<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
AMENDMENT NO. 1
TO
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
COMMISSION FILE NUMBER 000-23260
ONEWORLD SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
State of Incorporation: Delaware
IRS identification number: 94-3095680
1144 East Arques Avenue
Sunnyvale, CA 94086-4602
(408) 523-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001
Par Value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
The approximate aggregate market value of the Common Stock held by
non-affiliates of the Registrant, based upon the closing price of the Common
Stock reported on the National Association of Securities Dealers, Inc. Automated
Quotation (NASDAQ) National Market was $11,740,350 as of June 25, 1998. (1)
The number of shares of Common Stock outstanding as of June 25, 1998 was
17,162,912
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement dated on or about July 6,
1998 to be delivered to shareholders in connection with the Annual Meeting of
Shareholders to be held August 20, 1998 are incorporated by reference into Part
III. (1)Excludes 827,792 shares of Common Stock held by directors, officers and
affiliates as of June 25, 1998.
<PAGE> 2
EXPLANATORY NOTE
This Annual Report on Form 10-K/A ("Form 10-K/A") is being filed as Amendment
No. 1 to the Registrant's Annual Report on Form 10-K filed with the Securities
and Exchange Commission on June 29, 1998 ("Form 10-K") for the purpose of
amending Item 14 of Part IV of the Registrant's Form 10-K so as to add two
exhibits and update the exhibit list.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(a) Financial Statements and Schedule
The Financial Statements and Schedule filed as part of this
Annual Report on Form 10-K are listed in the index under Item 8.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1998.
(c) Exhibits
2
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<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Document Page
- ------ ----------------------- ----
<S> <C> <C>
2.1 Asset Purchase Agreement by and among Boca Global, Inc., Boca Research, Inc.
and the Company, dated as of March 31, 1998
3.1 Amended and Restated Certificate of Incorporation of OneWorld Systems, Inc.
3.2 Form of Bylaws of Global Village Communication Delaware *
4.1 Reference is made to Exhibits 3.1 through 3.2 *
4.2 Amended and Restated Investor Rights Agreements among the Company and certain *
other person named therein, dated as of May 26, 1992
4.3 Employee Shareholder Agreement between the Company and certain *
stockholders of the Company, as amended, and related schedule
4.4 Common Stock Purchase Agreement between the Company and other parties named *
therein, dated as of October 2, 1989
4.5 Series A Junior Preferred Stock Exchange Agreement between the Company *
and other parties named therein, dated as of May 14, 1991
4.6 Series B Preferred Stock Purchase Agreement between the Company and *
other parties named therein, dated as of May 14, 1991
4.7 Warrant to Purchase 31,395 Shares of Series B Preferred granted by *
the Company to Company to Dominion Ventures, dated as of November 27,
1991
4.8 Series C Preferred Stock Purchase Agreement between the Company and *
other parties named therein, dated as of May 26, 1992
10.1 Form of Indemnity Agreement entered into between the Company and its directors *
and officers, with related schedules
10.2 1991 Stock Option Plan, as amended (the "Option Plan") *
10.3 Form of Incentive Stock Option under the Option Plan *
10.4 Form of Supplemental Stock Option under the Option Plan *
10.5 1993 Employee Stock Purchase Plan *
10.10 Distribution Agreement between the Company and Ingram Micro, dated as of February *
16, 1993
10.12 1994 Non-Employee Directors' Stock Option Plan, including Form of Supplemental *
Stock Option
10.16++ Lease Agreement between Herman Christensen Jr. and Raymond P. Christensen and the *
Company dated July 14, 1994.
10.17++ Management Incentive Plan **
23.1 Consent of KPMG Peat Marwick LLP *
25.1 Power of Attorney (see page 40 of Form 10-K) *
27.1 Financial Data Schedule *
* Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (Registration No 33-73878 as amended) and incorporated by reference
hereby.
+ The Company has received confidential treatment with respect to portions
of these Exhibits.
++ The Company has requested confidential treatment with respect to
portions of this document.
* Filed as an exhibit to the Registrant's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on June 29, 1998.
** Filed as an exhibit to the Registrant's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on June 16, 1997.
</TABLE>
39
<PAGE> 4
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Company has duly caused this Form 10-K/A Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized on July 2, 1998.
OneWorld Systems, Inc.
By: /s/ NEIL SELVIN
-----------------------------------------
Neil Selvin, President, Chief Executive
Officer and Director
40
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Document Page
- ------ ----------------------- ----
<S> <C> <C>
2.1 Asset Purchase Agreement by and among Boca Global, Inc., Boca Research, Inc.
and the Company, dated as of March 31, 1998
3.1 Amended and Restated Certificate of Incorporation of OneWorld Systems, Inc.
3.2 Form of Bylaws of Global Village Communication Delaware *
4.1 Reference is made to Exhibits 3.1 through 3.2 *
4.2 Amended and Restated Investor Rights Agreements among the Company and certain *
other person named therein, dated as of May 26, 1992
4.3 Employee Shareholder Agreement between the Company and certain *
stockholders of the Company, as amended, and related schedule
4.4 Common Stock Purchase Agreement between the Company and other parties named *
therein, dated as of October 2, 1989
4.5 Series A Junior Preferred Stock Exchange Agreement between the Company *
and other parties named therein, dated as of May 14, 1991
4.6 Series B Preferred Stock Purchase Agreement between the Company and *
other parties named therein, dated as of May 14, 1991
4.7 Warrant to Purchase 31,395 Shares of Series B Preferred granted by *
the Company to Company to Dominion Ventures, dated as of November 27,
1991
4.8 Series C Preferred Stock Purchase Agreement between the Company and *
other parties named therein, dated as of May 26, 1992
10.1 Form of Indemnity Agreement entered into between the Company and its directors *
and officers, with related schedules
10.2 1991 Stock Option Plan, as amended (the "Option Plan") *
10.3 Form of Incentive Stock Option under the Option Plan *
10.4 Form of Supplemental Stock Option under the Option Plan *
10.5 1993 Employee Stock Purchase Plan *
10.10 Distribution Agreement between the Company and Ingram Micro, dated as of February *
16, 1993
10.12 1994 Non-Employee Directors' Stock Option Plan, including Form of Supplemental *
Stock Option
10.16++ Lease Agreement between Herman Christensen Jr. and Raymond P. Christensen and the *
Company dated July 14, 1994.
10.17++ Management Incentive Plan **
23.1 Consent of KPMG Peat Marwick LLP *
25.1 Power of Attorney (see page 40 of Form 10-K) *
27.1 Financial Data Schedule *
* Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (Registration No 33-73878 as amended) and incorporated by reference
hereby.
+ The Company has received confidential treatment with respect to portions
of these Exhibits.
++ The Company has requested confidential treatment with respect to
portions of this document.
* Filed as an exhibit to the Registrant's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on June 29, 1998.
** Filed as an exhibit to the Registrant's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on June 16, 1997.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
FOR THE ASSETS OF Global Village Communication, Inc.
by Boca Global, Inc.
March 31, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Recitals Page No.
- -------- --------
<S> <C> <C>
ARTICLE I - DEFINITIONS
1.1 Definitions...................................................................1
ARTICLE II - PURCHASE AND SALE OF ASSETS
2.1 Purchase of Assets............................................................6
2.2 Retained Assets...............................................................7
2.3 Assumed Liabilities...........................................................8
2.4 Retained Liabilities..........................................................8
2.5 Purchase Price................................................................9
2.6 Allocation of Purchase Price..................................................9
2.7 Time and Place of Closing.....................................................9
2.8 Execution and Delivery of Documents of Title by the Company;
Further Assurances...........................................................10
2.9 Execution and Delivery of Documents by Buyer; Further Assurances.............10
ARTICLE III - REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
3.1 Organization and Qualification...............................................10
3.2 Authority; No Violation......................................................10
3.3 [Intentionally Omitted]......................................................11
3.4 [Intentionally Omitted]......................................................11
3.5 SEC Reports and Financial Statements.........................................11
3.6 Absence of Undisclosed Liabilities...........................................11
3.7 Absence of Certain Changes...................................................11
3.8 Title to the Transferred Assets..............................................13
3.9 Sufficiency and Condition of Assets..........................................13
3.10 Real Estate..................................................................13
3.11 Accounts Receivable..........................................................14
3.12 Inventories..................................................................14
3.13 Intellectual Property........................................................14
3.14 Trade Secrets and Customer Lists.............................................15
3.15 Contracts....................................................................16
3.16 Customers and Suppliers......................................................17
3.17 Compliance with Laws.........................................................18
3.18 Taxes........................................................................18
3.19 [Intentionally Omitted]......................................................19
</TABLE>
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<TABLE>
<S> <C> <C>
3.20 Environmental Matters........................................................19
3.21 Employees....................................................................20
3.22 Litigation...................................................................20
3.23 [Intentionally omitted]......................................................20
3.24 Company Products.............................................................20
3.25 [Intentionally Omitted]......................................................21
3.26 Brokers......................................................................21
3.27 Burdensome Agreements........................................................21
3.28 [Intentionally Omitted]......................................................21
3.29 Transactions with Interested Persons.........................................21
3.30 Copies of Documents..........................................................21
3.31 Disclosure of Material Information...........................................21
3.32 Opinion of the Financial Advisor.............................................22
3.33 Board Recommendation.........................................................22
3.34 Required Company Vote........................................................22
3.35 State Takeover Statutes......................................................22
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER AND BRI
4.1 Organization and Qualification...............................................22
4.2 Authority; No Violation......................................................23
4.3 [Intentionally Omitted]......................................................23
4.4 [Intentionally Omitted]......................................................23
4.5 SEC Reports and Financial Statements.........................................23
4.7 Disclosure of Material Information...........................................23
4.8 Opinion of the Financial Advisor.............................................24
4.9 Board Recommendation.........................................................24
4.10 Subsidiaries.................................................................24
4.11 Absence of Undisclosed Liabilities...........................................24
4.12 Absence of Certain Changes...................................................24
4.14 Sole Representations and Warranties..........................................24
ARTICLE V - COVENANTS
5.1 Covenants of the Company.....................................................25
5.2 Covenants of the Company and Buyer...........................................26
5.3 Preparation of Proxy Statement; Stockholder Meeting..........................29
5.4 Covenants of Buyer and BRI...................................................29
5.5 Covenants of Buyer and BRI and the Company...................................30
ARTICLE VI - CLOSING CONDITIONS
6.1 Conditions to Obligations of Buyer...........................................31
6.2 Conditions to Obligations of the Company.....................................34
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE VII - TERMINATION
7.1 Termination of Agreement.....................................................36
7.2 Effect of Termination and Right to Proceed...................................37
ARTICLE VIII - INDEMNIFICATION
8.1 Survival of Representations and Warranties...................................37
8.2 Indemnification by the Company...............................................37
8.3 Indemnification by Buyer and BRI.............................................38
8.4 Minimum Indemnification; Materiality.........................................38
8.5 Notice and Opportunity to Defend.............................................39
8.6 Full Access to Business......................................................39
ARTICLE IX - MISCELLANEOUS
9.1 Fees and Expenses............................................................39
9.2 Publicity and Disclosures....................................................40
9.3 Notices......................................................................40
9.4 Successors and Assigns.......................................................41
9.5 Descriptive Headings.........................................................41
9.6 Counterparts.................................................................41
9.7 Severability.................................................................41
9.8 Attorneys' Fees..............................................................41
9.9 Course of Dealing............................................................41
9.10 Third Parties................................................................42
9.11 Tax Matters..................................................................42
9.12 Variations in Pronouns.......................................................42
9.13 WAIVER OF JURY TRIAL.........................................................42
9.14 GOVERNING LAW................................................................43
9.15 Entire Agreement.............................................................43
</TABLE>
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<TABLE>
TABLE OF EXHIBITS
- -----------------
<S> <C>
Exhibit A Bill of Sale
Exhibit B Instrument of Assumption
Exhibit C Opinion of Company's Counsel
Exhibit D Form of Promissory Note
Exhibit E Form of Guaranty
Exhibit F NonCompetition Agreements
Exhibit G Form of Warrant
Exhibit H Opinion of Buyer's Counsel
TABLE OF SCHEDULES
- ------------------
Schedule 1.1 Balance Sheet Methodology
Schedule 2.1 Fixed Assets
Schedule 2.2 Retained Assets
Schedule 2.3 Assumed Liabilities
Schedule 3.1 Qualification
Schedule 3.2 No Violations
Schedule 3.5 Financial Statements
Schedule 3.6 Liabilities
Schedule 3.7 Changes
Schedule 3.8 Material Liens or Defects
Schedule 3.9 Assets; Condition
Schedule 3.10 Real Estate
Schedule 3.11 Accounts Receivable
Schedule 3.12 Inventories
Schedule 3.13 Intellectual Property
Schedule 3.14 Trade Secrets
Schedule 3.15 Contracts
Schedule 3.16 Major Customers and Suppliers
Schedule 3.17 Necessary Permits
Schedule 3.18 Taxes
Schedule 3.20 Environmental Matters
Schedule 3.21 Employees
Schedule 3.22 Litigation
Schedule 3.24 Warranty and other Claims
Schedule 3.26 Brokers
Schedule 3.29 Transactions with Interested Persons
Schedule 4.1 Organization and Qualification
Schedule 4.5 BRI Financial Statements
Schedule 4.6 Brokers
</TABLE>
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<TABLE>
<S> <C>
Schedule 4.10 Subsidiaries
Schedule 4.12 Certain Changes
Schedule 5.1(a) Interim Conduct
</TABLE>
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<PAGE> 7
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement") dated as of , 1998, by and
among BOCA GLOBAL, INC., a Florida corporation ("Buyer"), BOCA RESEARCH, INC., a
Florida corporation ("BRI"), and GLOBAL VILLAGE COMMUNICATION, INC., a Delaware
corporation (the "Company").
