Exhibit 1.1
AGREEMENT AND PLAN OF MERGER
AMONG
PRIMIX SOLUTIONS INC.,
BLACK BEAN STUDIOS, INC.
AND
THE STOCKHOLDERS OF
BLACK BEAN STUDIOS, INC.
Dated as of December 3, 1999
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 3, 1999 (the
"Agreement"), by and among PRIMIX SOLUTIONS INC., a Delaware corporation
("Buyer"), BLACK BEAN STUDIOS, INC., a Massachusetts corporation (the
"Company"), and CLAUDIO ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ (the "Stockholders").
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the General Corporation Law of the State of Delaware
("Delaware Law") and the Massachusetts Business Corporation Law ("Massachusetts
Law"), Buyer and the Company desire to enter into a business combination
transaction pursuant to which the Company will merge with and into Buyer (the
"Merger");
WHEREAS, the Board of Directors of the Company has adopted a resolution
approving this Agreement pursuant to Section 79 of Massachusetts Law;
WHEREAS, the Board of Directors of Buyer has adopted a resolution
approving this Agreement pursuant to Section 251(c) of Delaware Law; and
WHEREAS, each of the Stockholders, the holders of 100% of the
outstanding capital stock of the Company, has adopted this Agreement in
accordance with and Section 79 of Massachusetts Law.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Buyer, the Company, and the Stockholders hereby agree as follows:
SECTION 1. THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the relevant provisions of Delaware
Law and Massachusetts Law, at the Effective Time (as defined in Section 1.3),
the Company shall be merged with and into Buyer. As a result of the Merger, the
separate corporate existence of the Company shall cease and Buyer shall continue
as the surviving corporation of the Merger (the "Surviving Corporation").
1.2 CLOSING. The closing of the Merger (the "Closing") shall be held on
the date hereof at the offices of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, Boston, Massachusetts
(or such other place and date as the parties may agree) or, if all of the
conditions to the obligations of the parties hereto have not been satisfied or
waived by such date, on such mutually agreeable later date as soon as
practicable after the satisfaction or waiver of all conditions to the
obligations of the parties hereto (the "Closing Date").
1.3 EFFECTIVE TIME. As of the Closing, the parties hereto shall cause
the Merger to be consummated by filing a certificate of merger with the
Secretary of State for the State of Delaware and articles of merger with the
Secretary of State of the Commonwealth of Massachusetts (the "Certificates of
Merger") in such form as required by, and executed in
accordance with the relevant provisions of, Delaware Law and Massachusetts Law
(the date and time of the later of such filings being the "Effective Time").
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in Section 259 of Delaware Law and Section 80 of
Massachusetts Law. Without limiting the generality of the foregoing, and subject
to Section 259 of Delaware Law and Section 80 of Massachusetts Law, at the
Effective Time, except as otherwise provided herein, all of the property,
rights, privileges, powers and franchises of the Company shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company
shall become the debts, liabilities and duties of the Surviving Corporation. At
the Effective Time, the Certificate of Incorporation of Buyer as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation and the By-laws of Buyer as in effect
immediately prior to the Effective Time shall become the By-laws of the
Surviving Corporation.
1.5 CONVERSION OF SECURITIES. At the Effective Time and without any
action on the part of Buyer, the Company, the Stockholders or any other holders
of any of the securities of any of those corporations:
(a) each share of the Company's common stock, without par value
(the "Common Stock"), issued and outstanding immediately prior to the Effective
Time (each, a "Company Share") shall be converted into the right to receive the
following consideration without interest thereon and only upon the surrender of
the certificate formerly representing such share of Common Stock: (i) the Per
Share Cash Payment (as defined in Section 1.6(a) below), and (ii) the Per Share
Stock Payment (as defined in Section 1.6(c) below);
(b) each share of Common Stock held in the treasury of the Company
immediately prior to the Effective Time shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto; and
(c) each share of the capital stock of Buyer issued and
outstanding or held in treasury immediately prior to the Effective Time shall
remain issued and outstanding or so held intrasory without charge.
Additionally, from and after the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of shares of Common Stock thereafter on the records of the Company.
1.6 CASH AND STOCK CONSIDERATION.
(a) CASH PURCHASE PRICE AT CLOSING. The aggregate cash
consideration payable by Buyer to the Stockholders shall equal SEVEN HUNDRED AND
FIFTY THOUSAND DOLLARS ($750,000) (the "Cash Purchase Price"). As used herein,
the term "Per Share Cash Payment" shall mean the per share cash consideration
payable by Buyer to the Stockholders determined by dividing the Cash Purchase
Price by the total number of Company Shares outstanding immediately prior to the
Effective Time (the "Company Share Number").
(b) STOCK CONSIDERATION. The aggregate number of shares of Buyer
common stock, par value $.001 per share (the "Buyer Stock"), issuable by Buyer
to the Stockholders at
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the Closing shall be 100,000 (the "Restricted Shares"); provided, however, that
the Restricted Shares shall be subject to restriction on transfer pursuant to
Section 6.4 hereof. As used herein, the term "Per Share Stock Payment" shall
mean the number of shares of Buyer Stock issuable by Buyer to the Stockholders
determined by dividing (x) the aggregate number of Restricted Shares which shall
constitute the aggregate stock consideration by (y) the Company Share Number.
1.7 FURTHER ASSURANCES. The Stockholders from time to time after the
Closing at the request of Buyer and without further consideration shall execute
and deliver further instruments of transfer and assignment and take such other
action as Buyer may reasonably require to more effectively transfer and assign
to, and vest in, Buyer the Company Shares and all rights thereto, and to fully
implement the provisions of this Agreement.
1.8 STOCKHOLDER APPROVAL AND WAIVER. Each of the Stockholders agrees
that immediately following the execution and delivery of this Agreement, such
Stockholder shall execute and deliver a unanimous written consent in lieu of a
special meeting of stockholders of the Company in which such Stockholder will
vote for adoption of this Agreement in accordance with, and such Stockholder's
written waiver of any notice required by, or appraisal rights with respect to
the transactions contemplated hereby arising under, Massachusetts Law.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDERS
2.1 MAKING OF REPRESENTATION AND WARRANTIES. As a material inducement
to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, the Company and the Stockholders jointly and severally
hereby make to Buyer the representations and warranties contained in this
Section 2. The Stockholders shall have no right of indemnity or contribution
from the Company with respect to the breach of any representation or warranty
under this Section 2. As used herein, the Company shall be deemed to have
"knowledge" of a particular fact or other matter if a Stockholder or other
executive officer of the Company is actually aware, after due inquiry, of such
fact or other matter.
2.2 ORGANIZATION AND QUALIFICATIONS OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts with full corporate power and authority to
own or lease its properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business is currently
conducted or proposed to be conducted. The copies of the Company's Articles of
Organization, as amended to date, certified by the Secretary of State of the
Commonwealth of Massachusetts, and of the Company's By-laws, as amended to date,
certified by the Company's Secretary, and heretofore delivered to Buyer's
counsel, are complete and correct, and no amendments thereto are pending. The
Company is not in violation of any term of its Articles of Organization or
By-laws. The Company is duly qualified to do business as a foreign corporation
in each jurisdiction where the failure to be so qualified would have a material
adverse effect on the properties, assets, liabilities, condition (financial or
other), business or results of operations of the Company (a "Material Adverse
Effect") (after giving effect to the Merger).
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2.3 CAPITAL STOCK OF THE COMPANY; BENEFICIAL OWNERSHIP.
(a) The authorized capital stock of the Company consists of
200,000 shares of Common Stock, of which 2,000 shares are duly and validly
issued, outstanding, fully paid and non-assessable. Schedule 2.3 attached hereto
lists the total number of shares of Common Stock of the Company and the names of
each beneficial owner thereof. There are no outstanding options, warrants,
rights, commitments, preemptive rights or agreements of any kind for the
issuance or sale of, or outstanding securities convertible into, any additional
shares of capital stock of any class of the Company. None of the Company's
capital stock has been issued in violation of any federal or state law. There
are no voting trusts, voting agreements, proxies or other agreements,
instruments or undertakings with respect to the voting of the Company Shares.
(b) The Stockholders own beneficially and of record all of the
Company Shares free and clear of any liens, restrictions or encumbrances.
2.4 SUBSIDIARIES. The Company has no subsidiaries or investments in, or
loans to, any other corporation, business or organization or entity.
2.5 AUTHORITY OF THE COMPANY.
(a) The Company has full right, authority and power to enter into
this Agreement and each agreement, document and instrument to be executed and
delivered by the Company pursuant to this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance by the
Company of this Agreement and each such other agreement, document and instrument
executed and delivered by the Company pursuant to or contemplated by this
Agreement have been duly authorized by all necessary action of the Company and
its stockholders and no other action on the part of the Company or its
stockholders is required in connection therewith.
This Agreement and each agreement, document and instrument to be
executed and delivered by the Company pursuant to this Agreement constitute, or
when executed and delivered will constitute, valid and binding obligations of
the Company enforceable in accordance with their terms. The execution, delivery
and performance by the Company of this Agreement and each such agreement,
document and instrument:
(i) do not and will not violate any provision of the
Articles of Organization or By-laws of the Company;
(ii) do not and will not violate any laws of the United
States or any state or other jurisdiction applicable to the Company, implicate
any anti-takeover laws or require the Company to obtain any approval, consent or
waiver of, or make any filing with, any person or entity (governmental or
otherwise) that has not been obtained or made; and
(iii) do not and will not result in a breach of,
constitute a default under, require any consent under, accelerate any obligation
under, or give rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which the Company is a party or by which the property of
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the Company is bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or encumbrance on any
of the Company's assets or Company Common Stock, except as specifically
identified on Schedule 2.5(a) attached hereto.
