------------------
Name: Name:
- ----------------------------- -------------------------------
Name: Name:
- ----------------------------- -------------------------------
Name: Name:
[Signature Page To Registration Rights Agreement]
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Exhibit A
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SCHEDULE OF STOCKHOLDERS
Name and Address No. of Shares of
---------------- ----------------
Registrable Stock
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