This Agreement sets forth the terms and conditions upon which the Buyer
will purchase from the Company, and the Company will sell to the Buyer, all of
those assets related to the modem business of the Company hereinafter defined
(other than the Retained Assets, as hereinafter defined) and the business and
goodwill of the Company as a going concern as to the modem development,
manufacturing, distribution and sale business, subject to those liabilities of
the Company which are specifically hereinafter described, for the consideration
provided herein.
In consideration of the foregoing, the mutual representations,
warranties and covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For the purposes of this Agreement, all capitalized
words or expressions used in this Agreement (including the Schedules and
Exhibits annexed hereto) shall have the meanings specified in this Article (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" means when used with respect to any Person, (a) if such
Person is a corporation, any officer or director thereof and any Person which
is, directly or indirectly, the beneficial owner (by itself or as part of any
group) of more than five percent (5%) of any class of any Equity Security
thereof, and, if such beneficial owner is a partnership, any general or limited
partner thereof, or if such beneficial owner is a corporation, any Person
controlling, controlled by or under common control with such beneficial owner,
or any officer or director of such beneficial owner or of any corporation
occupying any such control relationship, (b) if such Person is a partnership,
any general or limited partner thereof and (c) any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Person. For purposes of this definition, (i)"control" (including the correlative
terms "controlling", "controlled by" and "under common control with"), with
respect to any Person, shall mean possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise; and (ii) all employees, stockholders, consultants and agents of Buyer
and any direct or indirect stockholder of Buyer shall be considered an Affiliate
of Buyer.
<PAGE> 8
"Agreement" means this Asset Purchase Agreement (together with all
Exhibits and Schedules hereto) as from time to time assigned, supplemented,
modified, amended, or restated or as the terms hereof may be waived.
"Balance Sheet Methodology" means the procedures identified on Schedule
1.1 attached hereto with respect to the preparation of the Last Balance Sheet
and the Closing Balance Sheet.
"BRI" means Boca Research, Inc., a Florida corporation, and its
successors and assigns.
"Business Day" means any day, excluding Saturday, Sunday and any other
day on which commercial banks in New York, New York are authorized or required
by law to close.
"Buyer" means BOCA GLOBAL, INC. , a Florida corporation, and its
successors and assigns.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, and the regulations thereunder, and court
decisions in respect thereof, all as the same shall be in effect at the time.
"Charter" means the Certificate of Incorporation, Articles of
Incorporation or Organization or other organizational document of a corporation,
as amended and restated through the date hereof.
"Claim" means an action, suit, proceeding, hearing, investigation,
litigation, charge, complaint, claim or demand.
"Closing Balance Sheet" means the consolidated balance sheet of the
Company as to the Business as of the Closing Date prepared in accordance with
the Balance Sheet Methodology.
"Code" means the Internal Revenue Code of 1986, and the regulations
thereunder, published Internal Revenue Service rulings, and court decisions in
respect thereof, all as the same shall be in effect at the time.
"Commission" means the Securities and Exchange Commission and any other
similar or successor agency of the federal government administering the
Securities Act or the Exchange Act.
"Company" means GLOBAL VILLAGE COMMUNICATION, INC., a Delaware
corporation, and its successors and assigns.
"Environmental Action" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of noncompliance or
violation, investigation, request for information, proceeding, consent order or
consent agreement relating in any way to any Environmental Law or any
Environmental Permit, including, without limitation, (a) any claim by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other
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actions or damages pursuant to any Environmental Law and (b) any claim by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials, damage to
the environment or alleged injury or threat of injury to human health or safety
from pollution or other environmental degradation.
"Environmental Law" means any applicable federal, state or local law,
statute, rule, regulation, or ordinance relating to the environment, human
health or safety from pollution or other environmental degradation or Hazardous
Materials, including, without limitation, CERCLA, the Resource Conservation and
Recovery Act, the Hazardous Materials Transportation Act, the Clean Water Act,
the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide
Act and the Occupational Safety and Health Act, and any similar state and local
laws or bylaws, the rules, regulations and interpretations thereunder, all as
the same shall be in effect from time to time.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"Equity Security" shall have the meaning given to such term in Section
3(a)(ii) of the Exchange Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
any similar or successor federal statute, and the rules, regulations and
interpretations thereunder, all as the same shall be in effect at the time.
"ERISA Affiliate" means, for purposes of Title IV of ERISA, any trade or
business, whether or not incorporated, that together with the Company or any
Subsidiary of the Company, would be deemed to be a "single employer" within the
meaning of Section 4001 of ERISA, and, for purposes of the Code, any member of
any group that, together with the Company or any Subsidiary of the Company, is
treated as a "single employer" for purposes of Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, and any
similar or successor federal statute, and the rules and regulations and
interpretations of the Commission thereunder, all as the same shall be in effect
at the time.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Hazardous Materials" means (a) petroleum or petroleum products, natural
or synthetic gas, asbestos, urea formaldehyde foam insulation and radon gas, (b)
any substances defined as or included in the definition or "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
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hazardous wastes" "restricted hazardous waters," toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar import, under
any Environmental Law and (c) any other substance exposure to which is regulated
under any Environmental Law.
"Indebtedness" means all obligations, contingent or otherwise, whether
current or longterm, which in accordance with GAAP would be classified upon the
obligor's balance sheet as liabilities (other than deferred taxes) and shall
also include capitalized leases, guaranties, endorsements (other than for
collection in the ordinary course of business) or other arrangements whereby
responsibility is assumed for the obligations of others, including any agreement
to purchase or otherwise acquire the obligations of others or any agreement,
contingent or otherwise, to furnish funds for the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
"IRS" means the Internal Revenue Service and any similar or successor
agency of the federal government administering the Code.
"Last Balance Sheet" shall mean the consolidated balance sheet of the
Company as to the Business as at the month ended February 28, 1998, delivered to
the Buyer prior to the date hereof and prepared in accordance with the Balance
Sheet Methodology.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing.
"Material Adverse Effect" shall be defined as an event, occurrence or
act which shall result in a material adverse impact or effect on (a) the
business, operations, assets, liabilities, prospects or condition (financial or
otherwise) of the Business, with respect to the Company, and BRI, with respect
to BRI or the Buyer, (b) the ability of such party to perform its respective
obligations under any of the Purchase Documents, (c) the validity or
enforceability of any of the Purchase Documents or (d) the rights and remedies
of the Buyer and BRI on the one hand and the Company on the other under any of
the Purchase Documents.
"Officer's Certificate" means a certificate signed in the name of a
corporation by its President, Chief Executive Officer, Treasurer, Chief
Financial Officer, or, if so specified, the Clerk or Secretary, acting in his or
her official capacity.
"Person" means any individual, firm, partnership, association, trust,
corporation, limited liability company, governmental body or other entity.
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"Purchase Documents" means this Agreement, the NonCompetition Agreements
and any other certificate, document, instrument, stock power, or agreement
executed in connection therewith.
"Release" means any release, issuance, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water, or property other than in compliance
with all Environmental Laws and Permits.
"Securities Act" means the Securities Act of 1933, and any similar or
successor federal statute, and the rules, regulations and interpretations of the
Commission thereunder, all as the same shall be in effect at the time.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative
or addon minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
The following terms are defined in the following Sections of this
Agreement:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Assumed Liabilities 2.3
Business 2.1
Business Employees 5.5
Closing 2.7
Closing Date 2.7
Current Asset Value 6.1(m)
Financial Statements 3.5
Indemnifying Party 8.5
Losses 8.2
Necessary Permits 3.17(a)
NonCompetition Agreements 6.1(l)
Plan 3.19(a)
Proxy Statement 5.3
Purchased Assets 2.1
Purchase Price 2.5
Accounts Receivable 2.1(a)
</TABLE>
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<TABLE>
<S> <C>
Retained Assets 2.2
Retained Liabilities 2.4
SEC Reports 3.5
Stockholders' Meeting 5.3(c)
</TABLE>
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchase of Assets. Upon the terms and subject to the conditions
contained in this Agreement, at the Closing (as defined in Section 2.7 below),
the Company shall sell, assign, transfer and convey to Buyer, and Buyer shall
purchase, acquire and accept from the Company, the modem development,
manufacturing, distribution and sales business of the Company as a going concern
(the "Business"), including all of the Company's assets of every kind and
description relating to the Business (other than those assets included in the
Retained Assets as defined in Section 2.2 below) (the "Transferred Assets"), and
subject only to the liabilities and obligations of the Company which are defined
in Section 2.3 (the "Assumed Liabilities"). The Transferred Assets include,
without limitation, the following assets and properties (other than those assets
included in the Retained Assets as defined in Section 2.2):
(a) all assets relating to the Business owned by the Company.
Such assets include, without limitation, (i) all trade and other accounts
receivable and other Indebtedness owing to the Company with respect to the
Business and including the benefit of all collateral, security, guaranties, and
similar undertakings received or held in connection therewith (the Accounts
Receivable); (ii) all inventories with respect to the Business wherever located,
including raw materials, goods consigned to vendors or subcontractors, work in
process, finished goods and goods in transit; (iii) all prepaid expenses,
deposits and rights to refunds from customers and suppliers with respect to the
Business; (iv) all machinery, equipment, fixtures and furniture used in the
Business and preliminarily listed on Schedule 2.1 (a final mutually agreed upon
list to be provided to Buyer prior to the Closing); (v) all motor vehicles and;
(vi) all real estate described on Schedule 3.10 attached hereto, provided, that
Buyer shall have 30 days from the date hereof to complete its due diligence with
respect to such property, and provided, further, that Buyer shall notify the
Company of its intention to sublease the space currently occupied by the Company
upon the same terms as currently paid by the Company, receive an assignment of
the leases for such premises or refuse to accept the real estate identified on
Schedule 3.10 prior to the end of such 30-day period.
(b) all rights and interests of the Company in and to any
Business contracts, including contracts for the purchase of materials, supplies
and services and the sale of products and services, equipment leases, and any
other contract of the Company relating to the Business, including, without
limitation, those listed on Schedule 3.15 attached hereto;
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(c) copies of or access to all of the Company's books, records
and other data relating to the Business;
(d) all of the Company's goodwill, dealer and customer lists and
all other sales and marketing information, and all knowhow, technology,
drawings, engineering specifications, bills of materials, software and other
intangible assets of the Company in each case, relating to the Business;
(e) all of the Company's interest in patents, patent
applications, proprietary designs, copyrights, tradenames, servicemarks,
trademarks and trademark applications (including, without limitation, the
exclusive right to use the names "Global Village" and "Teleport" and all
variants thereof), and all patents, trademarks, servicemarks, proprietary
designs, trade names, assumed names and copyrights listed in Schedule 3.13
attached hereto, in each case relating to the Business and together with the
goodwill appurtenant thereto, all federal, state, local and foreign
registrations thereof, if applicable, all common law rights thereto, and all
claims or causes of action for infringement thereof;
(f) all permits, licenses, orders, ratings and approvals of all
federal, state, local or foreign governmental or regulatory authorities or
industrial bodies that are held by the Company and relate to the Business, to
the extent the same are transferable;
(g) all rights of the Company to causes of action, lawsuits,
judgments, claims and demands of any nature which would relate to the Business
or constitute counterclaims, rights of setoff, and affirmative defenses to any
claims brought against Buyer by third parties relating to the Business;
(h) [Intentionally omitted]
(i) all present and future insurance proceeds which may be
payable under the insurance policies listed on Schedule 3.23 attached hereto to
the extent that such proceeds relate to the future loss of asset value of the
Purchased Assets;
(j) except for Retained Assets described in Section 2.2 below,
all other items of property, real or personal, tangible or intangible,
including, without limitation, all restrictive and negative covenant agreements
with employees and others, including, without limitation, nondisclosure
agreements, computer programs, tapes, discs and timesharing files, owned, used
by or accruing to the benefit of the Company in each case, used in the Business
(k) Intellectual property and associated html code that is
transferable by the Company, as well as the exclusive rights to operate the
Global Village website located at "www.globalvillage.com",
"www.globalvillag.com" and "www.globalvillagestore.com".
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2.2 Retained Assets. The Company will retain ownership of the following
assets of the Company listed on Schedule 2.2 attached hereto (collectively, the
"Retained Assets").
2.3 Assumed Liabilities. The Buyer shall assume and agree to pay,
perform and discharge only the Assumed Liabilities, and will pay, perform and
discharge the Assumed Liabilities as they become due. The Assumed Liabilities
shall consist of only those liabilities of the Company listed on Schedule 2.3
attached hereto or otherwise specifically provided for in this Agreement.
2.4 Retained Liabilities. The liabilities and obligations which shall be
retained by the Company (the "Retained Liabilities") shall consist of all
liabilities of the Company other than Assumed Liabilities, including, without
limitation, the following:
(a) all liabilities of the Company relating to indebtedness for
borrowed money;
(b) all liabilities of the Company resulting from, constituting
or relating to a breach of any of the representations, warranties, covenants or
agreements of the Company under this Agreement in accordance with the
indemnification provisions of this Agreement;
(c) all liabilities of the Company for federal, state, local or
foreign Taxes, including Taxes incurred in respect of or measured by the income
of the Company earned on or realized prior to the Closing Date, including any
gain and income from the sale of the Assets and other transactions contemplated
herein, excluding those incurred by Buyer in connection with this transaction;
(d) all liabilities for all environmental, ecological, health or
safety claims to the extent arising out of the operation of the Business or the
Purchased Assets by the Company on or before the Closing Date;
(e) all liabilities of the Company arising in connection with its
operations unrelated to the Business except as otherwise specifically provided
herein or in Schedule 2.3;
(f) any liability of the Company based on its tortious or illegal
conduct;
(g) any liability or obligation incurred by the Company in
connection with the negotiation, execution or performance of this Agreement,
including, without limitation, all legal, accounting, brokers', finders' and
other professional fees and expenses other than through Buyer's breach of this
Agreement;
(h) all liabilities incurred by the Company after the Closing
Date other than through Buyer's breach of this Agreement (except to the extent
such liability is specifically assumed by Buyer); and
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(i) all liabilities or obligations associated with the Business
Employees (as defined in Section 5.5(b)(i)), including but not limited to any
liability or obligation under or with respect to any collective bargaining
agreement, employment agreement, any Plan (as defined in Section 3.19),
unemployment or workers' compensation laws, sales commissions (other than on
orders shipped and billed after the Closing Date) unless specifically provided
for elsewhere in this Agreement.
