ASSET PURCHASE AGREEMENT
dated as of January 22, 1997,
by and among
COGNITIVE COMMUNICATIONS, INC.,
XXXXX XXXXXX,
XXXXXXX XXXXXXX
and
COGNITIVE COMMUNICATIONS, LLC
TABLE OF CONTENTS
1. Definitions..............................................................1
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1.1 Defined Terms...................................................1
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1.2 Use of Defined Terms............................................8
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1.3 Accounting Terms................................................8
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1.4 Sections, Exhibits and Schedules................................8
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1.5 Miscellaneous Terms.............................................8
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2. Sale and Payment.........................................................8
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2.1 Sale and Purchase of the Assets.................................8
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2.2 CCL-DL Interests................................................8
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2.3 Assumption of Liabilities.......................................9
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2.4 Allocation of Consideration.....................................9
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3. The Closing..............................................................9
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4. Representations and Warranties of the Seller and the Stockholders........9
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4.1 Organization, Good Standing, Power and Qualification............9
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4.2 Capital Structure..............................................10
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4.3 Subsidiaries...................................................10
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4.4 Consents.......................................................10
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4.5 No Conflict....................................................10
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4.6 No Brokers.....................................................11
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4.7 Investment Purpose; Private Placement..........................11
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4.8 Disclosure.....................................................12
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4.9 Financial Statements...........................................12
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4.10 Absence of Undisclosed Liabilities.............................12
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4.11 Absence of Specified Changes...................................12
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4.12 Taxes..........................................................14
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4.13 Insurance......................................................15
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4.14 Contracts......................................................15
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4.15 Real Property..................................................16
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4.16 Tangible Property..............................................17
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4.17 Intangible Property; Intellectual Property.....................18
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4.18 Software.......................................................18
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4.19 Employee Benefit Plans.........................................19
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4.20 Employees......................................................21
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4.21 Inventory......................................................21
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4.22 Accounts Receivable............................................21
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4.23 Customers and Suppliers........................................21
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4.24 Compliance With Laws...........................................22
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4.25 Licenses and Permits...........................................22
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4.26 Legal Proceedings..............................................22
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4.27 Absence of Certain Practices...................................23
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4.28 Intercompany Transactions......................................23
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4.29 Books and Records..............................................23
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4.30 Bulk Sales and Transfer Taxes..................................23
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4.31 Assets.........................................................23
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5. Representations and Warranties of the Purchaser.........................24
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5.1 Organization, Standing, Power and Qualification................24
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5.2 Authorization..................................................24
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5.3 No Conflict....................................................25
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5.4 Consents.......................................................25
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5.5 Legal Proceedings..............................................25
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5.6 No Brokers.....................................................25
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5.7 Disclosure.....................................................25
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6. Covenants and Other Agreements..........................................25
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6.1 Employment, Incentive Compensation and Put Agreements;
Sale Options; Managers.........................................26
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6.2 Reasonable Efforts; Further Assurances.........................26
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6.3 Collections....................................................26
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6.4 Option Plan....................................................27
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6.5 Change of Name.................................................27
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7. Deliveries by the Seller and the Stockholders at the Closing............27
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8. Deliveries by the Purchaser at the Closing..............................28
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9.1 Survival of Representations, Warranties, Covenants
and Agreements.................................................29
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9.2 General Indemnity..............................................29
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9.3 Claims.........................................................30
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9.4 Disputes.......................................................31
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10. Cooperation.............................................................31
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11. Registration Rights.....................................................32
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11.1 Demand Registration............................................32
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11.2 Piggyback Registration.........................................33
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11.3 Conditions to Registration.....................................33
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11.4 Provisions Regarding Registration Generally....................33
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11.5 Registration Procedures........................................34
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11.6 Indemnification................................................35
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12. Miscellaneous...........................................................36
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12.1 Fees and Expenses..............................................36
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12.2 Publicity; Confidentiality.....................................36
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12.3 Headings.......................................................37
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12.4 Notices........................................................37
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12.5 Successors and Assigns.........................................38
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12.6 Governing Law: Consent to Jurisdiction.........................38
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12.7 Entire Agreement...............................................39
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12.8 Counterparts...................................................39
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12.9 Severability...................................................39
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12.10 No Prejudice...................................................39
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12.11 No Third Party Beneficiaries...................................39
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12.12 Amendment and Modification.....................................39
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12.13 Waiver.........................................................39
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12.14 Right to Setoff................................................39
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SCHEDULES
Schedule 2.1(a) - Excluded Assets
Schedule 2.1(b) - Assets
Schedule 2.3 - Assumed Contracts
Schedule 4.1 - Qualification of the Seller
Schedule 4.2 - Capital Structure
Schedule 4.4 - Seller's and Stockholders' Consents
Schedule 4.9 - Financial Statements
Schedule 4.10 - Absence of Undisclosed Liabilities
Schedule 4.11 - Absence of Specified Changes
Schedule 4.12 - Taxes
Schedule 4.13 - Insurance
Schedule 4.14 - Contracts
Schedule 4.15 - Real Property
Schedule 4.16 - Tangible Property
Schedule 4.17 - Intangible Property
Schedule 4.18 - Software
Schedule 4.19 - Employee Benefit Plans
Schedule 4.20 - Employees
Schedule 4.23 - Customers and Suppliers
Schedule 4.24 - Judgments
Schedule 4.25 - Licenses and Permits
Schedule 4.26 - Legal Proceedings
Schedule 4.28 - Intercompany Transactions
Schedule 5.4 - Purchaser's Consents
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EXHIBITS
Exhibit A - Xxxx of Sale
Exhibit B - Agreement among IPL, Seller and Optionholders
Exhibit C - Employment Agreements
Exhibit D - Incentive Compensation Agreement
Exhibit E - Put Agreement
Exhibit F - Sale Options
Exhibit G - Opinion of Seller's and Stockholders' Counsel
Exhibit H - Limited Liability Company Operating Agreement of
the Purchaser
Exhibit I - Opinion of Purchaser's Counsel
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as
of January 22, 1997, by and among Cognitive Communications, Inc., a Connecticut
corporation (the "Seller"), Xxxxx Xxxxxx and Xxxxxxx Xxxxxxx (collectively, the
"Stockholders") and Cognitive Communications, LLC, a Delaware limited liability
company (the "Purchaser") which is a majority-owned subsidiary of Manhattan
Transfer/Edit, Inc., a Delaware corporation ("MTE") which is a wholly-owned
subsidiary of International Post Limited, a Delaware corporation ("IPL").
W I T N E S S E T H :
WHEREAS, the Seller is in the business of providing strategic consulting
services in the area of communications and content strategy for, and research
relating to the implementation of, and the design and production of, intranets,
extranets and internets and is 100% owned by the Stockholders; and
WHEREAS, the Purchaser desires to acquire from the Seller, and the Seller
desires to sell to the Purchaser, certain of the Seller's assets and properties,
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. Definitions
1.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
Affiliate: With respect to any Person, any director or officer of
such Person and any member of the immediate family of any such director or
officer and any other Person who or which, directly or indirectly, controls, is
controlled by, or is under common control with such Person.
Affiliate Contracts: Defined in Section 4.20.
Agreement: This Asset Purchase Agreement, including all of the
Exhibits and Schedules annexed hereto.
Assets: All of the Seller's properties, assets, privileges, rights,
interests and claims, real and personal, tangible and intangible, of every type
and description (including all Intangible Property, Tangible Property and Real
Property of the Seller), except the Excluded Assets and any Assets disposed of
by the Seller prior to the Closing not in violation of this Agreement, whether
owned or leased or otherwise possessed, used or held for use in the Business,
whether or not
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described in the Schedules to this Agreement and whether or not reflected on the
Financial Statements, now in existence or hereafter acquired by the Seller prior
to the Closing.
Assumed Contracts: All Contracts which are listed on Schedule 2.3
annexed hereto or which the Purchaser shall agree to assume in writing prior to
the Closing.
Assumed Liabilities: The liabilities, duties and obligations of the
Seller expressly agreed to be assumed by the Purchaser pursuant to Section
2.3(a) and such other liabilities, duties and obligations of the Seller, if any,
as the Purchaser, in its sole discretion, shall expressly agree to assume in
writing prior to the Closing.
Base EBITDA: (a) With respect to the Purchaser's fiscal year ending
July 31, 1998, One Million One Hundred Thousand Dollars ($1,100,000) and (b)
with respect to the Purchaser's fiscal years ending July 31, 1999; July 31,
2000; July 31, 2001 and July 31, 2002, the greater of (i) One Million One
Hundred Thousand Dollars ($1,100,000) and (ii) the Purchaser's highest EBITDA
for any previous fiscal year.
Benefit Plans: Defined in Section 4.19.
Xxxx of Sale: A Xxxx of Sale and Assignment and Instrument of
Assumption substantially in the form annexed hereto as Exhibit A.
Business: The business currently conducted by the Seller,
including, without limitation, providing strategic consulting services in the
area of communications and content strategy for, and research relating to the
implementation of, and the design and production of, intranets, extranets and
internets.
Business Day: Any day of the year on which banks are not required
or authorized to be closed in the State of New York.
Cash Portion: Defined in Section 2.1.
CCL-DL Interests: Defined in Section 2.2.
CCL-DL Membership Interests: The ownership interests in the
Purchaser.
Closing: Defined in Article 3.
Closing Date: Defined in Article 3.
Code: The Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
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Commission: Securities and Exchange Commission.
Company Group Member: The Seller and its subsidiaries and
predecessors, if any, and (i) each Person that is or was at any time within the
preceding five (5) Benefit Plan years a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the Seller or
any of its subsidiaries or predecessors, if any, (ii) each trade or business,
whether or not incorporated, that is or was at any time within the preceding
five (5) Benefit Plan years under common control (within the meaning of Section
414(c) of the Code) with the Seller or any of its subsidiaries or predecessors,
if any, and (iii) each trade or business, whether or not incorporated, that is
or was at any time a member of the same affiliated service group (within the
meaning of Sections 414(m) and (o) of the Code) as the Seller or any of its
subsidiaries or predecessors.
Consents: All governmental and third party consents, permits,
approvals, orders, authorizations, qualifications, and waivers necessary for the
consummation of the transactions contemplated by this Agreement or that
thereafter may be necessary to effectuate the transfer or renewal of any
Contract, License and Permit or other license, permit, approval, order,
authorization, qualification or waiver.
Contingent Payment: For each of the Seller's fiscal years ending
July 31, 1998; July 31, 1999; July 31, 2000; July 31, 2001 and July 31, 2002,
the lesser of (a) the amounts distributed to the Stockholders under the
Profit-Sharing Program for such fiscal year, as defined in, and in accordance
with, the Incentive Compensation Agreement and (b) an amount equal to the
difference between (i) the sum of twenty five percent (25%) (the "Contingent
Percentage") of the Base EBITDA for such fiscal year and (ii) any amounts
distributed, or to be distributed, to the Stockholders for such fiscal year as a
result of their ownership interests in the Purchaser. Termination of either
Stockholder's Employment Agreement (x) by the Purchaser for Cause, as defined in
the Employment Agreement, or (y) by either Stockholder other than due to
Constructive Termination, as defined in the Employment Agreement, will reduce
the Contingent Percentage to (1) 12.5% in the event of the termination of one
such Stockholder and (2) 0% in the event of the termination of both
Stockholders. Termination of either Stockholder's Employment Agreement (A) by
the Purchaser other than for Cause, (B) by either Stockholder as a result of
Constructive Termination or (C) upon such Stockholder's death or disability will
not affect the Contingent Percentage after such termination.
Contract: Any contract, agreement, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant, right,
instrument or other similar document or agreement, whether written or oral.
Demand Registration: Defined in Section 11.1(a).
Dollars or "$": The legal currency of the United States of America.
