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EXHIBIT 2.2
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.
MOBEO, INC.
AND
XXXXX XXXXXX,
XXXXXXX XXXXXXX AND
XXXXXX XXXXX
DATED AS OF AUGUST 19, 1999
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TABLE OF CONTENTS
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1. STOCK PURCHASE AND RELATED MATTERS................................................... 1
1.1 Transfer of Stock............................................................. 1
1.2 Purchase Price................................................................ 1
l.3 Accounting Terms.............................................................. 3
1.4 Effective Date................................................................ 3
2. CLOSING.............................................................................. 3
2.1 Location and Date............................................................. 3
2.2 Deliveries.................................................................... 3
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
AND THE COMPANY............................................................... 4
3.1 Due Organization.............................................................. 4
3.2 Authorization; Validity....................................................... 4
3.3 No Conflicts.................................................................. 4
3.4 Capital Stock of the Company.................................................. 5
3.5 Transactions in Capital Stock................................................. 5
3.6 Absence of Claims Against Company............................................. 6
3.7 Subsidiaries and Stock........................................................ 6
3.8 Complete Copies of Materials.................................................. 6
3.9 Company Financial Condition................................................... 6
3.10 Financial Statements.......................................................... 6
3.11 Liabilities and Obligations................................................... 6
3.12 Books and Records............................................................. 7
3.13 Bank Accounts; Powers of Attorney............................................. 7
3.14 Accounts and Notes Receivable................................................. 7
3.15 Permits....................................................................... 8
3.16 Real Property................................................................. 8
3.17 Personal Property............................................................. 9
3.18 Intellectual Property........................................................ 10
3.19 Material Contracts and Commitments........................................... 11
3.20 Government Contracts......................................................... 12
3.21 Insurance.................................................................... 12
3.22 Environmental Matters........................................................ 13
3.23 Year 2000 Compliance......................................................... 14
3.24 Benefit Plans and Employee Matters........................................... 14
3.25 Taxes........................................................................ 18
3.26 Conformity with Law; Litigation.............................................. 20
3.27 Relations with Governments................................................... 21
3.28 Absence of Changes........................................................... 21
3.29 Disclosure................................................................... 23
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3.30 Broker....................................................................... 23
4. REPRESENTATIONS OF PURCHASER........................................................ 23
4.1 Due Organization............................................................. 23
4.2 Authorization; Validity of Obligations....................................... 23
4.3 No Conflicts................................................................. 23
4.4 Broker....................................................................... 24
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.................................... 24
5.1 Representations and Warranties; Performance of Obligations................... 24
5.2 No Litigation................................................................ 24
5.3 Opinion of Counsel........................................................... 25
5.4 Consents and Approvals....................................................... 25
5.5 Charter Documents............................................................ 25
5.6 Employment Agreement......................................................... 25
5.7 Advisory Services Agreements; Confidentiality Agreements..................... 25
5.8 Closing Deliveries........................................................... 25
5.9 Reserved..................................................................... 25
5.10 Financing.................................................................... 25
5.11 Repayment of all Indebtedness................................................ 26
5.12 Reserved..................................................................... 26
5.13 Options...................................................................... 26
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS
AND THE COMPANY.............................................................. 26
6.1 Representations and Warranties; Performance of Obligations................... 26
6.2 No Litigation................................................................ 26
6.3 Consents and Approvals....................................................... 27
7. CERTAIN COVENANTS................................................................... 27
7.1 Notification of Certain Matters.............................................. 27
7.2 Unpaid Taxes................................................................. 27
7.3 Tax Returns.................................................................. 27
7.4 Cooperation on Tax Matters................................................... 27
7.5 Certain Taxes................................................................ 28
7.6 Payment of Indebtedness...................................................... 28
7.7 No Negotiation............................................................... 28
7.8 Operation of the Company..................................................... 28
7.9 Access to Information........................................................ 29
7.10 FIRPTA Certification......................................................... 29
7.11 Employment Agreement and Advisory Agreements................................. 29
7.12 Broker's Fees................................................................ 30
7.13 Other Documents.............................................................. 30
7.14 Settlement................................................................... 30
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8. INDEMNIFICATION..................................................................... 30
8.1 General Indemnification by the Stockholders.................................. 30
8.2 Limitation and Expiration.................................................... 31
8.3 Indemnification Procedures................................................... 32
8.4 Survival of Representations Warranties and Covenants......................... 34
8.5 Remedies Cumulative. ........................................................ 34
8.6 Tax Contests................................................................. 34
9. NONCOMPETITION AND CONFIDENTIALITY.................................................. 35
9.1 Employment Agreement; Advisory Agreements.................................... 35
10. GENERAL............................................................................. 35
10.1 Successors and Assigns....................................................... 35
10.2 Entire Agreement............................................................. 35
10.3 Counterparts................................................................. 36
10.4 Termination.................................................................. 36
10.5 Expenses..................................................................... 37
10.6 Specific Performance; Remedies............................................... 37
10.7 Notices...................................................................... 37
10.8 Governing Law................................................................ 38
10.9 Severability................................................................. 38
10.10 Absence of Third Party Beneficiary Rights.................................... 38
10.11 Amendment; Waiver............................................................ 39
10.12 Operation of the Company..................................................... 39
10.13 Arbitration.................................................................. 39
10.14 Mutual Drafting.............................................................. 40
10.15 Further Representations...................................................... 40
10.16 Further Assurances........................................................... 40