2.5 Purchase Price. Upon the terms and subject to the conditions
contained in this Agreement, in reliance upon the representations, warranties
and agreements of the Company contained herein, and in consideration of the
sale, assignment, transfer and delivery of the Transferred Assets, the covenants
not to compete and the Warrant Purchase Agreement received from the Company,
Buyer will assume the Assumed Liabilities and will pay, upon the schedule set
forth below, by wire transfer of immediately available funds, to the Company,
Ten Million and no/00 Dollars (US$10,000,000.00) the "Purchase Price"). Payment
of the Purchase Price to the Company shall be made to the Company's account
which shall be provided to the Buyer prior to the Closing.
The Purchase Price shall be payable without interest, as follows:
(a) Four Million Dollars (US$4,000,000.00) of the Purchase
Price shall be payable in cash at the Closing Date; and
(b) Buyer shall deliver to the Company at the Closing a
Promissory Note in the amount of Six Million and no/100
Dollars (US$6,000,000.00), bearing no interest, payable as
follows:
(i) Three Million Dollars (US$3,000,000.00) of the
Purchase Price shall be payable in cash on
September 30, 1998; and
(ii) Three Million Dollars (US$3,000,000.00) of the
Purchase Price shall be payable in cash on
December 31, 1998.
Such promissory note shall be in form attached hereto as
Exhibit D and shall become due and payable upon a change
of control of BRI and such note shall be made by Buyer and
unconditionally guaranteed by BRI in the form of Guaranty
attached hereto as Exhibit E.
2.6 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Transferred Assets and the covenants not to compete received from the
Company in a manner that is mutually agreed upon by the parties prior to the
Closing. The Company and Buyer shall be bound by such allocation for all
purposes and to account for and report the purchase and sale contemplated hereby
for all financial, accounting and Tax purposes in accordance with such
allocation.
2.7 Time and Place of Closing. The closing of the transactions described
in Sections 2.1 through 2.6 above (the "Closing") shall take place at the
offices of Wilson Sonsini Goodrich &
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Rosati, 650 Page Mill Road, Palo Alto, California, at 10:00 a.m. (local
time) on the third business day following the satisfaction of the conditions to
closing as provided in this Agreement, but in no event later than June 30, 1998,
or at such other place or time as the parties hereto may agree. The date and
time at which the Closing actually occurs is hereinafter referred to as the
"Closing Date."
2.8 Execution and Delivery of Documents of Title by the Company; Further
Assurances. At the Closing, the Company shall execute and deliver to Buyer the
Bill of Sale attached hereto as Exhibit A and such deeds, conveyances,
bills of sale, certificates of title, assignments, assurances and other
instruments and documents as Buyer may reasonably request in order to effect the
sale, conveyance, and transfer of the Purchased Assets from the Company to the
Buyer. Such instruments and documents shall be sufficient to convey to Buyer
good and merchantable title in all of the Transferred Assets. The Company will,
from time to time after the Closing Date, take such additional actions and
execute and deliver such further documents as Buyer may reasonably request in
order more effectively to sell, transfer and convey the Transferred Assets to
Buyer and to place Buyer in position to operate and control all of the
Transferred Assets. To the extent any of such assets are, by nature or terms,
not transferrable, the Company shall hold, provide, and make such assets
available for the use and benefit of Buyer as Buyer's agent.
2.9 Execution and Delivery of Documents by Buyer; Further Assurances. At
the Closing, Buyer shall execute and deliver to the Company an Instrument of
Assumption in the form attached hereto as Exhibit B, the Promissory Note, and
such other documents as the Company may reasonably request in order to evidence
Buyer's assumption of the Assumed Liabilities. Buyer will, from time to time
after the Closing Date, take such additional action and deliver such further
documents as the Company may reasonably request in order effectively to assume
the Assumed Liabilities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
3.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has full power and authority to own, use and lease their
properties and to conduct its business as such properties are owned, used or
leased and as such business is currently conducted. The copies of the Company's
Charter and ByLaws, as amended to date, in each case certified by their
respective Secretaries and delivered to Buyer's counsel prior to the Closing,
are true, complete and correct. Except as set forth on Schedule 3.1
attached hereto, the Company is qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which it owns or
leases property or maintains inventories or where the conduct of its business
would require such qualification.
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<PAGE> 17
3.2 Authority; No Violation. The Company has all requisite corporate
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company have been duly and validly authorized and approved
by all necessary corporate action. This Agreement constitutes the legal and
binding obligation of the Company, enforceable against it in accordance with its
terms. To the best knowledge of the Company and except as set forth on Schedule
3.2, the entering into of this Agreement by the Company does not, and the
consummation by the Company of the transactions contemplated hereby, including
specifically the transfer of the Transferred Assets to Buyer by the Company,
will not violate the provisions of (a) any applicable federal, state,
local or foreign laws, (b) the Company's respective Charter or ByLaws, or
(c) any provision of, or result in a default or acceleration of any
obligation under, or result in any change in the rights or obligations of the
Company under any Lien, contract, agreement, license, lease, instrument,
indenture, order, arbitration award, judgment, or decree to which the Company is
a party or by which any of them is bound, or to which any property of the
Company is subject.
3.3 [Intentionally Omitted]
3.4 [Intentionally Omitted]
3.5 SEC Reports and Financial Statements. Since December 31, 1996, the
Company has filed all material forms, reports and documents with the Commission
required to be filed by it pursuant to the Securities Act and the Exchange Act
(the "SEC Reports"), and all of such filings complied in all material respects
with all applicable requirements of the Securities Act and the Exchange Act.
Attached hereto as Schedule 3.5 are the following financial statements
(collectively the "Financial Statements"): (i) audited consolidated and
unaudited consolidating balance sheets and statements of operations, changes in
owners' equity and consolidated statements of cash flow as of and for the fiscal
year ended March 31, 1997; and (ii) unaudited consolidated and
consolidating balance sheets and statements of income, changes in stockholders'
equity, and cash flow (the "Most Recent Financial Statements") as of and for the
nine (9) months ended December 31, 1997, for the Company.
3.6 Absence of Undisclosed Liabilities. Except as set forth in the Last
Balance Sheet or Schedule 3.6 attached hereto, there are no material
liabilities of the Company, whether accrued, absolute, contingent or otherwise
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of any other Person, or liabilities for Taxes due or then
accrued or to become due), except for liabilities which have arisen in the
ordinary course of business of the Company since the date of the Last Balance
Sheet. Schedule 3.6 sets forth a true and correct aged list of all
accounts payable of the Company as of February 28, 1998, in excess of $10,000 to
any one payee.
3.7 Absence of Certain Changes. Except as otherwise disclosed in
Schedule 3.5 or Schedule 3.7 attached hereto, as contemplated in this
Agreement or in the ordinary course of business, since February 28, 1998, there
has not been:
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<PAGE> 18
(a) any change in the business, operations, assets, liabilities,
prospects or condition (financial or otherwise) of the Company that, by itself
or in conjunction with all other such changes, whether or not arising in the
ordinary course of business, has been or is reasonably likely to be materially
adverse with respect to the Business (including, by way of example and not of
limitation, the loss of any significant distributor, customer or vendor);
(b) any announcement or communication to the Company on the part
of any key employee of the Company of his or her intention to leave the
Company's employ;
(c) any Lien placed on any of the Transferred Assets which
remains in existence on the date hereof;
(d) any contingent liabilities incurred by the Company with
respect to the obligations of any other Person that would be Assumed
Liabilities;
(e) any purchase, sale, lease, assignment, transfer or other
disposition, or any agreement or other arrangement for the purchase, sale,
lease, assignment, transfer or other disposition, of any part of the Business
properties or assets, other than purchases for and sales from inventory for fair
consideration in the ordinary course of business, except for fixed assets
purchased or other capital expenditures made in amounts not exceeding $10,000
for any single item and $50,000 in the aggregate for all such items;
(f) any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Business;
(g) any labor trouble or claim of unfair labor practices
involving the Company; any change in the employment contracts of or compensation
payable or to become payable by the Company to any of its officers, directors,
employees, consultants or agents who are Business Employees, or any bonus
payment or arrangement made by the Company to or with any of such officers,
directors, employees, consultants or agents who are Business Employees; or any
change in coverage or benefits available under any Plan described in
Section 3.19 provided, however, that the Buyer and BRI acknowledge and
agree that the Company shall be entitled to increase the compensation of the
Business Employees by a maximum of 6.5% of total compensation in the aggregate;
(h) any payment or discharge of a material Lien or liability of
the Company relating to the Transferred Assets not disclosed on the Financial
Statements or incurred in the ordinary course of business;
(i) any contracts, licenses, leases or agreements entered into by
the Company which would be assumed pursuant to this Agreement, which are outside
the ordinary course of business and which obligate the Company for more than
$10,000 in any one case or more than $35,000 in the aggregate;
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<PAGE> 19
(j) any amendment or other change (or any authorization to make
such an amendment or change) to the Company's Charter or ByLaws, that would
prohibit the consummation of the transactions contemplated hereby;
(k) any postponement or delay in payment of any accounts payable
or other liability of the Company that will be included as Assumed Liabilities
except in the ordinary course of business consistent with prior practices;
(l) any cancellation, waiver, compromise or release of any right
or claim relating to the Business involving more than $10,000 and outside the
ordinary course of business consistent with prior practices;
(m) any cancellation, termination, modification, or acceleration
by any party to any contract, license, lease or agreement involving more than
$10,000 which will be assigned hereunder to which the Company is a party or by
which it is bound; or
3.8 Title to the Transferred Assets. The Company has good and marketable
title to, or a valid leasehold interest in, all of the Transferred Assets, free
and clear of all material Liens, and free of any material infractions or
noncompliance with zoning and building laws (collectively, "Defects") and the
sale and delivery of the Transferred Assets to Buyer pursuant hereto shall vest
in Buyer good and marketable title thereto, free and clear of any and all
material Liens or Defects, other than as disclosed in Schedule 3.8 hereto
or as may be created by Buyer. The Company shall prior to the Closing use their
commercially reasonable efforts to cure at their expense any material Defect
identified by Buyer.
3.9 Sufficiency and Condition of Assets. To the knowledge of the
Company, all tangible properties and assets that have an assigned value owned or
leased by the Company and contained in the Transferred Assets are in good
operating condition and repair, ordinary wear and tear excepted, have been well
maintained, and conform with all applicable laws, statutes, ordinances, rules
and regulations, other than as disclosed on Schedule 3.9.
3.10 Real Estate. Schedule 3.10 lists and describes briefly all
real property leased or subleased to or by the Company that will be assumed by
the Buyer or BRI. With respect to each such lease and sublease;
(i) correct and complete copies thereof have been
delivered to Buyer;
(ii) to the knowledge of the Company, the lease or
sublease is legal, valid binding, enforceable, and in full force and effect;
(iii) to the knowledge of the Company, no party to the
lease or sublease is in breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
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<PAGE> 20
(iv) to the knowledge of the Company, no party to the
lease or sublease has repudiated any provision thereof, and there are no
disputes, oral agreements, or forbearance programs in effect as to the lease or
sublease;
(v) to the knowledge of the Company, with respect to each
sublease, the representations and warranties set forth in subsections (ii),
(iii) and (iv) above are true and correct with respect to the underlying lease;
(vi) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered materially any interest in the
leasehold or subleasehold;
(vii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of said
facilities; and
3.11 Accounts Receivable. All of the Accounts Receivable of the Company
are properly reflected in the Last Balance Sheet and will be on the Closing
Balance Sheet, and are, subject to the allowance for doubtful accounts set forth
therein, valid and enforceable claims, subject to no setoff or counterclaim, and
are to the knowledge of the Company collectible in the ordinary course of
business. Except as set forth in Schedule 3.11 attached hereto, the
Company does not have any accounts receivable or loans or notes receivable to be
assigned to the Buyer pursuant to this Agreement from any Affiliates or from any
of its officers, directors, consultants, employees, agents or stockholders.
3.12 Inventories.
(a) Except as disclosed in Schedule 3.12 attached hereto:
(i) the inventories of the Company to be transferred to the Buyer pursuant
to this Agreement will be properly reflected in the Closing Balance Sheet and
will be of a quality and quantity saleable in the ordinary course of business of
the Company at prevailing market prices, are priced at the lower of cost (first
in, first out) or market, (ii) the values of the inventories stated in the
Last Balance Sheet reflect the Company's normal inventory valuation policies and
were determined in accordance with GAAP consistently applied and (iii) the
values of the inventories to be stated in the Closing Balance Sheet will reflect
the Company's normal inventory valuation policies and will be determined in
accordance with GAAP consistently applied.
(b) As of the date hereof, purchase commitments for raw materials
and parts for the Company to be assumed by the Buyer pursuant to this Agreement
are not, individually or in the aggregate, in excess of normal requirements and
none of such commitments are at prices materially in excess of current market
prices.