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EBITDA: Earnings before interest, taxes, depreciation and
amortization, calculated in accordance with GAAP; provided, however, that EBITDA
shall be computed by taking into account directly allocated overhead expenses of
MTE and/or IPL with respect to the Purchaser, including property and casualty
insurance, workmen's compensation, employee fringe benefit costs, and other
direct costs normally allocated by MTE and/or IPL among their respective
Subsidiaries based in part on the size of such Subsidiaries, and by excluding:
(a) all special overhead charges of the Purchaser (including the 3% of revenues
overhead charge) and (b) the cost of all term life, health, accident and/or
other insurance covering any employee of the Purchaser for which it or any of
its Subsidiaries or Affiliates, including MTE and/or IPL, is the beneficiary.
Employment Agreements: Defined in Section 6.1.
Environmental Laws: Any Laws relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants (including asbestos), chemicals or
industrial, toxic or hazardous substances or wastes.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
Excluded Assets: The assets and properties of the Seller listed on
Schedule 2.1(a) annexed hereto.
GAAP: Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, applied on a consistent basis and
consistent with past practices.
Governmental Authority: Any United States or foreign governmental
authority, including all agencies, bureaus, commissions, authorities or bodies
of the federal government or any state, county, municipal or local government,
including any court, judge, justice or magistrate.
Holder: The holders of the CCL-DL Interests, the Incentive Options
and the Incentive Option Interests.
Incentive Compensation Agreement: Defined in Section 6.1.
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Incentive Options: Defined in the Incentive Compensation Agreement.
Incentive Option Interests: The CCL-DL Membership Interests
issuable upon exercise of the Incentive Options, as defined in the Incentive
Compensation Agreement.
Installment Payments: Defined in Section 2.1.
Insurance: Defined in Section 4.13.
Intangible Property: All Contracts, certificates of deposit, bank
accounts, securities, partnership or other ownership interests, rights to
receive money or property by assignment, future interests, claims and rights
against third parties, accounts receivable, notes receivable, Intellectual
Property, prepaid expenses, acquisition costs and other intangible property
(other than Software) of any nature owned, leased, licensed, used or held for
use, directly or indirectly, by, on behalf of or for the account of a Person.
Intellectual Property: All patents, trademarks, trademark rights,
trade names, product designations, service marks, copyrights, other intellectual
property, and applications for any of the foregoing, owned, leased, licensed,
used or held for use, directly or indirectly, by, on behalf of or for the
account of a Person.
IPL: International Post Limited, a Delaware corporation.
IPL Agreement: The agreement by and among IPL, the Seller and the
Optionholders substantially in the form annexed hereto as Exhibit B.
Judgment: Any judgment, writ, order, injunction, determination,
award or decree of or by any Governmental Authority.
Law: Any statute, ordinance, code, rule, regulation, order or other
law enacted, adopted, promulgated, applied or followed by any Governmental
Authority.
Licenses and Permits: Defined in Section 4.25.
Lien: Any security agreement, financing statement (whether or not
filed), security or other interest, conditional sale or other title retention
agreement, lease, consignment or bailment given for security purposes, lien,
charge, restrictive agreement, mortgage, deed of trust, indenture, pledge,
option, encumbrance, limitation, restriction, adverse interest, constructive or
other trust, claim, charge, attachment, exception to or defect in title or other
ownership interest (including reservations, rights of entry, possibilities or
reverter, encroachments, easements, rights of way, restrictive covenants and
licenses) of any kind, whether direct, indirect, accrued or contingent.
Material Adverse Effect: Defined in Section 4.1.
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MTE: Manhattan Transfer/Edit, Inc., a Delaware corporation.
Optionholders: Each of the Stockholders and Xx. Xxxxx Xxxxxx.
PBGC: The Pension Benefit Guaranty Corporation.
Person: Any individual, trustee, corporation, general or limited
partnership, limited liability partnership, limited liability company, joint
venture, joint stock company, bank, firm, Governmental Agency, trust,
association, organization or unincorporated entity of any kind or nature
whatsoever.
Piggyback Registration: Defined in Section 11.2.
Providee: Defined in Section 12.2.
Provider: Defined in Section 12.2.
Purchaser: Cognitive Communications, LLC, a Delaware limited
liability company.
Purchaser's Counsel: The law firm of Shereff, Friedman, Xxxxxxx &
Xxxxxxx, LLP.
Purchase Price: Defined in Section 2.1.
Real Property: All realty, fixtures, easements, rights-of-way and
other interests (excluding Tangible Property) in real property, buildings,
improvements and construction-in-progress.
Registrable Securities: The CCL-DL Interests and the Incentive
Option Interests (and any equity securities of the Purchaser issued as (or
issuable upon the conversion or exercise of any right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such above-described securities). Notwithstanding the
foregoing, Registrable Securities shall not include any securities sold by a
person to the public either pursuant to a registration statement or Rule 144
under the Securities Act or sold in a private transaction in which the
transferor's rights under Article 11 are not assigned.
Registration Expenses: Defined in Section 11.4.
Returns: All returns, declarations and reports and all information
returns and statements of any kind or nature whatsoever.
Sale Options: Defined in Section 6.1.
Seller: Cognitive Communications, Inc., a Connecticut corporation.
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Seller's and Stockholders' Counsel: The law firm of Xxxxxxx,
Xxxxxxxx & Kotel.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Stockholders: Xxxxx Xxxxxx and Xxxxxxx Xxxxxxx.
Software: All electronic data processing systems, information
systems, computer software programs, program specifications, charts, procedures,
source codes, input data, routines, data bases, report layouts, formats, record
file layouts, diagrams, functional specifications, narrative descriptions, flow
charts and other related material developed specifically for the Seller and
used, licensed, leased or owned, directly or indirectly, by the Seller.
Subsidiary: With respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the issued and outstanding stock or equivalent thereof having ordinary voting
power is owned or controlled by such Person, by one or more Subsidiaries or by
such Person and one or more Subsidiaries.
Survival Period: Defined in Section 9.1.
Surviving Lien: Any Lien affecting the Assets which the Purchaser,
prior to the Closing, expressly agrees in writing or by a notation on a Schedule
shall survive the Closing.
Tangible Property: All cash, furnishings, machinery, equipment,
computer systems and Software, supplies, inventories, vehicles, books and
records and other tangible property and facilities of any kind or nature
whatsoever.
Taxes: All foreign, federal, state, county, local and other taxes,
levies, impositions, deductions, charges and withholdings, including any
interest, penalties or additions thereto. Taxes shall include, but not be
limited to, income, franchise, gross receipts, sales, commercial rent and
employment taxes.
Unassumed Liabilities: Any and all liabilities, duties and
obligations of, and claims against or relating to, the operation of the Business
by the Seller or the ownership, possession or use of any of the Assets prior to
the Closing, whether accrued, unaccrued, absolute, contingent, known or unknown,
asserted or unasserted and whether now existing or arising at any time prior to,
at, or after the Closing (including, without limitation, all liabilities of the
Seller to any of the Stockholders, or to any employee, consultant, officer or
director of the Seller, or to their respective spouses and/or children and/or
Affiliates, in any amount whatsoever) and any Lien upon any of the Assets,
except only the Assumed Liabilities and Surviving Liens.
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1.2 Use of Defined Terms. Any defined term used in the plural shall refer to
all members of the relevant class, and any defined term used in the singular
shall refer to any one or more of the members of the relevant class. The use of
any gender shall be applicable to all genders.
1.3 Accounting Terms. All accounting terms not otherwise defined in this
Agreement shall be construed in conformity with, and all financial data required
to be submitted by this Agreement shall be prepared in conformity with, GAAP.
1.4 Sections, Exhibits and Schedules. References in this Agreement to
Sections, Exhibits and Schedules are to Sections, Exhibits and Schedules of and
to this Agreement. All Exhibits and Schedules to this Agreement are hereby
incorporated herein by this reference as if fully set forth herein.
1.5 Miscellaneous Terms. The term "or" shall not be exclusive. The terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific article,
section, paragraph or clause where such terms may appear. The term "including"
shall mean "including, but not limited to."
2. Sale and Payment.
2.1 Sale and Purchase of the Assets. Upon the terms and subject to the
conditions of this Agreement, and on the basis of the representations and
warranties contained in this Agreement, the Seller agrees that, on the Closing
Date, it will sell, assign, convey, transfer and deliver to the Purchaser, and
the Purchaser agrees to acquire, accept and receive from the Seller, for the
Purchase Price and in the manner herein below provided, all of the Seller's
rights, title and interests in and to all of the Assets. The Seller and the
Stockholders have endeavored to list all of the Assets with a value in excess of
$1,000 as of the date hereof on Schedule 2.1(b) annexed hereto.
In consideration of the sale, assignment, conveyance, transfer and
delivery of the Assets to the Purchaser, the Purchaser shall pay, as the
purchase price therefor, an aggregate of $600,000 (the "Purchase Price"). The
Purchaser shall pay the Purchase Price by payment to the Seller of (a) $50,000
at the Closing, by wire transfer of immediately available funds to an account or
accounts designated by the Seller or by check payable to the Seller (the "Cash
Portion") and (b) $550,000, in eleven (11) equal installments of $50,000 each,
payable on each of the first eleven (11) month anniversaries of the Closing
Date, by wire transfer of immediately available funds to an account or accounts
designated by the Seller or by check payable to the Seller (the "Installment
Payments"). Notwithstanding anything contained herein to the contrary, the
Purchaser agrees that it shall not be entitled to off-set any claims (whether
for indemnification hereunder or otherwise) against the Seller and/or any of the
Stockholders against any of the Installment Payments.
2.2 CCL-DL Interests. Simultaneously with the Closing, the Purchaser shall
issue and sell to the Stockholders an approximate 2% ownership interest in the
Purchaser for an aggregate purchase price of $1.00 (the "CCL-DL Interests").
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2.3 Assumption of Liabilities.
(a) Subject to the terms and conditions of this Agreement, the
Purchaser shall assume as of the Closing all of the Seller's obligations to be
performed after the Closing Date pursuant to the express terms of the Assumed
Contracts; provided, however, that in no event shall the Purchaser assume or
otherwise be bound by or responsible or liable for any liability, duty or
obligation incurred by the Seller in violation of the provisions of this
Agreement or which is not disclosed in writing to the Purchaser prior to the
Closing Date or any liability, duty or obligation arising out of a breach,
violation or default by the Seller of or under any Assumed Contract or other
Assumed Liability, any Law or Judgment (including any event occurring or fact or
circumstance existing as of or prior to the Closing Date that, with the passage
of time or the giving of notice or both, may become such a breach, violation or
default).
(b) The Purchaser shall not assume or otherwise be bound by or
responsible or liable for any Unassumed Liabilities.
(c) The Seller and the Stockholders covenant and agree that they
shall use their best efforts to cause, prior to or simultaneously with the
Closing Date, all Unassumed Liabilities of the Seller to be paid, discharged and
performed in full or shall obtain from the persons to whom such Unassumed
Liabilities are owed, unconditional releases, in form and substance reasonably
satisfactory to the Purchaser and its counsel, of the Purchaser and the Assets
and Business from all responsibilities, liabilities and claims with respect to
such Unassumed Liabilities.
2.4 Allocation of Consideration. The Purchaser and the Seller hereby agree
that the Purchase Price and the other consideration to be payable by the
Purchaser in connection with the sale and purchase of the Assets shall be
allocated by the Purchaser and the Seller among the Assets in accordance with
their relative fair market values as soon as practical after the Closing (but in
any event within thirty days). Such agreed allocation will be intended to comply
with Section 1060 of the Code, and the Purchaser and the Seller hereby agree to
report the transactions contemplated by this Agreement for Federal income tax
purposes in accordance with such allocation.
3. The Closing. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date this Agreement is executed by the
parties hereto (the day on which the Closing takes place is referred to herein
as the "Closing Date").