(b) Each of the Stockholders has the capacity to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by or on behalf of him or her pursuant to or contemplated by this
Agreement. This Agreement and each agreement, document and instrument executed
and delivered by the Stockholders pursuant to or contemplated by this Agreement
constitute, or when executed and delivered will constitute, valid and binding
obligations of the Stockholders enforceable in accordance with their respective
terms, except as the same may be limited by bankruptcy, insolvency, or
reorganization laws, or other laws relating to or affecting the availability of
the remedy of specific performance or equitable principles of general
application. The execution, delivery and performance by the Stockholders of this
Agreement and each such agreement, document and instrument:
(i) do not and will not violate any laws of the United
States or any state or other jurisdiction applicable to either Stockholder or
require the Stockholders to obtain any approval, consent or waiver of, or make
any filing with, any person or entity (governmental or otherwise) that has not
been obtained or made; and
(ii) do not and will not result in a breach of,
constitute a default under, require any consent under, accelerate any obligation
under or give rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which either Stockholder is a party or by which the
property of such Stockholder is bound or affected, or result in the creation or
imposition of any mortgage, pledge, lien, security interest or other charge or
encumbrance on such Stockholder's assets, including, without limitation, the
Company Shares held by such Stockholder.
(c) AGREEMENTS. Except as disclosed in Schedule 2.5(c) attached
hereto, there are no agreements or arrangements to which either Stockholder is a
party relating to the business of the Company or to such Stockholder's rights
and obligations as a stockholder of the Company, or the rights and obligations
of his or her designees as directors or officers of the Company. Neither
Stockholder owns, directly or indirectly, on an individual or joint basis, any
material interest in, or serves as an officer or director of, any customer,
competitor or supplier of the Company, or any organization which has a contract
or arrangement with the Company. Neither Stockholder has at any time transferred
any of the stock of the Company held by or for him or her to any employee or
consultant of the Company, which transfer constituted or could be viewed as
compensation for services rendered to the Company by said employee or
consultant. Except as provided in Schedule 2.5(c) attached hereto, the
execution, delivery and performance of this Agreement will not violate or result
in default or acceleration of any obligation under any contract, agreement,
indenture or other instrument involving the Company to which either Stockholder
is a party.
2.6 PROPERTIES. The Company does not own, and has never owned, any real
property. The Company has good, valid and (if applicable) marketable title to or
valid leasehold interests in all assets material to its business and to those
assets reflected on the Base Balance
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Sheet (as defined in Section 2.7(a) hereof), or acquired by the Company after
the date thereof (except for assets disposed of, cash used and accounts
receivable collected or written down since that date), free and clear of all
liens, claims or encumbrances of any nature, other than liens and encumbrances
that do not materially detract from the value of the assets subject thereto or
materially impair the operations of the Company. Except as set forth on Schedule
2.6 attached hereto, all equipment included in such assets which is necessary to
the business of the Company is in operable condition sufficient in the aggregate
for the normal conduct of the Company's business and all leases of real or
personal property to which the Company is a party are fully effective and afford
such entity peaceful and undisturbed possession of the subject matter to the
lease. The property and assets of the Company are sufficient for the conduct of
its business as presently conducted. The Company is not in violation of any
zoning, building or safety ordinance, regulation or requirement or other law or
regulation applicable to the operation of its owed or leased properties, which
violation would have a Material Adverse Effect (after giving effect to the
Merger), nor has any such entity received any notice of any such violation.
There are no defaults by the Company or, to its knowledge, by any other party,
which might curtail in any material respect the present use of its properties.
2.7 FINANCIAL STATEMENTS.
(a) The Company has delivered to Buyer the following financial
statements, copies of which are attached hereto as SCHEDULE 2.7 attached hereto:
(i) unaudited balance sheets of the Company as of December 31, 1998 and December
31, 1997 and statements of income, retained earnings and cash flows for the
years then ended, and (ii) an unaudited balance sheet of the Company as of
August 31, 1999 (the "Base Balance Sheet") and statements of income, retained
earnings and cash flows for the eight (8) months then ended, compiled by
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇.
Said financial statements have been compiled in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants, and present fairly in all
material respects the financial condition of the Company at the dates of said
statements and the results of its operations for the periods covered thereby,
subject, in the case of the Base Balance Sheet and related financial statements,
to normal year-end adjustments.
(b) As of the date hereof, the Company does not and will not have
any material liabilities of any nature, whether accrued, absolute, contingent or
otherwise, asserted or unasserted, known or unknown (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations of
others, or liabilities for taxes due or then accrued or to become due or
contingent or potential liabilities relating to activities of the Company or the
conduct of its business prior to the date hereof or the Closing Date, as the
case may be, regardless of whether claims in respect thereof had been asserted
as of such date), except liabilities (i) stated or adequately reserved against
on the Base Balance Sheet or the notes thereto, (ii) reflected in the Schedules
furnished to Buyer hereunder and attached hereto, or (iii) incurred after the
date of the Base Balance Sheet in the ordinary course of business of the
Company.
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2.8 TAXES.
(a) The Company has paid or caused to be paid all federal, state,
local, foreign, and other taxes, including without limitation, income taxes,
estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use
taxes, value-added taxes, gross receipts taxes, franchise taxes, capital stock
taxes, employment and payroll-related taxes, withholding taxes, stamp taxes,
transfer taxes, windfall profit taxes, environmental taxes and property taxes,
whether or not measured in whole or in part by net income, and all deficiencies,
or other additions to tax, interest, fines and penalties owed by it
(collectively, "Taxes"), required to be paid by it through the date hereof
whether disputed or not.
(b) The Company has in accordance with applicable law timely filed
all federal, state, local and foreign tax returns required to be filed by it
through the date hereof, and all such returns correctly and accurately set forth
the amount of any Taxes relating to the applicable period. The Company has
delivered to Buyer correct and complete copies of all federal, state, local and
foreign income tax returns, examination reports and statements of deficiencies
assessed against or agreed to by the Company.
(c) Neither the Internal Revenue Service nor any other
governmental authority is now asserting or, to the knowledge of the Company,
threatening to assert against the Company any deficiency or claim for additional
Taxes. No claim has ever been made by an authority in a jurisdiction where the
Company does not file reports and returns that the Company is or may be subject
to taxation by that jurisdiction. There are no security interests on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Taxes. The Company has never entered into a closing
agreement pursuant to Section 7121 of the Internal Revenue Code of 1986, as
amended (the "Code").
(d) There has not been any audit of any tax return filed by the
Company, no such audit is in progress, and the Company has not been notified by
any tax authority that any such audit is contemplated or pending. No extension
of time with respect to any date on which a tax return was or is to be filed by
the Company is in force, and no waiver or agreement by the Company is in force
for the extension of time for the assessment or payment of any Taxes.
(e) The Company has never been (and has never had any liability
for unpaid Taxes because it once was) a member of an "affiliated group" (as
defined in Section 1504(a) of the Code). The Company has never filed, and has
never been required to file, a consolidated, combined or unitary tax return with
any other entity. The Company does not own and has never owned a direct or
indirect interest in any trust, partnership, corporation or other entity. The
Company is not a party to any tax allocation or sharing agreement. The Company
has never made an election under Section 341(f) of the Code.
(f) The Company timely and properly elected to be an S corporation
(within the meaning of Section 1361(a)(1) of the Code) on Form 2553 filed on
October 29, 1996 with the IRS, and at all times since that date has continuously
remained an S corporation. In addition, the Company has timely and properly
elected to be an S corporation in every taxing jurisdiction that recognizes S
corporations and where the Company is subject to tax, and at all times since
then has continuously remained an S corporation in such jurisdictions. The
Company has not been
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taxable as anything other than an S corporation in each taxing jurisdiction that
recognizes S corporations since October 29, 1996. Neither the Company, any
Stockholder, nor any former shareholder of the Company has taken any action or
made any filing that would terminate the Company's status as an S corporation
for federal, state or local income tax purposes. Neither the IRS nor any other
taxing authority has ever challenged, disputed, or otherwise contested the
Company's status as an S corporation for federal, state, or local income tax
purposes.
(g) For purposes of this Agreement, all references to Sections of
the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.
2.9 COLLECTIBILITY OF ACCOUNTS RECEIVABLE. All of the accounts
receivable of the Company reflected on the Base Balance Sheet or existing at the
date hereof (less the reserve for bad debts set forth on the Base Balance Sheet)
are or will be at the Closing valid and enforceable claims and subject to no set
off or counterclaim, and to the knowledge of the Company, will be fully
collectible in the ordinary course of business; provided that the foregoing
shall not be construed to constitute a guaranty of full collectibility. The
Company has no accounts or loans receivable from any person, firm or corporation
which is affiliated with the Company or from any director, officer or employee
of the Company.