3.13 Intellectual Property. All patents, patent applications,
proprietary designs, copyrighted works, trade names, servicemarks, trademarks
and trademark applications which are owned by or licensed to the Company and are
used in the Business are listed in Schedule 3.13
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<PAGE> 21
attached hereto, which indicates with respect to each the nature of the
Company's interest therein and the expiration date thereof or the date on which
the Company's interest therein terminates. Except as set forth on Schedule 3.13,
all of the Company's patents and registered trademarks have been duly registered
in, filed in or issued by the United States Patent Office or the corresponding
offices of other countries identified in Schedule 3.13, and have been
properly maintained and renewed in accordance with all applicable laws and
regulations in the United States and each such country. Except as set forth on
Schedule 3.13, those copyrighted works for which copyright registration has been
secured with the U.S. Register of Copyright or corresponding offices in other
countries are set forth in Schedule 3.13, which indicates the registration
number and date of registration of each such registered work. Except as set
forth in Schedule 3.13, each such registration has been secured and maintained
in accordance with all applicable laws and regulations in the United States and
each such country. Except as set forth in Schedule 3.13, use of said
patents, patent applications, copyrighted works, servicemarks, trade names,
registered trademarks or trademark applications owned by the Company does not
require the consent of any other Person and the same are freely transferable
(except as otherwise provided by law) and are owned exclusively by the Company,
free and clear of any Liens. Except as set forth in Schedule 3.13,
(a) no other Person has an interest in or right or license to use, or the
right to license any other Person to use, any of said patents, patent
applications, proprietary designs, copyrighted works, trade names, servicemarks,
trademarks or trademark applications, (b) except as set forth on Schedule
3.13, there are no claims or demands of any other Person pertaining thereto and
no proceedings have been instituted, or are pending or, to the knowledge of the
Company, threatened, which challenge the Company's rights in respect thereof,
(c) to the knowledge of the Company, none of the patents, copyrighted
works, trade names or trademarks listed in Schedule 3.13 is being
infringed by another Person or is subject to any outstanding order, decree,
ruling, charge, injunction, judgment or stipulation, (d) no Claim has been
made or to the knowledge of the Company is threatened charging the Company with
infringement of any adversely held patent, trade name, trademark or copyright
and (e) to the knowledge of the Company, there does not exist
(i) any unexpired patent with claims which are or would be infringed by
products of the Company or any Subsidiary of the Company or by apparatus,
methods or designs employed by it in manufacturing such products or
(ii) any patent or application therefor or invention which would
materially adversely affect the Company's or any Subsidiary's ability to
manufacture, use or sell any such product, apparatus, method or design.
3.14 Trade Secrets and Customer Lists.
(a) Except as set forth on Schedule 3.14, the Company has the
right to use, free and clear of any Claims or rights of any other Person, all
trade secrets, customer lists, manufacturing and secret processes and knowhow
(if any) required for or used in the manufacture or marketing of all products
relating to the Business being sold, manufactured, including products licensed
from other Persons, and all of such trade secrets, customer lists, manufacturing
and secret processes and knowhow shall be transferred to Buyer as part of the
Transferred Assets. Any payments required to be made by the Company for the use
of such trade secrets, customer lists, manufacturing and secret processes and
knowhow are described in Schedule 3.14 attached hereto. The Company
warrants that it will keep confidential, and preserve the secrecy of, all
confidential information, knowhow, and
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trade secrets transferred to Buyer as part of the Transferred Assets, and that
it will enforce this ongoing obligation of confidentiality as to present and
past employees of the Company, to the same extent as it would have if the
transfer had not taken place. To the knowledge of the Company it is in no way
making an unlawful or wrongful use of any confidential information, knowhow, or
trade secrets of any other Person, including, without limitation, any former
employer of any present or past employee of the Company or any Subsidiary of the
Company. Except as described on Schedule 3.14 and to the knowledge of the
Company, no officer, director or employee of the Company is a party to any
noncompetition or confidentiality agreement with any Person other than the
Company or a Subsidiary of the Company.
(b) The Company agrees and promises to execute all assignments
and other such instruments, and render all such assistance as Buyer may
reasonably require in order to accomplish the transfer of Transferred Assets,
and to confirm in Buyer legal title to said Transferred Assets, including,
without limitation, recordation of assignment documents in the United States
Patent and Trademark Office, Copyright Office, or corresponding offices in other
countries.
3.15 Contracts. Except for contracts, commitments, leases, licenses,
plans and agreements described in Schedule 3.15 attached hereto, pursuant
to the terms of this Agreement, Buyer will not assume or otherwise become
subject to:
(a) any plan or contract regarding or providing for bonuses,
pensions, options, stock purchases, deferred compensation, severance benefits
retirement payments, profit sharing, stock appreciation, collective bargaining
or the like relating to the Business Employees, or any contract or agreement
with any labor union;
(b) any employment or consulting contract or contract for
personal services relating to Business Employees not terminable at will by the
Company without penalty to the Company;
(c) any contract or agreement for the purchase of any commodity,
product, material, supplies, equipment or other personal property, or for the
receipt of any service, other than purchase orders entered into in the ordinary
course of business for less than $10,000 each and which in the aggregate do not
exceed $35,000;
(d) any contract or agreement for the purchase or lease of any
fixed asset, whether or not such purchase or lease is in the ordinary course of
business, for a price in excess of $10,000;
(e) any contract or agreement for the sale of any commodity,
product, material, equipment, or other personal property, or the furnishing by
the Buyer of any service, other than contracts with customers entered into in
the ordinary course of business;
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<PAGE> 23
(f) any contract or agreement providing for the purchase of all
or substantially all of its requirements of a particular product from a
supplier, or for periodic minimum purchases of a particular product from a
supplier;
(g) any contract or agreement with any sales agent, distributor
or OEM of products of the Company;
(h) any contract or agreement concerning a partnership or joint
venture with one or more Persons;
(i) any confidentiality agreement or any noncompetition agreement
or other contract or agreement containing covenants limiting the Buyer's freedom
to compete in any line of business or in any location or with any Person;
(j) any license agreement (as licensor or licensee);
(k) any contract or agreement with any present or former officer,
director, consultant, agent or stockholder of the Company or with any Affiliate
of any of them;
(l) any loan agreement, indenture, note, bond, debenture or any
other document or agreement evidencing a capitalized lease obligation or
Indebtedness to any Person;
(m) any agreement of guaranty, indemnification, or other similar
commitment with respect to the obligations or liabilities of any other Person.
(n) any other agreement or contract (or group or related
agreements or contracts) the performance of which involves consideration paid or
received by the Buyer in excess of $10,000.00.
Copies of all such contracts, commitments, plans, leases, licenses and
agreements have been provided or made available to Buyer or its counsel prior to
the execution of this Agreement, and all such copies are true, correct and
complete and have been subject to no amendment, extension or other modification
as of the date hereof, except such as are described in Schedule 3.15 or as
indicated in the provided copies. Except as listed and described in
Schedule 3.15, the Company is not, and to the knowledge of the Company, no
other Person, is in material default under any such contract, commitment, plan,
lease, license or agreement described in Schedule 3.15 (a "default" being
defined for purposes hereof as an actual default or event of default or the
existence of any fact or circumstance which would, upon receipt of notice or
passage of time, constitute a default).
3.16 Customers and Suppliers. Schedule 3.16 attached hereto sets
forth the ten (10) largest suppliers and customers of the Company in the
calendar year 1997 (the "Large Suppliers and Customers"). Except as reflected in
Schedule 3.16, no supplier is a material sole source of supply to the
Company. The relationships of the Company with its suppliers and customers are
good
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<PAGE> 24
commercial working relationships and, except as set forth on Schedule 3.16,
neither (i) any of the Large Suppliers and Customers nor (ii) any supplier or
customer who at any time during 1996 or 1997 was or is the sole source of supply
of any item or purchase of any of the Company's products, has canceled or
otherwise terminated, or threatened to cancel or otherwise terminate, its
relationship with the Company or has during the last twelve (12) months
decreased materially or threatened to decrease or limit materially, its
services, supplies or materials to the Company or its usage or purchase of the
services or products of the Company, as the case may be. The Company does not
have any knowledge that any of the Large Suppliers and Customers intends to
cancel or otherwise adversely modify its relationship with the Company or any
Subsidiary or to decrease materially or limit its services, supplies or
materials to the Company or its usage or purchase of the services or products of
the Company, and the acquisition of the Transferred Assets and the Business by
Buyer will not, to the knowledge of the Company, adversely affect the
relationship of the Company with any of the Large Suppliers and Customers.
3.17 Compliance with Laws.
(a) Except as disclosed in Schedule 3.17, the Company has all
licenses, permits, franchises, orders, approvals, accreditations, written
waivers and other authorizations as are necessary in order to enable it to own
and conduct the Business and to occupy and use its real and personal properties
without incurring any material liability ("Necessary Permits"). No registration,
filing, application, notice, transfer, consent, approval, order, qualification,
waiver or other action of any kind is required by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to effect the transfer to Buyer of such Necessary Permits. The Company is
in full compliance with the terms and conditions of all Necessary Permits except
where the failure to be in compliance would not have a Material Adverse Effect.
(b) Except as disclosed in Schedule 3.17, the Company has
conducted and is conducting its business in material compliance with applicable
federal, state, local or foreign laws, statutes, ordinances, regulations, rules
or orders or other requirements of any governmental, regulatory or
administrative agency or authority or court or other tribunal relating to it
(including, but not limited to, any law, statute, ordinance, regulation, rule,
order or requirement relating to securities, properties, business, products,
advertising, sales or employment practices, immigration, terms and conditions of
employment, wages and hours, safety, occupational safety, health or welfare
conditions relating to premises occupied, product safety and liability or civil
rights). The Company is not now charged with, and to the knowledge of the
Company, is not now under investigation with respect to, any possible violation
of any applicable law, statute, ordinance, regulation, rule, order or
requirement relating to any of the foregoing in connection with the Business and
the Company has filed all material reports required to be filed with any
governmental, regulatory or administrative agency or authority. The Company
shall promptly inform Buyer of any notice relating to the foregoing received
after the date hereof and on or prior to the Closing Date.
3.18 Taxes. Except as disclosed in Schedule 3.18,
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(a) to the extent a failure to do so would adversely impact
Buyer, the Business, the Transferred Assets or Buyer's use of such Transferred
Assets, (i) the Company has timely filed within the time period for filing or
any extension granted with respect thereto, all federal, state, local and
foreign tax returns, reports and estimates ("Returns") which it is required to
file relating or pertaining to any and all taxes attributable to or levied upon
the Transferred Assets and (ii) paid any and all taxes it is required to pay in
connection with the taxable periods to which such Returns relate. There are (and
immediately following the Closing there will be) no liens or similar
encumbrances on the Transferred Assets relating or pertaining to taxes, except
with respect to taxes not yet due and payable. The Company has no knowledge of
any basis for the assertion of any claims which, if adversely determined, would
result in a lien or other encumbrance on the Transferred Assets or otherwise
adversely effect Buyer or the Transferred Assets; and
(b) to the extent relevant to the Transferred Assets and the
Business, the Company shall (i) provide Buyer with such assistance as may
reasonably be required in connection with the preparation of any tax Return and
the conduct of any audit or other examination by any taxing authority or in
connection with judicial or administrative proceedings relating to any liability
for taxes and (ii) retain and provide Buyer with copies of or access to all
records or other information that may be relevant to the preparation of any tax
Returns, or the conduct of any audit or examination, or other tax proceeding.
The Company shall retain all relevant documents, including prior year's tax
Returns, supporting work schedules and other records or information that may be
relevant to such returns and shall not destroy or otherwise dispose of any such
records without the prior written consent of Buyer.
3.19 [Intentionally Omitted]
3.20 Environmental Matters.
(a) Except as disclosed in Schedule 3.20 attached hereto,
to the knowledge of the Company, the use and operation by the Company of all
facilities and properties used in the business of the Company have been, and
will be on the Closing Date, in material compliance with all Environmental Laws,
and no Environmental Action has been filed, commenced, or, to the knowledge of
the Company, threatened with or against any of them alleging any failure so to
comply.
(b) To the knowledge of the Company, the Company has received all
material Environmental Permits required to allow each of them to conduct their
operations and businesses, such Environmental Permits are valid and in effect,
and the Company is in compliance with such Environmental Permits.
(c) Except as disclosed in Schedule 3.20, the Company has
not received notice from any Person, (i) that it has been identified by
the EPA or similar state authority as a potentially responsible party under
CERCLA with respect to a site listed on the "National Priorities List," as in
effect as of the Closing Date, of hazardous waste sites or any similar state
list; (ii) that any Hazardous Materials which the Company has generated,
transported, or disposed of has been found
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at any site at which a Person has conducted or has ordered that the Company
conduct a remedial investigation, removal, or other response action pursuant to
any Environmental Law; or (iii) that the Company is or shall be a named party to
any Environmental Action arising out of any Person's incurrence of costs,
expenses, losses, or damages of any kind whatsoever in connection with the
release of Hazardous Materials.
(d) Except as disclosed in Schedule 3.20, to the knowledge
of the Company, there have been no unpermitted Releases of Hazardous Materials
on, upon, into, or from the real property owned or leased at any time by the
Company.
3.21 Employees. Prior to the date hereof, the Company has set forth a
true and complete list of (a) all officers (with office held) of the
Company with respect to the Business who are contemplated to be transferred,
(b) all consultants and independent contractors retained by the Company
currently or during the last fiscal year with respect to the Business who are
contemplated to be transferred and (c) all employees of the Company with
respect to the Business who are contemplated to be transferred, including each
such employee's job title, remuneration and duration of employment period.
Except as disclosed in Schedule 3.21, the Company is not a party to any
written or oral employment, consulting, service, severance or pension agreement
to which the Buyer will become subject. The Company is not a party to, and none
of its employees are subject to, any collective bargaining agreement or other
union contract. The Company enjoys good relations with its employees and there
is no pending or, to the knowledge of the Company, threatened labor trouble with
or effort to organize any of its employees, and there has been no such labor
trouble or, to the knowledge of the Company, effort to organize during the past
five (5) years.
3.22 Litigation. Except as disclosed on Schedule 3.22 attached
hereto, (a) there is no Claim pending or, to the knowledge of the Company,
threatened (or, to the knowledge of the Company, any facts which could lead to
such a claim) by, against, affecting or regarding the Business at law or in
equity, before any federal, state, local or foreign court or any other govern
mental or administrative agency or tribunal or any arbitrator or arbitration
panel, and (b) there are no judgments, orders, rulings, charges, decrees,
injunctions, notices of violation or other mandates against or affecting the
Business. Nothing listed on Schedule 3.22, either individually or when
aggregated with other listings on such Schedule, would reasonably be expected to
have a Material Adverse Effect.