4. Representations and Warranties of the Seller and the Stockholders. Each of
the Seller and the Stockholders, jointly and severally, hereby represent and
warrant to the Purchaser as follows:
4.1 Organization, Good Standing, Power and Qualification. The Seller is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Connecticut, and has all necessary power and authority to carry
on its business as currently conducted, to enter into
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this Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of the Seller and the Stockholders and, assuming due
authorization, execution and delivery by the Purchaser, this Agreement
constitutes a legal, valid and binding obligation of the Seller and the
Stockholders enforceable against such parties in accordance with its terms,
except as may be limited by bankruptcy, reorganization, moratorium, fraudulent
conveyance and insolvency Laws and by other Laws affecting the rights of
creditors generally and except as may be limited by the availability of
equitable remedies. The Seller is duly licensed or qualified and in good
standing as a foreign corporation authorized to do business in each jurisdiction
set forth on Schedule 4.1 annexed hereto, and such jurisdictions constitute the
only jurisdictions where the character of the assets owned or leased by the
Seller and/or the nature of the activities conducted by the Seller makes such
licensing or qualification necessary, except where the failure to be so licensed
or qualified is not reasonably likely to have a material adverse effect on the
Seller's financial condition, assets, results of operations, future prospects
(business, financial or otherwise) or the Business as currently conducted by the
Seller or as proposed to be conducted by the Purchaser after the Closing (a
"Material Adverse Effect")(provided, however, that only with respect to the
provisions of this Section 4.1, the "Business proposed to be conducted by the
Purchaser after the Closing" shall assume that the Purchaser proposes to conduct
the Business after the Closing substantially the same as the Seller conducted
the Business immediately prior to the Closing).
4.2 Capital Structure. The authorized, issued and outstanding capital stock
of the Seller is set forth on Schedule 4.2 annexed hereto. The Stockholders are
the only holders of the issued and outstanding capital stock of the Seller. Each
of the Stockholders owns on the date hereof, and shall own on the Closing Date,
the number of shares of common stock of the Seller set forth on Schedule 4.2
annexed hereto, free and clear of all Liens.
4.3 Subsidiaries. The Seller does not have any Subsidiaries or control,
directly or indirectly, or have any direct or indirect equity participation in,
any Person.
4.4 Consents. Except as set forth on Schedule 4.4 annexed hereto, the
execution and delivery of this Agreement by the Seller and the Stockholders do
not, and the consummation of the transactions contemplated hereby shall not,
require any Consents to be obtained by any of the Seller or the Stockholders.
4.5 No Conflict. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby shall not, result in or
constitute (a) a default, breach or violation of the organizational documents of
the Seller or any Contract to which any of the Seller or the Stockholders is a
party or by which any of the assets or properties of any of the Seller or the
Stockholders may be bound or affected; (b) an event which (with notice or lapse
of time or both) would permit any Person to terminate, accelerate the
performance required by, or accelerate the maturity of any indebtedness or
obligation of any of the Seller or the Stockholders under any Contract to which
any of the Seller or the Stockholders is a party or by which any of the assets
or properties of any of the Seller or the Stockholders may be bound or affected;
(c) the creation or
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imposition of any Lien on the Assets; or (d) subject to the receipt of the
Consents required as set forth on Schedule 4.4 annexed hereto, a violation of
any Law or Judgment of any Government Authority or any other restriction of any
kind or character by which any of the Seller or the Stockholders or any of the
assets or properties of any of the Seller or the Stockholders may be bound or
affected.
4.6 No Brokers. None of the Seller (or any of its officers, directors,
employees or agents) or the Stockholders has entered into any Contract,
arrangement or understanding with any Person which may result in the obligation
of any party hereto to pay any finder's fees, brokerage or agent's commissions
or other like payments in connection with this Agreement or the transactions
contemplated hereby.
4.7 Investment Purpose; Private Placement.
(a) Each of the Stockholders is acquiring the CCL-DL Interests
solely for the purpose of investment and not with a view to the distribution
thereof, and each of the Stockholders acknowledge that the CCL-DL Interests are
not registered under the Exchange Act and that the acquisition of the CCL-DL
Interests is not registered under the Securities Act. Therefore, each of the
Stockholders acknowledge that the CCL-DL Interests may not be transferred, sold,
hypothecated or otherwise disposed of except pursuant to the registration
provisions of the Securities Act or pursuant to an applicable exemption
therefrom and subject to state securities Laws, as applicable.
(b) Each of the Stockholders acknowledge that the CCL-DL Interests
involve a great deal of risk and that there is no existing or other market for
the CCL-DL Interests. Each of the Stockholders are able to (i) bear the economic
risk of their investment in the Purchaser, (ii) afford a complete loss of such
investment and (iii) hold indefinitely the CCL-DL Interests. In reaching an
informed decision to invest in the Purchaser, each of the Stockholders has
obtained sufficient information to evaluate the merits and risks of an
investment in the Purchaser. In that connection, representatives of the
Purchaser have (x) fully and satisfactorily answered all questions which each of
the Stockholders desired to ask concerning the Purchaser and its business, and
(y) furnished each of the Stockholders with any additional information or
documents requested to verify the accuracy of or supplement any information
previously delivered to or discussed with each of the Stockholders.
(c) None of the Stockholders has construed the contents of this
Agreement or any additional agreement with respect to their proposed investment
in the Purchaser, or any prior or subsequent communications from the Purchaser,
or any of its officers, managers, employees or representatives, as investment,
tax or legal advice or as information necessarily applicable to the particular
financial situation of any Stockholder. The Stockholders have consulted their
own financial advisors, tax advisors, legal counsel and accountants, as
necessary or desirable, as to matters concerning their respective investment in
the Purchaser.
(d) Each of the Stockholders are "accredited investors" within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act.
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4.8 Disclosure. No representation, warranty or statement made by any of the
Seller or the Stockholders in this Agreement, the Exhibits attached hereto, or
in any other material furnished or to be furnished by any of the Seller or the
Stockholders to the Purchaser or its representatives, attorneys and accountants
pursuant to or in connection with this Agreement or the transactions
contemplated hereby, contains or shall contain any untrue statement of a
material fact, or omits or shall omit to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
4.9 Financial Statements. Schedule 4.9 annexed hereto contains a complete
and correct copy of the Trial Balance and General Ledger of the Seller as of
October 31, 1996 and schedules of the Seller's accounts receivable and accounts
payable as of January 14, 1997 (collectively, the "Financial Statements"). The
Financial Statements has been prepared in accordance with the books and records
of the Seller and fairly present the Seller's financial position, assets and
liabilities as of the date set forth therein.
4.10 Absence of Undisclosed Liabilities. Except to the extent set forth on
Schedule 4.10 annexed hereto and in the Financial Statements, the Seller does
not have any indebtedness, duty, responsibility, liability or obligation of any
nature, whether absolute, accrued, contingent or otherwise, whether as
principal, agent, partner, co-venturer, guarantor or in any capacity whatsoever,
related to or arising from the operation of its business or other ownership,
possession or use of its assets or properties.
4.11 Absence of Specified Changes. Except as set forth on Schedule 4.11
annexed hereto, since October 31, 1996, there has not been with respect to the
Seller any:
(a) event which has had or which is reasonably likely to have a
Material Adverse Effect;
(b) transaction not in the ordinary course of business, including
any sale of all or substantially all of the assets of the Seller or any merger
of the Seller and any other entity;
(c) material damage, destruction or loss, whether or not insured,
affecting the Business, as currently conducted by the Seller or as proposed to
be conducted by the Purchaser after the Closing, or any assets of the Seller;
(d) failure to maintain in full force and effect substantially the
same level and types of Insurance coverage as in effect on October 31, 1996 for
destruction, damage to, or loss of any asset of the Seller (whether or not
covered by Insurance);
(e) change in accounting principles, methods or practices,
investment practices, claims, payment and processing practices or policies
regarding intercompany transactions, except for such changes as were necessary
to conform with GAAP;
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(f) revaluation of any assets of the Seller;
(g) declaration, setting aside, or payment of a dividend or other
distribution in respect of the Seller's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any shares of the Seller's capital
stock;
(h) issuance or sale of any shares of capital stock or of any other
equity security or of any security convertible into or exchangeable for equity
securities;
(i) amendment to the Certificate of Incorporation or By-laws or
equivalent organizational documents of the Seller;
(j) disposition of or lapse of any Intangible Property or Software
of the Seller, or any license, permit or authorization to use any of the
foregoing, other than dispositions or lapses in the ordinary course of business
of Intangible Property or Software not material to the Seller or the Business;
(k) creation of any Lien, other than in the ordinary course of
business;
(l) discharge or satisfaction of any Lien or payment or
cancellation of any liability, other than in the ordinary course of business;
(m) cancellation of any assets, debt or claims or waiver or release
of any Contract, right or claim, other than cancellations, waivers and releases
in the ordinary course of business which do not exceed $1,000 in the aggregate;
(n) indebtedness incurred or any commitment to borrow money, any
incurrence of a contingent liability or any guaranty or commitment to guarantee
the indebtedness of others entered into, by the Seller, other than expenditures
incurred or commitments made pursuant to clause (p) below or customary
transactions in the ordinary course of business not in excess of $1,000 in the
aggregate;
(o) capital expenditure or capital commitment requiring an
expenditure of monies, other than customary transactions in the ordinary course
of business not in excess of $1,000 in the aggregate;
(p) increase or commitment to increase the salary or other
compensation payable or to become payable to any of its officers, directors or
employees, agents or independent contractors, or the payment of any bonus to the
foregoing Persons;
(q) loan or extension of credit to officers or employees; or
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(r) agreement or understanding to take any of the actions described
above in this Section 4.11.
4.12 Taxes.
(a) Except as set forth on Schedule 4.12 annexed hereto, all Tax
Returns for all periods which end prior to or which include the Closing Date
that are or were required to be filed by, or with respect to, the Seller have
been or shall be filed on a timely basis in accordance with the Laws of each
Governmental Authority. The Seller and the Stockholders shall timely file or
cause to be filed all Tax Returns that shall be required to be filed after the
Closing Date by, or with respect to, the Seller, for all periods which end prior
to or which include the Closing Date, in accordance with applicable Laws. All
such Tax Returns that have been filed were, when filed, and continue to be,
true, correct and complete in all material respects. All such Tax Returns that
will be filed shall be true, correct and complete in all material respects when
filed by the Seller and/or the Stockholders.
(b) Schedule 4.12 annexed hereto lists all United States federal,
state, local and foreign income Tax Returns that have been filed since 1992, by
or with respect to the Seller and that have been audited by any Governmental
Authority or are closed by the applicable statute of limitations. Schedule 4.12
annexed hereto describes all adjustments to income Tax Returns filed by, or on
behalf of, the Seller for all taxable years since 1992 that have been proposed
by any representative of any Governmental Authority, and the resulting Taxes, if
any, proposed to be assessed. All deficiencies proposed (plus interest,
penalties and additions to Tax that were or are proposed to be assessed thereon,
if any) as a result of any examinations have been paid, reserved against,
settled, or, as set forth on Schedule 4.12 annexed hereto, are being contested
in good faith by appropriate proceedings. Except as set forth on Schedule 4.12
annexed hereto, there are no outstanding waivers or extensions of any statute of
limitations relating to the payment of Taxes for which the Seller and/or any of
the Stockholders may be liable and no Governmental Authority has either formally
or informally requested such a waiver or extension.
(c) The Seller has paid, or made provision for the payment of, all
Taxes that have or may become due for all periods which end prior to or which
include the Closing Date, including all Taxes reflected on the Tax Returns
referred to in this Section 4.12, or in any assessment, proposed assessment or
notice, either formal or informal, received by any of the Seller or the
Stockholders, except such Taxes, if any, as are set forth on Schedule 4.12
annexed hereto that are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided. The charges,
accruals and reserves with respect to Taxes on the books and records of the
Seller (determined in accordance with GAAP) are adequate and are at least equal
to the liabilities of the Seller for Taxes. All Taxes that the Seller is or was
required by law to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the appropriate Governmental
Authorities. There are no Liens with respect to Taxes upon any of the assets of
the Seller (except for Taxes not yet due). All Taxes that may later become due
and payable with respect to any taxable period which ends prior to or which
includes the Closing Date for the Seller shall be paid by the Seller and the
Stockholders.