2.10 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 2.10
attached hereto, since the date of the Base Balance Sheet there has not been:
(a) any change in the properties, assets, liabilities, condition
(financial or other), business, prospects or results of operations of the
Company, which change by itself or in conjunction with all other such changes,
whether or not arising in the ordinary course of business, has had a Material
Adverse Effect on the Company;
(b) any contingent liability incurred by the Company as guarantor
or otherwise with respect to the obligations of others or any cancellation of
any material debt or claim owing to, or waiver of any material right of, the
Company;
(c) any mortgage, encumbrance or lien placed on any of the
properties of the Company which remains in existence on the date hereof or will
remain on the Closing Date;
(d) any obligation or liability of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including without limitation liabilities for Taxes due or to become due or
contingent or potential liabilities relating to products or services provided by
the Company or the conduct of the business of the Company since the date of the
Base Balance Sheet regardless of whether claims in respect thereof have been
asserted), incurred by the Company other than obligations and liabilities
incurred in the ordinary course of business consistent with the terms of this
Agreement (it being understood that product or service liability claims shall
not be deemed to be incurred in the ordinary course of business);
(e) any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Company other than in the ordinary course of
business;
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(f) any material damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties, assets
or business of the Company;
(g) any declaration, setting aside or payment of any dividend by
the Company, or the making of any other distribution in respect of the capital
stock of the Company, or any direct or indirect redemption, purchase or other
acquisition by the Company of its own capital stock, except for the distribution
to the Stockholders of cash on hand prior to the Closing in accordance with and
subject to the terms of Section 5.1(k) hereof;
(h) any labor trouble or claim of unfair labor practices involving
the Company; any change in the compensation payable or to become payable by the
Company to any of its officers, employees, agents or independent contractors
other than normal merit increases in accordance with its usual practices; or any
bonus payment or arrangement made to or with any of such officers, employees,
agents or independent contractors;
(i) any change with respect to the officers or management of the
Company;
(j) any payment or discharge of a material lien or liability of
the Company which was not shown on the Base Balance Sheet or incurred in the
ordinary course of business thereafter;
(k) any obligation or liability incurred by the Company to any of
its officers, directors, stockholders or employees, or any loans or advances
made by the Company to any of its officers, directors, stockholders or
employees, except normal compensation and expense allowances payable to officers
or employees;
(l) any change in accounting methods or practices, credit
practices or collection policies used by the Company;
(m) any other transaction entered into by the Company other than
transactions in the ordinary course of business; or
(n) any agreement or understanding, whether in writing or
otherwise, for the Company to take any of the actions specified in paragraphs
(a) through (m) above.
2.11 ORDINARY COURSE. Since the date of the Base Balance Sheet, the
Company has conducted its business only in the ordinary course and consistently
with its prior practices.
2.12 BANKING RELATIONS. All of the arrangements which the Company has
with any banking institution are described in Schedule 2.12 attached hereto,
indicating with respect to each of such arrangements the type of arrangement
maintained (such as checking account, borrowing arrangements, safe deposit box,
etc.) and the person or persons authorized in respect thereof.
2.13 INTELLECTUAL PROPERTY.
(a) Except as described in Schedule 2.13 attached hereto, the Company has
exclusive ownership of, or license to use, all patent, copyright, trade secret,
trademark, or other
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proprietary rights (collectively, "Intellectual Property") used or to be used in
the business of the Company as presently conducted or contemplated. Except as
set forth in said SCHEDULE 2.13, all of the rights of the Company in such
Intellectual Property are freely transferable. There are no claims or demands of
any other person pertaining to any such Intellectual Property and no proceedings
have been instituted, or are pending or threatened, which challenge the rights
of the Company in respect thereof. The Company has the right to use, free and
clear of claims or rights of other persons, all customer lists, designs,
manufacturing or other processes, computer software, systems, data compilations,
research results and other information required for or incident to its services
or its business as presently conducted or contemplated.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Company or used or to be used by the Company in its business as
presently conducted or contemplated, and all other items of Intellectual
Property which are material to the business or operations of the Company, are
listed in SCHEDULE 2.13. All of such patents, patent applications, trademark
registrations, trademark applications and registered copyrights have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions as identified on said Schedule, and have been properly
maintained and renewed in accordance with all applicable provisions of law and
administrative regulations of the United States and each such jurisdiction.
(c) All licenses or other agreements under which the Company is
granted rights in Intellectual Property, other than licenses of "off-the-shelf"
software utilized in the internal operations of the Company which are generally
commercially available to the public at retail, are listed in SCHEDULE 2.13. All
said licenses or other agreements are in full force and effect, there is no
material default by the Company or, to its knowledge, by any other party
thereto, and, except as set forth on SCHEDULE 2.13, all of the rights of the
Company thereunder are freely assignable. To the Company's knowledge, the
licensors under said licenses and other agreements have and have had all
requisite power and authority to grant the rights purported to be conferred
thereby. True and complete copies of all such licenses or other agreements, and
any amendments thereto, have been provided to Buyer.
(d) All licenses or other agreements under which the Company has
granted rights to others in Intellectual Property owned or licensed by the
Company are listed in SCHEDULE 2.13. All of said licenses or other agreements
are in full force and effect, there is no material default by the Company or, to
the Company's knowledge by any other party thereto, and, except as set forth on
SCHEDULE 2.13, all of the rights of Company thereunder are freely assignable.
True and complete copies of all such licenses or other agreements, and any
amendments thereto, have been provided to Buyer.
(e) Except as described on SCHEDULE 2.13, the Company has taken
all steps required in accordance with sound business practices to establish and
preserve its ownership and license of all Intellectual Property rights with
respect to its products, services and technology (including source code). The
Company has not made any such information available to any person other than
employees of Company except pursuant to written agreements requiring the
recipients to maintain the confidentiality of such information and appropriately
restricting the use
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thereof. The Company has no knowledge of any infringement by others of any
Intellectual Property rights of the Company.
(f) To the Company's knowledge (without any duty of
investigation), the present and contemplated business, activities and products
of the Company do not infringe any Intellectual Property of any other person. No
proceeding charging the Company with infringement of any adversely held
Intellectual Property has been filed or is threatened to be filed. To the
Company's knowledge (without any duty of investigation), there exists no
unexpired patent or patent application which includes claims that would be
infringed by or otherwise adversely affect the products, activities or business
of the Company. To the Company's knowledge, the Company is not making
unauthorized use of any confidential information or trade secrets of any person,
including without limitation, any former employer of any past or present
employee of Company. Except as set forth in SCHEDULE 2.13, neither the Company
nor, to its knowledge, any of its employees have any agreements or arrangements
with any persons other than the Company related to confidential information or
trade secrets of such persons or restricting any such employee's ability to
engage in business activities of any nature. The activities of the Company's
employees on behalf of the Company do not violate any such agreements or
arrangements known to the Company.
(g) Except as set forth on Schedule 2.13, all computer software
products that are owned by the Company, exclusively licensed to the Company,
licensed, sold or otherwise distributed to others by the Company or are
otherwise required for the conduct of its business ("Software") are Year 2000
Compliant. As used herein, "Year 2000 Compliant" shall mean the ability of the
Software to provide the following date related functions:
(i) consistently handle date information before, during
and after January 1, 2000, including but not limited to accepting date input,
providing date output and performing calculations on dates or portions of dates;
(ii) function accurately in accordance with the
documentation relating to the applicable Software and without interruption
before, during and after January 1, 2000, without any change in operations
associated with the advent of the new century;
(iii) respond to two-digit date input in a way that
resolves any ambiguity as to the century in a disclosed, defined and
predetermined manner; and
(iv) store and provide output of date information in
ways that are unambiguous as to century.
2.14 CONTRACTS. Except for contracts, commitments, plans, agreements
and licenses described in SCHEDULE 2.14 attached hereto (true and complete
copies of which have been delivered to Buyer), the Company is not a party to or
subject to:
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
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(b) any employment contract or contract for services which
requires the payment of more than $50,000 annually or which is not terminable
within 30 days by the Company without liability for any penalty or severance
payment;
(c) any contract or agreement for the purchase of any commodity,
material or equipment, except purchase orders in the ordinary course for less
than $10,000 each, such orders not exceeding $50,000 in the aggregate;
(d) any other contracts or agreements creating any obligations of
the Company of $50,000 or more with respect to any such contract or agreement
not specifically disclosed elsewhere under this Agreement;
(e) any contract or agreement which by its terms does not
terminate or is not terminable without penalty by the Company or its successors
within one year after the date hereof;
(f) any contract or agreement for the sale or license of its
products or services not made in the ordinary course of business;
(g) any contract with any sales agent or distributor of products
of the Company;
(h) any contract containing covenants limiting the freedom of the
Company to compete in any line of business or with any person or entity;
(i) any contract or agreement for the purchase of any fixed asset
for a price in excess of $100,000 whether or not such purchase is in the
ordinary course of business;
(j) any license agreement (as licensor or licensee), other than
licenses of "off-the-shelf" software utilized in the internal operations of the
Company which are generally commercially available to the public at retail;
(k) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money; or
(l) any contract or agreement with any officer, employee, director
or stockholder of the Company or with any persons or organizations controlled by
or affiliated with it.
The Company is not in default under any such contracts, commitments,
plans, agreements or licenses described in said Schedule and the Company has no
knowledge of conditions or facts which with notice or passage of time, or both,
would constitute a default thereunder.
2.15 LITIGATION. SCHEDULE 2.15 attached hereto lists all currently
pending litigation and governmental or administrative proceedings or
investigations to which the Company is a party. Except for matters described in
SCHEDULE 2.15, there is no litigation or governmental or administrative
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or its affiliates which may have a Material
Adverse Effect on
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the Company or which would prevent or hinder the consummation of the
transactions contemplated by this Agreement. With respect to each matter set
forth therein, SCHEDULE 2.15 sets forth a description of the matter, the forum
(if any) in which it is being conducted, the parties thereto and the type and
amount of relief sought.
