EXHIBIT 2.2
SPLIT-OFF AGREEMENT
THIS SPLIT-OFF AGREEMENT (the "Agreement") is made and entered into this
30 day of December, 2004, by and between MAC Worldwide, Inc., a Delaware
corporation ("Seller"), Xxxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx (each a "Purchaser"
and collectively, the "Purchasers"), Mimi & Coco, Inc., a Canadian numbered
corporation ("Mimi & Coco"), and Trafficlogic, Inc., a California corporation
("Trafficlogic").
R E C I T A L S:
WHEREAS, Seller is the owner of all of the issued and outstanding capital
stock of Mimi & Coco. Mimi & Coco is the sole operating subsidiary of Seller.
Seller has no other businesses or operations.
WHEREAS, contemporaneous with the execution of this Agreement, Seller,
Trafficlogic and a newly-formed, wholly-owned Delaware subsidiary of Seller,
Trafficlogic Acquisition Corp. ("Acquisition Sub"), have entered into an
Agreement and Plan of Merger and Reorganization (the "Merger Agreement")
pursuant to which Acquisition Sub will merge with and into Trafficlogic, with
Acquisition Sub being the surviving entity (the "Merger"), and the security
holders of Trafficlogic will receive shares of common stock in Seller in
exchange for their shares of common stock in Trafficlogic.
WHEREAS, the execution of this Agreement is required by Trafficlogic as a
condition to its execution of the Merger Agreement. The consummation of the
purchase and sale transaction contemplated by this Agreement is also a condition
to the completion of the Merger pursuant to the Merger Agreement. Seller has
represented to Trafficlogic in the Merger Agreement that the purchase and sale
transaction contemplated by this Agreement will be consummated in connection
with the Merger, and Trafficlogic is relying on such representation in entering
into the Merger Agreement.
WHEREAS, Purchasers desire to purchase the Shares (as defined in Section
1.1) from Seller, and to assume, as between Seller and Purchasers, all
responsibilities for any debts, obligations and liabilities of Mimi & Coco, on
the terms and subject to the conditions specified in this Agreement.
WHEREAS, Seller desires to sell and transfer the Shares to the Purchasers,
on the terms and subject to the conditions specified in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
I. PURCHASE AND SALE OF STOCK.
1.1 Purchased Shares. Subject to the terms and conditions provided below,
Seller shall sell and transfer to Purchasers and Purchasers shall purchase from
Seller, on the Closing Date (as defined in Section 1.3), all the issued and
outstanding shares of capital stock of Mimi & Coco (the "Shares").
1.2 Purchase Price. The purchase price for the Shares shall be the
transfer and delivery by Purchasers to Seller of all of the shares of common
stock of Seller that Purchasers own, which Purchasers represent consists of
24,301,170 shares, 12,150,585 of which are owned by Xxxxxxx Xxxxxxx and
12,150,585 of which are owned by Xxxxxxxx Xxxxxxx (the "Purchase Price Shares"),
deliverable as provided in Section 2.2.
1.3 Closing. The closing of the transactions contemplated in this
Agreement (the "Closing") shall take place immediately prior to the closing of
the Merger. The date on which the Closing occurs shall be referred to herein as
the Closing Date (the "Closing Date").
II. CLOSING.
2.1 Transfer of Shares. At the Closing, Seller shall deliver to each
Purchaser a certificate representing 50% of the Shares, duly endorsed to such
Purchaser or as directed by such Purchaser, which said delivery shall vest
Purchaser with good and marketable title to 50% of the issued and outstanding
shares of capital stock of Mimi & Coco, free and clear of all liens and
encumbrances. Collectively, said delivery shall vest Purchasers with good and
marketable title to all of the issued and outstanding shares of capital stock of
Mimi & Coco, free and clear of all liens and encumbrances.
2.2 Payment of Purchase Price. At the Closing, Purchasers shall deliver to
Seller the certificates representing the Purchase Price Shares duly endorsed to
Seller, which said delivery shall vest Seller with good and marketable title to
the Purchase Price Shares, free and clear of all liens and encumbrances.
2.3 Transfer of Records. On or before the Closing, Seller shall arrange
for transfer to Mimi & Coco all existing corporate books and records in Seller's
possession relating to Mimi & Coco and its business, including but not limited
to all agreements, litigation files, real estate files, personnel files and
filings with governmental agencies; provided, however, when any such documents
relate to both Seller and Mimi & Coco, only copies of such documents need be
furnished. On or before the Closing, Purchasers and Mimi & Coco shall transfer
to Seller all existing corporate books and records in the possession of
Purchasers or Mimi & Coco relating to Seller, including but not limited to all
corporate minute books, stock ledgers, certificates and corporate seals of
Seller and all agreements, litigation files, real property files, personnel
files and filings with governmental agencies; provided, however, when any such
documents relate to both Seller and Mimi & Coco or its business, only copies of
such documents need be furnished.
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III. PURCHASERS'S AND MIMI & COCO'S REPRESENTATIONS AND WARRANTIES. Each of the
Purchasers and Mimi & Coco, jointly and severally, represent and warrant to
Seller and Trafficlogic that:
3.1 Organization and Good Standing. Mimi & Coco is a corporation that has
been duly incorporated and is validly existing and in good standing under the
laws of Canada.
