EXHIBIT 2.1
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
by and among:
Island Pacific, Inc.,
a California corporation;
Page Digital Corporation, Inc.,
a Colorado corporation;
and
IPI Acquisition, Inc.,
a Delaware corporation
Dated as of November 20, 2003
ANNEX
"AFFILIATE" shall have the meaning set forth in the rules and regulations
promulgated by the Securities and Exchange Commission pursuant to the Securities
Act.
"APPLICABLE CONTRACT" any Contract (a) under which Page has or may acquire any
rights, (b) under which Page has or may become subject to any obligation or
liability, or (c) by which Page or any of the assets owned or used by it is or
may become bound.
"BALANCE SHEET" as defined in Section 3.4.
"BEST EFFORTS" the efforts that a prudent Person desirous of achieving a result
would use in similar circumstances to ensure that such result is achieved as
expeditiously as possible.
"BREACH" a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
material inaccuracy in or material breach of, or any material failure to perform
or comply with, such representation, warranty, covenant, obligation, or other
provision, which is not cured within 10 days from the date IPI notifies Page
that, in IPI's reasonable opinion, such Breach has occurred. If a "Breach"
cannot be cured within such 14 day period, due to no fault on the part of the
party in breach then such 14 day period shall be increased to 30 days.
"CERTIFICATES" AS DEFINED IN SECTION 2.8.
"CERTIFICATE OF MERGER" AS DEFINED IN SECTION 2.3.
"CLOSING AND CLOSING DATE" AS DEFINED IN SECTION 2.1.
"COMMON STOCK" AS DEFINED IN RECITAL A.
"CONSENT" any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" all of the transactions contemplated by this
Agreement, including:
the sale of the Shares by the Shareholders to IPI;
the execution, delivery, and performance of any and all Contracts
contemplated in this Agreement.
the performance by IPI and the Shareholders of their respective
covenants and obligations under this Agreement; and
IPI's acquisition and ownership of the Shares and exercise of control
over Page.
"CONTRACT" any agreement, contract, obligation, promise, or undertaking (whether
written or oral and whether express or implied) that is legally binding.
"DAMAGES" as defined in Section 11.2.
"DELAWARE LAW" AS DEFINED IN SECTION 2.2.
"DISCLOSURE SCHEDULE" the disclosure schedule delivered by the Stockholders and
Page to IPI concurrently with the execution and delivery of this Agreement.
"EFFECTIVE DATE" AS DEFINED IN THE PREAMBLE TO THIS AGREEMENT.
"EMPLOYMENT AGREEMENTS" as defined in Section 9.1.
"ENCUMBRANCE" any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ERISA" the Employee Retirement Income Security Act of 1974 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"FACILITIES" any real property, leaseholds, or other interests currently or
formerly owned or operated by Page and any buildings, plants, structures, or
equipment (including motor vehicles, tank cars, and rolling stock) currently or
formerly owned or operated by Page.
"GAAP" generally accepted United States accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(b) were prepared.
"GOVERNMENTAL AUTHORIZATION" any approval, consent, license, permit, waiver, or
other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY" any foreign, federal, state, city or local governmental or
quasi-governmental authority of any nature.
"INTELLECTUAL PROPERTY ASSETS" as defined in Section 3.19.
"INTERIM BALANCE SHEET" as defined in Section 3.4.
"IPI" as defined in the first paragraph of this Agreement.
"IRC" the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS" the United States Internal Revenue Service or any successor agency, and,
to the extent relevant, the United States Department of the Treasury.
"KNOWLEDGE" a Person will be deemed to have "Knowledge" of a particular fact or
other matter if such individual is actually aware of such fact or other matter,
or a prudent individual could be expected to discover or otherwise become aware
of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
"LEGAL REQUIREMENT" any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"MATERIAL ADVERSE EFFECT" a material adverse effect on the business, assets,
properties, financial condition, or results of operation of Page or IPI, as the
case may be.
"MERGER" AS DEFINED IN SECTION 2.2.
"MERGER CONSIDERATION" AS DEFINED IN SECTION 2.8.
"NONCOMPETITION AGREEMENTS" as defined in Section 2.12.1(c).
"OCCUPATIONAL SAFETY AND HEALTH LAW" any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"ORDER" any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" an action taken by a Person will be deemed to have
been taken in the "Ordinary Course of Business" only if such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal operations of such Person;
"ORGANIZATIONAL DOCUMENTS" the articles or certificate of incorporation and the
bylaws of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited partnership; (d) any charter
or similar document adopted or filed in connection with the creation, formation,
or organization of a Person; and (e) any amendment to any of the foregoing.
"PAGE" as defined in the preamble to this Agreement.
"PARTIES" as defined in Recital E.
"PERSON" any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"PLAN" as defined in Section 3.11.
"PROCEEDING" any action, arbitration, audit, hearing, investigation, litigation,
or suit (whether civil, criminal, administrative, investigative, or informal)
commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Body or arbitrator.
"RELATED PERSON" with respect to a particular individual, a "Related Person"
includes each other member of such individual's family, or any Person that is
directly or indirectly controlled by such individual or one or more members of
such individual's Family. With respect to specified Person other than an
individual, a "Related Person" is any Person that directly or indirectly
controls, is directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Persons.
"REPRESENTATIVE" with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"SECURITIES ACT" the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"STOCKHOLDERS" SHALL MEAN XXXXXXXX XXXX AND XXXXX XXXXXX.
"STOCKHOLDERS' RELEASES" as defined in Section 2.12.1(b).
"SUBSIDIARY" with respect to any Person (the "Owner"), any corporation or other
Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries. When
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of Page.
"STOCK CONSIDERATION" as defined in Section 2.8.2.
"TAX RETURN" any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or payment of any Tax
or in connection with the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"THREATENED" a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "Agreement")
dated the 20th day of November 2003 , by and among Island Pacific, Inc., a
Delaware corporation ("IPI"), Page Digital Incorporated, a Colorado corporation
("Page"), and IPI Acquisition, Inc., a Delaware corporation ("Merger Sub"),
Xxxxxxxx Xxxx and Xxxxx Xxxxxx (collectively the "Stockholders").
RECITALS
A. The Stockholders are the record beneficial owners of approximately
80% of the outstanding common stock (the "Common Stock") of Page.
B. Under the terms and subject to the conditions of this Agreement,
IPI, Merger Sub, and Page intend to enter into a business combination
transaction such that Page merges with and into a wholly owned subsidiary of IPI
namely Merger Sub.
C. Each of the Boards of Directors of Page and IPI (i) have determined
that the Merger (as defined in Section 2.2 below) is consistent with, and in
furtherance of, their respective long term business strategies and is fair to,
and in the best interest of, their respective stockholders and (ii) have
approved this Agreement, the Merger and the other transactions contemplated by
this Agreement.
D. The Board of Directors of Merger Sub has approved this Agreement,
the Merger and the other transactions contemplated by this Agreement.
E. As a condition to and inducement to IPI's and Merger Sub's
willingness to enter into this Agreement, simultaneously with the execution of
this Agreement, Xxxxxxxx Xxxx and Xxxxx Xxxxxx are entering into a Voting
Agreement substantially in the form attached hereto as EXHIBIT A (the "Voting
Agreement");
F. IPI, Page and Merger Sub intend, by executing this Agreement to
adopt a plan of reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended.
G. The Parties to this Agreement desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the transactions contemplated hereby.
AGREEMENT
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the definitions set forth in the Annex
to this Agreement, shall have the meanings specified or referred to in this
Agreement.
2. THE MERGER; CLOSING.
2.1. THE MERGER.
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As of the Effective Date (as defined below), and subject to
and upon the terms and conditions of this Agreement and the applicable
provisions of Delaware General Corporation Law ("DGCL") and the Colorado
Business Corporations Act ("CBCA"), Page shall be merged with and into Merger
Sub (the "Merger"), the separate corporate existence of Page shall cease and
Merger Sub shall continue as the surviving corporation. Merger Sub as the
surviving corporation after the Merger is sometimes referred to as the
"Surviving Corporation."
2.2. CLOSING.
Subject to the terms of this Agreement, the closing (the
"Closing") of the Merger of Page with and into Merger Sub shall take place at
the office of IPI's counsel, Xxxxxxx Xxxx Seidenwurm & Xxxxx, LLP, 000 X Xxxxxx,
Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx, no later than April 30, 2004. The date upon
which the closing occurs is hereinafter referred to as the "Closing Date." As
between the Parties, risk of loss and the benefits of ownership of the
consideration shall be transferred as of the Closing Date, notwithstanding any
delay in completing the ministerial act of filing the Certificate of Merger as
contemplated in Section 2.3 below.
2.3. EFFECTIVE DATE.
If all the conditions to the Merger set forth in Article 7
shall have been fulfilled or waived in accordance herewith and this Agreement
shall not have been terminated as provided in Article 10, the parties hereto
shall cause a Certificate of Merger meeting the requirements of Section 251 of
the DGCL and Section 0-000-000 of the CCAA (the "Certificate of Merger") to be
properly executed and filed in accordance with such Sections on the Closing
Date. The Merger shall become effective at the time of filing of the Certificate
of Merger with the Secretary of State of the State of Delaware in accordance
with the DGCL and the Secretary of State of the State of Colorado in accordance
with the CBCA or at such later time which the parties hereto shall have agreed
upon and designated in such filing as the effective time of the Merger (the
"Effective Date").
2.4. EFFECT OF THE MERGER.
At the Effective Date, the effect of the Merger shall be
provided in this Agreement and the applicable provisions of Delaware and
Colorado Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Date all the property, rights, privileges, powers and
franchises of Page and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of Page and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
2.5. ARTICLES OF INCORPORATION; BYLAWS.
2.5.1. At the Effective Date, the Articles of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Date, shall be the Articles of Incorporation of the Surviving Corporation.
2.5.2. The Bylaws of Merger Sub, as in effect
immediately prior to the Effective Date, shall be, at the Effective Date, the
Bylaws of the Surviving Corporation until thereafter amended.
2.6. OFFICERS AND DIRECTORS.
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The officers and directors of the Surviving Corporation as of
the Effective Date are listed on attached Exhibit "C."
2.7. EFFECT ON CAPITAL STOCK.
At the Effective Date, by virtue of the Merger and without any
action on the part of Merger Sub, Page or the holders of any of the securities
described below:
(a) each share of common stock, par value $0.01 per
share, of Page issued and outstanding immediately prior to the Effective Date,
and other than the shares of Dissenting Common Stock (as defined in Section 2.10
below ) shall be converted into the right to receive: (i) an amount of cash,
without interest (the "Cash Consideration") determined by dividing $2 million by
the total number of issued and outstanding shares of Common Stock on the
Effective Date, and (ii) a fraction of a fully paid and non-assessable share of
common stock $.0001 par value of IPI (the " IPI Stock Consideration"), equal to
one share of Common Stock multiplied by the Exchange Ratio. "Exchange Ratio"
means two million five hundred thousand, divided by the total number of issued
and outstanding shares of Common Stock of Page on the Effective Date. The
Exchange Ratio is subject to adjustment as set forth in Paragraph 2.7(b) below.