2.16 COMPLIANCE WITH LAWS. Except as set forth in Schedule 2.16
attached hereto, the Company is in compliance in all material respects with all
applicable statutes, ordinances, orders, judgements, decrees, rules and
regulations promulgated by any federal, state, municipal entity, agency, court
or other governmental authority which apply to the Company or to the conduct of
its business, and the Company has not received notice of a violation or alleged
violation of any such statute, ordinance, order, rule or regulation.
2.17 INSURANCE. The physical properties and assets of the Company are
insured to the extent disclosed in SCHEDULE 2.17 attached hereto and all such
insurance policies and arrangements are disclosed in said Schedule. Said
insurance policies and arrangements are in full force and effect, all premiums
with respect thereto are currently paid, the Company is in compliance with the
terms thereof, and, except as set forth on SCHEDULE 2.17, no consent or notice
is required to be obtained or given in connection with the transactions
contemplated by this Agreement to keep such policies in full force and effect.
2.18 WARRANTY OR OTHER CLAIMS. There are no existing or, to the
knowledge of the Company, threatened product or service liability, warranty or
other similar claims, or any facts upon which a material claim of such nature
could be based, against the Company for products or services which are defective
or fail to meet any product or service warranties. No material claim has been
asserted against the Company for renegotiation or price redetermination of any
business transaction, and, to the knowledge of the Company, there are no facts
upon which any such claim could be based.
2.19 POWERS OF ATTORNEY. The Company has not granted any outstanding
power of attorney to any third person.
2.20 FINDER'S FEE. Except as set forth in SCHEDULE 2.20 attached
hereto, neither the Company nor any Stockholder has incurred or become liable
for any broker's commission or finder's fee relating to or in connection with
the transactions contemplated by this Agreement.
2.21 PERMITS: BURDENSOME AGREEMENTS. SCHEDULE 2.21 attached hereto
lists all permits, registrations, licenses, franchises, certifications and other
approvals (collectively, the "Approvals") required from federal, state or local
authorities in order for the Company to conduct its business. The Company has
obtained all such Approvals, which are valid and in full force and effect, and
is operating in compliance therewith. Such Approvals include, but are not
limited to, those required under federal, state or local statutes, ordinances,
orders, requirements, rules, regulations, or laws pertaining to environmental
protection, public health and safety, worker health and safety, buildings,
highways or zoning.
2.22 CORPORATE RECORDS; COPIES OF DOCUMENTS. The corporate record books
of the Company accurately record all corporate action taken by its stockholders
and board of directors and committees. The copies of the corporate records of
the Company has been provided to
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Buyer for review, are true and complete copies of the originals of such
documents. The Company has made available for inspection and copying by Buyer
and its counsel true and correct copies of all documents referred to in this
Section or in the Schedules delivered to Buyer pursuant to this Agreement.
2.23 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth in
SCHEDULE 2.23 attached hereto, neither the Company, nor, to the knowledge of the
Company, any stockholder, officer, supervisory employee or director of the
Company nor, to the knowledge of Company, any of their respective spouses or
family members, owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director or in another similar
capacity of, any competitor or supplier of Company, or any organization which
has a material contract or arrangement with the Company.
2.24 EMPLOYEE BENEFIT PROGRAMS. Except as set forth on SCHEDULE 2.24
attached hereto, the Company does not maintain and has never maintained an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The Company has no
liabilities or obligations under ERISA. Except as set forth in SCHEDULE 2.24,
the Company has no other stock option plans, bonus or incentive award plans,
severance pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, or other employee benefit
plans, agreements, or arrangements. True and correct copies of all plans and
arrangements set forth on SCHEDULE 2.24 have been provided to Buyer. For
purposes of this Section 2.24, an entity "maintains" an employee benefit plan if
such entity sponsors, contributes to, or provides (or has promised to provide)
benefits under such employee benefit plan, or has any obligation (by agreement
or under applicable law) to contribute to or provide benefits under such
employee benefit plan, or if such employee benefit plan provides benefits to or
otherwise covers employees of such entity, or their spouses, dependents or
beneficiaries.
2.25 ENVIRONMENTAL MATTERS. No Hazardous Materials (as hereinafter
defined) have been generated, transported, used, disposed, stored or treated by
the Company and, to the knowledge of the Company, no Hazardous Materials have
been released, discharged, disposed, placed or otherwise caused to enter the
soil or water within any real property owned, leased or operated by the Company.
Except as set forth in SCHEDULE 2.25 attached hereto, to the Company's
knowledge, no site owned, operated or leased by the Company contains any
asbestos or asbestos-containing material, any polychlorinated biphenyls (PCBs)
or equipment containing PCBs, or any urea formaldehyde foam insulation. For
purposes of this Section 2.25, (i) "Hazardous Material" shall mean and include
any hazardous waste, hazardous material, hazardous substance, petroleum product,
oil, toxic substance, pollutant, contaminant, or other substance which may pose
a threat to the environment or to human health or safety, as defined or
regulated under any Environmental Law; (ii) "Environmental Law" shall mean any
environmental or health and safety-related law, regulation, rule, ordinance, or
by-law at the foreign, federal, state, or local level, whether existing as of
the date hereof, previously enforced, or subsequently enacted; and (iii)
"Company" shall mean and include the Company and all other entities for whose
conduct the Company is or may be held responsible under any Environmental Law.
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2.26 LIST OF DIRECTORS AND OFFICERS. SCHEDULE 2.26 attached hereto
contains a true and complete list of all current directors and officers of the
Company. In addition, SCHEDULE 2.26 contains a list of all managers, employees
and consultants of the Company who, individually, have received or are scheduled
to receive compensation from the Company for the fiscal year ending December 31,
1999, in excess of $75,000. In each such case SCHEDULE 2.26 includes the current
job title and aggregate annual compensation of each such individual. Except as
set forth in SCHEDULE 2.26, the Company has no consultants and no contracts or
arrangements with any consultants.
2.27 DISCLOSURE. To the Company's knowledge, the representations,
warranties and statements contained in this Agreement and in the certificates,
exhibits and schedules delivered by the Company pursuant to this Agreement to
Buyer do not contain any untrue statement of a material fact, and, when taken
together, do not omit to state a material fact required to be stated therein or
necessary in order to make such representations, warranties or statements not
misleading in light of the circumstances under which they were made. Except as
set forth on SCHEDULE 2.27, there are no facts known to the Company which, to
its knowledge, has or will have a Material Adverse Effect (after giving effect
to the Merger) which have not been specifically disclosed herein or in a
Schedule furnished herewith, other than general economic conditions affecting
the industries in which the Company operates.
2.28 NON-FOREIGN STATUS. The Company is not a "foreign person" within
the meaning of Section 1445 of the Code and Treasury Regulations Section
1.1445-2.
2.29 BACKLOG. As of the date hereof, the Company has a backlog of
orders for the sale or license of products or services, for which revenues have
not been recognized by the Company, as set forth in Schedule 2.29 attached
hereto, which orders may be subject to cancellation.
2.30 EMPLOYEES; LABOR MATTERS. The Company employs a total of
approximately eleven (11) full-time employees and no part-time employees, and
has no current contracts with independent contractors and generally enjoy good
employer-employee relationships. The Company is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it through the date hereof or
amounts required to be reimbursed to such employees. Upon termination of the
employment of any of said employees, neither the Company nor Buyer will by
reason of the transactions contemplated under this Agreement or any action taken
by the Company prior to the Closing be liable to any of said employees for
so-called "severance pay" or any other payments, except as set forth in Schedule
2.30 attached hereto. The Company has no policy, practice, plan or program of
paying severance pay or any form of severance compensation in connection with
the termination of employment, except as set forth in said Schedule. The Company
is in material compliance with all applicable laws and regulations respecting
labor, employment, fair employment practices, work place safety and health,
terms and conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work, or any other concerted interference with normal
operations which are existing, pending or, to the Company's knowledge,
threatened against or involving the Company. The Company has not received any
information indicating that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. The Company is, and at all times since November 6,
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1986 has been, in compliance with the requirements of the Immigration Reform
Control Act of 1986.
2.31 CUSTOMERS. SCHEDULE 2.31 attached hereto sets forth each customer
(whether pursuant to a commission, royalty or other arrangement) which accounts
for more than 10% of the sales of the Company for the twelve (12) months ended
December 31, 1998 or the eight (8) months ended as of the date of the Base
Balance Sheet (collectively, the "Customers"). The relationships of the Company
with its Customers are good commercial working relationships. No Customer has
canceled, materially modified, or otherwise terminated its relationship with the
Company, or has during the last twelve months decreased materially its usage or
purchase of the services or products of the Company, nor to the knowledge of
Company, does any Customer have any plan or intention to do any of the
foregoing.
SECTION 3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, each of the Stockholders hereby
makes to Buyer each of the representations and warranties set forth in this
Section 3. The Stockholders shall have no right of indemnity or contribution
from the Company with respect to the breach of any representation or warranty
under this Section 3.