3.2 Capacity and Enforceability. Purchaser has the capacity to execute and
deliver this Agreement and the documents to be executed and delivered by
Purchaser at the Closing pursuant to the transactions contemplated hereby. This
Agreement and all such documents constitute valid and binding agreements of
Purchaser, enforceable in accordance with their terms. The execution and
delivery by Mimi & Coco of this Agreement and the documents to be executed and
delivered at the Closing pursuant to the transactions contemplated hereby, and
performance in accordance the terms hereof and thereof, have been duly
authorized by Mimi & Coco. This Agreement and all such documents constitute the
valid and binding agreements of Mimi & Coco, enforceable in accordance with
their terms.
3.3 Compliance. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby by Purchaser or Mimi &
Coco will result in the breach of any term or provision of, or constitute a
default under, or violate any agreement, indenture, instrument, order, law or
regulation to which Purchaser or Mimi & Coco is a party or by which Purchaser or
Mimi & Coco is bound.
3.4 Purchase for Investment. Purchaser is financially able to bear the
economic risks of acquiring an interest in Mimi & Coco and the other
transactions contemplated hereby and has no need for liquidity in this
investment. Purchaser has such knowledge and experience in financial and
business matters in general and with respect to businesses of a nature similar
to the business of Mimi & Coco so as to be capable of evaluating the merits and
risks of, and making an informed business decision with regard to, the
acquisition of the Shares. Purchaser is acquiring the Shares solely for his own
account and not with a view to or for resale in connection with any distribution
or public offering thereof, within the meaning of any applicable securities laws
and regulations, unless such distribution or offering is registered under the
Securities Act of 1933, as amended (the "Securities Act"), or an exemption from
such registration is available. Purchasers has (i) received all the information
he has deemed necessary to make an informed investment decision with respect to
an acquisition of the Shares; (ii) has had an opportunity to make such
investigation as he has desired pertaining to Mimi & Coco and the acquisition of
an interest therein and to verify the information which is, and has been, made
available to him; and (iii) has had the opportunity to ask questions of Seller
concerning Mimi & Coco. Purchaser acknowledges that Purchaser is an officer and
director of Seller and Mimi & Coco and, as such, has actual knowledge of the
business, operations and financial affairs of Mimi & Coco. Purchaser has
received no public solicitation or advertisement with respect to the offer or
sale of the Shares. Purchasers realizes that the Shares are "restricted
securities" as that term is defined in Rule 144 promulgated by the Securities
and Exchange Commission under the Securities Act, the resale of the Shares is
restricted by federal and state securities laws and, accordingly, the Shares
must be held indefinitely unless their resale is subsequently registered under
the Securities Act or an exemption from such registration is available for their
resale. Purchaser understands that any resale of the Shares by him must be
registered under the Securities Act (and any applicable state securities law) or
be effected in circumstances that, in the opinion of counsel for Mimi & Coco at
the time, create an exemption or otherwise do not require registration under the
Securities Act (or applicable state securities laws). Purchasers acknowledges
and consents that certificates now or hereafter issued for the Shares will bear
a legend substantially as follows:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED
UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND QUALIFICATION UNDER THE STATE ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR
QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE
EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT AND RULE 144
THEREUNDER). THE COMPANY SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING
AS TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION
AND/OR SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY THAT ANY SUCH
TRANSFER WILL NOT VIOLATE THE SECURITIES LAWS AS A PRECONDITION TO ANY SUCH
TRANSFER.
Purchaser understands that the Shares are being sold to him pursuant to
the exemption from registration contained in Section 4(2) of the Securities Act
and that the Seller is relying upon the representations made herein as one of
the bases for claiming the Section 4(2) exemption.
3.5 WARN Act. Mimi & Coco does not have a sufficient number of employees
to make it subject to the Worker Adjustment and Retraining Notification Act
("WARN Act").
3.6 Liabilities. Following the Closing, Seller will have no liability for
any debts, liabilities or obligations of Mimi & Coco or its business or
activities, and there are no outstanding guaranties, performance or payment
bonds, letters of credit or other contingent contractual obligations that have
been undertaken by Seller directly or indirectly in relation to Mimi & Coco or
its business and that may survive the Closing. Seller has no employees.
3.7 Title to Purchase Price Shares. Purchaser is the sole record and
beneficial owner of the Purchase Price Shares. At Closing, Purchaser will have
good and marketable title to the Purchase Price Shares, which Purchase Price
Shares are, and at the Closing will be, free and clear of all options, warrants,
pledges, claims, liens, and encumbrances and any restrictions or limitations
prohibiting or restricting transfer to Seller, except for restrictions on
transfer as contemplated by applicable securities laws.
3.8 Representations in Merger Agreement. Mimi & Coco represents and
warrants that all of the representations and warranties by Seller, insofar as
they relate to Mimi & Coco, contained in the Merger Agreement are true and
correct.
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IV. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and warrants to
Purchasers that:
4.1 Organization and Good Standing. Seller is a corporation that has been
duly incorporated and is validly existing and in good standing under the laws of
the State of Delaware.
4.2 Authority and Enforceability. The execution and delivery of this
Agreement and the documents to be executed and delivered at the Closing pursuant
to the transactions contemplated hereby, and performance in accordance with the
terms hereof and thereof, have been duly authorized by Seller and all such
documents constitute the valid and binding agreements of Seller enforceable in
accordance with their terms.