3.23 [Intentionally omitted]
3.24 Company Products. Each product manufactured, sold, leased,
distributed or delivered by the Company ("Company Products") has been in
conformity with all applicable contractual commitments and all applicable
express and implied service and product warranties. Except as disclosed in
Schedule 3.24 attached hereto or in the ordinary course of Business,
(a) there are no existing or, to the knowledge of the Company, threatened
Claims that would be assumed by the Buyer for services or merchandise which are
defective or fail to meet any express or implied service or product warranties,
or any facts which, if discovered by a third party, would support such a Claim;
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and (b) no Claim that would be assumed by the Buyer has been asserted against
the Company for renegotiation or price redetermination with respect to any
transaction, and there are no facts upon which any such Claim could be based
other than through the ordinary course of business. Except as set forth on
Schedule 3.24, there are no statements, citations or decisions by any
governmental or regulatory body or agency that any Company Product is defective
or fails to meet any standards promulgated by any such governmental or
regulatory body or agency. Except as set forth on Schedule 3.24, there have been
no recalls ordered by any such governmental or regulatory body or agency with
respect to any Company Product.
3.25 [Intentionally Omitted]
3.26 Brokers. Except as disclosed in Schedule 3.26 attached
hereto, none of the Company, its Subsidiaries, or anyone acting on their behalf,
has engaged, retained, or incurred any liability to any broker, investment
banker, finder or agent or has agreed to pay any brokerage fees, commissions,
finder's fees or other fees with respect to the sale of the Business or the
transactions contemplated by this Agreement.
3.27 Burdensome Agreements. The Company is not subject to or bound by
any agreement, judgment, decree or order relating to the Business which is
expected to result in a Material Adverse Effect.
3.28 [Intentionally Omitted]
3.29 Transactions with Interested Persons. To the Company's knowledge
and except as set forth on Schedule 3.29 attached hereto or in the
documents of the Company as required by the Securities Act, no officer,
supervisory employee or director of the Company owns directly or indirectly,
either individually or jointly, any material interest in, or serves as an
officer or director of, any customer, competitor or supplier of the Company, or
any organization which has a material contract or arrangement with the Company
relating to the Business.
3.30 Copies of Documents. The Company has made available for inspection
and copying by Buyer and its counsel true and correct copies of all documents
referred to in this Article III or in the Schedules delivered to Buyer
pursuant to this Agreement.
3.31 Disclosure of Material Information. Neither this Agreement
(including the Schedules and Exhibits hereto) nor any document, certificate or
instrument furnished in connection therewith contains, when all such documents
are read together, with respect to the Company, any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein not misleading. The Company has reported to Buyer any and all
indications of which it is aware of potential material adverse factors in the
Business (other than factors affecting industry generally), such as (by way of
example, not of limitation) loss of a distributor, vendor or customer, announce
ments of key employees to resign or leave the Company or any other material
adverse factor taking place on or after February 28, 1998, to the date of this
Agreement. The representations and
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warranties contained in this Article are the only representations and warranties
made by the Company in connection with the transactions contemplated by this
Agreement and supersede any and all previous written or oral statements made by
the Company to the Buyer.
3.32 Opinion of the Financial Advisor. The Company has received the
opinion of Hambrecht & Quist LLC as of the date hereof, to the effect that the
consideration to be received by the Company is fair to the holders of the
Company's Common Stock from a financial point of view.
3.33 Board Recommendation. The Board of Directors of the Company, at a
meeting duly called and held, has (a) determined that this Agreement and the
transactions contemplated hereby, taken together, are advisable and in the best
interests of the Company and its stockholders , and (b) subject to the other
provisions hereof, resolved to recommend that the holders of the shares of the
Company's Common Stock approve this Agreement and the transactions contemplated
hereby.
3.34 Required Company Vote. The affirmative vote of a majority of the
shares of the Company's Common Stock is the only vote of the holders of any
class or series of the Company's securities necessary to approve this Agreement
and the transactions contemplated hereby.
3.35 State Takeover Statutes. The Board of Directors has taken such
action so that no state takeover statute or similar statute or regulation of the
State of Delaware (and, to the knowledge of the Company after due inquiry, of
any other state or jurisdiction) applies to this Agreement or any of the
transactions contemplated hereby. Neither the Company nor any of its
subsidiaries has any rights plan, preferred stock or similar arrangement which
have any of the aforementioned consequences in respect of the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND BRI
Each of Buyer and BRI, separate and severally, hereby represent and
warrant to the Company as follows:
4.1 Organization and Qualification. Each of Buyer and BRI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has full power and authority to own, use and lease
their properties and to conduct its business as such properties are owned, used
or leased and as such business is currently conducted and as it is proposed to
be conducted. The copies of the Buyer's and BRI's respective Charters and
ByLaws, as amended to date, in each case certified by their respective
Secretaries and delivered to the Company's counsel prior to the Closing, are
true, complete and correct. Except as set forth on Schedule 4.1 attached
hereto, the Buyer is qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which it owns or leases property or
maintains inventories or where the conduct of its business would require such
qualification.
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4.2 Authority; No Violation. Each of Buyer and BRI has all requisite
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Buyer and BRI have been duly and validly authorized and
approved by all necessary corporate action. This Agreement constitutes the legal
and binding obligation of the Buyer and BRI, enforceable against them in
accordance with its terms. To the best knowledge of the Buyer and BRI, the
entering into of this Agreement by the Buyer and BRI does not, and the
consummation by the Buyer and BRI of the transactions contemplated hereby,
including specifically the transfer of the Transferred Assets to Buyer by the
Company, will not violate the provisions of (a) any applicable federal,
state, local or foreign laws, (b) the Buyer's and BRI's respective Charter
or ByLaws, or (c) any provision of, or result in a default or acceleration
of any obligation under, or result in any change in the rights or obligations of
the Buyer or BRI, any Subsidiary of the Buyer or BRI under, any Lien, contract,
agreement, license, lease, instrument, indenture, order, arbitration award,
judgment, or decree to which the Buyer or BRI is a party or by which any of them
is bound, or to which any property of the Buyer or BRI is subject.
4.3 [Intentionally Omitted]
4.4 [Intentionally Omitted]
4.5 SEC Reports and Financial Statements. Since December 31, 1996, BRI
has filed all material forms, reports and documents with the Commission required
to be filed by it pursuant to the Securities Act and the Exchange Act (the "SEC
Reports"), and all of such filings complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act. Attached
hereto as Schedule 4.5 are financial statements (collectively the "BRI
Financial Statements")of audited consolidated and unaudited consolidating
balance sheets and statements of income, changes in stockholders' equity and
cash flow as of and for the fiscal year ended December 31, 1997.
4.6 Brokers. Except as disclosed in Schedule 4.6 attached hereto,
neither the Buyer, BRI, or anyone acting on their behalf, has engaged, retained,
or incurred any liability to any broker, investment banker, finder or agent or
has agreed to pay any brokerage fees, commissions, finder's fees or other fees
with respect to the transactions contemplated by this Agreement.
4.7 Disclosure of Material Information. Neither this Agreement
(including the Schedules and Exhibits hereto) nor any document, certificate or
instrument furnished in connection therewith contains, when all such documents
are read together, with respect to the Buyer or BRI, any untrue statement of a
material fact or omits to state a material fact necessary to made the statements
therein not misleading. Each of the Buyer and BRI has reported to the Company
any and all indications of which it is aware of potential material adverse
factors in their respective businesses taking place between December 31, 1997
and the date of this Agreement.
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4.8 Opinion of the Financial Advisor. The Buyer has received the opinion
of the Robinson-Humphrey Company, LLC, as of the date hereof, to the effect that
the consideration to be paid by the Buyer to the Company is fair to the holders
of BRI's Common Stock from a financial point of view.
4.9 Board Recommendation. The Board of Directors of the Buyer and BRI,
at meetings duly called and held, has determined that this Agreement and the
transactions contemplated hereby, taken together, are advisable and in the best
interests of the Buyer, BRI, and their stockholders and have authorized the
execution, delivery and performance of this Agreement in accordance with its
terms.
4.10 Subsidiaries. Schedule 4.10 attached hereto sets forth for
each Subsidiary of BRI (a) the name of the Subsidiary, (b) its jurisdiction of
incorporation, (c) the number of authorized, issued and outstanding securities
of each class of Equity Security of such Subsidiary, and (d) the name of each
holder of such Equity Security and the number of Securities held by such holder.
Except as set forth on Schedule 4.10, neither the Buyer nor BRI owns,
directly or indirectly, any securities issued by any other Person except for
United States government securities, certificates of deposit, or other cash
equivalents and is not a partner or participant in any partnership or joint
venture of any kind.
4.11 Absence of Undisclosed Liabilities. Except as set forth in the BRI
Financial Statements, there are no material liabilities of the Buyer or BRI,
whether accrued, absolute, contingent or otherwise (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations of
any other Person, or liabilities for Taxes due or then accrued or to become
due), except for liabilities which have arisen in the ordinary course of
business of the Buyer or BRI.
4.12 Absence of Certain Changes. Except as otherwise disclosed in
Schedule 4.12 attached hereto, since December 31, 1997, there has not been
any change in the business, operations, assets, liabilities, prospects or
condition (financial or otherwise) of the Buyer or BRI that, by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has been or is reasonably likely to be materially adverse
with respect to the Buyer or BRI or their abilities to perform their obligations
under this Agreement.
4.13 Availability of Capital. BRI and Buyer have adequate means to
perform their respective obligations under this Agreement and the Promissory
Note.
4.14 Sole Representations and Warranties. The representations and
warranties contained in this Article IV are the only representations and
warranties made by Buyer and BRI in connection with the transactions
contemplated by this Agreement and supersede any and all previous written or
oral statements made by Buyer and BRI to the Company.
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ARTICLE V
COVENANTS
5.1 Covenants of the Company. The Company shall keep, perform and fully
discharge the following covenants and agreements:
(a) Interim Conduct of Business. Except as contemplated by the
terms of this Agreement, from the date hereof until the Closing, the Company
shall operate the Business as a going concern consistent with prior practice and
in the ordinary course of business (except as may be authorized pursuant to this
Agreement or as set forth on Schedule 5.1(a) hereto). Without limiting the
generality of the foregoing, from the date hereof until the Closing, except for
transactions contemplated by this Agreement or expressly approved in writing by
Buyer, the Company shall not:
(i) except as contemplated hereby, enter into or amend any
employment, bonus, severance, or retirement contract or arrangement (including
any Plan as described in Section 3.19), or increase any salary or other form of
compensation payable or to become payable to any Business Employee other than in
the ordinary course of business consistent with prior practice;
(ii) purchase, lease or otherwise acquire any real estate
or any interest therein that would be assumed by the Buyer;
(iii) sell, lease or otherwise dispose of or agree to
sell, lease or otherwise dispose of any of the Transferred Assets except in the
ordinary course of business consistent with prior practice;
(iv) incur any liability, guaranty or obligation (fixed or
contingent) that would be assumed by the Buyer other than in the ordinary course
of business consistent with prior practice;
(v) place or permit to be placed any Lien on any of the
Transferred Assets, other than statutory Liens arising in the ordinary course of
business;
(vi) make or authorize any amendments or changes to its
Charter or ByLaws preventing the consummation or the transactions contemplated
by this Agreement;
(vii) make any investment in excess of $50,000, whether
singly or in the aggregate, in property, plant and equipment and other items of
capital expenditure that would be transferred to the Buyer;
(viii) accelerate receivables or delay or postpone payment
of any accounts payable or other liability, except in the ordinary course of
business consistent with prior practice; or
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(ix) abandon any part of the Business.
(x) fail to to protect the character, quality and
transferability of the Transferred Assets, including without limitation, the
Intellectual Property, at the same level of care that the Company takes with its
intellectual property.
(b) Access. The Company shall, upon reasonable notice, give Buyer
and its representatives full and free access to all properties, assets, books,
contracts, commitments and records of the Company during reasonable business
hours and shall promptly furnish Buyer with all financial and operating data and
other information as to the history, ownership, Affiliates, business,
operations, properties, assets, liabilities, or condition (financial or
otherwise) of the Company as Buyer may from time to time reasonably request. It
being understood and agreed by Buyer that any such request for information
relates solely to the Business, Transferred Assets or the Assumed Liabilities,
and the Company's ability to transfer the same.
(c) Transfer of Necessary Permits. From and after the date hereof
through to the Closing Date and following the Closing the Company will use its
commercially reasonable efforts to effect the transfer to Buyer of all of the
Necessary Permits and all other permits, licenses, and leases which are
associated with the Business as presently conducted, to the extent the same are
by their terms transferable.
(d) Change of Name; Use of Name. The Company will take all action
necessary or appropriate to change its corporate name, effective upon the
Closing, to a name that does not include the words "Global" and " Village" and
will take such other actions within its power as may be necessary or appropriate
to permit Buyer immediately after the Closing to use the Company's present
corporate name. From and after the effective date of the change of the Company's
corporate name, the Company shall not use the name or any other name that
includes both such words or that is substantially similar thereto for any
purpose except to refer to the business conducted by the Company prior to the
Closing.
(e) Satisfaction of Conditions. The Company shall use its
commercially reasonable efforts to accomplish the satisfaction of the conditions
precedent to Closing contained in Section 6.1 herein on or prior to the
Closing Date.
(f) Purchase Orders. The Company shall not place purchase orders
with its turnkey manufacturer for the month of June 1998 without the prior
written consent of BRI.