The IPI Stock Consideration using the Exchange Ratio shall be calculated to the
nearest whole share of Stock. The Cash Consideration and the Stock Consideration
to be received by the holders of Common Stock hereunder (together with the cash
in lieu of fractional shares of Stock as specified below) are referred to herein
collectively as the "Merger Consideration."
(b) If the Average Closing Price, as defined below,
for the 20 trading days immediately preceding the Closing Date (the "Subject
Period") shall be $1.50 or less, then the Exchange Ratio shall be the sum (the
"Sum") of two million five hundred thousand, plus an amount calculated by
dividing 1,250,000 by the Average Closing Price, and dividing the Sum by the
total issued and outstanding Common Stock on the Closing Date. The "Average
Closing Price" means the average of the Closing Prices for IPI Common Stock for
the 20 trading days immediately preceding the Effective Date. The "Closing
Price" means the daily closing sales price, or the daily closing bid price if no
sales were reported for an individual day, for IPI's common stock as reported by
the American Stock Exchange or such other market source as the IPI Board of
Directors deems reliable.
(c) All shares of Common Stock (other than shares to
be cancelled in accordance with Section 2.7(d) shall cease to be outstanding and
shall be cancelled and shall cease to exist, and each holder of shares of Common
Stock (other than Merger Sub and IPI) shall thereafter cease to have any rights
with respect to such shares of Common Stock, except, subject to this Section
2.7, the right to receive, without interest, the Merger Consideration in
accordance with this Section 2.7 upon the surrender of a certificate or
certificates (a "Certificate") representing such shares of Common Stock.
(d) Each share of Common Stock issued and held in
Page's treasury at the Effective Date, or held by Merger Sub or IPI, shall, by
virtue of the Merger, cease to be outstanding and shall be cancelled without
payment of any consideration therefor.
2.8. EXCHANGE OF CERTIFICATES REPRESENTING COMMON STOCK
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2.8.1. .
(a) At the Closing, the stockholders of Page, all of
whom are listed on Annex II to this Agreement, shall present their
certificates of Common Stock (the "Certificates") to Merger Sub. In exchange
therefor, Merger Sub shall pay to each stockholder the Cash Consideration in the
amount set forth in Annex II, and IPI shall issue a letter to IPI's transfer
agent containing instructions to the transfer agent to issue to the stockholders
the IPI Stock Consideration in the amount of IPI's Common Stock set forth in
Annex II.
(b) If one or more stockholders of Page shall not
have presented their Certificate(s) at the Closing, IPI shall mail to each
stockholder: (i) a letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to such Certificate(s) shall pass, only
upon delivery of such Certificate(s) to IPI and which letter shall be in such
form and have such other provisions as are customary for letters of this nature;
and (ii) instructions for effecting the surrender of such Certificate(s) in
exchange for the Merger Consideration (which shall provide that, at the election
of the surrendering holder, such Certificate(s) may be surrendered, and payment
therefor collected, by hand delivery). Upon surrender of such Certificate(s) to
IPI together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may be
reasonably required by IPI, the holder of such Certificate(s) shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of IPI Stock and the amount of cash, without interest, into which shares
of Common Stock formerly represented by such Certificate(s) shall have been
converted into the right to receive pursuant to Section 2.7, and the shares
formerly represented by the Certificate(s) so surrendered shall forthwith be
cancelled. If any portion of the IPI Stock Consideration is to be registered in
the name of a person other than the person in whose name the applicable
surrendered Certificate is registered, it shall be a condition to the
registration of such shares constituting such IPI Stock Consideration that the
surrendered Certificate shall be properly endorsed or otherwise be in proper
form for transfer and the person requesting such delivery of such shares shall
pay to IPI any transfer or other Taxes required by reason of such registration
in the name of a person other than the registered holder of such Certificate or
establish to the reasonable satisfaction of IPI that such Tax has been paid or
is not applicable. No interest will be paid or will accrue on the cash payable
upon surrender of any Certificate(s), including in lieu of any fractional shares
of IPI Stock. In the event of a transfer of ownership of Common Stock that is
not registered in the transfer records of Page, payment may be made with respect
to such Common Stock to such a transferee if such Certificate(s) representing
such shares of Common Stock is presented to IPI, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable transfer or other Taxes have been paid. Until surrendered as
contemplated by this Section 2.8, each Certificate shall be deemed at any time
after the Effective Date to represent only the right to receive upon such
surrender the amount of IPI Stock and cash, without interest, into which the
shares of Common Stock theretofore represented by such Certificate(s) shall have
been converted pursuant to this Article 2.
(c) All shares of IPI Stock issued and all cash paid
upon surrender of Certificates in accordance with the terms of this
Article 2 shall be deemed to have been issued and paid in full satisfaction of
all rights pertaining to the shares of Common Stock theretofore represented by
such Certificates. At or after the Effective Date, there shall be no transfers
on the stock transfer books of Page of the shares of Common Stock that were
outstanding immediately prior to the Closing Date. If, after the Closing Date,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this Article 2.
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(d) No dividends or other distributions with respect
to IPI Stock with a record date after the Closing Date shall be paid to
the holder of any unsurrendered Certificate, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2. until
the surrender of such Certificate in accordance with this Article 2. Subject to
the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificate representing whole shares
of IPI Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of any cash payable in lieu of a fractional share of
IPI Stock to which such holder is entitled pursuant to Section 2 and the amount
of dividends or other distributions with a record date after the Closing Date
theretofore paid with respect to such whole shares of IPI Stock and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Closing Date but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such whole shares of
IPI Stock.
(e) No certificates or script representing fractional
shares of IPI Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of IPI. Each holder of
Common Stock exchanged pursuant to the Merger who would otherwise be entitled to
receive a fraction of a share of IPI Stock shall receive, upon surrender of such
holder's Certificates in accordance with this Section 2 an amount in cash
(without interest) equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (after taking into account all
fractional share interests then held by such holder) would otherwise be entitled
by the Closing Price on the trading day immediately preceding the Closing Date.
(f) None of IPI, Page, the Surviving Corporation, or
any other Person shall be liable to any former holder of shares of
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar Laws.
(g) If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim which may be made against it with respect to such Certificate, IPI
will issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration payable in respect thereof pursuant to this Agreement.
2.9. ADJUSTMENT OF MERGER CONSIDERATION.
In the event that, subsequent to the date of this Agreement
but prior to the Closing Date, the outstanding shares of Common Stock or IPI
Stock shall have been changed into a different number of shares or a different
class as a result of a stock split, reverse stock split, stock dividend,
subdivision, reclassification, split, combination, exchange, recapitalization or
other similar transaction, the Exchange Ratio and Cash Consideration shall be
appropriately adjusted.
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2.10. DISSENTING PAGE STOCKHOLDERS.
Notwithstanding any provision of this Agreement to the
contrary, shares of Common Stock that are issued and outstanding immediately
prior to the Effective Date and which are held by holders of such shares of
Common Stock who have properly exercised dissenters' rights with respect thereto
in accordance with Article 13 of the CBCA (the "Dissenting Common Stock") will
not be exchangeable for the right to receive the Merger Consideration, and
holders of such shares of Dissenting Common Stock will be entitled to receive
payment of the appraised value of such shares of Common Stock in accordance with
the provisions of such Article 13 unless and until such holders fail to perfect
or effectively withdraw or lose their rights to dissent and payment under the
CBCA. If, after the Effective Date, any such holder fails to perfect or
effectively withdraws or loses such right, such shares of Common Stock will
thereupon be treated as if they had been converted into and have become
exchangeable for, at the Effective Date, the right to receive the Merger
Consideration, without any interest thereon. Page shall give IPI: (i) prompt
notice of any demands for payment received by Page pursuant to Article 13 of the
CBCA, withdrawals of such demands and any other instruments served pursuant to
the CBCA and received by Page; and (ii) the opportunity to participate in all
negotiations and proceedings with respect to any such demand for payment under
the CBCA. Page shall not, except with the prior written consent of IPI, make any
payment with respect to any demands for payment or offer to settle or settle any
such demands.
2.11. TAX CONSEQUENCES.
It is intended by each of the Parties that the Merger shall
constitute a reorganization within the meaning of Section 368 of the IRC, and
each of the Parties will use its commercially reasonable efforts to cause the
Merger to be treated as such a reorganization. The Parties adopt this Agreement
as a "plan of reorganization" within the meaning of Sections 1.368 2(g) and
1.368 3(a) of the United States Income Tax Regulations. Each party shall seek
the advice of such party's counsel or financial advisor regarding the ability of
the Merger to qualify as such a reorganization.
2.12. TAKING OF NECESSARY ACTION; FURTHER ACTION.
If, at any time after the Effective Date, any further action
is necessary or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of Page and Merger
Sub, the Stockholders and officers and directors of Page and Merger Sub will, at
the Stockholders' expense, take all such lawful and necessary action. IPI shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated thereby.
2.13. CLOSING OBLIGATIONS. At the Closing:
2.13.1. Page will deliver to IPI and Merger Sub the
following closing documents (collectively, "Page's Closing Documents"):
(a) releases in the form of Exhibit "B"
executed by the Stockholders (collectively, "Stockholders' Releases");
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(b) a certificate executed by Page and the
Stockholders representing and warranting to IPI and Merger Sub that each of Page
and the Stockholders' representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Disclosure Schedule that were delivered by the
Page and the Stockholders to IPI and Merger Sub prior to the Closing Date in
accordance with Section 5.5); and
(c) the Employment Agreements executed by
the Stockholders.
2.13.2. IPI and Merger Sub will deliver to Page the
following closing documents (collectively, "IPI's Closing Documents"):
(a) the Employment Agreements;
(b) a certificate executed by IPI and Merger
Sub to the effect that, except as otherwise stated in such certificate, each of
IPI's and Merger Sub's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is accurate in all
respects as of the Closing Date; and
(c) Articles of Merger, in the form of
Exhibit "D" hereto, to be filed by IPI with the Secretary of State of the State
of Colorado pursuant to Section 0-000-000 of the Colorado Business Corporation
Act immediately following the Closing.