4.3 Title to Shares. Seller is the sole record and beneficial owner of the
Shares. At Closing, Seller will have good and marketable title to the Shares,
which Shares are, and at the Closing will be, free and clear of all options,
warrants, pledges, claims, liens and encumbrances, and any restrictions or
limitations prohibiting or restricting transfer to Purchasers, except for
restrictions on transfer as contemplated by Section 3.4 above. The Shares
constitute all of the issued and outstanding shares of capital stock of Mimi &
Coco.
V. OBLIGATIONS OF PURCHASERS PENDING CLOSING. Each Purchaser and Mimi & Coco,
jointly and severally, covenant and agree that between the date hereof and the
Closing:
5.1 Business as Usual. Mimi & Coco shall operate in accordance with past
practices and shall use best efforts to preserve its goodwill and the goodwill
of its employees, customers and others having business dealings with Mimi &
Coco. Without limiting the generality of the foregoing, from the date of this
Agreement until the Closing Date, Mimi & Coco shall (a) make all normal and
customary repairs to its equipment, assets and facilities, (b) keep in force all
insurance, (c) preserve in full force and effect all material franchises,
licenses, contracts and real property interests and comply in all material
respects with all laws and regulations, (d) collect all accounts receivable and
pay all trade creditors in the ordinary course of business at intervals
historically experienced, and (e) preserve and maintain Mimi & Coco's assets in
their current operating condition and repair, ordinary wear and tear excepted.
Mimi & Coco shall not (i) amend, terminate or surrender any material franchise,
license, contract or real property interest, or (ii) sell or dispose of any of
its assets except in the ordinary course of business. Neither Mimi & Coco nor
Purchasers shall take or omit to take any action that results in Seller
incurring any liability or obligation prior to or in connection with the
Closing.
5.2 Not Impair Performance. Purchasers and Mimi & Coco shall not take any
intentional action that would cause the conditions upon the obligations of the
parties hereto to effect the transactions contemplated hereby not to be
fulfilled, including, without limitation, taking or causing to be taken any
action that would cause the representations and warranties made by any party
herein not to be true, correct and accurate as of the Closing, or in any way
impairing the ability of Seller to satisfy its obligations as provided in
Article VI.
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5.3 Assist Performance. Purchasers and Mimi & Coco shall exercise their
reasonable best efforts to cause to be fulfilled those conditions precedent to
Seller's obligations to consummate the transactions contemplated hereby, as well
as any conditions to the consummation of the Merger contained in the Merger
Agreement, which are dependent upon actions of Purchasers or Mimi & Coco and to
make and/or obtain any necessary filings and consents in order to consummate the
sale transaction contemplated by this Agreement. Purchasers shall cause Mimi &
Coco to comply with its obligations under this Agreement.
5.4 Access. Prior to the Closing, Purchasers shall use his reasonable best
efforts to cause Mimi & Coco to, and Mimi & Coco shall, permit the authorized
representatives of Trafficlogic to have reasonable access to the properties,
records and documents related to Mimi & Coco and its business and furnish to
Trafficlogic such financial records and other documents with respect to Mimi &
Coco's operations and business as Trafficlogic shall reasonably request.
VI. OBLIGATIONS OF SELLER PENDING CLOSING. Seller covenants and agrees that
between the date hereof and the Closing:
6.1 Business as Usual. Seller shall not take any intentional action that
prevents Mimi & Coco from satisfying its covenants set forth in Section 5.1
above.
6.2 Not Impair Performance. Seller shall not take any intentional action
that would cause the conditions upon the obligations of the parties hereto to
effect the transactions contemplated hereby not to be fulfilled, including,
without limitation, taking or causing to be taken any action which would cause
the representations and warranties made by any party herein not to be materially
true, correct and accurate as of the Closing, or in any way impairing the
ability of Purchasers to satisfy his obligations as provided in Article V.
6.3 Assist Performance. Seller shall exercise its reasonable best efforts
to cause to be fulfilled those conditions precedent to Purchasers' obligations
to consummate the transactions contemplated hereby which are dependent upon the
actions of Seller and to work with Purchasers to make and/or obtain any
necessary filings and consents.
VII. SELLER'S CONDITIONS PRECEDENT TO CLOSING. The obligations of Seller to
close the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of each of the following conditions
precedent (any or all of which may be waived by Seller and Trafficlogic in
writing):
7.1 Representations and Warranties, Performance. All representations and
warranties of Purchasers and Mimi & Coco contained in this Agreement shall have
been true and correct, in all material respects, when made and shall be true and
correct, in all material respects, at and as of the Closing, with the same
effect as though such representations and warranties were made at and as of the
Closing. Purchasers and Mimi & Coco shall have performed and complied with all
covenants and agreements and satisfied all conditions, in all material respects,
required by this Agreement to be performed or complied with or satisfied by
Purchasers and Mimi & Coco at or prior to the Closing.
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7.2 Bring-Down Certificate of Purchasers. Purchasers and Mimi & Coco shall
deliver to Seller at Closing a certificate signed by Purchasers and an
authorized officer of Mimi & Coco dated the Closing Date: (i) certifying that
Purchasers and Mimi & Coco have performed and complied with all covenants and
agreements and satisfied all conditions, in all material respects, required by
this Agreement to be performed or complied with or satisfied by Purchasers or
Mimi & Coco at or prior to the Closing; and (ii) certifying that all
representations and warranties made by Purchasers and Mimi & Coco in this
Agreement are true and correct, in all material respects, as of the Closing Date
with the same effect as though such representations and warranties were made at
and as of the Closing Date.