5.2 Covenants of the Company and Buyer. The Company shall keep, perform
and fully discharge the following covenants and agreements:
(a) Confidentiality. The Buyer, BRI, and the Company
(individually, a "Party", and collectively, the "Parties") have and will request
certain written and verbal information that is material and confidential in
nature (the "Information") relating to a possible purchase of the Business
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<PAGE> 33
(such purchase to be referred to herein as the "Transaction"). For purposes of
this Asset Purchase Agreement, the term Information shall include all
information relating to the Transaction that has been received as of the date of
this Asset Purchase Agreement and any additional information that may be
received in the future from or between the Parties in conjunction with their
evaluation of the Transaction. In consideration of the Parties being furnished
with the Information:
(i) The Parties agree that the Information will be
kept confidential and will not, without the other's prior written
consent, be disclosed by the Parties or the Parties'
representatives (which term shall mean, for all purposes herein,
Parties' directors, officers, employees, agents or
representatives, including, without limitation, attorneys,
accountants, consultants, lenders and financial advisors), in any
manner whatsoever, in whole or in part, and will not be used by
the Parties or the Parties' representatives directly or
indirectly for any purpose other than for the sole purpose of
evaluating the Transaction. The Parties agree to transmit the
Information only to those representatives who need to know the
Information for the purpose of evaluating the Transaction, who
are informed by the Parties of the confidential nature of the
Information and who agree to be bound by the terms of this
Agreement. The Parties will be responsible for any breach of this
Agreement by the Parties representatives.
(ii) Without the other Party's prior written consent, the
Parties and its representatives will not disclose to any other
person the fact that the Information has been made available, or
any of the terms, conditions or other facts with respect to the
Transaction, including the status thereof, except as permitted by
Subparagraph "v" hereof.
(iii) The Information and all copies thereof will be
returned promptly to the other Party's attention in the event
that the such other Party makes such a request or if the
contemplated Transaction shall not be consummated, and neither
Party nor any representative will make or retain any copies,
extracts or other reproductions, in whole or in part, of the
Information.
(iv) This Section shall be inoperative as to such portions
of the Information which (i) are or become generally available to
the public other than as a result of a disclosure by a Party or
its representatives; (ii) become available to a Party on a
non-confidential basis from a source other than the other Party;
or (iii) was known to a Party on a non-confidential basis prior
to its disclosure to such Party by the other Party.
(v) In the event that a Party or anyone to whom a Party
transmits the Information pursuant to this Agreement is requested
or becomes legally compelled (by oral questions, interrogatories,
request for information or documents, subpoena, civil
investigative demand or similar process, including regulatory
inquiries) to
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disclose any of the Information, such Party will provide the
other Party with prompt prior written notice so that such other
Party may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement. In
the event that such protective order or other remedy is not
obtained, or such other Party waives compliance with Paragraph
5.2(e)(ii) of this Agreement, the Party will furnish only that
portion of the Information that is legally required (which
determination may be based upon advice of outside legal counsel)
and will exercise all reasonable means to obtain reliable
assurance that confidential treatment will be accorded the
Information.
(vi) It is agreed and understood that in the event of any
breach or threatened breach thereof by a Party, such other Party
shall, in addition to any other remedies which may be available,
be entitled to injunctive and other equitable relief in any court
of competent jurisdiction.
(vii) It is understood and agreed that no failure or delay
by the a Party in exercising any right, power or privilege under
this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other further
exercise of any right, power or privilege hereunder.
(viii) If any provision of this Section shall be
determined to be void or unenforceable, the remaining provisions
of this Section shall nonetheless constitute valid and
enforceable obligations of the parties hereto.
(ix) Any consent or waiver of compliance with any
provision hereof shall be effective only if in writing, and no
such consent or waiver shall be deemed to extend beyond the
particular subject thereof.
(b) Exclusive Dealings. Subject to the provisions of Section 7.1,
the Company, on its own behalf and on behalf of its shareholders, agrees that,
in consideration of Buyer undertaking to prepare the necessary legal
documentation to evidence the contemplated transaction, the Company will not
engage in discussions or negotiations of any level with any other person or
entity regarding the sale of the Business or its assets or properties prior to
the termination of this Agreement. Notwithstanding the foregoing, the Company
shall be entitled to entertain, discuss and negotiate with any third party that
provides an unsolicited offer for the sale of the Company, the Business or
Transferred Assets that is potentially superior to the terms of this Agreement
in satisfaction of its fiduciary obligations to the Company's Stockholders, as
advised by its independent legal counsel.
(c) Disclosure Supplements. From time to time prior to the
Closing, the Company will supplement or amend the Schedule(s) hereto with
respect to any matter hereafter arising which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth or
described in any such Schedule or which is necessary to complete or
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<PAGE> 35
correct any information in any such Schedule or in any representation or
warranty of the Company which has been rendered inaccurate thereby.
(d) Books and Records. For a period of six (6) years
commencing on the Closing Date, or for such longer period as may be required by
applicable law, the Company shall make all such books and records related to the
Business not included as part of the Transferred Assets available for inspection
and copying by the Buyer and its representatives during regular business hours
upon two (2) Business Days' prior notice;
5.3 Preparation of Proxy Statement; Stockholder Meeting.
(a) Promptly following the date of this Agreement (and in no
event later than ten business days following execution and delivery of this
Agreement), the Company (i) shall prepare a proxy statement (the "Proxy
Statement")and other materials relating to the solicitation of the vote of a
majority of the issued and outstanding shares of the Company's common stock,
("Common Stock"), in favor of this Agreement and the consummation of the
transactions contemplated hereby and (ii) shall file preliminary proxy materials
with the Securities and Exchange Commission ("SEC"). The Company shall use its
commercially reasonable efforts as promptly as practicable to respond to and
resolve any comments raised by the SEC with respect to such materials. The
Company will use its commercially reasonable efforts to cause the Proxy
Statement and other materials to be mailed to the Company's stockholders as
promptly as practicable and in any event no later than the eleventh (11th)
calendar day following clearance by the SEC for distribution.
(b) The Company will immediately notify the Buyer of (i) the
receipt of any comments from the SEC regarding the Proxy Statement and (ii) any
request by the SEC for any amendment to the Proxy Statement or for additional
information. Buyer shall be given a reasonable opportunity to review and comment
on (1) all filings with the SEC, including the Proxy Statement and any
amendments thereto, (2) all correspondence from the SEC to the Company in
respect of the Proxy Statement, this Agreement and the transactions contemplated
hereby, and (3) all mailings to the Company's stockholders in connection with
the transactions contemplated hereby, including the Proxy Statement, prior to
the filing or mailing thereof. The Company shall use its commercially reasonable
efforts to reflect all reasonable comments raised by Buyer in respect of any of
the foregoing.
(c) The Company will, as promptly as practicable following the
date of this Agreement and in consultation with Buyer, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Stockholders' Meeting")
for the purpose of approving this Agreement and the transactions contemplated by
this Agreement. The Company will, through its Board of Directors, recommend to
its stockholders approval of the foregoing matters, as set forth in Section
3.36. Subject to obtaining the approval by the SEC of the Proxy Statement and
other proxy materials, the Company will use its commercially reasonable efforts
to hold the Stockholders' Meeting as soon as practicable after the date hereof.
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5.4 Covenants of Buyer and BRI. Buyer shall use its commercially
reasonable efforts to accomplish the satisfaction of the conditions precedent to
Closing contained in Section 6.2 herein on or prior to the Closing Date.
5.5 Covenants of Buyer and BRI and the Company. The parties hereto
hereby agree to keep, perform and fully discharge the following covenants and
agreements:
(a) Waiver of Compliance with the Bulk Sales Act. In connection
with the transactions contemplated hereby, the parties shall waive compliance
with the provisions of Article 6 of the Uniform Commercial Code Bulk
Transfers and the Bulk Sales Act and any other applicable United States, state
or provincial bulk sales act or statute ("Bulk Sales Acts").
(b) Employees.
(i) Except as herein provided, Buyer shall not be
obligated to hire any of the Company's employees. Buyer shall be free to offer
employment to such of the Company's employees identified to the Buyer by the
Company prior to the date hereof ("Business Employees") as Buyer may determine
are suitable to its needs. It is currently estimated that Buyer may want to
employ approximately 60 employees (the "Offerees"). The Buyer will agree to
offer employment to at least forty-eight (48) of the Company's employees, the
selection of such employees to be in the Buyer's sole discretion. The employment
relationship between the Buyer and the employees so hired will be on an at-will
basis and the Buyer does not warrant any term of longevity of such employment
nor the terms and conditions of such employment; provided, however, that Buyer
shall offer such employment to the Offerees upon terms and conditions which, at
a minimum, equal the terms and conditions currently provided by the Company. The
Company shall be solely responsible for any employment benefits, including
severance, pension or profit sharing, medical insurance and accrued vacation due
by the Company to such employees, whether employment is offered by Buyer to such
employee or not. Employees of the Company associated with the Business and
retained by Buyer shall be entitled to participate in Buyer's employment benefit
plans, including its stock option or stock purchase plans, as such plans are
determined and directed by the Buyer's Board of Directors. Selected employees of
the Company retained by Buyer will be provided with retention incentives as
determined by the Buyer.
(ii) The Company agrees that, following the execution of
this Agreement and prior to the Closing Date, Buyer shall be allowed to discuss
with the Business Employees the possibility of employment with Buyer and shall
be allowed to employ such persons effective as of the Closing Date on such terms
and conditions as may be negotiated between Buyer and such persons. Buyer shall
identify ten (10) days prior to the Closing Date those Business Employees that
it intends to hire. The Company covenants not to interfere with any such efforts
by Buyer and to use all reasonable efforts to assist Buyer in employing such
individuals effective as of the Closing Date.
(iii) As to any such Business Employee who is employed by
Buyer pursuant to this Section 5.5(b), the Company agrees to cause the release
of such employee from any
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contractual provision with the Company, or any affiliate of the Company which
would impair the utility of such employee's services to Buyer, or that would
impose upon such employee any monetary or other obligation to the Company that
otherwise would be occasioned by the termination of such employee's employment
or any agreement of noncompetition or confidentiality. Notwithstanding the
foregoing, nothing contained herein shall prevent the Company from seeking
redress from such employees for violations of such employees' duties as an
employee of the Company.
(c) WARN Act. The Company shall be responsible for any notice
required under or liability associated with the Worker Adjustment and Retraining
Notification Act (29 U.S.C. Sections 21012109) and any applicable State or
local plant closing, mass layoff, relocation, or severance laws (hereinafter
collectively referred to as "WARN") associated with the Business Employees which
takes place or arises on or before the Closing Date, and Buyer shall be
responsible for any such notice or liability associated with the persons hired
by Buyer on or after the Closing Date ("Buyer's Employees") which takes place or
arises after the Closing Date.
(d) COBRA. The Company shall be responsible for any group health
plan continuation or conversion coverage required under section 4980B of the
Code, Part 6 of Title I or ERISA, or applicable State or local laws ("Required
COBRA Coverage") with respect to the Business Employees due to a qualifying
event occurring on or before the Closing Date. The Buyer shall be responsible
for any Required COBRA Coverage with respect to Buyer's Employees due to a
qualifying event occurring as a result of the closing and after the Closing
Date.
(e) Distributions from Plans. Except where prohibited by
applicable law (including but not limited to section 401(k)(2)(B)(i) of the
Code), the Company shall distribute to the Business Employees their accrued
benefits under the Plans (subject, however, to any vesting schedule not
otherwise accelerated by applicable law or any term of the Plan), including but
not limited to accrued vacation, bonus, and sick pay (but determined without
regard to any last day of the plan year employment requirement or any other
similar condition). Such distributions shall be made in the manner and at the
time as prescribed by the terms of the Plan and applicable law.
(f) Buyer's Employee Plans. Effective as of the Closing Date,
Buyer shall establish for the benefit of Buyer's Employees such employee benefit
plans as Buyer shall deem appropriate.
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
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(a) Representations, Warranties and Covenants. Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects at the Closing Date; provided,
however, that the representations and warranties contained in Sections 3.6,
3.7(a) and 3.11 shall be made with respect to the Closing Balance Sheet and no
representations and warranties shall be made with regard to Section 3.7(b)
through (r) as of the Closing Date; and provided, further, however, that the
representations and warranties contained in Section 3.7(a) shall not be deemed
to be untrue for any failure on the part of the Company to have placed orders
with its contract manufacturer in compliance with Section 5.1(f) where Buyer's
permission was reasonably and timely requested by the Company and withheld by
Buyer or the failure on the part of Buyer or BRI to provide in a timely manner
products ordered by the Company. The Company shall have performed, on or before
the Closing Date, all of its respective obligations under this Agreement and the
other Purchase Documents which by the terms thereof are to be performed on or
before the Closing Date; and the Company shall have delivered to Buyer an
Officer's Certificate dated the Closing Date of the Company to such effect.
(b) No Pending Action. No legislation, order, rule, ruling or
regulation shall have been proposed, enacted or made by or on behalf of any
governmental body, department or agency, and no legislation shall have been
introduced in either House of Congress or in the legislature of any state, and
no investigation by any governmental authority shall have been commenced or
threatened, and no action, suit, investigation or proceeding shall have been
commenced before, and no decision shall have been rendered by, any court or
other governmental authority or arbitrator, which, in any such case, in the
reasonable judgment of Buyer could materially prevent or rescind the
transactions contemplated by this Agreement (including, without limitation, the
purchase and sale of the Transferred Assets) or result in a Material Adverse
Effect
(c) Purchase Permitted by Applicable Laws; Legal Investment.
Buyer's purchase of and payment for the Transferred Assets (a) shall not
be prohibited by any applicable law or governmental order, rule, ruling,
regulation, release or interpretation, (b) shall not constitute a
fraudulent or voidable conveyance under any applicable law and (c) shall
be permitted by all applicable laws, statutes, ordinances, regulations and rules
of the jurisdictions to which Buyer is subject.
(d) Proceedings Satisfactory. All proceedings taken in connection
with the purchase and sale of the Transferred Assets, the transactions
contemplated by Section 6.1(o) hereof, all of the other Purchase Documents
and all documents and papers relating thereto, shall be in form and substance
reasonably satisfactory to Buyer. Buyer and its counsel shall have received
copies of such documents and papers as Buyer or its counsel may reasonably
request in connection therewith, all in form and substance reasonably
satisfactory to Buyer. Buyer acknowledges that it has completed its due
diligence with respect to all items other than the material intellectual
property issues specifically identified in the IP letter dated March 30, 1998,
as amended, and delivered to the Company prior to the date hereof ("IP Issues").