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Schedules:
1.2(a)(ii) Reasons for Refunding $200,000
3.1(a) Jurisdictions in which Authorized or Qualified to do Business
3.1(b) List of Directors and Officers
3.4 Ownership Percentages
3.5 Options
3.10 Financial Statements
3.11 Liabilities and Obligations
3.13 Bank Accounts; Powers of Attorney
3.16(b) Real Property Description
3.16(c) Real Property Disclosure
3.17(a) Personal Property
3.18(a) Registered and Unregistered Marks
3.18(b) Patents and Copyrights
3.18(c) Other Rights
3.18(d) Intellectual Property Obligations
3.19(a) Significant Customers and Significant Suppliers
3.19(b) Material Contracts
3.19(c) Canceled Contracts
3.19(d) Third Party Consents
3.21 Insurance
3.24(b) Company Plans and Company Benefit Arrangements
3.24(c)(vi) Acceleration
3.24(d) Workers' Compensation Claims
3.24(e) Key Employees
3.24(f) At Will Employees
3.25(c) Assets
3.26(b) Litigation
3.28 Absence of Changes
3.30 Broker's Fees
Exhibits:
Exhibit 5.3 Form of Legal Opinion
Exhibits 5.6 Form of Employment Agreement
Exhibits 5.7 Form of Advisory Services Agreement
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INDEX OF DEFINED TERMS
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AAA.........................................................................................37
Accounts Receivable..........................................................................6
Advisory Services Agreement.................................................................25
Advisory Services Agreements ...............................................................25
Aether Indemnified Parties..................................................................30
Aether Indemnified Party....................................................................30
Agreement....................................................................................1
Arbitrator..................................................................................38
Audited Financials...........................................................................5
Balance Sheet Date...........................................................................5
Benefit Arrangement.........................................................................13
Benefit Liabilities.........................................................................16
Benefit Plan................................................................................14
Charter Documents............................................................................3
Claim.......................................................................................32
Claim Notice................................................................................32
Closing......................................................................................2
Closing Date.................................................................................2
Closing Payment..............................................................................2
COBRA.......................................................................................16
Company......................................................................................1
Company Benefit Arrangement.................................................................14
Company Financial Statements.................................................................5
Company Hazardous Materials Activities......................................................13
Company Intellectual Property...............................................................10
Company Plan................................................................................14
Company's knowledge..........................................................................3
Copyright...................................................................................10
Damages.....................................................................................30
Decision....................................................................................38
Disputes....................................................................................37
Effective Date ..............................................................................2
Employee Options............................................................................29
Employment Agreement........................................................................25
Employment Agreements.......................................................................25
Environmental Permits.......................................................................13
ERISA.......................................................................................14
ERISA Affiliate.............................................................................14
GAAP.........................................................................................2
Hazardous Material..........................................................................12
HSR Act.....................................................................................24
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Indemnification Threshold...................................................................31
Indemnifying Party..........................................................................32
Intellectual Property.......................................................................10
Interim Balance Sheet........................................................................5
Interim Financials...........................................................................5
IPO.........................................................................................29
IRS.........................................................................................15
Laws.........................................................................................4
Leases.......................................................................................8
Lien.........................................................................................1
Xxxx.........................................................................................9
Material Contracts..........................................................................11
Multiemployer Plan..........................................................................14
Notice Period...............................................................................33
Options.....................................................................................29
Other Rights................................................................................10
Owned Real Property..........................................................................7
Patent......................................................................................10
Pending Claims..............................................................................32
Pension Plan................................................................................14
Permits......................................................................................7
PTO..........................................................................................9
Purchase Price...............................................................................1
Purchaser....................................................................................1
Purchaser's Advisors........................................................................29
Qualified Plan..............................................................................14
Real Property................................................................................7
Related Party Agreements....................................................................11
Rules.......................................................................................37
Sellers' Releases............................................................................2
Shares.......................................................................................1
Significant Customers.......................................................................11
Significant Suppliers.......................................................................11
Stockholders.................................................................................1
Tangible Assets..............................................................................7
Tax.........................................................................................18
Tax Return..................................................................................18
Taxes.......................................................................................18
Third Party Consents........................................................................12
Third Party Intellectual Property...........................................................10
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
this 19th day of August, 1999, by and among Aether Technologies International,
L.L.C., a Delaware limited liability company (the "Purchaser"), Mobeo, Inc. a
Delaware corporation (the "Company"), and Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx and
Xxxxxx Xxxxx (each a "Stockholder" and collectively, the "Stockholders"). The
Company and the Stockholders are referred to collectively as the "Sellers."