7.3 Additional Documents. Purchasers and Mimi & Coco shall deliver or
cause to be delivered such additional documents as may be necessary in
connection with the consummation of the transactions contemplated by this
Agreement and the performance of their obligations hereunder.
7.4 Releases by Purchasers and Mimi & Coco.
(a) Purchasers. At the Closing, each Purchaser shall execute and
deliver to Seller and Trafficlogic a general release which in substance and
effect releases Seller and Trafficlogic from any and all liabilities and
obligations that Seller and Trafficlogic may owe to such Purchaser in any
capacity and from any and all claims that Purchaser may have against Seller,
Trafficlogic, or their respective officers, directors, stockholders, employees
and agents (other than those arising pursuant to this Agreement or any document
delivered in connection with this Agreement).
(b) Mimi & Coco. At the Closing, Mimi & Coco shall execute and
deliver to Seller and Trafficlogic a general release which in substance and
effect releases Seller and Trafficlogic from any and all liabilities and
obligations that Seller and Trafficlogic may owe to Mimi & Coco in any capacity
and from any and all claims that Mimi & Xxxx xxx have against Seller,
Trafficlogic, or their respective officers, directors, stockholders, employees
and agents (other than those arising pursuant to this Agreement or any document
delivered in connection with this Agreement).
7.5 Resignation of Purchasers. At the Closing, each Purchaser shall
deliver to Seller his resignation as an officer and director of Seller, said
resignation to be effective immediately upon the consummation of the
transactions contemplated by this Agreement.
7.6 Consummation of Merger. The consummation of the Merger shall have
occurred simultaneously with the Closing.
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VIII. PURCHASERS' CONDITIONS PRECEDENT TO CLOSING. The obligations of Purchasers
to close the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of each of the following conditions
precedent (any and all of which may be waived by Purchasers and Trafficlogic in
writing):
8.1 Representations and Warranties, Performance. All representations and
warranties of Seller contained in this Agreement shall have been true and
correct, in all material respects, when made and shall be true and correct, in
all material respects, at and as of the Closing with the same effect as though
such representations and warranties were made at and as of the Closing. Seller
shall have performed and complied with all covenants and agreements and
satisfied all conditions, in all material respects, required by this Agreement
to be performed or complied with or satisfied by them at or prior to the
Closing.
8.2 Bring-Down Certificate of Seller. Seller shall deliver or cause to be
delivered to each Purchaser at Closing a certificate signed by an authorized
officer of Seller, dated as of the Closing Date: (i) certifying that Seller has
performed and complied with all covenants and agreements and satisfied all
conditions, in all material respects, required by this Agreement to be performed
or complied with or satisfied by Seller at or prior to the Closing; and (ii)
certifying that all representations and warranties made by Seller in this
Agreement are true and correct, in all material respects, as of the Closing Date
with the same effect as though such representations and warranties were made at
and as of the Closing Date.
8.3 Consummation of Merger. The consummation of the Merger shall have
occurred simultaneously with the Closing.
IX. OTHER AGREEMENTS.
9.1 Expenses. Each party hereto shall bear its expenses separately
incurred in connection with this Agreement and with the performance of its
obligations hereunder.
9.2 Confidentiality. The parties hereto shall not make any public
announcements concerning this transaction other than in accordance with mutual
agreement reached prior to any such announcement(s) and other than as may be
required by applicable law. If for any reason the transactions contemplated
hereby are not consummated, then Purchasers shall return any information
received by Purchasers from Seller, and Purchasers shall cause all confidential
information obtained by Purchasers concerning Mimi & Coco and its business to be
treated as such.
9.3 Brokers' Fees. No party to this Agreement has employed the services of
a broker and each agrees to indemnify the other against all claims of any third
parties for fees and commissions of any brokers claiming a fee or commission
related to the transactions contemplated hereby.
9.4 Access to Information Post-Closing; Cooperation.
(a) Following the Closing, Purchasers and Mimi & Coco shall afford
to Seller and its authorized accountants, counsel, and other designated
representatives reasonable access (and including using reasonable efforts to
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give access to persons or firms possessing information) and duplicating rights
during normal business hours to allow records, books, contracts, instruments,
computer data and other data and information (collectively, "Information")
within the possession or control of Purchasers or Mimi & Coco insofar as such
access is reasonably required by Seller. Information may be requested under this
Section 9.4(a) for, without limitation, audit, accounting, claims, litigation
and tax purposes, as well as for purposes of fulfilling disclosure and reporting
obligations and performing this Agreement and the transactions contemplated
hereby. No files, books or records of Mimi & Coco existing at the Closing Date
shall be destroyed by Purchasers or Mimi & Coco after Closing but prior to the
expiration of any period during which such files, books or records are required
to be maintained and preserved by applicable law without giving the Seller at
least 30 days prior written notice, during which xxxx Xxxxxx shall have the
right to examine and to remove any such files, books and records prior to their
destruction.
(b) Following the Closing, Seller shall afford to Mimi & Coco and
its authorized accountants, counsel and other designated representatives
reasonable access (including using reasonable efforts to give access to persons
or firms possessing information) duplicating rights during normal business hours
to Information within Seller's possession or control relating to the business of
Mimi & Coco. Information may be requested under this Section 9.4(b) for, without
limitation, audit, accounting, claims, litigation and tax purposes as well as
for purposes of fulfilling disclosure and reporting obligations and for
performing this Agreement and the transactions contemplated hereby. No files,
books or records of Mimi & Coco existing at the Closing Date shall be destroyed
by Seller after Closing but prior to the expiration of any period during which
such files, books or records are required to be maintained and preserved by
applicable law without giving the Purchasers at least 30 days prior written
notice, during which time Purchasers shall have the right to examine and to
remove any such files, books and records prior to their destruction.