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(d) The Seller is not a party (other than as an investor) to any
industrial development bond.
(e) For purposes of this Section 4.12, references to the Seller
shall also refer to any predecessor companies.
4.13 Insurance. Schedule 4.13 annexed hereto sets forth an accurate, correct
and complete list and summary description (including the name of the insurer,
coverage, premium and expiration date) of all binders or policies of fire,
liability, product liability, workers compensation, vehicular, unemployment and
other insurance, self insurance programs and fidelity bonds (collectively,
"Insurance") maintained by the Seller or in which the Seller is a named insured.
All Insurance has been issued under valid and enforceable policies or binders
for the benefit of the Seller, and all such policies or binders are in full
force and effect and none of the premiums therefor are past due. The Seller is
in compliance with the terms of all such policies and binders. In the opinion of
the Seller and the Stockholders, all Insurance is of such types and in such
amounts and for such risks, casualties and contingencies as are customarily
insured against by enterprises in operations similar to the Business, as
currently conducted by the Seller. There are no pending or asserted claims
against any Insurance carrier as to which any insurer has denied liability, and
there are no claims under any Insurance policy or binder that have been
disallowed or improperly filed. Except as set forth on Schedule 4.13 annexed
hereto, no notice of cancellation or nonrenewal with respect to, or increase of
premium on, any Insurance has been received by the Seller since October 31,
1996.
4.14 Contracts. Schedule 4.14 annexed hereto sets forth an accurate, correct
and complete list of the following Contracts to which the Seller is a party or
may be bound or affected, by which its assets may be bound or affected or
pursuant to which the Seller is an obligor or a beneficiary:
(a) Contracts with respect to Real Property, Tangible Property,
Insurance, Intangible Property and Software, and all Affiliate Contracts,
Benefit Plans and Licenses and Permits;
(b) Any Contract for capital expenditures or for the purchase of
Tangible Property or services by the Seller which involves consideration payable
by any party thereto in excess of $1,000 in any fiscal year;
(c) Any Contract evidencing any indebtedness in excess of $1,000 or
obligation for the deferred purchase price of assets in excess of $1,000
(excluding normal trade payables) or guaranteeing any indebtedness, obligation
or liability in excess of $1,000;
(d) Any Contract concerning confidentiality or non-competition;
(e) Any Contract with any of the Stockholders, or any Affiliate of
any of the Stockholders;
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(f) Any joint venture, partnership, cooperative arrangement or any
other Contract involving a sharing of profits;
(g) Any Contract with any Governmental Authority;
(h) Any power of attorney, proxy or similar instrument;
(i) Any Contract to indemnify any Person or to share any Tax
liability of any of the Stockholders;
(j) Any other Contract related to the Business, as currently
conducted by the Seller or as proposed to be conducted by the Purchaser after
the Closing (other than those Contracts excluded by an express exception from
the descriptions set forth in clauses (a) through (i) above), which (A) involves
consideration payable by any party thereto in excess of $1,000 in any fiscal
year or (B) provides for a period of performance which extends beyond twelve
(12) months from the date hereof; and
(k) Any proposed arrangement or Contract which the Seller
reasonably expects to be near consummation and of a type that if entered into
would be a Contract described in clauses (a) through (j) above.
Accurate, correct and complete copies of each such Contract have
been delivered by the Seller and the Stockholders to the Purchaser. Each such
Contract is in full force and effect. The Seller has complied in all material
respects with all commitments and obligations on its part to be performed or
observed under each such Contract. To the best knowledge of the Seller and the
Stockholders, each party to each such Contract other than the Seller has
complied with all commitments and obligations on its part to be performed or
observed thereunder, except for such noncompliance which is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect. No
event has occurred which is or, after the giving of notice or passage of time or
both, would constitute a default under any such Contract. The Seller has not
received any notice of a default, offset or counterclaim under any such
Contract.
4.15 Real Property.
(a) Schedule 4.15 annexed hereto sets forth an accurate, correct
and complete list of all Real Property leased or subleased by the Seller. The
Seller does not own any Real Property. All such Real Property is in good
operating condition and repair (reasonable wear and tear excepted), is suitable
for the purposes for which it is presently being used and is adequate to meet
all present and reasonably anticipated future requirements of the Business, as
currently conducted by the Seller or as proposed to be conducted by the
Purchaser after the Closing. The Seller has been in peaceable possession of the
premises covered by each Real Property lease or sublease of the Seller since the
commencement of the original term of such lease or sublease.
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(b) Each of the Real Property leases and subleases of the Seller
(and leases underlying such subleases) is in full force and effect and contains
no terms other than the terms contained in the copies heretofore delivered to
the Purchaser. The Seller has complied with all commitments and obligations on
its part to be performed or observed under each such Real Property lease or
sublease. To the best knowledge of the Seller and the Stockholders, each party
to each such Real Property lease or sublease other than the Seller has complied
with all commitments and obligations on its part to be performed or observed
thereunder, except for such noncompliance which is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. The Seller
has not received any notice of a default, offset or counterclaim under any Real
Property lease or sublease of the Seller (or lease underlying such sublease) and
no event or condition has happened or presently exists which constitutes a
default or, after notice or lapse of time or both, would constitute a default
under any Real Property lease or sublease of the Seller (or lease underlying
such sublease). There is no Lien affecting any leasehold interest under any Real
Property lease or sublease of the Seller. The Closing will not constitute a
default under any of the Real Property leases or subleases of the Seller.
(c) There is no pending or, to the best knowledge of the Seller and
the Stockholders, threatened action or proceeding (including condemnation and
foreclosure) which could affect the Real Property of the Seller.
(d) To the best knowledge of the Seller and the Stockholders, there
are no defaults by the landlords under any of the Real Property leases or
subleases of the Seller and such landlords have performed all of their
obligations thereunder, except for such defaults which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect. The
Seller has not waived any obligation of any such landlord or any right under any
of the Real Property leases or subleases of the Seller. There is no pending or,
to the best knowledge of the Seller and the Stockholders, threatened action or
proceeding which could affect the Real Property leases or subleases of the
Seller.
4.16 Tangible Property.
(a) Schedule 4.16 annexed hereto sets forth an accurate, correct
and complete list of all Tangible Property owned or leased by the Seller with a
value in excess of $1,000. The Seller has good and clear title to all of the
Tangible Property set forth on Schedule 4.16 annexed hereto as being owned by
the Seller, free and clear of all Liens. All such Tangible Property is in good
operating condition and repair (reasonable wear and tear excepted), is suitable
for the purposes for which it is presently being used and is adequate to meet
all present requirements of the Business as currently conducted by the Seller.
The Seller has been in peaceable possession of the Tangible Property covered by
each Tangible Property lease of the Seller since the commencement of the term
thereof.
(b) Each of the Tangible Property leases of the Seller is in full
force and effect. The Seller has complied with all commitments and obligations
on its part to be performed or observed under each such Tangible Property lease.
To the best knowledge of the Seller and the Stockholders, each party to each
such Tangible Property lease other than the Seller has complied with all
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commitments and obligations on its part to be performed or observed thereunder,
except for such noncompliance which is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect. The Seller has not received
any notice of a default, offset or counterclaim under any Tangible Property
lease of the Seller, and no event or condition has happened or presently exists
which constitutes a default or, after notice or lapse of time or both, would
constitute a default under any such Tangible Property lease. There is no Lien
affecting any leasehold interest under any such Tangible Property lease.
4.17 Intangible Property; Intellectual Property.
(a) Schedule 4.17 annexed hereto sets forth an accurate, correct
and complete list of all Intangible Property of the Seller. Schedule 4.17
annexed hereto sets forth an accurate, correct and complete list of all licenses
and other Contracts entered into by the Seller relating to the Intangible
Property of the Seller. The Seller is the sole and exclusive owner of the
Intangible Property of the Seller set forth on Schedule 4.17 annexed hereto as
being owned by the Seller and, to the best knowledge of the Seller and the
Stockholders after due inquiry, has the right to use the Intangible Property of
the Seller set forth on Schedule 4.17 annexed hereto as being leased, licensed
or otherwise used by the Seller. No action, suit, proceeding or investigation is
pending or, to the best knowledge of the Seller and the Stockholders, threatened
with respect to the Intangible Property of the Seller.
(b) To the best knowledge of the Seller and the Stockholders after
due inquiry, none of the Intellectual Property of the Seller interferes with,
infringes upon, conflicts with or otherwise violates the rights of any Person
or, to the best knowledge of the Seller and the Stockholders, is being
interfered with or infringed upon by any Person, and none of the Intellectual
Property of the Seller is subject to any outstanding Judgment. Except as set
forth on Schedule 4.17 annexed hereto, there are no royalty, commission or
similar arrangements, and no licenses, sublicenses or Contracts, pertaining to
the Intellectual Property of the Seller. The Seller has not agreed to indemnify
any Person for or against any infringement of or by the Intellectual Property of
the Seller. Except as set forth on Schedule 4.17 annexed hereto, all items of
Intellectual Property of the Seller are properly registered under applicable
Law.
4.18 Software.
(a) Schedule 4.18 annexed hereto sets forth an accurate, correct
and complete list of all computer Software programs used, licensed, leased or
owned, directly or indirectly, by the Seller and all pending Software
development projects, together with an identification of the Persons undertaking
such projects. The Seller is the sole and exclusive owner of the Software set
forth on Schedule 4.17 or Schedule 4.18 annexed hereto as being owned by the
Seller and, to the best knowledge of the Seller and the Stockholders after due
inquiry, has the right to use the Software set forth on such schedules as being
leased, licensed or otherwise used by the Seller.
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(b) All documentation relating to Software material to the Seller
or the Business is current, accurate and sufficient in detail and content to
identify and explain the nature thereof and to allow its full and proper use by
the Seller without reliance on the special knowledge or memory of others. No
proprietary rights in any Software have been transferred, whether by sale,
assignment or license, or have been lost. All Software material to the Seller or
the Business is presently protected, and is not part of the public knowledge or
literature, nor has any Software been used, divulged or appropriated for the
benefit of any other Person or to the detriment of the Seller. The rights of the
Seller in the Software are free and clear of all Liens. The Seller has not
received notice of any violation of trade secret rights, copyrights or other
proprietary rights with respect to any Software, and neither the Seller nor any
Stockholders knows of any basis therefor. Any and all copies of Software are in
the sole and exclusive possession and control of the Seller.
4.19 Employee Benefit Plans.
(a) Benefit Plans. Schedule 4.19 annexed hereto sets forth an
accurate, correct and complete list of all "employee benefit plans" (as defined
in Section 3(3) of ERISA), bonus, profit sharing, deferred compensation,
incentive or other compensation plans or arrangements, and other employee fringe
benefit plans, whether funded or unfunded, qualified or unqualified, maintained
or contributed to by any of the Company Group Members for the benefit of any of
their respective directors, officers or employees or other Persons (all the
foregoing are collectively referred to herein as the "Benefit Plans"). All
Benefit Plans, related trust Contracts or annuity Contracts (or any other
funding instrument), and all plans, Contracts, arrangements and commitments
referred to in this Section 4.19, are in full force and effect. No liability to
any Company Group Member exists with respect to any Benefit Plan which has been
terminated.