Buyer agrees that unless Buyer notifies the Company in writing prior to April
14, 1998 that it is terminating the transaction because of a material IP Issue
reasonably satisfactory to Buyer, including a detailed analysis of the issue,
Buyer and BRI shall be
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deemed to have satisfied their due diligence with respect to this Agreement and
the transactions contemplated hereby. Any Purchase Document, any Schedule or
Exhibit to this Agreement and any other document, agreement or certificate
contemplated by this Agreement, not approved by Buyer in writing as to form and
substance on the date this Agreement is executed, shall be reasonably
satisfactory in form and substance to Buyer.
(e) Consents Permits. The Company shall have received (and there
shall be in full force and effect) all material consents, approvals, licenses,
permits, orders and other authorizations of, and shall have made (and there
shall be in full force and effect) all such filings, registrations,
qualifications and declarations with, any Person pursuant to any applicable law,
statute, ordinance regulation or rule or pursuant to any agreement, order or
decree to which the Company is a party or to which it is subject, in connection
with the transactions contemplated by this Agreement and the sale of the
Transferred Assets.
(f) Corporate Documents. The Company shall have delivered to
Buyer an Officer's Certificate of the Secretary of the Company certifying
(A) the incumbency and genuineness of signatures of all officers of the
Company executing this Agreement, any document delivered by the Company at the
Closing and any other document, instrument or agreement executed in connection
herewith, (B) the truth and correctness of resolutions of the Company
authorizing the entry by the Company into this Agreement and the transactions
contemplated hereby;
(g) Opinion of Counsel. Buyer shall have received an opinion,
dated the Closing Date and satisfactory in form and content acceptable to Buyer
and its counsel, of Wilson Sonsini Goodrich & Rosati, counsel to the Company, as
to the matters set forth on Exhibit C attached hereto. In rendering such
opinion such counsel may, to the extent it may deem such reliance or limitation
is proper, (a) rely on (i) certificates of public officials,
(ii) certificates, in form and substance satisfactory to Buyer and its
counsel, of officers of the Company and (iii) an opinion or opinions, in
form and substance satisfactory to Buyer and its counsel, of other counsel
satisfactory to Buyer and its counsel and (b) limit the scope of such
opinion to the laws of Delaware and the federal laws of the United States.
(h) Transfer of Necessary Permits. All of the Necessary Permits
shall have been transferred, to the extent transferable, to Buyer on or before
the Closing Date.
(i) Transfer of Transferred Assets. All of the Transferred Assets
shall have been effectively sold, transferred, conveyed and assigned to Buyer
and all of the deeds, conveyances, bills of sale, certificates of title,
assignments, assurances and other instruments and documents referenced in
Section 3.2 shall have been executed, delivered and, if appropriate, filed
or recorded.
(j) Cooperation and NonCompetition Agreements. The Company shall
execute and deliver to Buyer, within ten (10) days following the execution of
this Asset Purchase Agreement, a Cooperation and NonCompetition Agreement ("the
NonCompetition Agreement") in substantially the form of Exhibit F attached
hereto:
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(k) Net Current Asset Value Letter. Buyer shall have received a
letter addressed to it and satisfactory to it in form and content, from the
Company's auditor, that the Company's Closing Balance Sheet prepared in
accordance with the Balance Sheet Methodology reflects a net current asset value
of at least One Million One Hundred Thousand Dollars ($1,100,000.00).
(l) Other Transactions. Buyer and the Company shall have entered
into an Information Systems Agreement, in form and substance to be mutually
agreed upon by the parties hereto permitting Buyer to utilize all of the
Company's Information Systems currently available to the Business and agreeing
to cooperate with Buyer in creating, adapting or otherwise establishing
information systems for Buyer's business which fulfill substantially the same
functions as those currently used by the Company, including facilitating the
transfer of any data or software being transferred by the Company to Buyer
hereunder.
(m) Inter-Company Manufacturing Agreement. An agreement between
the Company and Buyer for Buyer (or Boca) to manufacture servers for the Company
on a preferred "cost plus" basis" is to be agreed upon between Buyer (or Boca
Research, Inc.) and the Company in form mutually acceptable to the parties.
(n) Warrants. The Company shall grant to the Buyer Warrants
purchase 425,000 shares of the Company's common stock (subject to stock splits,
recapitalizations and the like) at a price equal to 110% of the closing price
based on the ten trading days ending 3 trading days prior to the Closing Date.
Such Warrant shall be substantially in the form attached hereto as Exhibit G.
(o) License Agreement. The parties shall have entered into a
Cross License Agreement in form and substance mutually agreeable to the parties.
Each party covenants and agrees to use its good faith best efforts to conclude
such agreement prior to April 14, 1998.
6.2 Conditions to Obligations of the Company. The obligations of the
Company to consummate this Agreement and the transactions contemplated hereby
are subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations
and warranties of Buyer and BRI in this Agreement shall remain true and correct
in all material respects at the Closing Date, and Buyer shall, on or before the
Closing Date, have performed all of its obligations under this Agreement and the
Other Purchase Documents which by the terms thereof are to be performed by it on
or before the Closing Date; and Buyer shall have delivered an Officer's
Certificate to the Company dated the Closing Date to such effect.
(b) No Pending Action. No legislation, order, rule, ruling or
regulation shall have been proposed, enacted or made by or on behalf of any
governmental body, department or agency, and no legislation shall have been
introduced in either House of Congress or in the legislature of any state, and
no investigation by any governmental authority shall have been commenced or
threatened, and no action, suit, investigation or proceeding shall have been
commenced before, and no decision
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shall have been rendered by, any court or other governmental authority or
arbitrator, which, in any such case, was not known by the Company on the date
hereof or which could adversely affect, restrain, prevent or rescind the
transactions contemplated by this Agreement (including, without limitation, the
purchase and sale of the Transferred Assets) or result in a Material Adverse
Effect.
(c) Corporate Documents. Buyer and BRI shall have delivered
respectively to the Company:
(i) an Officer's Certificate of the Secretary of such
party certifying (A) the incumbency and genuineness of signatures of all
officers of Buyer executing this Agreement, any document delivered by Buyer at
the Closing and any other document, instrument or agreement executed in
connection herewith, (B) the truth and correctness of resolutions of Buyer
authorizing the entry by Buyer into this Agreement and the transactions
contemplated hereby and (C) the truth, correctness and completeness of the
ByLaws of Buyer;
(ii) the Charter of Buyer certified as of a recent date by
the Secretary of State of the State of Florida; and
(iii) certificates of corporate good standing and legal
existence of Buyer as of a recent date from the Secretary of State of the State
of Florida and California.
(d) Opinion of Counsel to Buyer. The Company shall have received
an opinion, dated the Closing Date and satisfactory in form and content
acceptable to the Company and its counsel, of Spinner, Dittman, Federspiel &
Dowling, counsel to Buyer, in substantially the form attached hereto as Exhibit
H. In rendering such opinion such counsel may, to the extent it may deem
such reliance or limitation is proper, (a) rely on (i) certificates
of public officials, (ii) certificates, in form and substance satisfactory
to the Company, of Buyer or officers of Buyer and (iii) an opinion or
opinions, in form and substance satisfactory to the Company and its counsel, of
other counsel satisfactory to the Company and its counsel and (b) limit
the scope of such opinion to the laws of Florida and the federal laws of the
United States.
(e) This Agreement is contingent upon the approval of the
Company's Stockholders prior to the Closing Date.
(f) Purchase Permitted by Applicable Laws; Legal Investment. The
Buyer's purchase of and payment for the Transferred Assets (a) shall not
be prohibited by any applicable law or governmental order, rule, ruling,
regulation, release or interpretation, (b) shall not constitute a
fraudulent or voidable conveyance under any applicable law and (c) shall
be permitted by all applicable laws, statutes, ordinances, regulations and rules
of the jurisdictions to which the Buyer is subject.
(g) Proceedings Satisfactory. All proceedings taken in connection
with the purchase and sale of the Transferred Assets, the transactions
contemplated by Section 6.1(o) hereof,
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all of the other Purchase Documents and all documents and papers relating
thereto, shall be in form and substance reasonably satisfactory to the Company.
The Company and its counsel shall have received copies of such documents and
papers as the Company or its counsel may reasonably request in connection
therewith, all in form and substance reasonably satisfactory to the Company. Any
Purchase Document, any Schedule or Exhibit to this Agreement and any other
document, agreement or certificate contemplated by this Agreement, not approved
by the Company in writing as to form and substance on the date this Agreement is
executed, shall be reasonably satisfactory in form and substance to the Company.
(h) License Agreement. The parties shall have entered into a
[Cross] License Agreement substantially in the form of Exhibit I attached
hereto.
(i) Guaranty. The Buyer shall have delivered to the Company a
Guaranty substantially in the form of Exhibit E attached hereto.
(j) Other Transactions. Buyer and the Company shall have entered
into an Information Systems Agreement, in form and substance to be mutually
agreed upon by the parties hereto, permitting Buyer to utilize all of the
Company's Information Systems currently available to the Business and agreeing
to cooperate with Buyer in creating, adapting or otherwise establishing
information systems for Buyer's business which fulfill substantially the same
functions as those currently used by the Company, including facilitating the
transfer of any data or software being transferred by the Company to Buyer
hereunder.
ARTICLE VII
TERMINATION
7.1 Termination of Agreement. This Agreement and the transactions
contemplated hereby may (at the option of the party having the right to do so)
be terminated at any time on or prior to the Closing Date:
(a) Mutual Consent. By mutual written consent of Buyer and the
Company;
(b) Court Order. By Buyer, or the Company if any court of
competent jurisdiction shall have issued an order pursuant to the request of a
third party restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;
(c) Failure to Close By June 30, 1998. By Buyer or the Company if
the transactions contemplated hereby shall not have been consummated on or
before June 30, 1998, provided, however, that such right to terminate this
Agreement shall not be available to any party whose failure to fulfill any
obligation of this Agreement has been the cause of, or resulted in, the failure
of the transactions contemplated hereby to be consummated on or before such
date;
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(d) Termination by Company. By the Company upon notice to Buyer
at any time prior to June 30, 1998, if (i) a condition to the performance
of the Company set forth in Section 6.2 hereof shall not be fulfilled at
the time specified for the fulfillment thereof, (ii) a material default
under or a material breach of this Agreement shall be made by Buyer and such
default or breach shall not be curable prior to June 30, 1998; or
(e) Termination by Buyer. By Buyer by notice to the Company at
any time prior to June 30, 1998, if (i) a condition to the performance of
Buyer set forth in Section 6.1 hereof shall not be fulfilled at the time
specified for the fulfillment thereof; (ii) a material default under or a
material breach of this Agreement shall be made by the Company, and such default
or breach shall not be curable prior to June 30, 1998;
(f) Termination by Buyer and/or the Company. By Buyer or the
Company by notice to the other party if the Company enters into any agreement
with a third party that would have a Material Adverse Effect on the Company's
ability to perform its obligations hereunder with respect to any of the
following involving the Company and/or its subsidiaries: (i) any merger,
consolidation, share exchange, recapitalization, business combination, or other
similar transaction involving the sale of the Company, the Business or
Transferred Assets ; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of the Company, the Business or the Transferred Assets in a
single transaction or series of transactions; (iii) any tender offer or exchange
offer for 25% or more of the outstanding shares of capital stock of the Company
or the filing of a registration statement under the Securities Act of 1933 in
connection therewith; or (iv) any public announcement by the Company of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
7.2 Effect of Termination and Right to Proceed. If this Agreement is
terminated pursuant to this Article VII, then except as provided below,
all further obligations of Buyer and the Company under this Agreement shall
terminate without further liability of Buyer or any Affiliate thereof to the
Company or to Buyer or any Affiliate thereof, except with respect to the
obligations set forth in Sections 5.2 and 7.1, and except, in the case of
termination pursuant to Section 7.1(d) or Section 7.1(e) as to liability
for misrepresentation, breach or default in connection with any warranty,
representation, covenant or obligation given, occurring or arising to the date
of termination. In addition, anything in this Agreement to the contrary
notwithstanding, if any of conditions to obligations specified in
Sections 6.1 or 6.2 hereof have not been satisfied, Buyer, in addition to
any other rights which it may have, shall have the right to waive its rights to
have such conditions satisfied and elect to proceed with the transactions
contemplated hereby and, if any of the conditions to the obligations of the
Company specified in Section 6.2 hereof have not been satisfied, the
Company in addition to any other rights which may be available to them, shall
have the right to waive their rights to have such conditions satisfied and elect
to proceed with the transactions contemplated hereby. If the Company or the
Buyer terminates this Agreement pursuant to Sections 5.2(b) and 7.1(f), the
Company shall pay the Buyer the sum of US$3,000,000.00 on the earlier of the
closing of such transaction or 90 days after such termination.
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ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations and Warranties. The parties hereby
shorten the applicable period of limitation of claims made under representations
and warranties, and for that purpose each and every such representation and
warranty set forth in this Agreement (including the Officer's Certificates
required by Sections 6.1 and 6.2 above), shall survive until the first
anniversary of the Closing Date, except with respect to the representations and
warranties set forth in Sections 3.2, 3.20, 3.26, 4.2 and 4.6, which shall
survive the Closing without limitation. From and after the applicable period of
survival with respect to such respective representations and warranties of the
Company and Buyer, none of the Company, or Buyer or any Affiliate of the Company
or Buyer shall have any liability whatsoever with respect to any such
representation or warranty, except for breaches as to which any party shall have
notified the other party prior to such date. This Section 8.1 shall have
no effect upon any other obligation of the parties hereto, whether to be
performed before or after the Closing Date.