RECITALS
A. The Stockholders are the owners of all of the issued and outstanding
shares (the "Shares") of the capital stock of the Company.
B. The Stockholders desire to sell to Purchaser, and Purchaser desires
to purchase from the Stockholders, the Shares pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. STOCK PURCHASE AND RELATED MATTERS
1.1 TRANSFER OF STOCK. Upon the terms and subject to the conditions
hereof, at the Closing (as defined in Section 2.1), Purchaser will purchase from
the Stockholders, and the Stockholders will sell, transfer and deliver to
Purchaser, all of the Shares free and clear of all Liens (defined below) in
consideration of payment of the Purchase Price specified in Section 1.2. For the
purposes of this Agreement, "Lien" means any security interest, pledge,
encumbrance, lien (statutory or otherwise), charge, security agreement, option,
right of first refusal, preemptive right, restriction on transfer (other than
restrictions on transfer imposed by applicable securities laws) or preferential
arrangement of any kind or nature whatsoever.
1.2 PURCHASE PRICE.
(a) Closing Payment. For purposes of this Agreement, the
"Purchase Price" shall be Twelve Million One Hundred Eighty Thousand Dollars
($12,180,000), less the Adjustment Amount, if any, as calculated in Section
1.2(b), payable as set forth below:
(i) Fifty Thousand Dollars ($50,000) payable to the
Stockholders and previously paid to the Company on July 13, 1999, which will be
non-refundable and will be credited toward the Purchase Price;
(ii) If the Closing fails to occur by the forty-fifth (45)
day after the Effective Date and such failure to close is caused by, and within
the control of Purchaser, Purchaser will pay Two Hundred Thousand Dollars
($200,000) to the Sellers, which will be non-refundable and will be credited
toward the Purchase Price, provided, however, that Purchaser will not be
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obligated to make such payment if this Agreement has been terminated by
Purchaser for any of the reasons set forth in Schedule 1.2(a)(ii); and
(iii) A payment (the "Closing Payment") equal to the
difference between (A) the Purchase Price and (B) the sum of (x) all amounts
previously paid by Purchasers to Sellers under this Section 1.2, plus (y) the
broker's fees and commissions required under the agreement described in Schedule
3.30. The Closing Payment shall be paid on the Closing Date by wire transfer of
immediately available funds to an account designated by Sellers.
(b) Purchase Price Adjustment. The "Adjustment Amount" (which
will be expressed as a positive amount) will be equal to the amount, if any, by
which the total stockholders' deficit set forth in the Company's audited
financial statements for the year ended December 31, 1998 (the "Target Amount")
increases as of the Closing Date, determined in accordance with GAAP (as defined
in Section 1.3) as set forth on Section 1.2(c) below (the "Closing Amount");
provided, however, that any amounts paid pursuant to the agreement between the
Company and Metrocall, Inc., dated April 30, 1999, shall not be included in
determining the Closing Amount. The Adjustment Amount shall be zero if the
deficit between the Target Amount and the Closing Amount remains the same or
decreases (including without limitation if the stockholders' deficit becomes
positive stockholders' equity).
(c) Adjustment Procedures.
(i) Purchaser will prepare consolidated financial
statements ("Closing Financial Statements") of the Company as of the Closing
Date and for the period from the date of the Balance Sheet through the Closing
Date, including a computation of consolidated stockholders' equity (or deficit,
as applicable) as of the Closing Date. Purchaser will deliver the Closing
Financial Statements to Sellers within ninety (90) days after the Closing Date.
If within thirty (30) days following delivery of the Closing Financial
Statements, Sellers have not given Purchaser notice of its objection to the
Closing Financial Statements (such notice must contain a statement of the basis
of Sellers' objection), then the consolidated stockholders' equity (or deficit,
as applicable) reflected in the Closing Financial Statements will be used in
computing the Adjustment Amount. If Sellers give such notice of objection, then
the issues in dispute will be submitted to the Washington D.C. office of Xxxxxx
Xxxxxxxx LLP, certified public accountants (the "Accountants"), for resolution.