Each Stockholder hereby represents and warrants to Buyer that with
respect to his or her receipt of the Restricted Shares hereunder:
Each Stockholder is acquiring the Restricted Shares for his or her own
account, for investment, and not with a view to any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"). Such Stockholder is a resident of The Commonwealth of Massachusetts and
the offer and sale of the Restricted Shares to him or her will take place in The
Commonwealth of Massachusetts. Such Stockholder is knowledgeable and experienced
in the making of investments of the type involved in the acquisition of the
Restricted Shares pursuant to this Agreement and is able to bear the economic
risk of loss of his or her investment in Buyer. Such Stockholder has been
granted the opportunity to investigate the affairs of Buyer and to ask questions
of and receive from its officers and employees (including questions regarding
the terms and conditions of the offering of the Restricted Shares), and has
availed himself or herself of such opportunity either directly or through his or
her authorized representative.
Such Stockholder understands that because the Restricted Shares have
not been registered under the Securities Act or securities or "blue sky" laws of
any jurisdiction, none of the Restricted Shares held by him or her may be sold
unless such Restricted Shares are subsequently registered under the Securities
Act or exemptions from such registration are available. Such Stockholder
acknowledges and understands that he or she has no independent right to require
Buyer to register the Restricted Shares. Such Stockholder understands that the
certificate representing the Restricted Shares will bear a legend in
substantially the form provided below (in addition to any legend required under
applicable state securities laws):
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"THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE
HOLDER NAMED HEREON FOR HIS OR HER OWN ACCOUNT FOR INVESTMENT;
AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD OR IN ANY OTHER
WAY TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS IN EFFECT AT THAT TIME, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT."
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
4.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to the Company and the Stockholders to enter into this Agreement and consummate
the transactions contemplated hereby, Buyer hereby makes the representations and
warranties to the Company and the Stockholders contained in this Section 4.
4.2 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware with full
corporate power to own or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it.
4.3 CAPITAL STOCK OF BUYER. The authorized capital stock of Buyer
consists of (i) 55,000,000 shares of common stock, $.001 per share, of which
14,638,814 shares were duly and validly issued and outstanding, fully paid and
non-assessable as of December 2, 1999; and (ii) 5,000,000 shares of preferred
stock, $1.00 per share, of which no shares are issued and outstanding. Except
for options to purchase up to 2,810,539 shares of Buyer Stock which were granted
under the Buyer's 1996 Stock Plan and 1995 Stock Plan which remain outstanding
and unexercised as of December 1, 1999, there are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into, any shares
of Buyer Stock. The Restricted Shares have been duly authorized and issued, are
fully paid and non-assessable, were issued in accordance with applicable
securities laws and, except as contemplated under Section 6.4, are free and
clear of any and all liens, encumbrances, charges or claims.
4.4 AUTHORITY OF BUYER. Buyer has full right, authority and power to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance by
Buyer of this Agreement, and each such other agreement, document and instrument
have been duly authorized by all necessary corporate action of Buyer and no
other action on the part of Buyer is required in connection therewith.
This Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement constitute, or when
executed and delivered will constitute, valid and binding obligations of Buyer
enforceable in accordance with their
-17-
terms. The execution, delivery and performance by Buyer of this Agreement and
each such agreement, document and instrument:
(i) do not and will not violate any provision of the
Certificate of Incorporation or By-laws of Buyer;
(ii) do not and will not violate any laws of the United
States or any state or other jurisdiction applicable to Buyer, implicate any
anti-takeover laws or require Buyer to obtain any approval, consent or waiver
of, or make any filing with, any person or entity (governmental or otherwise)
that has not been obtained or made; and
(iii) do not and will not result in a breach of,
constitute a default under, require any consent under, accelerate any obligation
under, or give rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which Buyer is a party or by which the property of Buyer
is bound or affected, or result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any of Buyer's
assets or capital stock.
4.5 FINDER'S FEE. Buyer has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
4.6 SEC REPORTS. Buyer's Form 10-K for the period ended December 31,
1998 and all other forms, reports and documents filed with the Securities and
Exchange Commission since the filing of such Form 10-K (collectively, the "SEC
Reports") have been prepared in accordance with the applicable requirements of
the Securities Act and the Securities Exchange Act of 1934, as amended. The
balance sheets (including the related notes) included in the SEC Reports are
complete and correct in all material respects and fairly present the financial
position of Buyer as of the respective dates thereof, and the other related
statements (including the related notes) included therein and complete and
correct in all material respects fairly present the results of operations and
cash flows of Buyer for the respective fiscal periods set forth therein in
accordance with generally accepted accounting principles applied on a consistent
basis, except in the case of interim financial statements for normal recurring
and certain non-recurring audit adjustments necessary for a fair presentation of
the financial position and operating results of Buyer for the interim periods
which will not be materially adverse and for the omission of footnotes to said
interim financial statements that would be required by generally accepted
accounting principles.
4.7 LITIGATION. There is no litigation or governmental or
administrative proceeding or investigation pending or, to the knowledge of
Buyer, threatened against Buyer or its affiliates which may have a material
adverse effect on Buyer or which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
4.8 DISCLOSURE. To Buyer's knowledge, the representations, warranties
and statements contained in this Agreement and in the certificates, exhibits and
schedules delivered by Buyer pursuant to this Agreement to the Company do not
contain any untrue statement of a
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material fact, and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
SECTION 5. CONDITIONS.
5.1 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligation of Buyer to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) REPRESENTATIONS: WARRANTIES: COVENANTS. Each of the
representations and warranties of the Company and the Stockholders contained in
Sections 2 and 3 shall be true and correct in all respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing; and the Company and the Stockholders shall, on or before the Closing,
have performed all of their obligations hereunder which by the terms hereof are
to be performed on or before the Closing.
(b) NO MATERIAL CHANGE. There shall have been no material adverse
change in the properties, assets, liabilities, condition (financial or other),
business, prospects or operations of the Company since the date of the Base
Balance Sheet, except in the ordinary course of business.
(c) CERTIFICATE FROM OFFICERS. The Stockholders shall have
delivered to Buyer a certificate of the Company's President dated as of the
Closing to the effect that the statements set forth in paragraph (a) and (b)
above in this Section 5.1 are true and correct.
(d) APPROVAL OF BUYER'S COUNSEL. All actions, proceedings,
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, as counsel
for Buyer, and such counsel shall have received on behalf of Buyer such other
certificates, opinions, and documents in form satisfactory to such counsel as
Buyer may reasonably require from the Company and the Stockholders to evidence
compliance with the terms and conditions hereof as of the Closing and the
correctness as of the Closing of the representations and warranties of the
Stockholders and the Company and the fulfillment of their respective covenants.
(e) OPINION OF COUNSEL. On the Closing Date, Buyer shall have
received from ▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C., counsel for the Company and
the Stockholders, an opinion as of said date in the form attached hereto as
EXHIBIT A.
(f) NO LITIGATION. There shall have been no determination by
Buyer, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state or other
governmental authority of litigation, proceedings or other action against Buyer,
the Company or the Stockholders or any material adverse change in the laws or
regulations applicable to the Company.
-19-
(g) CONSENTS. The Company or the Stockholders shall have made all
filings with and notifications of governmental authorities, regulatory agencies
and other entities required to be made by the Company or the Stockholders in
connection with the execution and delivery of this Agreement, the performance of
the transactions contemplated hereby and the continued operation of the business
of the Company by Buyer subsequent to the Closing; and the Company, the
Stockholders and Buyer shall have received all authorizations, waivers, consents
and permits, in form and substance reasonably satisfactory to Buyer, from all
third parties, including, without limitation, applicable governmental
authorities, regulatory agencies, lessors, lenders and contract parties,
required to permit the continuation of the business of the Company and the
consummation of the transactions contemplated by this Agreement, and to avoid a
breach, default, termination, acceleration or modification of any material
indenture, loan or credit agreement or any other material agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment,
injunction, decree, determination or arbitration award as a result of, or in
connection with, the execution and performance of this Agreement.
(h) BUSINESS RELATIONS. Buyer shall be reasonably satisfied based
on personal interviews with the Customers or otherwise that such Customers
intend to continue their current level of business with the Company after the
Closing.
(i) RESIGNATIONS. The Company shall have delivered to Buyer the
resignations of all of the directors of the Company and of such officers of the
Company as may be requested by Buyer prior to the Closing, such resignations to
be effective at the Closing.
(j) RELEASES. The Company shall have delivered to Buyer general
releases signed by each of the Stockholders of all claims which he or she may
have (in any capacity) in the form attached here to as Exhibit B.
(k) CLOSING DATE CASH AND ASSETS. The Company shall have made no
distributions at any time during the three month period prior to the Closing
Date, other than cash distributions or other non-cash distributions having a
fair market value of an aggregate of $5,000; provided that, in any event, the
Company shall have retained cash of at least $30,000 and all other tangible and
intangible assets of the Company, including, without limitation, accounts
receivables, deposits, computer and office equipment and software licenses.
Furthermore, the Company shall have paid any and all outstanding debts and
liabilities of the Company on or prior to the Closing.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS. The
obligation of the Company and the Stockholders to consummate this Agreement and
the transactions contemplated hereby is subject to the fulfillment, prior to or
at the Closing, of the following conditions precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of Buyer contained in Section 4 shall be true and
correct as though made on and as of the Closing; Buyer shall, on or before the
Closing, have performed all of its obligations hereunder which by the terms
hereof are to be performed on or before the Closing; and Buyer shall have
delivered to the Company and the Stockholders a certificate of the President or
the Chief Financial Officer of Buyer dated on the Closing to such effect.
-20-
(b) NO MATERIAL CHANGE. There shall have been no material adverse
change in the properties, assets, liabilities, condition (financial or other),
business, prospects or operations of Buyer since the date of this Agreement.