3. REPRESENTATIONS AND WARRANTIES OF PAGE AND THE STOCKHOLDERS.
Page and the Stockholders represent and warrant to IPI and Merger Sub
as follows:
3.1. ORGANIZATION AND GOOD STANDING.
3.1.1. Part 3.1 of the Disclosure Schedule contains a
complete and accurate list for Page of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to do business, and
its capitalization. Page is a corporation duly organized, validly existing, and
in good standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. Page is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualifications, except where the failure to be so
qualified would not have a Material Adverse Effect.
3.1.2. Page and the Stockholders have delivered to
IPI copies of the Organizational Documents of Page listed on Schedule 3.2.1, as
currently in effect.
3.2. AUTHORITY; NO CONFLICT.
3.2.1. This Agreement constitutes the legal, valid,
and binding obligation of Page and the Stockholders, enforceable against Page
and the Stockholders in accordance with its terms. Upon the execution and
delivery by Page and the Stockholders of this Agreement, Page and the
Stockholders' Closing Documents will constitute the legal, valid, and binding
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obligations of Page and the Stockholders, enforceable against Page and the
Stockholders in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. Page and the Stockholders have
the absolute and unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and Page and the Stockholders' Closing Documents and
to perform their obligations under this Agreement and Page and the Stockholders'
Closing Documents.
3.2.2. Except as set forth in Part 3.2 of the
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with, or result in
a violation of (A) any provision of the Organizational Documents of Page, or (B)
any resolution adopted by the board of directors or the stockholders of Page;
(b) contravene, conflict with, or result in
a violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which Page or any
Stockholder, or any of the assets owned or used by Page, may be subject;
(c) contravene, conflict with, or result in
a violation of any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by Page or that otherwise relates to the
business of, or any of the assets owned or used by, Page;
(d) cause Page or Merger Sub, as the
Surviving Corporation, to become subject to, or to become liable for the payment
of, any Tax;
(e) cause any of the assets owned by Page to
be reassessed or revalued by any taxing authority or other Governmental Body;
(f) contravene, conflict with, or result in
a violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any material Applicable
Contract; or
(g) result in the imposition or creation of
any Encumbrance upon or with respect to any of the assets owned or used by Page.
Except as set forth in Part 3.2 of the Disclosure Schedule, neither Page, nor
any Stockholder, is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
8
3.2.3. The Stockholders are acquiring the Stock
Consideration for their own account and not with a view to their distribution
within the meaning of Section 2(11) of the Securities Act.
3.3. CAPITALIZATION.
The authorized equity securities of Page consist of 50,000,000
shares of common stock, of which 5,597,300 shares are issued and outstanding and
constitute the Common Stock. The Stockholders are and will be on the Closing
Date the record and beneficial owners and holders of 4,811,760 shares of Common
Stock, free and clear of all Encumbrances. Except for a legend indicating that
the Common Stock represented by the certificate is not registered under the
Securities Act of 1933, and with respect to shares of Common Stock issued
pursuant to the 1995 Page Digital Incorporated Stock Plan, a legend indicating
that such shares are subject to a Right of First Refusal Agreement entered into
between Page and each holder thereof pursuant to such stock plan, no legend or
other reference to any purported Encumbrance appears upon any certificate
representing equity securities of Page. No Person has any claim of ownership or
right to obtain Common Stock of Page. All of the outstanding equity securities
of Page have been duly authorized and validly issued and are fully paid and
nonassessable. There are no Contracts relating to the issuance, sale, or
transfer of any equity securities or other securities of Page. None of the
outstanding equity securities or other securities of Page was issued in
violation of the Securities Act or any other Legal Requirement. Page does not
own, or have any Contract to acquire, any equity securities or other securities
of any Person or any direct or indirect equity or ownership interest in any
other business. Any option(s) and warrant(s) not exercised at or before 11:59
p.m. on the day immediately before the Closing Date shall be cancelled and
become null and void.
3.4. FINANCIAL STATEMENTS.
Page and the Stockholders have delivered to IPI: (a) audited
balance sheets of Page (the "Balance Sheets") in each of the fiscal years ended
October 31, 1999 through 2002, and the related audited statements of income,
changes in stockholders' equity, and cash flow for each of the years then ended;
(b) an audited balance sheet of Page (including the notes thereto), and the
related audited statements of income, changes in stockholders' equity, and cash
flow for the year then ended, together with the report thereon of Xxxxx Xxxxxxx,
independent certified public accountants, and (c) an unaudited balance sheet of
Page as of October 31, 2003 (the "Interim Balance Sheet") and the related
unaudited statements of income, changes in stockholders' equity, and cash flow
for the 12 months then ended, including in each case the notes thereto. Such
financial statements and notes fairly present the financial condition and the
results of operations, changes in stockholders' equity, and cash flow of Page as
at the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and the
absence of notes (that, if presented, would not differ materially from those
included in the Balance Sheets); the financial statements referred to in this
Section 3.4 reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements. No financial statements of any Person other than Page are
required by GAAP to be included in the audited financial statements of Page.
3.5. BOOKS AND RECORDS.
9
The books of account, minute books, stock record books, and
other records of Page, all of which will have been made available to IPI, are
complete and correct and have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Securities Exchange
Act of 1934, as amended (regardless of whether or not Page is subject to that
Section), including the maintenance of an adequate system of internal controls.
The minute books of Page contain accurate and complete records of all meetings
held of, and corporate action taken by, the Stockholders, the Boards of
Director, and committees of the Board of Directors of Page, and no meeting of
any such Stockholders, Board of Directors, or committees has been held for which
minutes have not been prepared and are not contained in such minute books. At
the Closing, all of those books and records will be delivered to the Merger-Sub.
3.6. TITLE TO PROPERTIES; ENCUMBRANCES.
Part 3.6 of the Disclosure Schedule contains a complete and
accurate list of all real property, leaseholds, or other interests therein owned
by Page. Page owns all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible) that it purports to own located in the
facilities owned or operated by Page or reflected as owned in the books and
records of Page, including all of the properties and assets reflected in the
balance sheet for the fiscal year ended October 31, 2002 (the "2002 Balance
Sheet") and the Interim Balance Sheet (except for assets held under capitalized
leases disclosed or not required to be disclosed in Part 3.6 of the Disclosure
Schedule and personal property sold since the date of the 2002 Balance Sheet and
the Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by Page since the date of the 2002 Balance Sheet (except for personal property
acquired and sold since the date of the 2002 Balance Sheet in the Ordinary
Course of Business and consistent with past practice). All material properties
and assets reflected in the 2002 Balance Sheet and the Interim Balance Sheet are
free and clear of all Encumbrances.
3.7. ACCOUNTS RECEIVABLE.
To the Knowledge of Page and the Stockholders, all accounts
receivable of Page that are reflected on the 2002 Balance Sheet or the Interim
Balance Sheet or on the accounting records of Page as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. To Page's and the Stockholders' Knowledge,
unless paid prior to the Closing Date, the Accounts Receivable are or will be as
of the Closing Date current and collectible net of the respective reserves shown
on the 2002 Balance Sheet or the Interim Balance Sheet or on the accounting
records of Page as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the Interim
Balance Sheet represented of the Accounts Receivable reflected therein and will
not represent a material adverse change in the composition of such Accounts
Receivable in terms of aging). To Page's and the Stockholders' Knowledge,
subject to such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within ninety days after the day
on which it first becomes due and payable. There is no contest, claim, or right
of set-off, other than returns in the Ordinary Course of Business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. Part 3.7 of the Disclosure Schedule
contains a complete and accurate list of all Accounts Receivable as of the date
of the Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
10
3.8. NO UNDISCLOSED LIABILITIES.
Except as set forth in Part 3.8 of the Disclosure Schedule,
Page has no material liabilities or material obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent, or otherwise) except
for liabilities or obligations reflected or reserved against in the Balance
Sheet or the Interim Balance Sheet and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof.
3.9. TAXES.
3.9.1. Page has filed or caused to be filed on a
timely basis all Tax Returns that are or were required to be filed by it,
pursuant to applicable Legal Requirements, except where the failure to so file
could or would not have a Material Adverse Effect. Part 3.9 of the Disclosure
Schedule contains a complete and accurate list of, all such Tax Returns filed.
Page has paid, or made provision for the payment of, all Taxes that have or may
have become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by the Stockholders or Page, except such Taxes, if any, as
are listed in Part 3.9 of the Disclosure Schedule and are being contested in
good faith and as to which adequate reserves (determined in accordance with
GAAP) have been provided in the Balance Sheets and the Interim Balance Sheet.
3.9.2. The United States federal and state income Tax
Returns of Page have been audited by the IRS or relevant state tax authorities
or are closed by the applicable statute of limitations for all taxable years
through 1998. Part 3.9 of the Disclosure Schedule contains a complete and
accurate list of all audits of all such Tax Returns, including a reasonably
detailed description of the nature and outcome of each audit. All deficiencies
proposed as a result of such audits have been paid, reserved against, settled,
or, as described in Part 3.9 of the Disclosure Schedule, are being contested in
good faith by appropriate proceedings. Part 3.9 of the Disclosure Schedule
describes all adjustments to the United States federal income Tax Returns filed
by Page for all taxable years since 1999, and the resulting deficiencies
proposed by the IRS. Except as described in Part 3.9 of the Disclosure Schedule,
no Stockholder or Page has given or been requested to give waivers or extensions
(or is or would be subject to a waiver or extension given by any other Person)
of any statute of limitations relating to the payment of Taxes of Page or for
which Page may be liable.
3.9.3. The charges, accruals, and reserves with
respect to Taxes on the respective books of Page are adequate (determined in
accordance with GAAP) and are at least equal to that Page's liability for Taxes.
There exists no proposed tax assessment against Page except as disclosed in the
2002 Balance Sheet or in Part 3.9 of the Disclosure Schedule. No consent to the
application of Section 341(f)(2) of the IRC has been filed with respect to any
property or assets held, acquired, or to be acquired by Page. All Taxes that
Page is or was required by Legal Requirements to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to the
proper Governmental Body or other Person, except where the failure to so
withhold or collect would not have a Material Adverse Effect.
3.9.4. All Tax Returns filed by (or that include on a
consolidated basis) Page are true, correct, and complete. There is no tax
sharing agreement that will require any payment by Page after the date of this
Agreement. Page is not, nor within the five-year period preceding the Closing
Date has been, an "S" corporation. During the consistency period (as defined in
Section 338(h)(4) of the IRC with respect to the sale of the Shares to IPI), no
11
Page or target affiliate (as defined in Section 338(h)(6) of the IRC with
respect to the sale of the Shares to IPI) has sold or will sell any property or
assets to IPI or to any member of the affiliated group (as defined in Section
338(h)(5) of the IRC) that includes IPI. Part 3.9 of the Disclosure Schedule
lists all such target affiliates.