If issues in dispute are submitted to the Accountants for resolution, (i) each
party will furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as the Accountants may request and
are available to that party (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (ii)
the determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; and
(iii) Purchaser and Sellers will each bear 50% of the fees of the Accountants
for such determination.
(d) On the tenth (10th) business day following the final determination
of the Adjustment Amount (the "Adjustment Payment Date"), Sellers shall pay the
Adjustment Amount, if any, by wire
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transfer to an account designated by Purchaser. Payments must be made in
immediately available funds in U.S. dollars.
l.3 ACCOUNTING TERMS. Except as otherwise expressly provided herein
or in the Schedules hereto, all accounting terms used in this Agreement shall be
interpreted, and all financial statements, Schedules, certificates and reports
as to financial matters required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles ("GAAP"), consistently
applied.
1.4 EFFECTIVE DATE. This Agreement shall be effective as of the date
of its execution (the "Effective Date"). The representations and warranties of
the parties set forth in Sections 3 and 4 hereof shall be effective as of the
Effective Date and as of the Closing Date.
2. CLOSING
2.1 LOCATION AND DATE. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m.,
local time, at the offices of Xxxxxx, Xxxxxx & Xxxxxxxxx, 0000 X Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, on a date selected by the Purchaser within forty-five
(45) days from the Effective Date; provided that all conditions to Closing shall
have been satisfied or waived, or at such other time and date as Purchaser, the
Company and the Stockholders may mutually agree, which date shall be referred to
as the "Closing Date."
2.2 DELIVERIES. The Stockholders shall deliver to Purchaser the
following at the Closing: (a) stock certificates representing the Shares,
accompanied by stock powers duly executed in blank or duly executed instruments
of transfer and any other documents that are necessary to transfer to Purchaser
good and marketable title to the Shares free and clear of all Liens; (b)
resignations of directors of the Company as Purchaser may request; (c) a
certification satisfying the requirements of sections 1.897-2(h) and
1.1445-2(c)(3) of the Treasury Regulations that the Shares are not United States
real property interests, together with a properly executed notice suitable for
filing with the Internal Revenue Service as described in section 1.897-2(h)(2)
of the Treasury Regulations; (d) release(s) executed by Sellers (collectively
"Sellers' Releases"); and (e) all other documents, certificates, instruments or
writings required to be delivered by the Stockholders or the Company at or prior
to the Closing pursuant to this Agreement or otherwise required in connection
herewith. Against delivery of the Shares, Purchaser shall deliver to the
Stockholders at the Closing in immediately available funds, the Closing Payment,
and all other documents, certificates, instruments or writings required to be
delivered by Purchaser at or prior to the Closing pursuant to this Agreement or
otherwise required in connection herewith.
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3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
AND THE COMPANY
To induce Purchaser to enter into this Agreement and consummate the
transactions contemplated hereby, each of the Stockholders and the Company,
jointly and severally, represent and warrant to Purchaser as follows (for
purposes of this Agreement, the phrases "knowledge of the Company" or the
"Company's knowledge," or words of similar import, mean the knowledge of the
Stockholders and the other directors and officers of the Company, including
facts of which the directors and officers, in the reasonably prudent exercise of
their duties, should be aware):
3.1 DUE ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and the Company is duly authorized and qualified to do business
under all applicable laws, regulations, ordinances and orders of public
authorities to own, operate and lease its properties and to carry on its
business in the places and in the manner as now conducted. Schedule 3.l(a)
hereto contains a list of all jurisdictions in which the Company is authorized
or qualified to do business. The Company is in good standing as a foreign
corporation in each jurisdiction in which it does business. The Company has
delivered to Purchaser true, complete and correct copies of the Certificate of
Incorporation and Bylaws of the Company. Such Certificate of Incorporation and
Bylaws are collectively referred to as the "Charter Documents." The Company is
not in violation of any Charter Documents. The minute books of the Company have
been made available to Purchaser (and have been delivered, along with the
Company's original stock ledger and corporate seal, to Purchaser) and are
correct and complete in all material respects. Schedule 3.1(b) contains a
complete and accurate list of the directors and officers of the Company.
3.2 AUTHORIZATION; VALIDITY. The Company has all requisite corporate
power and authority to enter into and perform its obligations pursuant to the
terms of this Agreement. The Company has the full legal right, corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The Stockholders have the full legal right and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
performance by the Company of the transactions contemplated herein have been
duly and validly authorized by the Board of Directors of the Company, and this
Agreement has been duly and validly authorized by all necessary corporate action
on behalf of the Company. This Agreement is a legal, valid and binding
obligation of each of the Stockholders and the Company, enforceable against each
of them in accordance with its terms.