(b) Funding. All contributions to, and payments from, the Benefit
Plans that may have been required to be made in accordance with the Benefit
Plans have been made in a timely manner since the commencement of such Benefit
Plans. All such contributions to, and payments from, the Benefit Plans for any
period ending before the Closing that are not yet required to be made will be,
as of the Closing, properly accrued on the Financial Statements delivered prior
to the Closing. None of the Company Group Members currently have any unfunded
pension benefit liabilities and no liability, contingent or otherwise, of any
Company Group Member currently exists with respect to any past unfunded pension
benefit liabilities, if any. There currently are no, and there have never been
any uncorrected, accumulated funding deficiencies, as defined in Sections 302 of
ERISA and Section 412 of the Code, whether or not waived, in any Benefit Plan
and no liability, contingent or otherwise, of any Company Group Member currently
exists on account of any accumulated funding deficiencies, if any. No Benefit
Plan is underfunded on a termination basis, as calculated in accordance with the
rules of the PBGC.
(c) Compliance With the Code and ERISA. Each of the Company Group
Members and each Benefit Plan (and any related trust agreement or annuity
contract or any other funding instrument) comply currently, and have complied in
all material respects in the past, both as
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to form and operation, with the provisions of all Laws applicable to Benefit
Plans. All necessary governmental approvals for the Benefit Plans have been
obtained.
(d) Administration. Each Benefit Plan has been administered to date
in material compliance with the requirements of the Code and ERISA. There is no
liability for failure to file or distribute reports, Returns and similar
documents with respect to the Benefit Plans required to be filed since the
commencement of the Benefit Plans with any Government Authority or distributed
to any Benefit Plan participant on a timely basis. To the best knowledge of the
Seller and the Stockholders, there are no investigations by any Governmental
Authority, termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Benefit Plans), suits or proceedings
against or involving any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan pending or threatened that could give rise to
any liability to any of the Stockholders, any of the Company Group Members, or
the directors, officers or employees of the Seller or a trustee, administrator
or other fiduciary of any trusts created under any Benefit Plan.
(e) Prohibited Transactions. No "prohibited transaction" (as
defined in Section 4975 of the Code or Section 406 of ERISA) has ever occurred
which involves the assets of any Benefit Plan and which could subject any of the
Stockholders, the Company Group Members, or any of the directors, officers or
employees of the Seller, or a trustee, administrator or other fiduciary of any
trusts created under any Benefit Plan, to the tax or penalty on prohibited
transactions imposed by Section 4975 of the Code or the sanctions imposed under
Title I of ERISA. None of the Stockholders, the Company Group Members, the
directors, officers or employees of the Seller, a trustee, administrator or
other fiduciary of any Benefit Plan, nor any agent of any of the foregoing, has
ever engaged in any transaction or acted or failed to act in a manner which
could subject any of the Company Group Members, their businesses or the
Purchaser to any liability for breach of fiduciary duty under ERISA or any other
applicable Law.
(f) Liabilities to Pension Benefit Guaranty Corporation. None of
the Company Group Members has any liability to the PBGC or has ever had any such
event which could result in a liability to any Company Group Member following
the Closing. There has never been a "reportable event" (as defined in Section
4043(b) of ERISA and the regulations of the PBGC under such Section) with
respect to any Benefit Plan subject to Title IV of ERISA for which thirty (30)
day reporting requirements have not been waived.
(g) Multi-employer Plans. None of the Benefit Plans is, and none of
the Company Group Members has ever been a party to, a "multi-employer pension
plan" as defined in Section 3(37) of ERISA.
(h) Welfare Plans. No welfare plan (as defined in Section 3(1) of
ERISA) maintained by any Company Group Member provides medical or death benefits
with respect to current or former employees beyond their termination of
employment (other than coverage mandated by Law). Each such welfare plan to
which Sections 601-609 of ERISA and Section 4980B of the Code apply has been
administered in compliance with such sections.
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(i) Compensation. No Contract entitles any individual to severance
or termination pay or accelerates the time of payment and vesting, or increases
the amount, of compensation due, or benefits payable under any Benefit Plan with
respect to, any Person.
4.20 Employees.
(a) Contracts. Schedule 4.20 annexed hereto sets forth an accurate,
correct and complete list of all Contracts with Stockholders, officers,
directors and employees of the Seller, or Affiliates of any of the foregoing
(collectively, "Affiliate Contracts").
(b) Compensation. Schedule 4.20 annexed hereto sets forth an
accurate, correct and complete list of all employees of the Seller as of the
date hereof, including name, title or position and their present annual
compensation (including bonuses, commissions, fringe benefits and deferred
compensation). Except as set forth in the Financial Statements, the Seller has
not, except in the ordinary course of its business consistent with past
practice, (i) paid, or made any accrual or arrangement relating to severance or
termination of employment, to any of its present or former officers or directors
or to any of its employees who are not officers or directors of the Seller; (ii)
made any general wage or salary increases; or (iii) increased or altered any
other benefits or Insurance provided to any officer, director or employee of the
Seller. No officer, director or employee of the Seller is eligible for payments
that would constitute "excess parachute payments" under Section 280G of the
Code.
(c) Disputes. There are no controversies pending or, to the best
knowledge of the Seller and the Stockholders, threatened involving any group of
employees of the Seller and there are no collective bargaining or other union
Contracts to which the Seller is a party or by which the Seller may be bound or
affected. The Seller has not suffered or sustained any work stoppage and, to the
best knowledge of the Seller and the Stockholders, no such work stoppage is
threatened. No union organizing, election or other activities involving any
employees of the Seller are in progress or threatened.
4.21 Inventory. All inventory of the Seller was acquired by the Seller in
the ordinary course of business and is in good condition and is usable and
saleable in the ordinary course of such business. The Seller has good and valid
title to the inventory, free and clear of all Liens.
4.22 Accounts Receivable. All accounts receivable of the Seller reflected on
the Financial Statements as at October 31, 1996 and January 14, 1997 and all
accounts receivable of the Seller arising subsequent to the date thereof are as
a result of bona fide services performed by the Seller in the ordinary course of
business of the Seller and, to the best knowledge of the Seller and the
Stockholders, are subject to no defenses, offsets or counterclaims.
4.23 Customers and Suppliers. Schedule 4.23 annexed hereto sets forth an
accurate, correct and complete list of the ten (10) largest customers (in terms
of gross revenues) of the Seller and all suppliers (in terms of purchases)
material to the Business, as currently conducted by the Seller,
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for the fiscal year ended December 31, 1995. Since October 31, 1996, none of the
customers set forth on Schedule 4.23 annexed hereto has (i) ceased doing
business with, or materially decreased the amount of business given to, the
Seller, (ii) notified the Seller (nor does the Seller or any Stockholder have
any reason to believe) that it does not intend to enter into a business
relationship with the Purchaser after the Closing substantially on the same
terms as such customer had with the Seller prior to the Closing, or (iii)
materially modified the terms on which it does business with the Seller nor, to
the best knowledge of the Seller and the Stockholders, threatened to do any of
the foregoing. Since October 31, 1996, none of the suppliers set forth on
Schedule 4.23 annexed hereto has cancelled or otherwise terminated its
relationship with the Seller.
4.24 Compliance With Laws. Each of the Seller, the Business and the Assets
comply with all Laws, including Environmental Laws, applicable to the Seller,
the Business and the Assets, except for such noncompliance which is not
reasonably likely to have a Material Adverse Effect. An accurate, correct and
complete list of all Judgments applicable to the Seller, the Business and the
Assets are set forth on Schedule 4.24 annexed hereto, and the Seller is in
compliance with all such Judgments.
4.25 Licenses and Permits. Schedule 4.25 annexed hereto contains an
accurate, correct and complete list of each license, permit, certificate,
approval, franchise, registration, accreditation or authorization issued to the
Seller and used in the Business, as currently conducted by the Seller or as
proposed to be conducted by the Purchaser after the Closing, or which are
required under applicable Environmental Laws (collectively, "Licenses and
Permits"). The Licenses and Permits are valid and in full force and effect and
there are no pending or, to the best knowledge of the Seller and the
Stockholders, threatened proceedings which could result in the termination,
revocation, limitation or impairment of any of the Licenses and Permits. The
Seller has all Licenses and Permits as are necessary or appropriate to enable it
to own and conduct the Business, as currently conducted by the Seller or as
proposed to be conducted by the Purchaser after the Closing (assuming the
Purchaser proposes to conduct the Business after the Closing substantially the
same as the Seller conducted the Business immediately prior to the Closing), and
comply with all applicable Environmental Laws, and all of such Licenses and
Permits are included in the Assets.
4.26 Legal Proceedings. Except as set forth on Schedule 4.26 annexed hereto,
there is no action, suit, proceeding, complaint, charge, Tax or other audit,
investigation or arbitration or other method of settling disputes or
disagreements by or before any Governmental Authority pending or, to the best
knowledge of the Seller and the Stockholders, threatened against or affecting
any of the Seller, Business or Assets or which questions the validity of this
Agreement or any action taken or to be taken in connection with the actions
contemplated hereby. Except as set forth on Schedule 4.26 annexed hereto,
neither the Seller, the Business nor any of the Assets are subject to any
Judgment or other agreement which restricts the ability of any of the Seller,
the Stockholders or the Purchaser from consummating the transactions
contemplated hereby or from operating the business as currently conducted by the
Seller or as proposed to be conducted by the Purchaser after the Closing
(assuming the Purchaser proposes to conduct the Business after the Closing
substantially the same as the Seller conducted the Business immediately prior to
the Closing).
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4.27 Absence of Certain Practices. None of the Seller, any Stockholder,
director, officer, agent or employee of the Seller or any other Person acting on
behalf of the Seller, including the Stockholders, has given or agreed to give
any gift or similar benefit of more than nominal value to any customer,
supplier, or governmental employee or official or any other Person who is or may
be in a position to help or hinder the Seller in connection with any proposed
transaction involving the Seller. None of the Seller, any Stockholder, director,
officer, agent or employee of the Seller or any other Person acting on behalf of
the Seller has, contrary to Law, (i) used any corporate or other funds for
contributions, payments, gifts, or entertainment, or made any expenditures
relating to political activity to, or on behalf of, government officials or
others, (ii) accepted or received any contributions, payments, gifts or
expenditures or (iii) had any transaction or payment which was not recorded in
its accounting books and records or disclosed on its financial statements
(including the Financial Statements).
4.28 Intercompany Transactions. Schedule 4.28 annexed hereto contains a
complete and accurate list of all services and transactions currently provided
to the Seller by any of the Stockholders (or any of their Affiliates), or
provided by the Seller to any of the Stockholders (or any of their Affiliates),
including a description of the financial terms of such transactions.
4.29 Books and Records. The books of account and other financial records of
the Seller are accurate, correct and complete in all material respects. The
minute books of the Seller contain accurate, correct and complete records of the
charter (as amended or restated) and By-laws (as amended or restated) and of all
meetings of the Seller, and accurately reflect all other corporate action of the
Stockholders, the Board of Directors and the committees of the board of
directors of the Seller.
4.30 Bulk Sales and Transfer Taxes. Neither the sale and transfer of the
Assets pursuant to this Agreement, nor the Purchaser's ownership, possession or
use thereof from and after the Closing as a result of such sale and transfer,
will result in or be subject to: (a) any Law pertaining to bulk sales or
transfers or fraudulent conveyances which might make such sale or transfer or
any part thereof ineffective as to creditors of or claimants against the Seller;
(b) any State or local sales, use, transfer, excise, or license tax, fee, or
charge applicable to any of the Assets; or (c) the imposition of any liability
upon the Purchaser for appraisal rights or any other liability of any nature
whatsoever owing to any stockholder of the Seller or any other person which has
not been expressly assumed by the Purchaser in this Agreement.
4.31 Assets.
(a) There are no properties or assets used, held for use or usable
by the Seller in the Business valued in excess of $1,000 which are not set forth
on the Schedules hereto and, except for contemplated additions or deletions in
the ordinary course of business that are not material in the aggregate, the
Assets include all properties and assets the ownership, holding or use of which
is necessary for the performance by the Purchaser of any Assumed Liability and
the lawful conduct of the Business.