(c) APPROVAL OF THE COMPANY'S COUNSEL. All actions, proceedings,
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this agreement shall have been approved by ▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
P.C., as counsel for the Company and the Stockholders, and such counsel shall
have received on behalf of the Company and the Stockholders such other
certificates, opinions and documents in form satisfactory to such counsel as the
Company may reasonably require from Buyer to evidence compliance with the terms
and conditions hereof as of the Closing and the correctness as of the Closing
Date of the representations and warranties of Buyer and the fulfillment of its
covenants hereunder.
(d) OPINION OF COUNSEL. On the Closing Date, the Stockholders
shall have received from ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, counsel for the Buyer, an
opinion as of said date in the form attached hereto as Exhibit C.
(e) NO LITIGATION. There shall have been no determination by the
Company, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state or other
governmental authority of material litigation, proceedings or other action
against Buyer, the Company or the Stockholders.
(f) CONSENTS. Buyer shall have made all filings with and
notifications of governmental authorities, regulatory agencies and other
entities required to be made by Buyer in connection with the execution and
delivery of this Agreement and the performance of the transactions contemplated
hereby; and the Company, the Stockholders and Buyer shall have received all
authorizations, waivers, consents and permits from all third parties, including,
without limitation, applicable governmental authorities, regulatory agencies,
lessors, lenders and contract parties, required to permit the consummation of
the transactions contemplated by this Agreement, and to avoid a breach, default,
termination, acceleration or modification of any material indenture, loan or
credit agreement or any other material agreement, contract, instrument,
mortgage, lien, lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award as a result of, or in connection
with, the execution and performance of this Agreement.
SECTION 6. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
6.1 SURVIVAL OF WARRANTIES. Each of the representations, warranties,
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto; PROVIDED, HOWEVER, that such representations
and warranties shall expire on the same dates as and to the extent that the
rights to indemnification with respect thereto under Section 7 shall expire.
-21-
6.2 BUYER OPTIONS. At or as soon as practicable after the Closing,
Buyer shall grant options to purchase an aggregate of 15,200 shares of Buyer
Stock ("Buyer Options") to the employees of the Surviving Corporation identified
on Schedule 6.2 attached hereto. The Buyer Options shall be granted to the
employees identified on Schedule 6.2 to purchase the number of shares of Buyer
Stock set forth opposite the name of each such employee pursuant to the terms of
the Buyer's stock option plans, which terms shall include, among other things,
an exercise price equal to the fair market value of the Buyer Stock as of the
date of grant and vesting over a four (4) year term. Buyer hereby undertakes to
maintain on file with the Securities and Exchange Commission a Registration
Statement on Form S-8 to register the issuance of shares of Buyer Stock upon
exercise of the Buyer Options and all other stock options granted under the
Buyer's 1996 Stock Plan to the Stockholders on the date hereof.
6.3 TAX RETURNS. The Stockholders shall cooperate with Buyer to permit
the Company and/or Buyer in accordance with applicable law to promptly prepare
and file on or before the due date or any extension thereof all federal, state
and local Tax returns required to be filed by the Company.
6.4 RESTRICTION ON TRANSFER.
(a) GENERAL. From and after the Closing Date and until the first
(1st) anniversary thereof (the "Restricted Period"), none of the Restricted
Shares to be issued at Closing to the Stockholders shall be sold, assigned,
transferred, pledged, hypothecated, given away or in any other manner disposed
of or encumbered ("Transfer"), whether voluntarily or by operation of law,
unless such transfer is in compliance with all applicable securities laws
(including, without limitation, the Securities Act), and such disposition is in
accordance with the terms and conditions of this Section 6.4. Any attempted
disposition of Restricted Shares not in accordance with the terms and conditions
of this Section 6.4 shall be null and void, and Buyer shall not reflect on its
records any change in record ownership of any Restricted Shares as a result of
any such disposition, shall otherwise refuse to recognize any such disposition
and shall not in any way give effect to any such disposition of any Restricted
Shares. Subject to the foregoing general provisions, Restricted Shares may be
transferred pursuant to the following specific terms and conditions:
(i) TIME-BASED RESTRICTIONS. Subject to compliance with
applicable securities laws, the Stockholders may Transfer up to 50% of their
respective Restricted Shares at any time after the first (1st) anniversary of
the Closing Date and 100% of their respective Restricted Shares at any time on
or after the second (2nd) anniversary of the Closing Date.
(ii) TRANSFERS TO PERMITTED TRANSFEREES. The
Stockholders may Transfer any or all of the Restricted Shares to Permitted
Transferees (as hereinafter defined); provided, however, that such Permitted
Transferee(s) shall, as a condition to any such Transfer, agree to be subject to
the terms and conditions of this Section 6.5 and shall have delivered a written
acknowledgment to that effect to Buyer. As used herein a "Permitted Transferee"
shall mean any of the following to whom a Stockholder may Transfer Restricted
Shares hereunder: such Stockholder's spouse, parents, children (natural or
adopted), stepchildren or grandchildren or a trust or a limited partnership for
their principal benefit of which such Stockholder is the settlor or general
partner; PROVIDED, HOWEVER, that any such trust or a limited partnership does
not
-22-
require or permit distribution of any Restricted Shares during the
Restricted Period except as provided in subparagraph (i) of the Section 6.4; and
(iii) TRANSFERS UPON DEATH. Upon the death of a
Stockholder or any Permitted Transferee the Restricted Shares may be transferred
by operation of law to the estate, legal representatives, executors and
administrators of such Stockholder or any such Permitted Transferee, subject to
the terms of this Section 6.4.
(b) LEGEND. Any certificate(s) representing the Restricted Shares
shall carry substantially the following legends:
"The transferability of this certificate and the
shares of stock represented hereby are subject to the
restrictions, terms and conditions (including
restrictions against transfers) contained in Section
6.4 of a certain Agreement and Plan of Merger dated
December 3, 1999 between Primix Solutions Inc. and
the holder of this certificate (a copy of which is
available at the offices of Primix Solutions Inc. for
examination)."
(c) OPINIONS. In connection with any Transfer of Restricted Shares
in accordance with this Agreement pursuant to Rule 144 or a comparable
provision, Buyer will cooperate with the Stockholders in authorizing its
transfer agent to transfer the Restricted Shares including by causing its
counsel to provide an appropriate legal opinion or instructions acceptable to
such transfer agent. It will be a condition to providing any such opinion or
instructions that the Stockholders provide standard Rule 144 representation
letters.
6.5 NON-COMPETITION; NON-SOLICITATION. In view of the fact that any
activity of the Stockholders in violation of the terms hereof would adversely
affect Buyer and would deprive Buyer of the benefits of its bargain under this
Agreement and to preserve the goodwill associated with the business of Buyer,
each of the Stockholders hereby agrees that, during such Stockholder's
employment with Buyer or any Affiliate (as hereinafter defined), he or she will
not, without the express written consent of Buyer, directly or indirectly,
anywhere in the United States, engage in any activity which is, or participate
or invest in, or provide or facilitate the provision of financing to, or assist
(whether as owner, part-owner, shareholder, member, partner, director, officer,
trustee, employee, agent or consultant, or in any other capacity), any business,
organization or person other than Buyer (or any Affiliate), and including any
such business, organization or person involving, or which is, a family member of
the Stockholders, whose business, activities, products or services are
competitive with any of the business, activities, products or services conducted
or offered by Buyer and any Affiliate which business, activities, products and
services shall include in any event and without limitation the business of
multi-media interactive design and development and related consulting services
and any other business activity engaged in, conducted by or in active planning
by Buyer or any Affiliate on the date such Stockholder's employment with Buyer
and any Affiliate terminates. During the period commencing on the date hereof
and ending on the date which is the first (lst) anniversary of the Closing Date,
Stockholder's employment with Buyer and any Affiliate terminates for any reason,
such Stockholder shall not, without the express consent of Buyer, directly or
indirectly, hire or
-23-
engage or attempt to hire or engage for or on behalf of himself or herself or
any such competitor any officer or employee of Buyer or any Affiliate, or any
former employee of Buyer and any Affiliate who was employed during the six (6)
month period immediately preceding the date hereof or at any time during the
term of such Stockholder's affiliation with Buyer or any Affiliate, encouraging
for or on behalf of himself or herself or any such competitor, any such officer
or employee to terminate his or her relationship or employment with Buyer or any
Affiliate, soliciting for or on behalf of himself or herself or any such
competitor any client or strategic partner of Buyer or any Affiliate during the
term of his or her employment with Buyer and diverting to any person or entity
any client or business opportunity of Buyer or any of any Affiliate.
Notwithstanding anything herein to the contrary, the Stockholders may
make passive investments in any enterprise the shares of which are publicly
traded if such investment constitutes less than one percent (1%) of the equity
of such enterprise.
The Stockholders represent and warrant to Buyer that neither of the
Stockholders nor any business entity controlled by them is a party to any
contract, commitment, arrangement or agreement which could, following the date
hereof, restrain or restrict Buyer or any Affiliate from carrying on its
business, and as of the date of this Agreement, neither of the Stockholders has
any business interests whatsoever in or relating to the businesses in which
Buyer and any Affiliate is currently engaged, other than his or her interest in
Buyer and interests in public companies of less than one percent (1%).