(c) At all times following the Closing, Seller, Purchasers and Mimi
& Coco shall use reasonable efforts to make available to the other party on
written request, the current and former officers, directors, employees and
agents of Seller or Mimi & Coco for any of the purposes set forth in Section
9.4(a) or (b) above or as witnesses to the extent that such persons may be
reasonably be required in connection with any legal, administrative or other
proceedings in which Seller or Mimi & Xxxx xxx from time to be involved.
(d) The party to whom any Information or witnesses are provided
under this Section 9.4 shall reimburse the provider thereof for all
out-of-pocket expenses actually and reasonably incurred in providing such
Information or witnesses.
(e) Seller, Purchasers, Mimi & Coco and their respective employees
and agents shall each hold in strict confidence all Information concerning the
other party in their possession or furnished by the other or the other's
representative pursuant to this Agreement with the same degree of care as such
party utilizes as to such party's own confidential information (except to the
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extent that such Information is (i) in the public domain through no fault of
such party or (ii) later lawfully acquired from any other source by such party),
and each party shall not release or disclose such Information to any other
person, except such party's auditors, attorneys, financial advisors, bankers,
other consultants and advisors or persons with whom such party has a valid
obligation to disclose such Information, unless compelled to disclose such
Information by judicial or administrative process or, as advised by its counsel,
by other requirements of law.
(f) Seller, Purchasers and Mimi & Coco shall each use their best
efforts to forward promptly to the other party all notices, claims,
correspondence and other materials which are received and determined to pertain
to the other party.
9.5 Guarantees, Surety Bonds and Letter of Credit Obligations. In the
event that Seller is obligated for any debts, obligations or liabilities of Mimi
& Coco by virtue of any outstanding guarantee, performance or surety bond or
letter of credit provided or arranged by Seller on or prior to the Closing Date,
Purchasers and Mimi & Coco shall use best efforts to cause to be issued
replacements of such bonds, letters of credit and guarantees and to obtain any
amendments, novations, releases and approvals necessary to release and discharge
fully Seller from any liability thereunder following the Closing. Purchasers and
Mimi & Coco, jointly and severally, shall be responsible for, and shall
indemnify, hold harmless and defend Seller from and against, any costs or losses
incurred by Seller arising from such bonds, letters of credits and guarantees
and any liabilities arising therefrom and shall reimburse Seller for any
payments that Seller may be required to pay pursuant to enforcement of its
obligations relating to such bonds, letters of credit and guarantees.
9.6 Filings and Consents. Purchasers and Mimi & Coco, at their risk,
shall determine what, if any, filings and consents must be made and/or obtained
prior to Closing to consummate the purchase and sale of the Shares. Purchasers
and Mimi & Coco, jointly and severally, shall indemnify the Seller Indemnified
Parties (as defined in Section 11.1 below) against any Losses (as defined in
Section 11.1 below) incurred by any Seller Indemnified Parties by virtue of the
failure to make and/or obtain any such filings or consents. Recognizing that the
failure to make and/or obtain any filings or consents may cause Seller to incur
Losses or otherwise adversely affect Seller, Purchasers and Mimi & Coco confirm
that the provisions of this Section 9.6 will not limit Seller's right to treat
such failure as the failure of a condition precedent to Seller's obligation to
close pursuant to Article VII above.
9.7 Insurance. Purchasers acknowledges that on the Closing Date,
effective as of the Closing, all insurance coverage and bonds provided by Seller
for Mimi & Coco, and all certificates of insurance evidencing that Mimi & Coco
maintains any required insurance by virtue of insurance provided by Seller, will
terminate with respect to any insured damages resulting from matters occurring
subsequent to Closing.
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9.8 Agreements Regarding Taxes.
(a) Tax Sharing Agreements. Any tax sharing agreement between Seller
and Mimi & Coco is terminated as of the Closing Date and will have no further
effect for any taxable year (whether the current year, a future year, or a past
year).
(b) Returns for Periods Through the Closing Date. Seller will
include the income and loss of Mimi & Coco (including any deferred income
triggered into income by Reg. ss.1.1502-13 and any excess loss accounts taken
into income under Reg. ss.1.1502-19) on Seller's consolidated federal income tax
returns for all periods through the Closing Date and pay any federal income
taxes attributable to such income. Seller and Mimi & Coco agree to allocate
income, gain, loss, deductions and credits between the period up to Closing (the
"Pre-Closing Period") and the period after Closing (the "Post-Closing Period")
based on a closing of the books of Mimi & Coco and both Seller and Mimi & Coco
agree not to make an election under Reg. ss.1.1502-76(b)(2)(ii) to ratably
allocate the year's items of income, gain, loss, deduction and credit. Seller,
Mimi & Coco and Purchasers agree to report all transactions not in the ordinary
course of business occurring on the Closing Date after Purchasers' purchase of
the Shares on Mimi & Coco's tax returns to the extent permitted by Reg.
ss.1.1502-76(b)(1)(ii)(B). Purchasers agrees to indemnify Seller for any
additional tax owed by Seller (including tax owned by Seller due to this
indemnification payment) resulting from any transaction engaged in by Mimi &
Coco during the Pre-Closing Period or on the Closing Date after Purchasers'
purchase of the Shares. Mimi & Coco will furnish tax information to Seller for
inclusion in Seller's consolidated federal income tax return for the period
which includes the Closing Date in accordance with Mimi & Coco's past custom and
practice.