3.10. NO MATERIAL ADVERSE CHANGE.
Since the date of the 2002 Balance Sheet, there has not been
any material adverse change in the business, operations, properties, prospects,
assets, or condition of Page, and no event has occurred or circumstance exists
that may result in such a material adverse change.
3.11. ERISA.
To the knowledge of Page and the Stockholders, Page is in
compliance in all material respects with all applicable provisions of Title IV
of the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406,
September 2, 1974, 00 Xxxx. 000, 00 X.X.X.X. SS 1001 et seq. (1975), as amended
from time to time ("ERISA"). Neither a reportable event nor a prohibited
transaction (as defined in ERISA) has occurred and is continuing with respect to
any "pension plan" (as such term is defined in ERISA, a "Plan"); no notice of
intent to terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds entitling the Pension Benefit
Guaranty Corporation (together with any entity succeeding to or all of its
functions, the "PBGC") to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings;
neither Page nor any commonly controlled entity (as defined in ERISA) has
completely or partially withdrawn from a multi-employer plan (as defined in
ERISA). Page and each commonly controlled entity has met its minimum funding
requirements under ERISA with respect to all of its Plans and the present fair
market value of all Plan property equals or exceeds the present value of all
vested benefits under each Plan, as determined on the most recent valuation date
of the Plan and in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of Page or any commonly
controlled entity to the PBGC or the Plan under Title IV or ERISA; and neither
Page nor any commonly controlled entity has incurred any liability to the PBGC
under ERISA.
3.12. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
3.12.1. To the knowledge of Page and the
Stockholders, except as set forth in Part 3.12 of the Disclosure Schedule, Page
is in full compliance with each Legal Requirement that is or was applicable to
it or to the conduct or operation of its business or the ownership or use of any
of its assets. No event has occurred or circumstance exists that may constitute
or result in a violation by Page of, or a failure on the part of Page to comply
with, any Legal Requirement.
3.12.2. Part 3.12 of the Disclosure Schedule contains
a complete and accurate list of each Governmental Authorization that is held by
Page or that otherwise relates to the business of, or to any of the assets owned
or used by, Page. Each Governmental Authorization listed in Part 3.12 of the
Disclosure Schedule is valid and in full force and effect and, except as set
forth in Part 3.12 of the Disclosure Schedule, Page has been in full compliance
with all of the terms and requirements of each Governmental Authorization
identified or required to be identified in Part 3.12 of the Disclosure Schedule
12
(a) Page has not received, at any time since
January 1, 2000, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or failure to comply with any term
or requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(b) all applications required to have been
filed for the renewal of the Governmental Authorizations listed or required to
be listed in Part 3.12 of the Disclosure Schedule have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.12 of the Disclosure Schedule
collectively constitute all of the Governmental Authorizations necessary to
permit Page to lawfully conduct and operate their businesses in the manner they
currently conduct and operate such businesses and to permit Page to own and use
their assets in the manner in which they currently own and use such assets.
3.13. LEGAL PROCEEDINGS; ORDERS.
3.13.1. Except as set forth in Part 3.13 of the
Disclosure Schedule, there is no pending Proceeding:
(a) that has been commenced by or against
Page or that otherwise relates to Page or would have a Material Adverse Effect;
or
(b) that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of Page and the Stockholders, (1) no such Proceeding has been
threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. Page
and the Stockholders have delivered to IPI copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in Part
3.13 of the Disclosure Schedule. Page and the Stockholder's believe that the
Proceedings listed in Part 3.13 of the Disclosure Schedule will not have a
Material Adverse Effect.
3.13.2. Except as set forth in Part 3.13 of the
Disclosure Schedule:
(a) there is no Order to which Page, or any
of the assets owned or used by Page, is subject;
(b) the Stockholders are not subject to any
Order that relates to the business of, or any of the assets owned or used by,
Page;
(c) no officer, director, agent, or employee
of Page is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of Page; and
13
(d) Page and the Stockholders have not
received, at any time since January 1, 2000, any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of, or failure
to comply with, any term or requirement of any Order to which Page, or any of
the assets owned or used by Page, is or has been subject.
3.13.3. Except as set forth in Part 3.13 of the
Disclosure Schedule:
(a) Page is in full compliance with all of
the terms and requirements of each Order to which it, or any of the assets owned
or used by it, is subject;
(b) no event has occurred or circumstance
exists that may constitute or result in (with or without notice or lapse of
time) a violation of or failure to comply with any term or requirement of any
Order to which Page, or any of the assets owned or used by Page, is subject; and
3.14. ABSENCE OF CERTAIN CHANGES AND EVENTS.
Except as set forth in Part 3.14 of the Disclosure Schedule,
since the date of the 2002 Balance Sheet, Page has conducted their businesses
only in the Ordinary Course of Business and there has not been any:
3.14.1. Change in Page's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
Page; issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
Page of any shares of any such capital stock; or declaration or payment of any
dividend or other distribution or payment in respect of shares of capital stock;
3.14.2. Amendment to the Organizational Documents of
Page;
3.14.3. Payment or increase by Page of any bonuses,
salaries, or other compensation to any Stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
3.14.4. Adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of Page;
3.14.5. Damage to or destruction or loss of any asset
or property of Page, whether or not covered by insurance, having a Material
Adverse Effect;
3.14.6. Entry into, termination of, or receipt of
notice of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contracts or transactions involving a total remaining commitment by or to Page
of $2,500 or more, in the aggregate;
3.14.7. Sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of any asset or
property of Page or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of Page, including the sale,
lease, or other disposition of any of the Intellectual Property Assets;
14
3.14.8. Cancellation or waiver of any claims or
rights with an aggregate value to Page in excess of $2,500;
3.14.9. Material change in the accounting methods
used by Page; or
3.14.10. Agreement, whether oral or written, by Page
to do any of the foregoing.
3.15. CONTRACTS; NO DEFAULTS.
3.15.1. Part 3.15(1) of the Disclosure Schedule
contains a complete and accurate list, and Page and the Stockholders have
delivered to IPI true and complete copies, of:
(a) each Applicable Contract that involves
performance of services or delivery of goods or materials by Page of an
aggregate amount or value in excess of $1,000;
(b) each Applicable Contract that involves
performance of services or delivery of goods or materials to Page of an
aggregate amount or value in excess of $1,000;
(c) each Applicable Contract that was not
entered into in the Ordinary Course of Business and that involves expenditures
or receipts of Page in excess of $1,000;
(d) each lease, rental or occupancy
agreement, license, installment and conditional sale agreement, and other
Applicable Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property (except
personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $1,000 and with terms of
less than one year);
(e) each licensing agreement or other
Applicable Contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the nondisclosure of
any of the Intellectual Property Assets;
(f) each collective bargaining agreement and
other Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(g) each joint venture, partnership, and
other Applicable Contract (however named) involving a sharing of profits,
losses, costs, or liabilities by Page with any other Person;
(h) each Applicable Contract containing
covenants that in any way purport to restrict the business activity of Page or
limit the freedom of Page to engage in any line of business or to compete with
any Person;
(i) each Applicable Contract providing for
payments to or by any Person based on sales, purchases, or profits, other than
direct payments for goods;
15
(j) each power of attorney that is currently
effective and outstanding;
(k) each Applicable Contract entered into
other than in the Ordinary Course of Business that contains or provides for an
express undertaking by Page to be responsible for consequential damages;
(l) each Applicable Contract for capital
expenditures in excess of $1,000;
(m) each written warranty, guaranty, and/or
other similar undertaking with respect to contractual performance extended by
Page other than in the Ordinary Course of Business; and
(n) each amendment, supplement, and
modification (whether oral or written) in respect of any of the foregoing.
Part 3.15 of the Disclosure Schedule sets forth reasonably complete details
concerning such Contracts, including the parties to the Contracts, the amount of
the remaining commitment of Page under the Contracts, and the location in Page's
office where details relating to the Contracts are located.
3.15.2. Except as set forth in Part 3.15.2 of the
Disclosure Schedule:
(a) no stockholder of Page (nor any Related
Person of any stockholder) has or may acquire any rights under, and no
stockholder of Page has or may become subject to any obligation or liability
under, any Contract that relates to the business of, or any of the assets owned
or used by, Page; and
(b) no officer, director, agent, employee,
consultant, or contractor of Page is bound by any Contract that purports to
limit the ability of such officer, director, agent, employee, consultant, or
contractor to (A) engage in or continue any conduct, activity, or practice
relating to the business of Page, or (B) assign to Page or to any other Person
any rights to any invention, improvement, or discovery.
3.15.3. Except as set forth in Part 3.15.3 of the
Disclosure Schedule, each Contract identified or required to be identified in
Part 3.15.1 of the Disclosure Schedule is in full force and effect and is valid
and enforceable in accordance with its terms.
3.15.4. Except as set forth in Part 3.15.4 of the
Disclosure Schedule:
(a) Page is in full compliance with all
applicable terms and requirements of each material Contract under which Page has
any obligation or liability or by which Page or any of the assets owned or used
by Page is bound;
(b) to the knowledge of Page and the
Stockholders, each other Person that has or had any obligation or liability
under any material Contract under which Page has or had any rights is in full
compliance with all applicable terms and requirements of such Contract;
16
(c) no event has occurred or circumstance
exists that (with or without notice or lapse of time) may contravene, conflict
with, or result in a violation or breach of, or give Page or other Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any material
Applicable Contract; and
(d) Page has neither given to, nor received,
from any other Person at any time any notice or other communication (whether
oral or written) regarding any actual, alleged, possible, or potential violation
or breach of, or default under, any Contract.
3.15.5. There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to Page under current or completed Contracts with any Person and no such
Person has made written demand for such renegotiation.
3.15.6. The Contracts relating to the sale, design,
manufacture, or provision of products or services by Page have been entered into
in the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.
3.16. INSURANCE.
3.16.1. Page and the Stockholders have delivered to
IPI:
(a) true and complete copies of all policies
of insurance to which Page is a party or under which Page, or any director of
Page, is or has been covered at any time within the three years preceding the
date of this Agreement;
(b) true and complete copies of all pending
applications for policies of insurance; and
(c) any statement by the auditor of Page's
financial statements with regard to the adequacy of such entity's coverage or of
the reserves for claims.
3.16.2. Part 3.16.2 of the Disclosure Schedule
describes:
(a) any self-insurance arrangement by or
affecting Page, including any reserves established thereunder;
(b) any contract or arrangement, other than
a policy of insurance, for the transfer or sharing of any risk by Page; and
(c) all obligations of Page to third parties
with respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
3.16.3. Part 3.16.3 of the Disclosure Schedule sets
forth, by year, for the current policy year and each of the three preceding
policy years:
17
(a) a summary of the loss experience under
each policy;
(b) a statement describing each claim under
an insurance policy for an amount in excess of $5,000, which sets forth:
(i) the name of the claimant;
(ii) a description of the policy by
insurer, type of insurance, and period of coverage; and
(iii) the amount and a brief
description of the claim; and
(c) a statement describing the loss
experience for all claims that were self-insured, including the number and
aggregate cost of such claims.