The parties acknowledge that the time, scope, geographic area and other
provisions of this Section 6.5 have been specifically negotiated by
sophisticated commercial parties and agree that (a) all such provisions are
reasonable under the circumstances of the transactions contemplated hereby, (b)
are given as an integral and essential part of the transactions contemplated
hereby, and (c) but for the covenants of the Stockholders contained in this
Agreement, Buyer would not have entered into or consummated the transactions
contemplated under the this Agreement. The Stockholders have independently
consulted with their counsel and has been advised in all respects concerning the
reasonableness and proprietary of the covenants contained in this Section 6.5,
with specific regard to the business to be conducted by Buyer and its
Affiliates, and represents that the covenants contained in this Section 6.5 is
intended to be, and shall be, fully enforceable and effective in accordance with
its terms.
As used herein an "Affiliate" of Buyer shall mean any person or entity
which directly or indirectly controls, is controlled by, or is under common
control with Buyer.
6.6 PAYMENT OF FINDER'S FEES. The Stockholders, and neither Buyer nor
the Surviving Corporation, shall be responsible for the payment of any and all
finder's fees payable by the Company or the Stockholders in connection with the
transactions contemplated by this Agreement, including without limitation
arising under that certain letter agreement dated May 24, 1999 by and between
the Company and the Catalyst Group (the "Company Finder's Fees").
6.7 SALE OF RESTRICTED SHARES. In the event that the Stockholders, or
either of them, shall desire to sell at least 50,000 Restricted Shares at a time
when they shall have the right to Transfer such shares in accordance with the
provisions of Section 6.4(a) above, but at which
-24-
time, due to a change in the provisions of Rule 144 promulgated under the
Securities Act, the Stockholders are unable to make a public sale of such shares
pursuant to Rule 144, then in such event the Buyer shall, on written notice from
the Stockholder(s) desiring to sell such shares, promptly use its reasonable
efforts to cause such shares to be registered for resale with the Securities and
Exchange Commission on Form S-3 or other comparable form in effect at the time
of such request, subject to customary terms and conditions. The Company shall
pay all expenses of such registration except for underwriters' or
broker-dealers' discounts or commissions; PROVIDED that such expenses shall not
exceed $15,000 in the aggregate. In the event that the expenses of any
registration requested pursuant to this Section 6.7 exceed $15,000, Buyer shall
proceed to effect such registration so long as the Stockholders shall pay all
such expenses in excess of $15,000. The obligation to register such shares shall
continue in effect for a period of four (4) years after the Closing Date, but
Buyer shall not have any obligation to file more than two (2) such registration
statements on Form S-3.
SECTION 7. INDEMNIFICATION
7.1 INDEMNIFICATION BY THE STOCKHOLDERS. Each of the Stockholders
agrees subsequent to the Closing to indemnify and hold the Surviving
Corporation, Buyer and their respective subsidiaries and affiliates and persons
serving as officers, directors, partners or employees thereof (individually a
"Buyer Indemnified Party" and collectively the "Buyer Indemnified Parties")
harmless from and against any damages (including, without limitation, diminution
in value), liabilities, losses, taxes, fines, penalties, costs and expenses
(including, without limitation, reasonable fees of counsel) of any kind or
nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in the investigation, defense or settlement of the
foregoing) which may be sustained or suffered by any of them arising out of or
based upon any of the following matters:
(a) fraud or intentional misrepresentation by the Company or the
Stockholders with respect to any of their representations or warranties under
this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto or any breach of the representations contained in Sections 2.3 and 2.5;
(b) any breach of any covenant, representation, warranty of the
Company or the Stockholders under this Agreement or in any certificate, schedule
or exhibit delivered pursuant hereto, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing
constituting a breach of such representations, warranties or covenants;
(c) any liability of the Company for Taxes arising from an event
or transaction prior to the Closing or as a result of the Closing which have not
been paid or provided for or reserved against by the Company, including without
limitation, any increase in Taxes due to the unavailability of any loss or
deduction claimed by the Company;
(d) any liability for the Company Finder's Fees; and
(e) any breach of the covenants of the Stockholders under Sections
6.4, 6.5 or 8.1 hereof.
-25-
7.2 LIMITATIONS ON INDEMNIFICATION BY THE STOCKHOLDERS. Notwithstanding
the foregoing, the right of Buyer Indemnified Parties to indemnification under
Section 7.1 shall be subject to the following provisions:
(a) No indemnification shall be payable to a Buyer Indemnified
Party with respect to claims asserted pursuant to Sections 7.1(b) or 7.1(c)
after the expiration of one year after the Closing Date (the "Indemnification
Cut-Off Date"); and
(b) No indemnification shall be payable pursuant to Sections
7.1(b) or 7.1(c) above to any Buyer Indemnified Party, except to the extent the
total of all claims for indemnification pursuant to Sections 7.1(a), 7.1(b) or
7.1(c) shall exceed $50,000 in the aggregate, whereupon the full amount of such
excess shall be recoverable in accordance with the terms hereof.
(c) No indemnification shall be payable to a Buyer Indemnified
Party with respect to claims assessed pursuant to Section 7.1(a) after the
expiration of four (4) years after the Closing Date.
7.3 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold the
Stockholders harmless from and against any damages, liabilities, losses and
expenses (including, without limitation, reasonable fees of counsel) of any kind
or nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing) which may be sustained or suffered by him or her arising out of or
based upon any breach of any representation, warranty or covenant made by Buyer
in this Agreement or in any certificate delivered by Buyer hereunder, or by
reason of any claim, action or proceeding asserted or instituted growing out of
any matter or thing constituting such a breach.
7.4 LIMITATION ON INDEMNIFICATION BY BUYER. Notwithstanding the
foregoing, the right of the Stockholders to indemnification under Section 7.3
shall be subject to the following provisions:
(a) No indemnification shall be payable to the Stockholders with
respect to claims asserted pursuant to Section 7.3 after the Indemnification
Cut-Off Date;
(b) No indemnification shall be payable pursuant to Subsection 7.3
above to the Stockholders, except to the extent the total of all claims for
indemnification pursuant to Section 7.3 shall exceed $50,000 in the aggregate,
whereupon the full amount of such excess shall be recoverable in accordance with
the terms hereof; and
7.5 NOTICE; DEFENSE OF CLAIMS. An indemnified party may make claims for
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims can be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall also give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within thirty (30) days after receiving such notice the indemnifying party shall
-26-
give written notice to the indemnified party stating whether it disputes the
claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within thirty (30) days
after receipt of notice thereof, it shall be deemed to have accepted and agreed
to the claim, which shall become immediately due and payable. The indemnifying
party shall be entitled to direct the defense against a third party claim or
liability with counsel selected by it (subject to the consent of the indemnified
party, which consent shall not be unreasonably withheld) as long as the
indemnifying party is conducting a good faith and diligent defense. The
indemnified party shall at all times have the right to fully participate in the
defense of a third party claim or liability at its own expense directly or
through counsel; PROVIDED, HOWEVER, that if the named parties to the action or
proceeding include both the indemnifying party and the indemnified party and the
indemnified party is advised that representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the indemnified party may engage separate counsel at the expense of the
indemnifying party. If no such notice of intent to dispute and defend a third
party claim or liability is given by the indemnifying party, or if such good
faith and diligent defense is not being or ceases to be conducted by the
indemnifying party, the indemnified party shall have the right, at the expense
of the indemnifying party, to undertake the defense of such claim or liability
(with counsel selected by the indemnified party), and to compromise or settle
it, exercising reasonable business judgment. If the third party claim or
liability is one that by its nature cannot be defended solely by the
indemnifying party, then the indemnified party shall make available such
information and assistance as the indemnifying party may reasonably request and
shall cooperate with the indemnifying party in such defense, at the expense of
the indemnifying party.
SECTION 8. MISCELLANEOUS.
8.1 FEES AND EXPENSES. Each of the parties will bear its own expenses
in connection with the negotiation and the consummation of the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, the Surviving Corporation
shall be responsible for the reasonable legal expenses of the Company and the
Stockholders relating to the negotiation and closing of the Merger; PROVIDED,
FURTHER, HOWEVER, that the Stockholders shall pay for and assume the liabilities
of the Company Finder's Fees as provided for in Section 6.6 hereof.
8.2 GOVERNING LAW. This Agreement shall be construed under and governed
by the internal laws of The Commonwealth of Massachusetts without regard to its
conflict of laws principles.
8.3 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States post office facilities properly addressed with postage prepaid. All
notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
To Buyer or the
-27-
Surviving Corporation: c/o Primix Solutions Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Stockholders: Claudio ▇▇▇▇ ▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
With a copy to: ▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
Reservoir Place
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice given hereunder may be given on behalf of any party by its
counsel or other authorized representatives.
8.4 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, and that certain related Non-Disclosure Agreement
dated November __, 1999 by and between the parties hereto are complete, reflect
the entire agreement of the parties with respect to its subject matter, and
supersede all previous written or oral negotiations, commitments and writings.
No promises, representations, understandings, warranties and agreements have
been made by any of the parties hereto except as referred to herein or in such
Schedules and Exhibits or in such other writings and agreements; and all
inducements to the making of this Agreement relied upon by either party hereto
have been expressed herein or in such Schedules or Exhibits or in such other
writings.