(c) Audits. Seller will allow Mimi & Coco and its counsel to
participate at Mimi & Coco's expense in any audits of Seller's consolidated
federal income tax returns to the extent that such audit raises issues that
relate to and increase the tax liability of Mimi & Coco. Seller shall have the
absolute right, in its sole discretion, to engage professionals and direct the
representation of Seller in connection with any such audit and the resolution
thereof, without receiving the consent of Purchasers or Mimi & Coco or any other
party acting on behalf of Purchasers or Mimi & Coco, provided that Seller will
not settle any such audit in a manner which would materially adversely affect
Mimi & Coco after the Closing Date unless such settlement would be reasonable in
the case of a person that owned Mimi & Coco both before and after the Closing
Date. In the event that after Closing any tax authority informs the Purchasers
or Mimi & Coco of any notice of proposed audit, claim, assessment, or other
dispute concerning an amount of taxes which pertain to the Seller, or to Mimi &
Coco during the period prior to Closing, Purchasers or Mimi & Coco must promptly
notify the Seller of the same within 15 calendar days of the date of the notice
from the tax authority. In the event Purchasers or Mimi & Coco does not notify
the Seller within such 15 day period, Purchasers and Mimi & Coco, jointly and
severally, will indemnify the Seller for any incremental interest, penalty or
other assessments resulting from the delay in giving notice. To the extent of
any conflict or inconsistency, the provisions of this Section 9.8 shall control
over the provisions of Section 11.2 below.
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(d) Cooperation on Tax Matters. Purchasers, Seller and Mimi & Coco
shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of tax returns pursuant to this Section and
any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Mimi & Coco shall (i) retain all books and
records with respect to tax matters pertinent to Mimi & Coco relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Seller, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (ii) give Seller
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the Seller so requests, Purchasers agrees to
cause Mimi & Coco to allow Seller to take possession of such books and records.
9.9 ERISA Agreement. Effective as of the Closing Date, Mimi & Coco shall
terminate its participation in, and withdraw from, all employee benefit plans
sponsored by Seller, and Seller and Purchasers shall cooperate fully in such
termination and withdrawal. Without limitation, Mimi & Coco shall be solely
responsible for (i) all liabilities under those employee benefit plans
notwithstanding any status as an employee benefit plan sponsored by Seller, and
(ii) all liabilities for the payment of vacation pay, severance benefits, and
similar obligations, including, without limitation, amounts which are accrued
but unpaid as of the Closing Date with respect thereto. Purchasers and Mimi &
Coco acknowledge that Mimi & Coco is solely responsible for providing
continuation health coverage, as required under the Consolidated Omnibus
Reconciliation Act of 1985, as amended ("COBRA"), to each person, if any,
participating in an employee benefit plan subject to COBRA with respect to such
employee benefit plan as of the Closing Date, including, without limitation, any
person whose employment with Mimi & Coco is terminated after the Closing Date.
X. TERMINATION.
10.1 This Agreement may be terminated at, or at any time prior to, the
Closing:
(a) by mutual written consent of Seller, Purchasers and
Trafficlogic; and
(b) by the Seller or Purchasers if the Merger Agreement is abandoned
or terminated without the Merger occurring.
If this Agreement is terminated as provided herein, it shall become wholly void
and of no further force and effect and there shall be no further liability or
obligation on the part of any party except to pay such expenses as are required
of such party.
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XI. INDEMNIFICATION.
11.1 Indemnification by Purchasers. Purchasers and Mimi & Coco, jointly
and severally, covenant and agree to indemnify, defend, protect and hold
harmless Seller, and its officers, directors, employees, stockholders, agents,
representatives and affiliates (collectively, together with Seller, the "Seller
Indemnified Parties") at all times from and after the date of this Agreement
from and against all losses, liabilities, damages, claims, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation), whether or not involving a third party claim and regardless of
any negligence of any Seller Indemnified Party (collectively, "Losses"),
incurred by any Seller Indemnified Party as a result of or arising from (i) any
breach of the representations and warranties of Purchasers and Mimi & Coco set
forth herein or in certificates delivered in connection herewith, (ii) any
breach or non-fulfillment of any covenant or agreement (including any other
agreement of Purchasers and Mimi & Coco to indemnify Seller set forth in this
Agreement) on the part of Purchasers or Mimi & Coco under this Agreement, (iii)
any debt, liability or obligation of Mimi & Coco, (iv) the conduct and
operations of the business of Mimi & Coco whether before or after Closing, (v)
claims asserted against Mimi & Coco whether before or after Closing, or (vi) any
federal or state income tax payable by Seller and attributable to the
transaction contemplated by this Agreement.