3.16.4. Except as set forth in Part 3.16.4 of the
Disclosure Schedule:
(a) all policies to which Page is a party or
that provide coverage to either Stockholder, Page, or any director or officer of
an Page:
(i) are valid, outstanding, and
enforceable;
(ii) are sufficient for compliance
with all Legal Requirements and Contracts to which Page is a party or by which
any of them is bound;
(iii) do not provide for any
retrospective premium adjustment or other experienced-based liability on the
part of Page.
(b) neither the Stockholders on behalf of
Page, nor Page has received (A) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer of any policy is
not willing or able to perform its obligations thereunder.
(c) Page has paid all premiums due, and have
otherwise performed all of their respective obligations, under each policy to
which Page is a party or that provides coverage to Page or director thereof. (d)
Page has given notice to the insurer of all claims that may be insured thereby.
3.17. EMPLOYEES.
3.17.1. Part 3.17 of the Disclosure Schedule contains
a complete and accurate list of the following information for each employee or
director of Page, including each employee on leave of absence or layoff status;
employer; name; job title; current compensation paid or payable and any change
in compensation since January 1, 2003; vacation accrued; and service credited
for purposes of vesting and eligibility to participate under Page's pension,
retirement, profit-sharing, thrift savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan.
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3.17.2. No employee or director of Page is a party
to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, non-competition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of Page, or (ii) the ability of Page to conduct its
business, including any Proprietary Rights Agreement with the Stockholders or
Page by any such employee or director. To Page's and the Stockholders'
Knowledge, no director, officer, or other key employee of Page intends to
terminate his employment with Page.
3.17.3. Part 3.17 of the Disclosure Schedule also
contains a complete and accurate list of the following information for each
retired employee or director of Page, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.18. LABOR RELATIONS; COMPLIANCE.
Page has not been and is not now a party to any collective
bargaining or other labor Contract. There has not been nor is there presently
pending, existing, or Threatened (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or affecting
Page relating to the alleged violation of any Legal Requirement pertaining to
labor relations or employment matters, including any charge or complaint filed
by an employee or union with the National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting any of Page or their premises, or (c) any application for
certification of a collective bargaining agent. No event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by Page, and no such action
is contemplated by Page. Page has complied in all respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. Page is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.19. INTELLECTUAL PROPERTY.
3.19.1. Intellectual Property Assets - The term
"Intellectual Property Assets" includes:
(a) the name "Page Digital", all fictional
business names, trading names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
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(b) all patents, patent applications, and
inventions and discoveries that may be patentable (collectively, "Patents");
(c) all copyrights in both published works
and unpublished works (collectively, "Copyrights") currently or previously owned
or used or licensed by Page;
(d) all rights in mask works (collectively,
"Rights in Mask Works") currently or previously owned or used or licensed by
Page; and
(e) all know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"); owned, used, or licensed by Page as licensee or licensor.
3.19.2. Agreements - Part 3.19.2 of the Disclosure
Schedule contains a complete and accurate list and summary description,
including any royalties paid or received by Page, of all Contracts relating to
the Intellectual Property Assets to which Page is a party or by which Page is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $1,000 under which an Page is the licensee. There are no outstanding and,
to Page's and the Stockholders' Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
3.19.3. Know-How Necessary for the Business.
(a) The Intellectual Property Assets are all
those necessary for the operation of Page' businesses as they are currently
conducted. Page is the owner of all right, title and interest in and to each of
the Intellectual Property Assets, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims, and has
the right to use without payment to a third party all of the Intellectual
Property Assets.
(b) Except as set forth in Part 3.19.3 of
the Disclosure Schedule, all former and current employees of Page have executed
written Contracts with Page that assign to one or more of Page all rights to any
inventions, improvements, discoveries, or information relating to the business
of Page. No employee of Page has entered into any Contract that restricts or
limits in any way the scope or type of work in which the employee may be engaged
or requires the employee to transfer, assign, or disclose information concerning
his work to anyone other than one or more of Page.
3.19.4. Patents.
(a) Page owns no Patents.
(b) no Patent has been or is now involved in
any interference, reissue, re-examination, or opposition proceeding. To Page and
the Stockholders' Knowledge, there is no potentially interfering patent or
patent application of any third party that would interfere with the intellectual
property of Page.
(c) none of the products manufactured and
sold, nor any process or know-how used, by Page infringes or is alleged to
infringe any patent or other proprietary right of any other Person.
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3.19.5. Trademarks.
(a) Part 3.19.5 of Disclosure Schedule
contains a complete and accurate list and summary description of all Marks. Page
is the owner of all right, title and interest in and to each of the Marks, free
and clear of all liens, security interests, charges, encumbrances, equities, and
other adverse claims.
(b) All Marks that have been registered with
the United States Patent and Trademark Office are currently in compliance with
all formal legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date.
(c) No Xxxx has been or is now involved in
any opposition, invalidation, or cancellation and, to Page's and the
Stockholders' Knowledge, no such action is Threatened with respect to any of the
Marks.
(d) To Page and the Stockholders' Knowledge,
there is no potentially interfering trademark or trademark application of any
third party.
(e) No Xxxx is infringed or, to Page and the
Stockholders' Knowledge, has been challenged or threatened in any way. None of
the Marks used by Page infringes or is alleged to infringe any trade name,
trademark, or service xxxx of any third party.
(f) All products and materials containing a
Xxxx xxxx the proper federal registration notice where permitted by law.
3.19.6. Copyrights.
(a) Part 3.19.6 of the Disclosure Schedule
contains a complete and accurate list and summary description of all Copyrights.
Page is the owner of all right, title and interest in and to each of the
Copyrights, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(b) All the Copyrights have been registered
and are currently in compliance with formal legal requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the date of Closing.
(c) No Copyright is infringed or, to Page's
and the Stockholders' Knowledge, has been challenged or threatened in any way.
None of the subject matter of any of the Copyrights infringes or is alleged to
infringe any copyright of any third party or is a derivative work based on the
work of a third party.
(d) All works encompassed by the Copyrights
have been marked with the proper copyright notice.
3.19.7. Trade Secrets.
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(a) Page and the Stockholders have taken
reasonable precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(b) Page has good title and an absolute (but
not necessarily exclusive) right to use the Trade Secrets. The Trade Secrets are
not part of the public knowledge or literature, and, to Page and the
Stockholders' Knowledge, have not been used, divulged, or appropriated either
for the benefit of any Person (other than one or more of Page) or to the
detriment of Page. No Trade Secret is subject to any adverse claim or has been
challenged or threatened in any way.
3.20. DISCLOSURE.
3.20.1. No notice given pursuant to Section 5.5 will
contain any untrue statement or omit to state a material fact necessary to make
the statements therein or in this Agreement, in light of the circumstances in
which they were made, not misleading.
3.20.2. There is no fact or condition known to Page
and the Stockholders that has specific application to Page (other than general
economic or industry conditions) and that materially adversely affects or, as
far as Page and the Stockholders can reasonably foresee, materially threatens,
the assets, business, prospects, financial condition, or results of operations
of Page (on a consolidated basis) that has not been set forth in this Agreement
or the Disclosure Schedule.
3.21. RELATIONSHIPS WITH RELATED PERSONS.
Except as set forth in Part 3.21 of the Disclosure Schedule,
neither the Stockholders or any Related Person of the Stockholders or of Page,
since the first day of the next to last completed fiscal year of Page, has had
any interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to Page' businesses. Neither
Stockholders nor any Related Person of Stockholders is, or since the first day
of the next to last completed fiscal year of Page, has owned (of record or as a
beneficial owner) an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial interest
in any transaction with Page other than business dealings or transactions
conducted in the Ordinary Course of Business with Page at substantially
prevailing market prices and on substantially prevailing market terms, or (ii)
engaged in competition with Page with respect to any line of the products or
services of such Page (a "Competing Business") in any market presently served by
Page. Except as set forth in Part 3.21 of the Disclosure Schedule, neither the
Stockholders, nor any Related Person of the Stockholders, is a party to any
Contract with, or has any claim or right against, Page.
3.22. BROKERS OR FINDERS.
Except as set forth in Section 12.17, Page and the
Stockholders, and their agents, have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF IPI.
IPI represents and warrants to Page and the Stockholders as follows:
4.1. ORGANIZATION AND GOOD STANDING.
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IPI is a corporation duly organized, validly existing, and in
good standing under Delaware law with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its existing
obligations. IPI is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualifications, except where
the failure to be so qualified would not have a Material Adverse Effect.
4.2. AUTHORITY; NO CONFLICT.
4.2.1. This Agreement constitutes the legal, valid,
and binding obligation of IPI, enforceable against IPI in accordance with its
terms. Upon the execution and delivery by IPI of the IPI's Closing Documents
IPI's Closing Documents will constitute the legal, valid, and binding
obligations of IPI, enforceable against IPI in accordance with their respective
terms. IPI has the absolute and unrestricted right, power and authority to
execute and deliver this Agreement and the IPI's Closing Documents and to
perform its obligations under this Agreement and the IPI's Closing Documents.
4.2.2. Except as set forth in Schedule 4.2, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated Transactions
pursuant to:
(a) any provision of IPI's Organizational
Documents;
(b) any resolution adopted by the board of
directors or the stockholders of IPI;
(c) any Legal Requirement or Order to which
IPI may be subject; or
(d) any Contract to which IPI is a party or
by which IPI may be bound.
Except as set forth in Schedule 4.2, IPI is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.3. CAPITALIZATION.
The capitalization of IPI is as described in IPI's most recent
periodic report filed with the SEC. Except as set forth in Schedule 4.3, IPI has
not issued any capital stock since such filing, other than pursuant to the
exercise of employee stock options under IPI's stock option plan(s), the
issuance of shares of common stock to employees pursuant to IPI's employee stock
purchase plan(s) and pursuant to the conversion or exercise of Common Stock
Equivalents. No person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the Contemplated
Transactions. The issue and sale of the Stock Consideration will not obligate
Buyer to issue shares of Common Stock or other securities without consideration
(other than nominal consideration) to any Person (other than the Stockholders)
and will not result in a right of any holder of Buyer's securities to adjust the
exercise, conversion, exchange or reset price under such securities.
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4.4. SEC REPORTS; FINANCIAL STATEMENTS.
IPI has filed all reports required to be filed by it under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as IPI was required by law to file such material) (the foregoing
materials, including the exhibits thereto, being collectively referred to herein
as the "SEC Reports"). To IPI's Knowledge and as of their respective dates, the
SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of IPI included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of IPI and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.