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(b) The Seller has good and marketable title to all of the Assets
owned by it, free and clear of any Lien except (i) the lien of property taxes
not delinquent, and (ii) the Liens listed on the Schedules hereto. The Seller is
the sole and exclusive owner of all of the Assets, other than those listed on
the Schedules hereto as being leased, licensed or otherwise used by the Seller,
and, except as disclosed on the Schedules hereto, the Seller does not use any of
the Assets by the consent of any other person and is not required to make any
payments to others with respect to the Assets. To the best knowledge of the
Seller and the Stockholders after due inquiry, the Seller has the right to use
all of the Assets leased, licensed or otherwise used by it. Upon the Closing,
the Purchaser will indefeasibly own and hold good and marketable title to the
Assets owned by the Seller, free and clear of all Liens (except for any
Surviving Liens) of any nature whatsoever, whether such Liens are now existing
or perfected or at any time hereafter arise or become perfected pursuant to any
Law, Contract or otherwise, and the Purchaser will have the right to use all of
the Assets leased, licensed or otherwise used by the Seller.
(c) All leases, subleases, licenses and other Contracts which are
being transferred to the Purchaser at the Closing will be, upon the consummation
of the transactions contemplated by this Agreement, in good standing, valid and
effective and grant the leasehold estates or rights of occupancy or use they
purport to grant.
5. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Seller and the Stockholders as follows:
5.1 Organization, Standing, Power and Qualification. The Purchaser is a
limited liability company duly formed, validly existing and in good standing
under the Laws of the State of Delaware, and has all necessary power and
authority to own, lease and operate the assets it now owns, leases and operates,
to carry on its business, as currently conducted or as proposed to be conducted,
to enter into this Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Purchaser, and assuming due authorization,
execution and delivery by the Seller and the Stockholders, this Agreement
constitutes a legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms, except as may be limited by
bankruptcy, reorganization, moratorium, fraudulent conveyance and insolvency
Laws and by other Laws affecting the rights of creditors generally and except as
may be limited by the availability of equitable remedies.
5.2 Authorization. The Sale Options to be issued hereunder are duly
authorized and constitute legal, valid and binding obligations of the Purchaser
enforceable against the Purchaser in accordance with their terms, except as may
be limited by bankruptcy, reorganization, moratorium, fraudulent conveyance and
insolvency Laws and by other Laws affecting the rights of creditors generally
and except as may be limited by the availability of equitable remedies. The
CCL-DL Membership Interests to be issued upon exercise of the Sale Options shall
be, when issued and paid for in accordance with the terms thereof, assuming the
truth of the representations and warranties of the Stockholders, duly authorized
and validly issued, free of any and all Liens and all preemptive, subscription
and other rights (in each case other than those created by the Stockholders).
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5.3 No Conflict. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby shall not, result in or
constitute (a) a default, breach or violation of the Certificate of Formation or
Operating Agreement of the Purchaser or any Contract to which the Purchaser is a
party or by which any of its assets may be bound or affected; (b) an event which
(with notice or lapse of time or both) would permit any Person to terminate,
accelerate the performance required by, or accelerate the maturity of any
indebtedness or obligation of the Purchaser under any Contract to which the
Purchaser is a party or by which any of its assets may be bound or affected; (c)
the creation or imposition of any Lien on any assets of the Purchaser; or (d)
subject to the receipt of the Consents required as set forth on Schedule 5.4
annexed hereto, a violation of any Law or Judgment of any Governmental Authority
or any other restriction of any kind or character by which the Purchaser or any
of its Assets may be bound or affected.
5.4 Consents. Except as set forth on Schedule 5.4 annexed hereto, the
execution and delivery of this Agreement by the Purchaser do not, and the
consummation of the transactions contemplated hereby shall not, require any
Consents to be obtained by the Purchaser.
5.5 Legal Proceedings. There is no action, suit, proceeding, complaint,
charge, Tax or other audit, investigation or arbitration or other method of
settling disputes or disagreements by or before any Governmental Authority
pending or, to the best knowledge of the Purchaser, threatened against or
affecting the Purchaser or its assets or which questions the validity of this
Agreement or any action taken or to be taken in connection with the transactions
contemplated thereby. Neither the Purchaser nor any of its assets are subject to
any Judgment or other agreement which restricts the ability of the Purchaser
from consummating the transactions contemplated hereby or purchasing the Assets.
5.6 No Brokers. Neither the Purchaser nor any of its officers, managers,
employees or agents has entered into any Contract, arrangement or understanding
with any Person which could result in the obligation of any party hereto to pay
any finder's fees, brokerage or agent's commissions or other like payments in
connection with this Agreement or the transactions contemplated hereby.
5.7 Disclosure. No representation, warranty or statement made by the
Purchaser in this Agreement, the Exhibits and Schedules annexed hereto, or in
any other material furnished or to be furnished by the Purchaser to the Seller
or any Stockholders or their respective representatives, attorneys and
accountants pursuant to or, in connection with this Agreement or the
transactions contemplated hereby, contains or shall contain any untrue statement
of a material fact, or omits or shall omit to state a material fact required to
be stated herein or therein or necessary to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
6. Covenants and Other Agreements.
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6.1 Employment, Incentive Compensation and Put Agreements; Sale Options;
Managers.
(a) At the Closing, the Purchaser shall enter into (i) employment
agreements with each of the Optionholders (the "Employment Agreements"),
substantially in the form annexed hereto as Exhibit C, (ii) an incentive
compensation agreement with the Optionholders (the "Incentive Compensation
Agreement"), substantially in the form annexed hereto as Exhibit D, and (iii) a
put agreement with the Optionholders (the "Put Agreement"), substantially in the
form annexed hereto as Exhibit E. Additionally, at the Closing, the Purchaser
shall issue to the Optionholders options (the "Sale Options") to purchase CCL-DL
Membership Interests substantially in the form annexed hereto as Exhibit F, and
MTE and the Stockholders shall enter into the Limited Liability Company
Operating Agreement of the Purchaser substantially in the form annexed hereto as
Exhibit H.
(b) From and after the Closing, the Managers of the Purchaser shall
consist solely of Xxxx Xxxxxx, Xxx Xxxxx, Xxxxxx Xxxxx and each of the
Stockholders, and each of such Managers shall serve for a term of five (5) years
from the Closing Date. As long as the Stockholders beneficially own the CCL-DL
Interests and the Sale Options and prior to the consummation of a public
offering of securities of the Purchaser, each Stockholder/Member shall have the
right to designate a Manager of the Purchaser reasonably acceptable to MTE. It
is acknowledged and agreed to that each of SW and MR are deemed reasonably
acceptable to MTE as Managers of the Purchaser, subject to the provisions of
their respective Employment Agreements.
6.2 Reasonable Efforts; Further Assurances. Each of the parties hereto will
use their reasonable efforts to take or cause to be taken all actions and to do
or cause to be done all things necessary, proper or advisable under applicable
Laws to consummate and make effective the transactions contemplated by this
Agreement (and each other agreement delivered or to be delivered in connection
herewith), and each of the Seller and the Stockholders will use their best
efforts to insure that the Purchaser has the benefits of all of the covenants
and agreements contained in this Agreement (and each other agreement delivered
or to be delivered in connection herewith). From and after the date hereof, each
of the Seller and the Stockholders shall, at the request of the Purchaser,
execute and deliver to the Purchaser, without further consideration, all such
further assignments, endorsements, instruments of conveyance and transfer, and
other documents as the Purchaser may reasonably request in order to fully
effectuate the transactions contemplated by this Agreement (and each other
agreement delivered or to be delivered in connection herewith).
6.3 Collections. On and after the Closing Date, the Purchaser shall have the
sole right and authority (in consultation with its officers and subject to the
review of the Stockholders) to collect, for its own account and sole benefit,
all monies payable in respect of the Assets, no matter how or when earned. If
the Seller or any Stockholder shall receive any such monies, they shall hold all
such monies in trust for the sole benefit of the Purchaser. Within five (5)
business days after receipt thereof, the Seller or any Stockholder shall cause
the transfer and delivery to the Purchaser of any monies or other property which
any of them may receive after the Closing Date in respect of the Assets. The
Seller authorizes the Purchaser to endorse in the Seller's name all notes,
checks, drafts, money orders or other instruments of payment in respect of the
foregoing which may come into the
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possession of the Purchaser, and the Seller hereby ratifies all that the
Purchaser shall lawfully do or cause to be done by virtue hereof. This right
shall become irrevocable upon Closing.
6.4 Option Plan. The Purchaser agrees to establish a option plan authorizing
the issuance to its key senior employees of options to purchase up to an
aggregate 5% ownership interest in the Purchaser (assuming exercise of the Sale
Options) to be administered by the Managers of the Purchaser, or a designated
committee thereof. Options granted thereunder will be exercisable at the fair
market value of the interests so purchased as determined in good faith by the
Managers, or a committee thereof, on the grant date.
6.5 Change of Name. As soon as practicable after the Closing, and in any
event within twenty (20) days, the Seller shall, and the Stockholders shall
cause the Seller to, change its name to any name not containing the words
"Cognitive" or "Communication" or words similar to or susceptible of confusion
with such words, or any combination or abbreviation thereof, by appropriate
amendment to its Certificate of Incorporation (or other charter document), and
the Stockholders further agree not to use any such words in the name of any
business entity they may form or otherwise control.
7. Deliveries by the Seller and the Stockholders at the Closing.
At or prior to the Closing, the Seller and the Stockholders shall have
delivered to the Purchaser all of the following:
(a) the Xxxx of Sale;
(b) resolutions duly adopted by the Board of Directors of the
Seller authorizing the transactions which are the subject of this Agreement,
certified by all of the directors of the Seller;
(c) certificates issued by appropriate Governmental Authorities
evidencing, as of a recent date, the good standing and tax status of the Seller
in its jurisdiction of incorporation and in those jurisdictions in which it is
qualified to do business;
(d) a copy of the Certificate of Incorporation or other applicable
charter instruments and all amendments thereto of the Seller, certified by all
of the directors of the Seller;
(e) a copy of the By-laws or comparable documents, including all
amendments thereto, of the Seller, certified by all of the directors of the
Seller;
(f) the purchase price for the CCL-DL Interests as set forth in
Section 2.2;
(g) all Consents set forth in Schedule 4.4 annexed hereto;
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(h) the Employment Agreements, the Incentive Compensation Agreement
and the Put Agreement duly executed by the Optionholders, in each case in
substantially the forms annexed hereto as Exhibit C, Exhibit D and Exhibit E,
respectively;
(i) the favorable opinion, dated the date of the Closing, of the
Seller's and Stockholders' Counsel, reasonably satisfactory in substance and
form to the Purchaser, substantially in the form annexed hereto as Exhibit G;
and
(j) the Limited Liability Company Operating Agreement of the
Purchaser duly executed by the Stockholders, in substantially the form annexed
hereto as Exhibit H.
8. Deliveries by the Purchaser at the Closing.
At the Closing, the Purchaser shall deliver to the Seller and/or the
Stockholders the following:
(a) the Xxxx of Sale;
(b) the Cash Portion;
(c) a copy of the Certificate of Formation and all amendments
thereto of the Purchaser, certified by the Secretary of State of the State of
Delaware;
(d) all Consents set forth on Schedule 5.4 annexed hereto;
(e) the Employment Agreements, the Incentive Compensation Agreement
and the Put Agreement duly executed by the Purchaser, in each case in
substantially the forms annexed hereto as Exhibit C, Exhibit D and Exhibit E,
respectively;
(f) the Sale Options duly executed by the Purchaser, in
substantially the form annexed hereto as Exhibit F;
(g) the IPL Agreement duly executed by IPL;
(h) the Limited Liability Company Operating Agreement of the
Purchaser duly executed by MTE, in substantially the form annexed hereto as
Exhibit H;
(i) the favorable opinion, dated the date of the Closing, of the
Purchaser's Counsel, reasonably satisfactory in substance and form to the
Stockholders, substantially in the form annexed hereto as Exhibit I;
(j) resolutions duly adopted by the Board of Directors of IPL
authorizing the transactions which are the subject of this Agreement, certified
by the Secretary of IPL; and
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(k) resolutions duly adopted by the Managers of the Purchaser
authorizing the transactions which are the subject of this Agreement, certified
by the Secretary of the Purchaser.