11.2 Third-Party Claims.
(a) Defense. If any claim or liability (a "Third-Party Claim")
should be asserted against any of the Seller Indemnified Parties (the
"Indemnitee") by a third party after the Closing for which Purchasers and Mimi &
Coco have an indemnification obligation under the terms of Section 11.1, then
the Indemnitee shall notify Purchasers and Mimi & Coco (the "Indemnitor") within
20 days after the Third-Party Claim is asserted by a third party (said
notification being referred to as a "Claim Notice") and give the Indemnitor a
reasonable opportunity to take part in any examination of the books and records
of the Indemnitee relating to such Third-Party Claim and to assume the defense
of such Third-Party Claim and in connection therewith and to conduct any
proceedings or negotiations relating thereto and necessary or appropriate to
defend the Indemnitee and/or settle the Claim. The expenses (including
reasonable attorneys' fees) of all negotiations, proceedings, contests, lawsuits
or settlements with respect to any Third-Party Claim shall be borne by the
Indemnitor. If the Indemnitor agrees to assume the defense of any Third-Party
Claim in writing within 20 days after the Claim Notice of such Third-Party Claim
has been delivered, through counsel reasonably satisfactory to Indemnitee, then
the Indemnitor shall be entitled to control the conduct of such defense, and any
decision to settle such Third-Party Claim, and shall be responsible for any
expenses of the Indemnitee in connection with the defense of such Third-Party
Claim so long as the Indemnitor continues such defense until the final
resolution of such Third-Party Claim. The Indemnitor shall be responsible for
paying all settlements made or judgments entered with respect to any Third-Party
Claim the defense of which has been assumed by the Indemnitor. Except as
provided on subsection (b) below, both the Indemnitor and the Indemnitee must
approve any settlement of a Third Party Claim. A failure by the Indemnitee to
timely give the Claim Notice shall not excuse Indemnitor from any
indemnification liability except only to the extent that the Indemnitor is
materially and adversely prejudiced by such failure.
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(b) Failure To Defend. If the Indemnitor shall not agree to assume
the defense of any Third-Party Claim in writing within 20 days after the Claim
Notice of such Third-Party Claim has been delivered, or shall fail to continue
such defense until the final resolution of such Third-Party Claim, then the
Indemnitee may defend against such Third-Party Claim in such manner as it may
deem appropriate and the Indemnitee may settle such Third-Party Claim on such
terms as it may deem appropriate. The Indemnitor shall promptly reimburse the
Indemnitee for the amount of all settlement payments and expenses, legal and
otherwise, incurred by the Indemnitee in connection with the defense or
settlement of such Third-Party Claim. If no settlement of such Third-Party Claim
is made, then the Indemnitor shall satisfy any judgment rendered with respect to
such Third-Party Claim before the Indemnitee is required to do so, and pay all
expenses, legal or otherwise, incurred by the Indemnitee in the defense against
such Third-Party Claim.
11.3 Non-Third-Party Claims. Upon discovery of any claim for which
Purchasers and Mimi & Coco have an indemnification obligation under the terms of
Section 11.1 which does not involve a claim by a third party against the
Indemnitee, the Indemnitee shall give prompt notice to Purchasers and Mimi &
Coco of such claim and, in any case, shall give Purchasers and Mimi & Coco such
notice within 30 days of such discovery. A failure by Indemnitee to timely give
the foregoing notice to Purchasers and Mimi & Coco shall not excuse Purchasers
or Mimi & Coco from any indemnification liability except to the extent that
Purchasers or Mimi & Coco is materially and adversely prejudiced by such
failure.
11.4 Survival. Except as otherwise provided in this Section 11.4, all
representations and warranties made by Purchasers, Mimi & Coco and Seller in
connection with this Agreement shall survive the Closing. Anything in this
Agreement to the contrary notwithstanding, the liability of all Indemnitors
under this Article XI shall terminate on the third (3rd) anniversary of the
Closing Date, except with respect to (a) liability for any item as to which,
prior to the third (3rd) anniversary of the Closing Date, any Indemnitee shall
have asserted a Claim in writing, which Claim shall identify its basis with
reasonable specificity, in which case the liability for such Claim shall
continue until it shall have been finally settled, decided or adjudicated, (b)
liability of any party for Losses for which such party has an indemnification
obligation, incurred as a result of such party's breach of any covenant or
agreement to be performed by such party after the Closing, (c) liability of
Purchasers and Mimi & Coco for Losses incurred by a Seller Indemnified Party due
to breaches of their representations and warranties in Article III of this
Agreement, and (d) liability of Purchasers and Mimi & Coco for Losses arising
out of Third-Party Claims for which Purchasers and Mimi & Coco have an
indemnification obligation, which liability shall survive until the statute of
limitation applicable to any third party's right to assert a Third-Party Claim
bars assertion of such claim.
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XII. MISCELLANEOUS.
12.1 Notices. All notices and communications required or permitted
hereunder shall be in writing and deemed given when received by means of the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or personal delivery, or
overnight courier, as follows:
(a) If to Seller, addressed to:
(Prior to Closing)
MAC Worldwide, Inc.
0000 Xxxxxxx Xxx
Xxxxxx Xxxxx, XX 00000
(After Closing)
InfoSearch Media, Inc.
(formerly known as MAC Worldwide, Inc.)
0000 Xxx Xxx Xxxxxx
Xxxxxx Xxx Xxx, XX 00000
Attention: Xxxxx Xxxxxx, President
With a copy to:
(Prior to Closing)
Gottbetter & Partners
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
(After Closing)
McGuireWoods LLP
0000 Xxxxxx xx xxx Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XxxXxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
(b) If to Purchasers or Mimi & Coco, addressed to:
Xx. Xxxxxxx Xxxxxxx
Mimi & Coco, Inc.
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With a copy to (which shall not constitute notice hereunder):
Gottbetter & Partners
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
(c) If to Trafficlogic, addressed to: Trafficlogic, Inc.