4.5. MATERIAL CHANGES.
Since March 31, 2003, except as disclosed in the SEC Reports,
(i) there has been no event, occurrence or development that has had or that
could have a Material Adverse Effect on IPI, (ii) IPI has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in IPI's financial
statements pursuant to GAAP or required to be disclosed in filings made with the
SEC, (iii) IPI has not altered its method of accounting, and (iv) IPI has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock. Buyer does not have pending before the SEC any
request for confidential treatment of information.
4.6. LITIGATION.
Except as disclosed in the SEC Reports or Schedule 4.6, there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the Knowledge of IPI, threatened against or affecting IPI, any
Subsidiary of IPI or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have a Material Adverse Effect. Neither IPI nor any
Subsidiary of IPI, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There
has not been any formal investigation, and to the Knowledge of IPI, there is not
pending or contemplated, any investigation by the SEC involving IPI or any
current or former director or officer of IPI. The SEC has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by IPI or any Subsidiary of IPI under the Exchange Act or the Securities
Act.
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4.7. LISTING AND MAINTENANCE REQUIREMENTS.
IPI has not, in the 12 months preceding the date hereof,
received notice from the American Stock Exchange on which IPI's Common Stock is
listed or quoted to the effect that IPI is not in compliance with the listing or
maintenance requirements of the American Stock Exchange. IPI is, and has no
reason to believe that it will not, in the foreseeable future, continue to be,
in compliance with all such listing and maintenance requirements.
4.8. NO DISAGREEMENTS WITH ACCOUNTANTS AND LAWYERS.
There are no disagreements of any kind presently existing, or
reasonably anticipated by IPI to arise, between the accountants and lawyers
presently employed by IPI and IPI is current with respect to any fees owed to
its accountants and lawyers.
4.9. CERTAIN PROCEEDINGS.
There is no pending Proceeding that has been commenced against
IPI and that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions. To
IPI's Knowledge, no such Proceeding has been Threatened.
4.10. BROKERS OR FINDERS.
Except as disclosed to Page and the Stockholders, IPI and its
officers and agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement and will indemnify and hold
Page and the Stockholders harmless from any such payment alleged to be due by or
through IPI as a result of the action of IPI or its officers or agents.
5. COVENANTS OF PAGE AND THE STOCKHOLDERS PRIOR TO CLOSING DATE.
5.1. ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, Page
and the Stockholders will cause Page and its Representatives to, (a) afford IPI
and its Representatives and prospective lenders and their Representatives
(collectively, "IPI's Advisors") full and free access to each of Page's
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish IPI and IPI's Advisors with
copies of all such contracts, books and records, and other existing documents
and data as IPI may reasonably request, and (c) furnish IPI and IPI's Advisors
with such additional financial, operating, and other data and information as IPI
may reasonably request.
5.2. OPERATION OF THE BUSINESSES OF PAGE.
Between the date of this Agreement and the Closing Date, Page
and the Stockholders will:
5.2.1. Conduct the business of Page only in the
Ordinary Course of Business, except in connection with the preparation and
negotiation of this Agreement and consummation of the Contemplated Transactions
and all expenses in regard thereto shall be borne by Page and the Stockholders;
25
5.2.2. Use their Best Efforts to preserve intact the
current business organization of Page, keep available the services of the
current officers, employees, and agents of Page, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with Page;
5.2.3. Confer with IPI concerning operational matters
of a material nature; and
5.2.4. Otherwise report periodically to IPI
concerning the status of the business, operations, and finances of such Page.
5.3. NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement,
between the date of this Agreement and the Closing Date, Page and the
Stockholders will not cause Page to, without the prior consent of IPI, take any
affirmative action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in Section
3.14 is likely to occur.
5.4. REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement,
Page and the Stockholders will, make all filings required by Legal Requirements
to be made by them in order to consummate the Contemplated Transactions. Between
the date of this Agreement and the Closing Date, Page and the Stockholders will
(a) cooperate with IPI with respect to all filings that IPI elects to make or is
required by Legal Requirements to make in connection with the Contemplated
Transactions, and (b) cooperate with IPI in obtaining all consents identified in
Schedule 3.2.
5.5. NOTIFICATION.
Between the date of this Agreement and the Closing Date, Page
and the Stockholders will promptly notify IPI in writing if Page or the
Stockholders becomes aware of any fact or condition that causes or constitutes a
Breach of any of Page's or Stockholders' representations and warranties as of
the date of this Agreement, or if Page or the Stockholders become aware of the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause of constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Schedule if the Disclosure Schedule were dated the date of the
occurrence of discovery of any such fact or condition, Page and the Stockholders
will promptly deliver to IPI a supplement to the Disclosure Schedule specifying
such change. During the same period, Page and Stockholders will promptly notify
IPI of the occurrence of any Breach of any covenant of Page or the Stockholders
in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible or unlikely.
5.6. PAYMENT OF INDEBTEDNESS BY RELATED PERSONS.
Except as expressly provided in this Agreement, all
indebtedness owed to Page by either the Stockholders, or any Related Person to
the Stockholders, including without limitation all notes receivable, employee
advances, and shareholder advances, will be paid in full prior to Closing.
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5.7. NO NEGOTIATION.
Until such time, if any, as this Agreement is terminated
pursuant to Section 10, Page and the Stockholders and their Representatives will
not, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than IPI) relating to any transaction involving the sale of the
business or assets (other than in the Ordinary Course of Business) of Page, or
any of the capital stock of Page, or any merger, consolidation, business
combination, or similar transaction involving Page.
5.8. BEST EFFORTS.
Between the date of this Agreement and the Closing Date, Page
and the Stockholders will use their Best Efforts to cause the conditions in
Sections 7 and 8 to be satisfied.
6. COVENANTS .
6.1. APPROVALS OF GOVERNMENTAL BODIES.
Between the date of this Agreement and the Closing Date, IPI
and Page will, and will cause each Related Person to, (i) cooperate with each
other with respect to all filings that the are required to be made by Legal
Requirements in connection with the Contemplated Transactions, and (ii)
cooperate with Page in obtaining all governmental consents identified in Part
3.2 of the Disclosure Schedule; provided that this Agreement will not require
IPI to dispose of or make any change in any portion of its business or to incur
any other burden to obtain a Governmental Authorization.
6.2. BEST EFFORTS.
Between the date of this Agreement and the Closing Date, IPI,
Page and the Stockholders will use its Best Efforts to cause the conditions in
Sections 7 to be satisfied.
6.3. PAGE STOCKHOLDER APPROVAL; PROXY STATEMENT;
QUALIFICATION PERMIT AND REGISTRATION STATEMENT.
6.3.1. Page, acting through its Board of Directors,
shall: (i) call a meeting of its stockholders (the "Page Stockholders' Meeting")
for the purpose of voting upon this Agreement; (ii) hold the Page Stockholders'
Meeting as soon as practicable; and (iii) subject to its fiduciary duties under
applicable Law, recommend to its stockholders the approval and adoption of this
Agreement and the transactions contemplated hereby and take all reasonable and
lawful action to solicit and obtain such approval and adoption. The record date
for the Page Stockholders' Meeting shall be a date chosen by the Board of
Directors of Page.
6.3.2. As soon as practicable after the execution of
this Agreement, (i) Page shall prepare a proxy statement (such proxy statement,
and any amendments or supplements thereto, the "Proxy Statement") with respect
to the Page Stockholders' Meeting and (ii) IPI shall prepare and file with the
California Department of Corporations (the "Department") an application for a
permit for qualification under Section 25121 of the California Corporate
Securities laws of 1968 (the "Securities Laws") (a "Qualification Permit") of
the IPI Stock Consideration to be issued pursuant to this Agreement and an
27
application for a fairness hearing ("Fairness Hearing") before the California
Commissioner of Corporations pursuant to Section 25142 of the Securities Laws
together with the information statement included therein (the "Information
Statement")and any other documents required by the Department so that the
issuance of the IPI Stock Consideration be as exempt transaction under Section
3(a)(10) of the Securities Act of 1933. IPI and Page will notify each other of
the receipt of any comments from the Department or its staff and of any request
by the Department or its staff for amendments or supplements to the Information
Statement for additional information and will supply each other with copies of
all correspondence between each other or any of its representatives, on the one
hand, and the Department or its staff, on the other hand, with respect to the
Information Statement. Each party shall give the other party and its counsel the
opportunity to review the Proxy Statement prior to it being sent to Stockholders
of Page and the Information Statement prior to its being filed with the
Department. Each party shall give the other party and its counsel the
opportunity to review all amendments and supplements to the Information
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the Department. Each of
Page and IPI agrees to use its reasonable best efforts, after consultation with
the other parties hereto, to respond promptly to all such comments of and
requests by the Department. If at any time prior to the adoption of this
Agreement by Page's stockholders there shall occur any event which must be set
forth in an amendment or supplement to the Information Statement, Page will
inform IPI and cooperate with IPI in filing an amendment to the Application for
the Fairness Hearing.
6.3.3. In the event that a Qualification Permit is
not issued by the Department on or before February 1, 2004 IPI shall prepare and
file with the SEC a registration statement on Form S-4 (together with all
amendments thereto, the "Registration Statement") in which the Proxy Statement
shall be included, in connection with the registration under the Securities Act
of the shares of IPI Stock to be issued to the stockholders of Page in
connection with the Merger. IPI and Page will notify each other of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or the Registration
Statement or for additional information and will supply each other with copies
of all correspondence between each other or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. Each party shall give the other party and its counsel
the opportunity to review the Proxy Statement prior to it being filed with the
SEC and shall give the other party and its counsel the opportunity to review all
amendments and supplements to the Proxy Statement and all responses to requests
for additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of Page and IPI agrees to use its reasonable
best efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC. IPI and Page shall use
their reasonable best efforts to cause the Registration Statement to become
effective as promptly as practicable, and, prior to the effective date of the
Registration Statement, IPI shall take all or any action required under any
applicable federal or state securities laws in connection with such actions and
the preparation of the Registration Statement. As promptly as practicable after
the Registration Statement shall have become effective, Page shall mail the
Proxy Statement to its stockholders. If at any time prior to the adoption of
this Agreement by Page's stockholders there shall occur any event which must be
set forth in an amendment or supplement to the Proxy Statement, Page will
prepare and mail to its stockholders such an amendment or supplement.
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6.3.4. Except for a withdrawal, qualification or
modification of a recommendation by the Board of Directors of Page, no amendment
or supplement to the Information Statement, Proxy Statement, or the Registration
Statement will be made by IPI or Page without the approval of the other party
(such approval not to be unreasonably withheld or delayed).