9. Indemnification.
9.1 Survival of Representations, Warranties, Covenants and Agreements.
Except as otherwise expressly provided for herein, all representations,
warranties, covenants and agreements of the parties hereto included or provided
for herein, or in other instruments or agreements delivered or to be delivered
pursuant hereto shall survive for a period of eighteen (18) months following the
Closing Date (the "Survival Period"); provided, however, that all
representations, warranties, covenants or agreements relating to Taxes shall
survive until the expiration of the applicable statute of limitations relating
to such Taxes, taking into account any extensions of the statute of limitations
pursuant to the Code or pursuant to any Contract. The respective
representations, warranties, covenants and agreements contained herein shall not
be deemed waived or otherwise affected or impaired by the consummation of the
transactions hereunder, notwithstanding that any party has notice of a breach or
failure to perform by any other party hereto or that any party may have made any
investigation; provided, however, that, with respect to the representations,
warranties, covenants and agreements of the Seller and/or the Stockholders, if
either of the persons currently serving as IPL's Chief Operating Officer or
Chief Financial Officer has actual notice as of the date hereof of such breach
or failure, the preceding clause shall not apply.
9.2 General Indemnity.
(a) Each of the Seller and the Stockholders, jointly and severally,
agree to indemnify the Purchaser and its Affiliates, and all directors,
managers, officers, employees and representatives of each of the foregoing,
against (i) any and all damage, loss, claim, expense, deficiency or cost in
connection with the breach or threatened breach by any of the Seller or the
Stockholders of any representation or warranty made by any of such parties
hereunder or from any state of facts which is misrepresented in or omitted from
any certificate, Exhibit, Schedule or other instrument furnished by any of them
to the Purchaser hereunder, or the failure to comply or threatened failure to
comply by any of them with any covenant made by any of them hereunder, (i) any
and all damage, loss, claim, expense, deficiency or cost related to any of the
Unassumed Liabilities or Excluded Assets, (iii) any liability of any of the
Seller or the Stockholders relating to the conduct of the Business on or prior
to the Closing Date, including for Taxes or with respect to any Benefit Plan,
and (iv) any and all actions, suits, proceedings, demands, assessments,
Judgments, costs, costs of collection and legal and other expenses incident to
any of the foregoing.
(b) The Purchaser agrees to indemnify and hold harmless the Seller
and the Stockholders against (i) any and all damage, loss, claim, expense,
deficiency or cost in connection with the breach or threatened breach by the
Purchaser of any representation or warranty made by the Purchaser hereunder or
from any state of facts which is misrepresented in or omitted from any
certificate, Exhibit, Schedule or other instrument furnished by the Purchaser to
the Seller and/or the Stockholders hereunder or the failure to comply or
threatened failure to comply by the Purchaser with
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any covenant contained herein, and (ii) any and all actions, suits, proceedings,
demands, assessments, Judgments, costs, costs of collection and legal and other
expenses incident to any of the foregoing.
(c) The indemnification obligations of the Seller and the
Stockholders pursuant to Section 9.2(a) hereof, other than indemnification
obligations relating to Section 4.22 of this Agreement or Taxes, shall not
exceed the amount of the Purchase Price and the aggregate Contingent Payments.
The Purchaser shall not assert any claim for indemnification pursuant to this
Agreement, other than indemnification obligations relating to Section 4.22 of
this Agreement or Taxes, unless and until the aggregate amount of such claims
exceeds Thirty Five Thousand Dollars ($35,000) in the aggregate, in which case
the Purchaser may assert all such claims.
9.3 Claims.
(a) In the event that at any time a claim is made by any Person not
a party to this Agreement with respect to any matter to which the indemnity
provided for by Section 9.2(a) relates, the Purchaser, on not less than twenty
(20) days' notice to the Seller and the Stockholders, may make settlement of
such claim and such settlement shall be binding upon the Seller and the
Stockholders; provided, however, that the Seller and the Stockholders shall have
the option, to be exercised by notice to the Purchaser within ten (10) days
after such first mentioned notice shall have been given, to assume the contest
and defense of such claim; provided further, however, that none of the Seller or
the Stockholders shall be liable for any settlement of any such claim effected
by the Purchaser without their written consent but, if settled with their
written consent, the Seller and the Stockholders agree to indemnify and hold
harmless the Purchaser from and against any loss, liability, damage or expense
by reason of such settlement. If the Seller and the Stockholders shall exercise
such option, they shall have control over such contest and defense and over the
payment, settlement or compromise of such claim, and the Purchaser agrees to
cooperate fully with the Seller and the Stockholders and their attorneys with
respect to such contest and defense. Any payment or settlement resulting from
such contest, together with the total expenses thereof, including reasonable
attorneys' fees, shall be binding upon the Seller, the Stockholders and the
Purchaser. Notwithstanding the foregoing, the Seller and the Stockholders agree
that, without the Purchaser's prior written consent, they will not settle,
compromise or consent to the entry of any Judgment in any pending or threatened
claim in respect of which indemnification could be sought under the
indemnification provisions of this Article 9 (whether or not the Purchaser or
any other Person who may be indemnified hereunder is an actual or potential
party to such claim) unless such settlement compromise or consent includes an
unconditional release of the Purchaser and each other Person who may be
indemnified hereunder from all loss, liability, damage or expense arising out of
such claim.
(b) In the event that at any time a claim is made by any Person not
a party to this Agreement with respect to any matter to which the indemnity
provided for by Section 9.2(b) relates, the Seller and the Stockholders, on not
less than twenty (20) days' notice to the Purchaser, may make settlement of such
claim and such settlement shall be binding upon the Purchaser; provided,
however, that the Purchaser shall have the option, to be exercised by notice to
the Seller and the Stockholders within ten (10) days after such first mentioned
notice shall have been given, to assume the contest and
- 30 -
defense of such claim; provided further, however, that the Purchaser shall not
be liable for any settlement of any such claim effected by the Seller and the
Stockholders without its written consent but if settled with its written
consent, the Purchaser agrees to indemnify and hold harmless the Seller and the
Stockholders from and against any loss, liability, damage or expense by reason
of such settlement. If the Purchaser shall exercise such option, it shall have
control over such contest and defense and over the payment, settlement or
compromise of such claim, and the Seller and the Stockholders agree to cooperate
fully with the Purchaser and its attorneys with respect to such contest and
defense. Any payment or settlement resulting from such contest, together with
the total expenses thereof, including but not limited to reasonable attorneys'
fees, shall be binding upon the Purchaser, the Seller and the Stockholders.
Notwithstanding the foregoing, the Purchaser agrees that, without the prior
written consent of the Seller and the Stockholders, the Purchaser will not
settle, compromise or consent to the entry of any Judgment in any pending or
threatened claim in respect of which indemnification could be sought under the
indemnification provisions of this Article 9 (whether or not the Seller, the
Stockholders or any other Person who may be indemnified hereunder is an actual
or potential party to such claim) unless such settlement compromise or consent
includes an unconditional release of the Stockholders and each other Person who
may be indemnified hereunder from all loss, liability, damage or expense arising
out of such claim.
9.4 Disputes.
(a) If the Purchaser claims that any Seller or Stockholder is
liable with respect to any matter to which the foregoing indemnity relates, the
Purchaser shall give written notice to such party, which notice shall specify
the amount claimed and the facts upon which the claim is based. Each claim shall
be deemed approved by the applicable party unless such party gives the Purchaser
written notice of disapproval within twenty (20) days of receipt of such claim.
The parties shall undertake, in good faith, to adjust any such claim which is so
disapproved.
(b) If any of the Seller or the Stockholders claim that the
Purchaser is liable with respect to any matter to which the foregoing indemnity
relates, they shall give written notice to the Purchaser, which notice shall
specify the amount claimed and the facts upon which the claim is based. Each
claim shall be deemed approved by the Purchaser, unless the Purchaser gives the
Seller and the Stockholders written notice of disapproval within twenty (20)
days of receipt of such claim. The parties shall undertake, in good faith, to
adjust any such claim which is so disapproved.
10. Cooperation.
(a) Each of the Purchaser, the Seller and the Stockholders shall provide the
other parties with such assistance as may reasonably be requested by any of them
in connection with any claim arising under this Agreement, and each shall retain
and provide the others with any records or information that may be relevant to
any claim.
(b) If any of the Seller, the Stockholders or the Purchaser, as the case may
be, fails to provide any information requested by another party within a
reasonable period, or otherwise fails to
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do any act required of it under this Article 10, then such party shall be
obligated, notwithstanding any other provision of this Agreement, to indemnify
such other party and shall hold such other party harmless from and against any
and all costs, claims, or damages. For purposes of the indemnification
provisions of this Agreement, the failure to give any notice in a timely manner
shall not relieve the indemnifying party of its obligations hereunder unless the
indemnifying party is prejudiced by such failure.
11. Registration Rights.
11.1 Demand Registration.
(a) At any time after the first anniversary of the date of the
consummation of the Purchaser's initial public offering under the Securities
Act, the Holders of 50% or more of the then outstanding Registrable Securities
may make a written request to the Purchaser to register such number of
Registrable Securities under the Securities Act as such Holders may request in
writing to the Purchaser (such requests are referred to herein as a "Demand
Registration"). Any such request from the Holders shall specify the number of
Registrable Securities proposed to be sold and the intended method of
distribution thereof. Subject to the penultimate sentence of Section 11.1(b),
the Purchaser shall have no obligation to file more than one (1) registration
statement under the Securities Act with respect to a Demand Registration and
shall have no obligation to register any Registrable Securities with respect to
a Demand Registration unless such Registrable Securities may be registered on a
Form S-3 registration statement (or any successor form with similar "short-form"
disclosure permitting the inclusion or incorporation of information by reference
to other documents filed by the Purchaser with the Commission). The Purchaser
shall give written notice of any such requests to all of the Holders within
thirty (30) days after receipt thereof. Within fifteen (15) days after receipt
of such notice by the Holder, the Holder may request in writing that any of his
Registrable Securities be included in the registration statement with respect to
the Demand Registration.
(b) Except as otherwise provided in Section 11.1 hereof, a
registration will not be deemed to be a Demand Registration unless it has been
declared effective by the Commission; provided, however, that if, after the
registration statement has been declared effective by the Commission, the
offering of Registrable Securities pursuant to such registration statement is or
becomes subject to any stop order, injunction or other order or requirement of
the Commission or any other governmental or administrative agency, or if any
court prevents or otherwise limits the sale of the Registrable Securities
pursuant to the registration statement, such registration statement will be
deemed not to have been effected for purposes of this Section 11.1. If a
registration statement requested pursuant to this Section 11.1 is deemed not to
have been effected, then the Purchaser shall continue to be obligated to effect
a Demand Registration in accordance with this Section 11.1. The Holders shall be
permitted to withdraw all or any part of the Registrable Securities to be
offered for their benefit at any time prior to the effective date of the Demand
Registration; provided, however, that the withdrawing holders shall be
responsible for all fees and expenses incurred by them prior to such withdrawal.