0000 Xxx Xxx Xxxxxx Xxxxxx xxx Xxx, XX 00000
Attention: Xxxxx Xxxxxx, President
With a copy to (which shall not constitute notice hereunder):
McGuireWoods LLP
1345 Avenue of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XxxXxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
or to such other address as any party hereto shall specify pursuant to this
Section 12.1 from time to time.
12.2 Exercise of Rights and Remedies. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
12.3 Time. Time is of the essence with respect to this Agreement.
12.4 Reformation and Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
12.5 Further Acts. Seller, Purchasers and Mimi & Coco shall execute any
and all documents and perform such other acts which may be reasonably necessary
to effectuate the purposes of this Agreement.
12.6 Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties relating to the subject matter contained herein.
This Agreement cannot be amended or changed except through a written instrument
signed by all of the parties hereto, including Trafficlogic. No provisions of
this Agreement or any rights hereunder may be waived by any party without the
prior written consent of Trafficlogic.
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12.7 Assignment. No party may assign his or its rights or obligations
hereunder, in whole or in part, without the prior written consent of the other
parties.
12.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts or choice of laws thereof.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts, with the same effect as if all parties had signed the same
document. Each such counterpart shall be an original, but all such counterparts
taken together shall constitute a single agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page was an original thereof.
12.10 Section Headings and Gender. The Section headings used herein are
inserted for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement. All personal pronouns used in this
Agreement shall include the other genders, whether used in the masculine,
feminine or neuter, and the singular shall include the plural, and vice versa,
whenever and as often as may be appropriate.
12.11 Specific Performance; Remedies. Each of Seller, Purchasers and Mimi
& Coco acknowledges and agrees that Trafficlogic would be damaged irreparably if
any provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached. Accordingly, each of Seller, Purchasers and Mimi
& Coco agrees that Trafficlogic will be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and its terms and provisions in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, subject to Section 12.14, in
addition to any other remedy to which they may be entitled, at law or in equity.
Except as expressly provided herein, the rights, obligations and remedies
created by this Agreement are cumulative and in addition to any other rights,
obligations or remedies otherwise available at law or in equity, and nothing
herein will be considered an election of remedies. Seller, Purchasers and Mimi &
Coco acknowledge that they are familiar with the terms of the Merger Agreement,
that a breach of this Agreement by any of them may result in the inability of
one or more of the parties to the Merger Agreement to consummate the Merger or
the Private Placement Offering (as defined in the Merger Agreement) or the
election by one or more of the parties to the Merger Agreement not to consummate
the Merger or the Private Placement Offering, and that any damages of
Trafficlogic arising from such failure to consummate the Merger or Private
Placement Offering are foreseeable damages resulting from the breach of this
Agreement.
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12.12 Submission to Jurisdiction; Process Agent; No Jury Trial.
(a) Each party to the Agreement hereby submits to the jurisdiction
of any state or federal court sitting in New York, New York, in any action
arising out of or relating to this Agreement and agrees that all claims in
respect of the action may be heard and determined in any such court. Each party
to the Agreement also agrees not to bring any action arising out of or relating
to this Agreement in any other court. Each party to the Agreement agrees that a
final judgment in any action so brought will be conclusive and may be enforced
by action on the judgment or in any other manner provided at law or in equity.
Each party to the Agreement waives any defense of inconvenient forum to the
maintenance of any action so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto.
(b) EACH PARTY TO THE AGREEMENT HEREBY AGREES TO WAIVE HIS OR HER
RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT
OR ANY OTHER AGREEMENTS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY
DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope
of this waiver is intended to be all encompassing of any and all actions that
may be filed in any court and that relate to the subject matter of the
transactions, including, contract claims, tort claims, breach of duty claims,
and all other common law and statutory claims. Each party to the Agreement
hereby acknowledges that this waiver is a material inducement to enter into a
business relationship and that they will continue to rely on the waiver in their
related future dealings. Each party to the Agreement further represents and
warrants that it has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND
THE WAIVER WILL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In
the event of commencement of any action, this Agreement may be filed as a
written consent to trial by a court.
12.13 Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof will arise
favoring or disfavoring any party because of the authorship of any provision of
this Agreement. Any reference to any federal, state, local, or foreign law will
be deemed also to refer to law as amended and all rules and regulations
promulgated thereunder, unless the context requires otherwise. The words
"include," "includes," and "including" will be deemed to be followed by "without
limitation." The words "this Agreement," "herein," "hereof," "hereby,"
"hereunder," and words of similar import refer to this Agreement as a whole and
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not to any particular subdivision unless expressly so limited. The parties
hereto intend that each representation, warranty, and covenant contained herein
will have independent significance. If any party hereto has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which
that party has not breached will not detract from or mitigate the fact that such
party is in breach of the first representation, warranty, or covenant.
[Signatures Follow on the Next Page]
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IN WITNESS WHEREOF, this Agreement has been duly executed by or on
behalf of each of the parties as of the date first above written.
MAC WORLDWIDE, INC.
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxxx
------------------------------------------
Title: Chief Financial Officer
-----------------------------------------
MIMI & COCO, INC.
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxxx
------------------------------------------
Title: Secretary and Treasurer
-----------------------------------------
PURCHASERS
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Cavalo, Individually
/s/ Vincenzo Cavalo
Vincenzo Cavalo, Individually
TRAFFICLOGIC, INC.
By: /s/ Xxxxx Xxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: President
-20-