7. CONDITIONS.
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE.
The respective obligation of each party to close
shall be subject to the satisfaction or waiver, where permissible, prior to the
Closing Date, of the following conditions:
7.1.1. STOCKHOLDER APPROVAL. Page stockholder
approval shall have been obtained in compliance with the CBCA.
7.1.2. ISSUANCE OF QUALIFICATION PERMIT OR
EFFECTIVENESS OF REGISTRATION STATEMENT. The Department shall have issued a
Qualification Permit or the SEC shall have declared the Registration Statement
on Form S-4 "Effective", and no Stop Order or proceeding for that purpose shall
have been initiated or threatened in writing by the Department or the SEC.
7.1.3. NO ORDER. There shall not have been issued
order, or issued or enacted any Law, which prohibits or has the effect of
prohibiting the consummation of the Merger or makes such consummation illegal.
7.1.4. APPROVALS. Other than the filing of merger
documents in accordance with the DGCL and the CBCA, all authorizations,
consents, waivers, orders or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity, the failure
of which to obtain, make or occur would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, shall have been
obtained, been filed or have occurred.
7.2. CONDITIONS TO OBLIGATION OF IPI AND MERGER SUB TO
CLOSE.
The obligations of IPI and Merger Sub to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following additional conditions, unless waived in writing by IPI:
7.2.1. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Page and the Stockholders contained in this
Agreement (considered individually) shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as if made
at the Closing Date (except that representations and warranties given as of a
specific date shall be true and correct only as of such date), except as would
not, in the aggregate, have a Material Adverse Effect. For purposes of this
Section 7.2.1, the representations and warranties of Page and the Stockholders
contained in this Agreement shall be deemed true and correct in all material
respects, and Page and the Stockholders shall not be deemed to have breached any
such representation or warranty as a consequence of the existence of any fact,
event or circumstance, inconsistent with any representation or warranty, unless
such fact, event or circumstance, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
of Page and the Stockholders contained in this Agreement, has had or would
reasonably be expected to have a Material Adverse Effect. IPI shall have
received a certificate signed on behalf of Page by the chief executive officer
or the chief financial officer of Page to such effect and a certificate signed
by the Stockholders to such effect.
29
7.2.2. PERFORMANCE OF OBLIGATIONS OF PAGE. Page shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and IPI shall have
received a certificate signed on behalf of Page by the chief executive officer
or the chief financial officer of Page to such effect.
7.2.3. PAGE MATERIAL ADVERSE EFFECT. Since the date
of this Agreement, there shall have been no event, development or state of fact
that results in or would reasonably be expected to result in a Material Adverse
Effect.
7.2.4. CONSENT. Page shall have obtained the consent
of each Person whose consent shall be required in connection with the
transactions contemplated hereby under any material Contract except where the
failure to obtain any such consent, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; provided that in no
event shall Page modify any terms of any Material Contract or make any payment
to any third party, in connection with obtaining such consents, without the
prior written consent of IPI, which consent shall not be unreasonably withheld
or delayed.
7.2.5. OPINION OF PAGE'S COUNSEL. Page shall have
delivered an opinion of its counsel, dated as of the Closing Date, in the form
and substance acceptable to IPI and Merger Sub.
7.2.6. CONSENT OF LESSOR. Page shall have delivered
to Merger Sub and IPI , from Southfield Crestone LLC (the "Lessor"), a consent
to the assignment of the building lease (the "Lease") dated December 1999, on
premises 000 X. Xxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxx from Page Digital
Incorporated, Xxxxxxxx Xxxx and Xxx Xxxx, collectively as Assignor, to Merger
Sub as Assignee
7.3. CONDITIONS TO OBLIGATION OF PAGE TO CLOSE.
The obligation of Page to close shall be subject to the
satisfaction at or prior to the Closing Date of the following additional
conditions, unless waived in writing by Page:
7.3.1. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of IPI and Merger Sub contained in this Agreement
(considered individually) shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as if made at the
Closing Date (except that representations and warranties given as of a specific
date shall be true and correct only as of such date), except as would not, in
the aggregate, have a Material Adverse Effect. For purposes of this Section
7.3.1, the representations and warranties of IPI and Merger Sub contained in
this Agreement shall be deemed true and correct in all material respects, and
IPI and Merger Sub shall not be deemed to have breached any such representation
and warranty as a consequence of the existence of any fact, event or
circumstance, inconsistent with any representation or warranty, unless such
fact, event or circumstance, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
of IPI and Merger Sub contained in this Agreement, has had or would reasonably
be expected to have a Material Adverse Effect. Page shall have received a
certificate signed on behalf of IPI by the chief executive officer or the chief
financial officer of IPI to such effect.
30
7.3.2. PERFORMANCE OF OBLIGATIONS OF IPI AND MERGER
SUB. Each of IPI and Merger Sub shall have performed in all material respects
all obligations required to be performed by them under this Agreement at or
prior to the Closing Date, and Page shall have received a certificate from each
of IPI and Merger Sub, signed on behalf of IPI and Merger Sub, by their
respective chief executive officer or the chief financial officer to such
effect.
7.3.3. Opinion of IPI's Counsel. IPI shall have
delivered an opinion of its counsel, dated as of the Closing Date in the form
and substance acceptable to Page.
8. INTENTIONALLY LEFT BLANK.
9. OTHER TERMS.
9.1. EMPLOYMENT AGREEMENTS. IPI shall enter into employment
agreements (the "Employment Agreements") with each of Xxxxxxxx Xxxx and Xxxxx
Xxxxxx on substantially the terms set forth in attached Exhibits "G" and "H."
9.2. BOARD OF DIRECTORS. No later than 90 days after the
Closing Date, IPI shall use its best efforts to cause Xxxxxxxx Xxxx to be
elected to IPI's Board of Directors.
9.3 ASSIGNMENT AND ASSUMPTION AGREEMENT. Provided the Lessor
consents, as provided in Section 7.2.6 herein, Merger Sub shall execute an
Assignment and Assumption Agreement of the Lease, pursuant to which Merger Sub
will agree to perform, as a direct obligation to the Lessor, all of the
provisions , covenants, and obligations of Xxxxxxxx Xxxx and Xxx Xxxx under the
Lease. Pursuant to the Assignment and Assumption Agreement, Merger Sub will
indemnify and hold harmless Xxxxxxxx Xxxx and Xxx Xxxx from any and all
obligations and claims arising under the Lease, and IPI will guarantee the
obligations of Merger Sub under such indemnification.
9.4 REMOVAL OF PERSONAL GUARANTEE. IPI and Merger Sub shall
use their reasonable best efforts to negotiate the removal of Xxxxxxxx Xxxx"s
and Xxx Xxxx'x personal guarantee from the Lease. Merger Sub shall reimburse
Xxxxxxxx Xxxx for any reasonable and necessary expenses Xxxxxxxx Xxxx and Xxx
Xxxx may incur with respect to the restructuring of the Lease.
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10. TERMINATION.
10.1. TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
10.1.1. by either IPI or Page, if a material Breach
of any provision of this Agreement has been committed by any party, and such
Breach has not been waived or cured within 7 days of written notice specifying
such breach;
10.1.2. (i) by IPI if any of the conditions in
Section 7.1., and 7.2 has not been satisfied as of the Closing Date, or if
satisfaction of such a condition is, or becomes impossible, (other than through
the failure of IPI to comply with its obligations under this Agreement) and IPI
has not waived such condition on or before the Closing Date; or (ii) by Page, if
any of the conditions in Section 7.3 has not been satisfied or if satisfaction
of such a condition is or becomes impossible (other than through the failure of
Page or the Stockholders to comply with their obligations under this Agreement)
and Page has not waived such condition on or before the Closing Date; or
10.1.3. by written agreement of IPI and Page.
10.1.4. If Page has satisfied the conditions
contained in Sections 7.1.1, 7.2.1, 7.2.2, 7.2.3, 7.2.4 and 7.2.5, and Page is
not in default of this Agreement, and IPI shall terminate this Agreement without
cause, other than as provided in this Section 10, then IPI shall pay to Page, as
Page's and the Stockholders' sole and exclusive remedy, in accordance with this
Section 10.1.4:
(i) $130,000 if the termination shall occur
within 60 days subsequent to the date of this Agreement.
(ii) $70,000 (total of $200,000) if the
termination shall occur between 60 and 90 days subsequent to the date of this
Agreement.
(iii) $40,000 (total of $240,000) if the
termination shall occur at any time subsequent to 90 days from the date of this
Agreement.
10.2. EFFECT OF TERMINATION.
Each party's right of termination under Section 10.1 is in
addition to any other rights it may have under this Agreement or otherwise, and
the exercise of a right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 10.1, all further obligations
of the parties under this Agreement will terminate, except that the obligations
in Sections 11.2, and 11.3 will survive; provided, however, that if this
Agreement is terminated by a party because of the Breach of the Agreement by the
other party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
11. INDEMNIFICATION REMEDIES.
32
11.1. SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE.
All representations, warranties, covenants, and obligations in
this Agreement, the Disclosure Schedule, the supplements to the Disclosure
Schedule, and any certificate or document delivered pursuant to this Agreement
will survive the Closing for a period of 18 months. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants
and obligations.
11.2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY PAGE AND
THE STOCKHOLDERS.
Page and the Stockholders, jointly and severally, will
indemnify and hold harmless IPI and Merger Sub and their respective
Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (excluding incidental
and consequential damages, for which Page and the Stockholders shall have no
liability whatsoever under this Agreement or any other agreement contemplated
hereby), expense (including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a third party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
11.2.1. any Breach of any representation or warranty
made by Page and the Stockholders in this Agreement (without giving effect to
any supplement to the Disclosure Schedule), the Disclosure Schedule, the
supplements to the Disclosure Schedule, or any other certificate or document
delivered by Page and the Stockholders pursuant to this Agreement;
11.2.2. any Breach of any representation or warranty
made by Page and the Stockholders in this Agreement as if such representation or
warranty were made on and as of the Closing Date without giving effect to any
supplement to the Disclosure Schedule, other than any such Breach that is
disclosed in a supplement to the Disclosure Schedule and is expressly identified
in the certificate delivered pursuant to Section 7.2.1 as having caused the
condition specified in Section 7.1 not to be satisfied;
11.2.3. any product shipped or manufactured by, or
any services provided by, Page prior to the Closing Date;
11.2.4. any claim by any Person other than Trumpet
Partners LLC for brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by any such
Person with Page or the Stockholders (or any Person acting on their behalf) in
connection with any of the Contemplated Transactions.
The remedies provided in this Section 11.2 will not be exclusive of or limit any
other remedies that may be available to IPI or the other Indemnified Persons.