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11.2 Piggyback Registration. If, at any time, the Purchaser proposes to file
a registration statement under the Securities Act with respect to an offering
for its own account or for the account of others of any class of equity
securities of the Purchaser (other than a registration relating solely to
employee benefit plans, a transaction under Rule 145 of the Act or a
registration on any registration form which does not include substantially the
same information as would be required to be included in a registration statement
covering the sale of the Registrable Securities and other than a registration
relating to the Purchaser's initial public offering unless (and pro rata, based
on the aggregate number of equity securities of the Purchaser then owned by such
persons, to the same extent as) IPL or any of its Subsidiaries or Affiliates are
selling any of their equity securities of the Purchaser pursuant to such
registration), then the Purchaser shall give written notice of such proposed
filing to the Holders at least twenty-five (25) days before the anticipated
filing date, and such notice shall offer the Holders the opportunity to register
such number of Registrable Securities as such Holder may request in writing to
the Purchaser within fifteen (15) days after the date such Holder first received
notice of such registration (a "Piggyback Registration"); provided, however,
that the Purchaser shall have no obligation to register any Registrable
Securities pursuant to this Section 11.2 unless Holders shall request that 50%
or more of the then outstanding Registrable Securities be included in such
registration.
11.3 Conditions to Registration. The Holder may not participate in any
registration hereunder unless the Holder:
(a) agrees to sell his Registrable Securities on the basis provided
in any underwriting agreements approved by the Purchaser;
(b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting agreements and which are customary with
industry practice; and
(c) agrees that if an underwriter advises the Purchaser in writing
that the number of securities proposed to be sold in such registration is
greater than the number of securities which the underwriter believes is feasible
to sell at that time, at the price and on the terms approved by the Purchaser,
then the underwriter may exclude some or all of the Registrable Securities to be
offered by the Holders from such registration. The Purchaser shall advise the
Holders of the limitation and that the number of Registrable Securities to be
offered by the Holders will be reduced to the number recommended by the
underwriter.
11.4 Provisions Regarding Registration Generally.
(a) Registration Expenses. In any registration initiated as a
Demand Registration or a Piggyback Registration, the Purchaser will pay or cause
to be paid all costs, fees and expenses in connection therewith ("Registration
Expenses"), including, without limitation, the Purchaser's legal and accounting
fees, printing expenses and "blue sky" fees and expenses, except that the
Purchaser shall not pay for (i) underwriting discounts and commissions, (ii)
state transfer taxes, (iii) brokerage
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commissions, (iv) fees and expenses of counsel and accountants for the Holders
and (v) blue sky fees and expenses in jurisdictions where the Purchaser is not
currently registered or qualified, whether or not the registration statement
becomes effective.
(b) Holdback Agreements. To the extent not inconsistent with
applicable Law, the Holders agree not to effect any public sale or distribution
of securities of the Purchaser, including a sale pursuant to Rule 144 or in
reliance on any other exemption from registration under the Securities Act,
during the fourteen (14) days prior to, and during the ninety (90) day period
beginning on, the effective date of a registration statement that includes
Registrable Securities (except as part of such registration), but only if and to
the extent requested in writing (with reasonable prior written notice) by the
underwriter(s) in the case of an underwritten public offering of securities of
the Purchaser.
(c) Alternative Disposition. Notwithstanding the other provisions
of this Article 11, the Purchaser shall not be obligated to register any
Registrable Securities of any Holder pursuant to this Article 11 if, in the
opinion of counsel to the Purchaser, the sale or other disposition of the
Registrable Securities of such Holder or Holders could be effected without
registration under the Securities Act during the four (4) week period
immediately preceding the effective date of the registration.
11.5 Registration Procedures. In connection with any registration under
Article 11, the Purchaser covenants and agrees that it shall use its best
efforts to:
(a) prepare and file with the Commission a registration statement
with respect to the Registrable Securities to be offered by the Holders and use
its best efforts to cause such registration statement to become effective
(provided that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Purchaser will furnish to the counsel
selected by the Holders copies of all such documents proposed to be filed);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith and such other documents necessary to comply with the Securities Act,
the Exchange Act and the rules and regulations promulgated thereunder, as may be
necessary to keep such registration statement effective for a period of not less
than six (6) months and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) furnish to the Holders such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents, including correspondence with the Commission, as the
Holders may reasonably request in order to facilitate the disposition of the
Registrable Securities to be offered by the Holders;
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(d) use its best efforts to continue to qualify the Registrable
Securities to be offered by the Holders under such other securities or "blue
sky" laws of such jurisdictions as the Purchaser is already registered or
qualified;
(e) notify the Holders, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statement therein not misleading, and at the request of
the Holders, the Purchaser will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of the Registrable
Securities to be offered by the Holders, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading; and
(f) cause all Registrable Securities to be offered by the Holders
to be listed on each securities exchange on which the equity securities of the
Purchaser are then listed.
11.6 Indemnification.
(a) The Purchaser agrees to indemnify and hold harmless the Holders
against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) arising out of or based upon any untrue or
alleged untrue statement of material fact contained in any registration
statement, any amendment or supplement thereto, any prospectus or preliminary
prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same arise out of or are based upon any such
untrue statement or omission based upon information with respect to the Holders
furnished in writing to the Purchaser by or on behalf of the Holders expressly
for use therein; provided, however, that in the event the prospectus shall have
been amended or supplemented and copies thereof, as so amended or supplemented,
shall have been furnished to the Holders prior to the confirmation of any sales
of Registrable Securities by the Holders, such indemnity with respect to the
prospectus shall not inure to the benefit of any Holder if the person asserting
such loss, claim, damage or liability did not, at or prior to the confirmation
of the sale of Registrable Securities by such Holder to such person, receive a
copy of the prospectus as so amended or supplemented and the untrue statement or
omission of a material fact contained in the prospectus was corrected in the
prospectus as so amended or supplemented.
(b) In connection with any registration statement in which the
Holders participate, the Holders will furnish to the Purchaser in writing such
information with respect to the Holders as the Purchaser reasonably requests for
use in connection with any such registration statement or prospectus, and each
Holder agrees to indemnify and hold harmless the Purchaser, its managers and
officers and each person who controls the Purchaser (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue or alleged untrue statement of material fact contained in any
registration statement, any amendment or supplement thereto, any prospectus or
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preliminary prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, to the extent that such untrue statement is contained in
or such omission relates to any information with respect to such Holder so
furnished in writing by such Holder specifically for inclusion in any prospectus
or registration statement.
(c) In order to provide for just and equitable contribution in
circumstances in which the foregoing indemnification is applicable in accordance
with its terms but for any reason is held to be unavailable from the Purchaser
or the Holders, the Purchaser and the Holders shall contribute to the total
losses, claims, damages, liabilities and expenses and damages (including
reasonable costs of investigation) to which the Purchaser and the Holders may be
subject in such proportion as shall be appropriate to reflect the relative fault
of the Purchaser, on the one hand, and the Holders, on the other hand, with
respect to the statements or omissions which resulted in such loss, claim,
damage, liability or expense, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Purchaser or the Holders, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Purchaser and
the Holders agree that it would not be just and equitable if contributions
pursuant to this clause (c) were to be determined by pro rata allocation (even
if the Holders were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. Notwithstanding anything contained herein to
the contrary, no person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
12. Miscellaneous.
12.1 Fees and Expenses. Except as otherwise provided in this Agreement,
each party shall bear its own legal and accounting expenses, and any finder's
fees, broker's or agent's commission or similar payments incurred by such party,
in connection with the transactions contemplated by this Agreement; provided,
however, that the Purchaser agrees that if the Closing hereunder is consummated
it shall pay up to $25,000 to Seller's and Stockholders' Counsel at the Closing
for their fees and expenses incurred by the Seller and the Stockholders in
connection with this Agreement and the transactions contemplated hereby.
12.2 Publicity; Confidentiality.
(a) The parties shall agree with each other as to timing and
content prior to issuing any announcement, press release, public statement or
other information to the press or any third party with respect to this Agreement
or the transactions contemplated hereby; provided, however, that, nothing herein
shall prohibit any party to this Agreement from making any public disclosure
regarding
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this Agreement and the transactions contemplated hereby if, in the opinion of
counsel to such party, such disclosure is required by Law or by valid judicial
process.
(b) Each of the parties (each a "Providee") hereto shall, and
shall cause their respective officers, directors, managers, employees and
advisors to, keep confidential any information or document provided by or
otherwise obtained from any other party hereto or its Subsidiaries or Affiliates
(collectively, the "Providers") concerning the business and/or operations of the
Providers, unless such information or document (i) was already or becomes
generally available to the public, other than as a result of a disclosure by the
Providee, (ii) was or becomes available on a non-confidential basis from a
source other than the Providers provided that such source is not known by the
Providee to be bound by a confidentiality agreement with, or an obligation of
confidentiality to, the Providers, or (iii) is required to be disclosed by Law
or by valid judicial process.
12.3 Headings. Section headings contained in this Agreement are
included for convenience only and shall not affect the interpretation of any
provisions of this Agreement.
12.4 Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing (including facsimile or
similar writing) and shall be deemed to have been duly given (i) on the date of
service if personally served, (ii) on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers (or at
such other address or facsimile number for a party as shall be specified by like
notice):
If to the Seller or the Stockholders, to:
Cognitive Communications, Inc.
0 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxx 00000
Fax No.:
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with a copy to:
Xxxxxxx, Xxxxxxxx & Kotel
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
If to the Purchaser, to:
Cognitive Communications, LLC
c/o International Post Limited
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Fax No.: (000) 000-0000
with a copy to:
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
12.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. None of the parties hereto shall assign any rights or delegate any
duties hereunder without the prior written consent of other parties hereto;
however, the Purchaser may assign its rights and remedies, and delegate its
obligations, to any one or more of its or IPL's Subsidiaries or Affiliates.
12.6 Governing Law: Consent to Jurisdiction. This Agreement shall be
construed in accordance with, and governed by, the internal laws of the State of
New York as applied to contracts made and to be performed entirely within the
State of New York. Any legal action, suit or proceeding arising out of or
relating to this Agreement may be instituted in any state or federal court
located within the County of New York, State of New York, and each party hereto
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court. Each party hereto further irrevocably submits to the jurisdiction of
any such court in any such action, suit or proceeding.
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12.7 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, sets forth the entire understanding and agreement of the
parties with respect to their subject matter and supersede any and all prior
understandings, negotiations or agreements among the parties hereto, both
written and oral, with respect to such subject matter.
12.8 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
a single agreement.
12.9 Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, in whole or in part, the validity of the
remaining provisions shall not be affected and the remaining portion of any
provision held to be invalid, illegal or unenforceable shall in no way be
affected, prejudiced or disturbed thereby.
12.10 No Prejudice. This Agreement has been jointly prepared and
negotiated by the parties hereto and the terms hereof shall not be construed in
favor of or against any party on account of its participation in such
preparation.
12.11 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person except as expressly provided herein other
than the parties hereto and their respective successors and permitted assigns.
12.12 Amendment and Modification. This Agreement may be amended or
modified only by written agreement executed by all parties hereto.
12.13 Waiver. At any time prior to the Closing, each of the parties
hereto may (i) extend the time for the performance of any of the obligations or
other acts of any other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (iii) waive compliance with any of the covenants, agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed by the party granting such waiver. Such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or future failure.
12.14 Right to Setoff. Except as expressly provided in Section 2.1, the
Seller and the Stockholders guarantee to the Purchaser the accuracy and
truthfulness of the representations and warranties and the due performance of
the covenants and agreements made by them pursuant to this Agreement and to
insure the availability of funds for the payment of amounts, claims or other
expenses of the type set forth in this Agreement, including, without limitation,
in Article 10, the Purchaser shall be entitled to off-set claims against any
Seller arising under this Agreement against any accrued and unpaid amounts due
(or amounts which may accrue and become due) to the Seller
- 39 -
or the Stockholders from the Purchaser as a Contingent Payment and against the
Seller and the Stockholders, or any of them, directly. This right of set-off
shall not be exclusive and shall not preclude the Purchaser from exercising any
of its rights or remedies.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
COGNITIVE COMMUNICATIONS, INC.
By: -----------------------------------
Name:
Title:
-----------------------------------
Xxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
COGNITIVE COMMUNICATIONS, LLC
By: -----------------------------------
Xxxxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
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