8.2 Indemnification by the Company. The Company shall indemnify, defend
and hold the Buyer and BRI, its respective officers, directors, employees,
consultants, owners, agents and Affiliates, harmless from and in respect of any
and all Losses which may be sustained or suffered by any of them arising out of
or resulting from any breach or inaccuracy of any representation or warranty or
the breach of or failure to perform any warranty, covenant, undertaking or other
agreement of the Company contained in this Agreement or any other Purchase
Document and arising out of any and all actions, suits, claims and
administrative or other proceedings of every kind and nature instituted or
pending against the Company or Buyer or any of their Affiliates at any time
before or after the Closing Date to the extent that such Losses (a) relate
to or arise out of or in connection with the assets, businesses, operations,
conduct, products and/or employees (including former employees) of the Company,
whether relating to or arising out of or in connection with occurrences before
or after the Closing Date and (b) do not arise out of a breach or
inaccuracy of the Buyer's representations and warranties in, or a breach or
default by Buyer in the performance of any warranty, covenant under, undertaking
or other agreement contained in this Agreement or any other Purchase Document
(the "Losses"); provided, however, that the Company shall have no liability to
the Buyer pursuant to this Section as a result of the breach of any
representation or warranty to the extent that the Buyer knew that such
representation or warranty was untrue, inaccurate or incorrect prior to the
Closing Date.
8.3 Indemnification by Buyer and BRI. Buyer and BRI shall indemnify,
defend and hold the Company, its respective officers, directors, employees,
consultants, owners, agents and Affiliates, harmless from and in respect of any
and all Losses which may be sustained or suffered by any of them arising out of
or resulting from any breach or inaccuracy of any representation or warranty or
the breach of or failure to perform any warranty, covenant, undertaking or other
agreement of Buyer and BRI contained in this Agreement or any other Purchase
Document to the extent that such Losses
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do not arise out of a breach or inaccuracy of the Company's representations and
warranties in, or a breach or default in the performance of any warranty,
covenant under, undertaking or other agreement contained in this Agreement or
any other Purchase Document; provided, however, that Buyer and BRI shall have no
liability to the Company pursuant to this Section 8.3 as a result of the
breach of any representation or warranty to the extent that the Company knew
that such representation or warranty was untrue, inaccurate or incorrect prior
to the Closing Date.
8.4 Minimum Indemnification; Materiality. Notwithstanding anything to
the contrary contained herein, no party hereto shall be entitled to recover from
any other party unless and until the total of all claims for indemnity or
damages with respect to any inaccuracy or breach of any such representations or
warranties (other than those contained in Sections 3.26 or 4.6 above) or
breach of or default in the performance of any covenants, undertakings or other
agreements, whether such claims are brought under this Article VIII or
otherwise, exceeds $500,000.00 and then only for the amount by which such claims
for indemnity or damages exceed $250,000.00. Other than for breaches of the
representations and warranties contained in Sections 3.13 and 3.20, under no
circumstances shall the Company be obligated to indemnify BRI and Buyer for
Losses in excess of the Purchase Price received by the Company. Notwithstanding
the foregoing, under no circumstances shall BRI and Buyer collectively be
obligated to indemnify the Company for Losses in excess of the Purchase Price.
8.5 Notice and Opportunity to Defend. If there occurs an event that a
party asserts is an indemnifiable event pursuant to Section 8.2 or 8.3,
the parties seeking indemnification shall promptly notify the other parties
obligated to provide indemnification (collectively, the "Indemnifying Party").
If such event involves (a) any Claim or (b) the commencement of any
action, suit or proceeding by a third person, the party seeking indemnification
will give such Indemnifying Party prompt written notice of such Claim or the
commencement of such action, suit or proceeding, provided, however, that the
failure to provide prompt notice as provided herein will relieve the
Indemnifying Party of its obligations hereunder only to the extent that such
failure prejudices the Indemnifying Party hereunder. In case any such action,
suit or proceeding shall be brought against any party seeking indemnification
and it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it desires to do so, to assume the defense thereof, with counsel reasonably
satisfactory to such party seeking indemnification and, after notice from the
Indemnifying Party to such party seeking indemnification of such election so to
assume the defense thereof, the Indemnifying Party shall not be liable to the
party seeking indemnification hereunder for any attorneys' fees or any other
expenses, in each case subsequently incurred by such party, in connection with
the defense of such action, suit or proceeding. The party seeking
indemnification agrees to cooperate fully with the Indemnifying Party and its
counsel in the defense against any such action, suit or proceeding. In any
event, the party seeking indemnification shall have the right to participate at
its own expense in the defense of such action, suit or proceeding. In no event
shall an Indemnifying Party be liable for any settlement or compromise effected
without its prior consent.
8.6 Full Access to Business. The Company shall also give the Buyer full
access to:
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(i) the premises occupied by the Business;
(ii) the Company's books and records;
(iii) the Company's Seller's information systems; and
(iv) the Business Employees.
ARTICLE IX
MISCELLANEOUS
9.1 Fees and Expenses. Each of the parties hereto will pay and discharge
its own expenses and fees in connection of with the negotiation of and entry
into this Agreement and the consummation of the transactions contemplated
hereby.
9.2 Publicity and Disclosures. Prior to the Closing, no press release or
any public disclosure, either written or oral, of the transactions contemplated
by this Agreement shall be made by any party without the prior knowledge and
written consent of the Company and Buyer other than compliance with the
Securities Act disclosures and other regulatory bodies.
9.3 Notices. All notices, requests, demands, consents and communications
necessary or required under this Agreement or any other Purchase Document shall
be made in the manner specified, or, if not specified, shall be delivered by
hand or sent by registered or certified mail, return receipt requested, or by
telecopy (receipt confirmed) to:
if to Buyer:
Boca Research, Inc.
1377 Clint Moore Road
Boca Raton, FL 33487
Attention: R. Michael Brewer
Facsimile Transmission Number: (561)997-1656
with a copy to:
Spinner, Dittman, Federspiel & Dowling
501 East Atlantic Avenue
Delray Beach, FL 33483
Attention: Robert W. Federspiel, Esq.
Facsimile Transmission Number: (561) 276-5489
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<PAGE> 47
if to the Company:
[Newco]
1144 East Arques Avenue
Sunnyvale, CA 94086
Attention: Neil Selvin
Facsimile Transmission Number: (408) 523-2019
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Alan K. Austin
Facsimile Transmission Number: (650)493-6811
All such notices, requests, demands, consents and communications shall
be deemed to have been duly given only when such notice, request, demand,
consent or communication is delivered or, if sent by telecopier, when received.
9.4 Successors and Assigns. All covenants and agreements set forth in
this Agreement and made by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the successors and assigns of such party, whether or
not so expressed.
9.5 Descriptive Headings. The headings of the sections and paragraphs of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
9.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
9.7 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason in any
jurisdiction, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired or affected, it being intended that each of parties' rights and
privileges shall be enforceable to the fullest extent permitted by law, and any
such invalidity, illegality and unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the fullest extent permitted by law, the parties hereby waive any provision of
any law, statute,
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ordinance, rule or regulation which might render any provision hereof invalid,
illegal or unenforceable.
9.8 Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement or the other Purchase Documents, or where any
provision hereof or thereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to any
other available remedy.
9.9 Course of Dealing. No course of dealing and no delay on the part of
any party hereto in exercising any right, power, or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. The failure of any of the parties to this Agreement
to require the performance of a term or obligation under this Agreement or the
waiver by any of the parties to this Agreement of any breach hereunder shall not
prevent subsequent enforcement of such term or obligation or be deemed a waiver
of any subsequent breach hereunder. No single or partial exercise of any rights,
powers or remedies conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
9.10 Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any Person, other than the parties hereto and their
permitted successors or assigns, any rights or remedies under or by reason of
this Agreement or any other Purchase Document.
9.11 Tax Matters.
(a) The Buyer shall pay all real property transfer Taxes, sales
Taxes, stock transfer Taxes, documentary stamp Taxes, recording charges and
other similar Taxes resulting from, arising under or in connection with the
transfer of the Transferred Assets or any other related transaction under the
Agreement.
(b) The Company shall be responsible for and shall timely pay or
cause to be paid any and all Taxes (other than Buyer's Taxes, as defined below)
with respect to or relating to the Business or the Transferred Assets,
whensoever arising, that are attributable to any taxable period ending on or
prior to the Closing Date and, in the case of a taxable period that includes,
but does not end on the Closing Date, the portion of such taxable period that
ends on the Closing Date ("the Company's Taxes"). Notwithstanding anything in
this Agreement to the contrary, the Company's Taxes shall constitute a Retained
Liability.
(c) Buyer shall be responsible for and shall timely pay or cause
to be paid any and all Taxes (other than the Company's Taxes) with respect to
the Business or the Transferred Assets, whensoever arising, that are
attributable to any taxable period commencing after the Closing Date and, in the
case of a taxable period that includes, but does not end on, the Closing Date,
the portion of such taxable period that begins on the day after the Closing Date
("Buyer's Taxes").
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<PAGE> 49
Notwithstanding anything in this Agreement to the contrary, Buyer's Taxes shall
constitute an Assumed Liability.
(d) The obligations of the Company set forth in the Agreement
relating to Taxes shall, except as otherwise agreed in writing, be unconditional
and absolute and shall remain in effect without limitation as to time or amount
of recovery by Buyer until thirty (30) days after the expiration of
the applicable statute of limitations governing the Taxes to which such
obligations relate (after giving effect to any agreement extending or tolling
such statute of limitations).
9.12 Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the Person or Persons may require.
9.13 WAIVER OF JURY TRIAL. EACH OF BUYER AND THE COMPANY HEREBY
EXPRESSLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OTHER PURCHASE DOCUMENT
OR THE TRANSFERRED ASSETS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS AGREEMENT. THE COMPANY AND BUYER ALSO WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY
PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THE COMPANY AND BUYER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAVIER IS IRREVOCABLE AND
MAY ONLY BE MODIFIED EITHER ORALLY OR IN AMENDMENTS, RENEWALS, SUPPLE MENTS OR
MODIFICATIONS TO THIS AGREEMENT, ANY OTHER PURCHASE DOCUMENT OR THE SHARES. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL (WITHOUT A JURY) BY THE COURT.
9.14 GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT GIVING EFFECT
TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). EACH OF THE PARTIES HERETO FURTHER
AGREES THAT PROCESS MAY BE SERVED UPON IT BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED AS MORE GENERALLY PROVIDED IN SECTION 9.3 HEREOF, AND
CONSENTS TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTIES WITH RESPECT
TO ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN
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<PAGE> 50
CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
ENFORCEMENT OF ANY RIGHTS UNDER THIS AGREEMENT.
9.15 Entire Agreement. This Agreement, including the Schedules and
Exhibits referred to herein, is complete, and all promises, representations,
understandings, warranties and agreements with reference to the subject matter
hereof, and all inducements to the making of this Agreement relied upon by all
the parties hereto, have been expressed herein or in said Schedules or Exhibits.
This Agreement may not be amended except by an instrument in writing signed on
behalf of the Company and Buyer.
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<PAGE> 51
IN WITNESS WHEREOF the parties hereto have executed this Agreement under
seal as of the date first set forth above.
ATTEST: GLOBAL VILLAGE COMMUNICATION, INC.
/s/ Marc E. Linden By: /s/ Neil Selvin
- ------------------------------ -----------------------------------
Secretary President
ATTEST: BOCA GLOBAL, INC.
/s/ Robert W. Federspiel By: /s/ Anthony F. Zalenski
- ------------------------------ -----------------------------------
Secretary President
ATTEST: BOCA RESEARCH, INC.
/s/ Robert W. Federspiel By: /s/ Anthony F. Zalenski
- ------------------------------ -----------------------------------
Secretary President
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<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ONEWORLD SYSTEMS, INC.
I.
The name of this corporation is OneWorld Systems, Inc.
II.
The address of the registered office of the corporation in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, and the
name of the registered agent of the corporation in the State of Delaware at such
address is The Prentice-Hall Corporation System, Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
IV.
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is Thirty Five Million
(35,000,000) shares. Thirty Million (30,000,000) shares shall be Common Stock,
each having a par value of one-tenth of one cent ($.001). Five Million
(5,000,000) shares shall be Preferred Stock, each having a par value of
one-tenth of one cent ($.001)
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to establish
from time to time the number of shares constituting any such series or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
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<PAGE> 2
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A.
(1) The management of the business and the conduct of the affairs
of the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
(2) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
directors shall be elected at each annual meeting of stockholders for a term of
one year. Each director shall serve until his successor is duly elected and
qualified or until his death, resignation or removal. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of any
incumbent director.
(3) Subject to the rights of the holders of any series of
Preferred Stock, the Board of Directors or any individual director may be
removed from office at any time (i) with cause by the affirmative vote of the
holders of a majority of the voting power of all the then outstanding shares of
voting stock of the corporation entitled to vote at an election of directors
(the "Voting Stock") or (ii) without cause by the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3 %) of the voting
power of all the then-outstanding shares of the Voting Stock.
(4) Subject to the rights of the holders of any series of
Preferred Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
B.
(1) Subject to paragraph (h) of Section 43 of the Bylaws, the
Bylaws may be altered or amended or new Bylaws adopted by the affirmative vote
of at least sixty-six and two-thirds percent (66-2/3 %) of the voting power of
all of the then-outstanding shares of the Voting Stock. The Board of Directors
shall also have the power to adopt, amend, or repeal Bylaws.
(2) The directors of the corporation need not be elected by
written ballot unless the Bylaws so provide.
(3) No action shall be taken by the stockholders of the
corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws and following the closing of the Initial Public
Offering no action shall be taken by the stockholders by written consent.
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<PAGE> 3
(4) Special meetings of the stockholders of the corporation may
be called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption) or (iv) by the holders of the shares entitled to cast
not less than ten percent (10%) of the votes at the meeting, and shall be held
at such place, on such date, and at such time as the Board of Directors shall
fix.
(5) Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
VI.
A. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General corporation Law, as so amended.
B. Any repeal or modification of this Article VI shall be prospective
and shall not affect the rights under this Article VI in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66 2/3 %) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
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