Notwithstanding anything contained in this Section 11.2, Page and Stockholders
will have no liability (for indemnification or otherwise) until the total
33
Damages exceed $50,000, and there only to the extent such Damages exceed
$50,000. In no event shall Page and the Stockholders be liable to IPI or any
third party basing a claim for damages on a duty of Page and the Stockholders
for total Damages of more than $7 million.
11.3. INDEMNIFICATION AND PAYMENT OF DAMAGES BY IPI.
IPI will indemnify and hold harmless Page, and will pay to
Page the amount of any Damages (excluding incidental and consequential damages,
for which IPI shall have no liability whatsoever under this Agreement or any
other agreement contemplated hereby), arising, directly or indirectly, from or
in connection with (a) any material Breach of any representation or warranty
made by IPI in this Agreement or in any certificate delivered by IPI pursuant to
this Agreement, (b) any material Breach by IPI of any covenant or obligation of
IPI in this Agreement, or (c) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with IPI (or any Person
acting on its behalf) in connection with any of the Contemplated Transactions.
IPI will have no liability (for indemnification or otherwise) until the total
Damages exceed $50,000, and then only to the extent such Damages exceed $50,000.
In no event shall IPI be liable to Page, or any third party basing a claim for
Damages on a duty of IPI to Page, for total Damages of more than $5 Million.
11.4. TIME LIMITATIONS.
If the Closing occurs, Page and the Stockholders will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 3.3, 3.11, 3.13, and 3.19,
unless on or before December 31, 2005, IPI notifies Page and the Stockholders of
a claim specifying the factual basis of that claim in reasonable detail to the
extent then known by IPI. A claim with respect to Section 3.3, 3.11, 3.13, or
3.19, or a claim for indemnification or reimbursement not based upon any
representation or warranty or any covenant or obligation to be performed and
complied with prior to the Closing Date, may be made at any time. If the Closing
occurs, IPI will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on or before
December 31, 2003, Page notifies IPI of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Page.
11.5. PROCEDURE FOR INDEMNIFICATION -- THIRD-PARTY CLAIMS.
11.5.1. Promptly after receipt by an indemnified
party of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to give
such notice.
11.5.2. If any Proceeding referred to in Section
11.5.1. is brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the indemnifying
party will, unless the claim involves Taxes, be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (i) the indemnifying party
is also a party to such Proceeding and the indemnified party determines in good
faith that joint representation would be inappropriate, or (ii) the indemnifying
party fails to provide reasonable assurance to the indemnified party of its
34
financial capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), to assume the defense of such Proceeding with
counsel satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Section 10 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims may
be effected by the indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent. If
notice is given to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any compromise or settlement
effected by the indemnified party.
11.5.3. Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
11.5.4. Page and the Stockholders hereby consent to
the nonexclusive jurisdiction of any court in which a Proceeding is brought
against any Indemnified Person for purposes of any claim that an Indemnified
Person may have under this Agreement with respect to such Proceeding or the
matters alleged therein, and agree that process may be served on Page and the
Stockholders with respect to such a claim anywhere in the world.
11.6. PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS.
A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought.
12. GENERAL PROVISIONS.
12.1. GOVERNING LAW.
35
This Agreement shall be governed by and must be construed in
accordance with the laws of the State of California.
12.2. FURTHER ASSURANCES.
Each party to this Agreement shall execute all instruments and
documents and take all actions as may be reasonably required to effectuate this
Agreement.
12.3. VENUE AND JURISDICTION.
For purposes of venue and jurisdiction, this Agreement shall
be deemed made and to be performed in the City of San Diego, California.
12.4. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one
document.
12.5. TIME OF ESSENCE.
Time and strict and punctual performance are of the essence
with respect to each provision of this Agreement.
12.6. ATTORNEY'S FEES.
In the event any litigation, arbitration, mediation, or other
proceeding ("Proceeding") is initiated by any party against any other party to
enforce, interpret or otherwise obtain judicial or quasi judicial relief in
connection with this Agreement, the prevailing party in such Proceeding shall be
entitled to recover from the unsuccessful party all costs, expenses, actual
attorney's and expert witness fees, relating to or arising out of (a) such
Proceeding (whether or not such Proceeding proceeds to judgment), and (b) any
post judgment or post award proceeding including without limitation one to
enforce any judgment or award resulting from any such Proceeding. Any such
judgment or award shall contain a specific provision for the recovery of all
such subsequently incurred costs, expenses, actual attorney's and expert witness
fees.
12.7. MODIFICATION.
This Agreement may be modified only by a contract in writing
executed by the party to this Agreement against whom enforcement of such
modification is sought.
12.8. HEADINGS.
The headings of the Paragraphs of this Agreement have been
included only for convenience, and shall not be deemed in any manner to modify
or limit any of the provisions of this Agreement, or be used in any manner in
the interpretation of this Agreement.
12.9. PRIOR UNDERSTANDINGS.
36
This Agreement contains the entire agreement between the
parties to this Agreement with respect to the subject matter of this Agreement,
is intended as a final expression of such parties' agreement with respect to
such terms as are included in this Agreement, is intended as a complete and
exclusive statement of the terms of such agreement, and, except to the extent
other documents, agreements or understandings are referred to or incorporated to
this Agreement, supersedes all negotiations, stipulations, understandings,
agreements, representations and warranties, if any, with respect to such subject
matter, which precede or accompany the execution of this Agreement.
12.10. INTERPRETATION.
Whenever the context so requires in this Agreement, all words
used in the singular shall be construed to have been used in the plural (and
vice versa), each gender shall be construed to include any other genders.
12.11. PARTIAL INVALIDITY.
Each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement or the application of such provision to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected by such invalidity or unenforceability, unless such provision or such
application of such provision is essential to this Agreement.
12.12. SUCCESSORS-IN-INTEREST AND ASSIGNS.
Neither party shall assign or delegate to any other Person
this Agreement or any rights or obligations under this Agreement. Subject to any
restriction on transferability contained in this Agreement, this Agreement shall
be binding upon and shall inure to the benefit of the successors in interest and
assigns of each party to this Agreement. Nothing in this Paragraph shall create
any rights enforceable by any person not a party to this Agreement, except for
the rights of the successors in interest and assigns of each party to this
Agreement, unless such rights are expressly granted in this Agreement to other
specifically identified persons.
12.13. NOTICES.
All notices or other communications required or permitted to
be given to a party to this Agreement shall be in writing and shall be
personally delivered, sent by certified mail, postage prepaid, return receipt
requested, or sent by an overnight express courier service that provides written
confirmation of delivery, to such party at the following respective address:
Page Digital Incorporated
0000 Xxxxx X. Xxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
37
Stockholders:
Xxxxxxxx Xxxx
Xxxxx Xxxxxx
c/o Page Digital Incorporated
0000 Xxxxx X. Xxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxxxxx & Xxxxx, LLP
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn.: Xxxxx Xxxxxxxxx, Esq.
IPI AND MERGER SUB:
------------------
c/o Island Pacific, Inc.
Attn.: Ran Xxxxxx
00000 Xxx Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
with a copy to:
Solomon, Ward, Seidenwurm & Xxxxx
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Each such notice or other communication shall be deemed given, delivered and
received upon its actual receipt, except that if it is sent by mail in
accordance with this Paragraph, then it shall be deemed given, delivered and
received three days after the date such notice or other communication is
deposited with the United States Postal Service in accordance with this
Paragraph. Any party to this Agreement may give a notice of a change of its
address to the other party to this Agreement.
12.14. WAIVER.
Any waiver of a default under this Agreement must be in
writing and shall not be a waiver of any other default concerning the same or
any other provision of this Agreement. No delay or omission in the exercise of
any right or remedy shall impair such right or remedy or be construed as a
waiver. A consent to or approval of any act shall not be deemed to waive or
render unnecessary consent to or approval of any other or subsequent act.
12.15. DRAFTING AMBIGUITIES.
Each party to this Agreement and its legal counsel have
reviewed and revised this Agreement. The rule of construction that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or of any amendments or exhibits to this
Agreement.
12.16. JOINT AND SEVERAL LIABILITY.
38
The obligations of the Stockholders under this Agreement shall
be apportioned 88% to Xxxxxxxx Xxxx and 12% to Xxxxx Xxxxxx.
12.17. EXPENSES.
Except as otherwise expressly provided in this Agreement, each
party to this Agreement will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Page will pay all amounts payable to
Trumpet Partners, LLC in connection with this Agreement and the Contemplated
Transactions. The Stockholders will cause Page not to incur any out-of-pocket
expenses in connection with this Agreement. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
12.18. PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to
this Agreement or the Contemplated Transactions will be issued, if at all, at
such time and in such manner as IPI determines. Unless consented to by IPI in
advance or required by Legal Requirements, prior to the Closing, Page and the
Stockholders shall keep this Agreement strictly confidential and may not make
any disclosure of this Agreement to any Person. Page and the Stockholders and
IPI will consult with each other concerning the means by which Page's employees,
customers, and suppliers and others having dealings with Page will be informed
of the Contemplated Transactions, and IPI will have the right to be present for
any such communication.
12.19. CONFIDENTIALITY.
Page and the Stockholders shall at all times maintain in
confidence, and will maintain in confidence, any written, oral, or other
information related to or obtained in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
legal proceedings.
12.20. TERMINATION OF EMPLOYMENT AGREEMENTS.
12.20.1. Effective upon the Closing any employment
agreement subsisting between Page and any Stockholder shall be terminated and of
no further force and effect.
12.20.2. Each Shareholder fully and forever releases
and discharges Page, IPI and Merger Sub, their agents, employees, officers,
directors, attorneys and assigns from any and all claims, demands, damages,
liabilities and obligations, whether known or unknown, in any way relating to
the employment agreements that were terminated in accordance with this Section
12.20.
39
12.20.3. Each Shareholder expressly waives all rights
under Section 1542 of the California Civil Code with regard to the release set
forth in this Section 12.20, which provides:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if know by him, must have materially affected his
settlement with the debtor.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
ISLAND PACIFIC INC., PAGE DIGITAL INCORPORATED,
a Delaware corporation a Colorado corporation
By: //SS By:
---------------------------------
Name: RAN X. XXXXXX Name: XXXXXXXX XXXX
------------------------------- ------------------------------
Its: CHIEF FINANCIAL OFFICER Its: PRESIDENT
------------------------------- ------------------------------
Stockholders:
//SS
-----------------------------------
Xxxxxxxx Xxxx, an Individual
//SS
-----------------------------------
Xxxx Xxxxxx, an individual
40
EXHIBIT "C"
LIST OF SURVIVING OFFICERS AND DIRECTORS
Xxxxxx Xxxxx, President and Chief Executive Officer
Ran Xxxxxx, Chief Financial Officer