8.5 ASSIGNABILITY: BINDING EFFECT. This Agreement shall only be
assignable by Buyer to a corporation or partnership controlling, controlled by
or under common control with Buyer upon written notice to the Company and the
Stockholders; provided, however, that it shall be a condition of any such
assignment that Buyer shall remain primarily liable to the Stockholders as a
guarantor and not as a surety for the observance and/or performance of each of
Buyer's representation, warranties and covenants under this Agreement and under
any agreement executed and delivered in connection with this Agreement. This
Agreement may not be assigned by the Stockholders or the Company without the
prior written consent of Buyer. This Agreement
-28-
shall be binding upon and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective heirs, executors, administrators, successors
and permitted assigns.
8.6 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
8.7 EXECUTION IN COUNTERPARTS. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
8.8 AMENDMENTS. This Agreement may not be amended or modified except by
a writing duly and validly executed by Buyer, the Company and the Stockholders.
Compliance with any condition or covenant set forth herein may be waived only by
a writing duly executed by the party(s) for whose benefit the condition or
covenant is stabilized.
8.9 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
8.10 PUBLICITY AND DISCLOSURES. Except as required by law or
regulation, no press releases or public disclosure, either written or oral, of
the transactions contemplated by this Agreement, shall be made by a party to
this Agreement without the prior knowledge and written consent of Buyer and the
Company.
8.11 ARBITRATION. All disputes, claims, or controversies arising out of
or relating to this Agreement or the negotiation, validity or performance hereof
that are not resolved by mutual agreement shall be resolved solely and
exclusively by binding arbitration to be conducted before JAMS, Inc. or its
successor ("JAMS"). The arbitration shall be held in Boston, Massachusetts
before a single arbitrator and shall be conducted in accordance with the rules
and regulations promulgated by JAMS unless specifically modified herein.
The parties covenant and agree that the arbitration shall commence
within sixty (60) days of the date on which a written demand for arbitration is
filed by any party hereto. In connection with the arbitration proceeding, the
arbitrator shall have the power to order the production of documents by each
party and any third-party witnesses; however, the arbitrator shall not have the
power to order the taking of depositions, the answering of interrogatories or
the response to requests for admission. In connection with any arbitration, each
party shall provide to the other, no later than seven (7) business days before
the date of the arbitration, the identity of all persons that may testify at the
arbitration and a copy of all documents that may be introduced at the
arbitration or considered or used by a party's witness or expert. The
arbitrator's decision and award shall be made and delivered within six (6)
months of the selection of the arbitrator. The arbitrator's decision shall set
forth a reasoned basis for any award of damages or finding of
-29-
liability. The arbitrator shall not have power to award damages in excess of
actual compensatory damages and shall not multiply actual damages or award
punitive damages or any other damages that are specifically, excluded under this
Agreement, and each party hereby irrevocably waives any claim to such damages.
The parties covenant and agree that they will participate in the
arbitration in good faith and that they will share equally its costs, except as
otherwise provided herein. The arbitrator may in his or her discretion assess
costs and expenses (including the reasonable legal fees and expenses of the
prevailing party) against any party to a proceeding. Any party unsuccessfully
refusing to comply with an order of the arbitrators shall be liable for costs
and expenses, including attorneys' fees, incurred by the other party in
enforcing the award. This Section 8.11 applies equally to requests for
temporary, preliminary or permanent injunctive relief, except that in the case
of temporary or preliminary injunctive relief any party may proceed in court
without prior arbitration for the limited purpose of avoiding immediate and
irreparable harm. The provisions of this Section 8.11 shall be enforceable in
any court of competent jurisdiction.
8.12 CONSENT TO JURISDICTION. Each of the parties hereto irrevocably
and unconditionally consents to the exclusive jurisdiction of JAMS to resolve
all disputes, claims or controversies arising out of or relating to this
Agreement or the negotiation, validity or performance hereof, and further
consents to the jurisdiction of the courts of The Commonwealth of Massachusetts
for the purposes of enforcing the arbitration provisions of Section 8.11 of this
Agreement. Each party further irrevocably waives any objection to proceeding
before JAMS based upon lack of personal jurisdiction or to the laying of venue
and further irrevocably and unconditionally waives and agrees not to make a
claim in any court that arbitration before JAMS has been brought in an
inconvenient forum. Each of the parties hereto hereby consents to service of
process by registered mail at the address to which notices are to be given. Each
of the parties hereto agrees that its or his submission to jurisdiction and its
or his consent to service of process by mail is made for the express benefit of
the other parties hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER:
PRIMIX SOLUTIONS INC.
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
COMPANY:
BLACK BEAN STUDIOS, INC.
By:
------------------------------------
Name: Claudio ▇▇▇▇ ▇▇▇▇
Title: President
STOCKHOLDERS:
----------------------------------------
Claudio ▇▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
List of Exhibits and Schedules
Exhibit A: Opinion of Counsel for the Company and the Stockholders
Exhibit B: General Release
Exhibit C: Opinion of Counsel for Buyer
Schedule 2.3 Outstanding Options
2.5(a) Consent and Encumbrances, etc.
2.5(c) Related Party Agreements
2.6 Properties
2.7 Financial Statements
2.10 Absence of Certain Changes
2.12 Banking Arrangements
2.13 Intellectual Property
2.14 Contracts
2.15 Litigation
2.16 Compliance with Laws
2.17 Insurance
2.20 Finder's Fees
2.21 Permits, Burdensome Agreements
2.23 Transactions with Interested Persons
2.24 Employee Benefit Plans
2.25 Environmental Matters
2.26 Officers and Directors; Consultants
2.27 Disclosure
2.29 Backlog
2.30 Labor Matters
2.31 Customers
6.2 Buyer Options
TABLE OF CONTENTS
Page
SECTION 1. THE MERGER...........................................................................................1
1.1 The Merger.....................................................................................1
1.2 Closing........................................................................................1
1.3 Effective Time.................................................................................1
1.4 Effect of the Merger...........................................................................2
1.5 Conversion of Securities.......................................................................2
1.6 Cash and Stock Consideration...................................................................2
1.7 Further Assurances.............................................................................3
1.8 Stockholder Approval and Waiver................................................................3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE STOCKHOLDERS .......................................................................................3
2.1 Making of Representation and Warranties........................................................3
2.2 Organization and Qualifications of the Company.................................................3
2.3 Capital Stock of the Company; Beneficial Ownership.............................................4
2.4 Subsidiaries...................................................................................4
2.5 Authority of the Company.......................................................................4
2.6 Properties.....................................................................................5
2.7 Financial Statements...........................................................................6
2.8 Taxes..........................................................................................7
2.9 Collectibility of Accounts Receivable..........................................................8
2.10 Absence of Certain Changes.....................................................................8
2.11 Ordinary Course................................................................................9
2.12 Banking Relations..............................................................................9
2.13 Intellectual Property..........................................................................9
2.14 Contracts.....................................................................................11
2.15 Litigation....................................................................................12
2.16 Compliance with Laws..........................................................................13
2.17 Insurance.....................................................................................13
2.18 Warranty or Other Claims......................................................................13
2.19 Powers of Attorney............................................................................13
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TABLE OF CONTENTS
(continued)
2.20 Finder's Fee..................................................................................13
2.21 Permits: Burdensome Agreements................................................................13
2.22 Corporate Records; Copies of Documents........................................................13
2.23 Transactions with Interested Persons..........................................................14
2.24 Employee Benefit Programs.....................................................................14
2.25 Environmental Matters.........................................................................14
2.26 List of Directors and Officers................................................................15
2.27 Disclosure....................................................................................15
2.28 Non-Foreign Status............................................................................15
2.29 Backlog.......................................................................................15
2.30 Employees; Labor Matters......................................................................15
2.31 Customers.....................................................................................16
SECTION 3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS....................................................................................................16
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................17
4.1 Making of Representations and Warranties......................................................17
4.2 Organization of Buyer.........................................................................17
4.3 Capital Stock of Buyer........................................................................17
4.4 Authority of Buyer............................................................................17
4.5 Finder's Fee..................................................................................18
4.6 SEC Reports...................................................................................18
4.7 Litigation....................................................................................18
4.8 Disclosure....................................................................................18
SECTION 5. CONDITIONS..........................................................................................19
5.1 Conditions to the Obligations of Buyer........................................................19
5.2 Conditions to Obligations of the Company and the Stockholders.................................20
SECTION 6. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING........................................................21
6.1 Survival of Warranties........................................................................21
6.2 Buyer Options.................................................................................22
6.3 Tax Returns...................................................................................22
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6.4 Restriction on Transfer.......................................................................22
6.5 Non-Competition; Non-Solicitation.............................................................23
6.6 Payment of Finder's Fees......................................................................24
6.7 Sale of Restricted Shares.....................................................................24
SECTION 7. INDEMNIFICATION.....................................................................................25
7.1 Indemnification by the Stockholders...........................................................25
7.2 Limitations on Indemnification by the Stockholders............................................26
7.3 Indemnification by Buyer......................................................................26
7.4 Limitation on Indemnification by Buyer........................................................26
7.5 Notice; Defense of Claims.....................................................................26
SECTION 8. MISCELLANEOUS.......................................................................................27
8.1 Fees and Expenses.............................................................................27
8.2 Governing Law.................................................................................27
8.3 Notices.......................................................................................27
8.4 Entire Agreement..............................................................................28
8.5 Assignability: Binding Effect.................................................................28
8.6 Captions and Gender...........................................................................29
8.7 Execution in Counterparts.....................................................................29
8.8 Amendments....................................................................................29
8.9 Severability..................................................................................29
8.10 Publicity and Disclosures.....................................................................29
8.11 Arbitration...................................................................................29
8.12 Consent to Jurisdiction.......................................................................30
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