3.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby, and the
fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of, any of
the Charter Documents, or any resolution adopted by the board of directors or
the shareholders of the Company;
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(b) conflict with, or result in a default (or would constitute
a default but for any requirement of notice or any of lapse of time or both)
under, any document, agreement or other instrument to which the Company or any
of the Stockholders is a party or by which the Company or any of the
Stockholders is bound or result in the creation or imposition of any Lien on any
of the Company's assets pursuant to: (i) any federal, state, local, municipal,
or foreign law, statute, ordinance, treaty, rule or regulation, or other
administrative order constituting regulation (collectively "Laws") to which the
Company or the Stockholders or any of their respective assets are subject; or
(ii) any judgment, order, writ, injunction, or decree of any court or government
authority to which the Company or any of the Stockholders is bound or any of
their respective assets is subject; or (iii) any act of a third party;
(c) result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization of the Company; or
(d) violate any Laws to which the Company or any of the
Stockholders is subject or by which the Company or any of the Stockholders is
bound.
3.4 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 10,000 shares of common stock, no par value, of which
1,171 shares are issued and outstanding. The Company has not issued and there
are no other outstanding equity securities of the Company (including without
limitation any preferred stock) or, except for the options set forth in Schedule
3.5, securities convertible into equity securities of the Company. All of the
Shares have been duly authorized and validly issued, are fully paid and
nonassessable and are owned of record and beneficially by the Stockholders free
and clear of all Liens, except for the Liens described in Schedule 3.4, which
will be released on or before the Closing Date. All of the Shares were offered,
issued, sold and delivered by the Company in compliance with all applicable
state and federal laws concerning the issuance and sale of securities. Further,
none of the Shares was issued in violation of any preemptive rights. No legend
or other reference to any other Lien appears upon any certificate representing
capital stock of the Company. There are no voting agreements or voting trusts
with respect to any of the Shares. The number of Shares owned of record and
beneficially by each Stockholder and the percentage interest in the Company
represented by such Shares is set forth in Schedule 3.4.
3.5 TRANSACTIONS IN CAPITAL STOCK. Except for the options set forth
in Schedule 3.5, no option, warrant, call, subscription right, conversion right
or other contract or commitment of any kind exists of any character, written or
oral, that may obligate the Company to issue or sell any shares of capital stock
or by which any shares of capital stock may otherwise become outstanding. The
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. As a result of the
transactions contemplated by this Agreement, Purchaser will be the record and
beneficial owner of all outstanding capital stock of the Company and all rights
to acquire capital stock of the Company.
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3.6 ABSENCE OF CLAIMS AGAINST COMPANY. None of the Stockholders has
any claims of any kind against the Company nor has any Stockholder assigned any
such claims to any third party.
3.7 SUBSIDIARIES AND STOCK. The Company has no subsidiaries. The
Company does not presently own, of record or beneficially, or control, directly
or indirectly, any capital stock, securities convertible into capital stock or
any other equity interest in any corporation, association or business entity,
nor is the Company, directly or indirectly, a participant in any joint venture,
partnership or other noncorporate entity.
3.8 COMPLETE COPIES OF MATERIALS. The Company has delivered to
Purchaser true, complete and correct copies of each agreement, contract,
commitment or other document (or summaries thereof) that is referred to in the
Schedules or that has been requested by Purchaser.
3.9 COMPANY FINANCIAL CONDITION. The Company's earnings before taxes
for the six month period ended June 30, 1999 were in excess of $108,000.
3.10 FINANCIAL STATEMENTS. Schedule 3.10 includes (a) true, complete
and correct copies of the Company's audited balance sheets as of December 31,
1997 and December 31, 1998 (the end of its most recent completed fiscal years),
and statements of operations for the years ended December 31, 1996, 1997 and
1998 and statements of changes in Stockholders' equity (deficit), and statements
of cash flows (collectively, the "Audited Financials") and (b) true, complete
and correct copies of the Company's unaudited balance sheet (the "Interim
Balance Sheet") as of June 30, 1999 (the "Balance Sheet Date") and unaudited
statement of operations, statement of changes in Stockholders equity (deficit),
and statement of cash flow, for the six month period then ended (collectively,
the "Interim Financials," and together with the Audited Financials, the "Company
Financial Statements"). The Company Financial Statements have been prepared from
the books and records of the Company in accordance with GAAP consistently
applied and present fairly the financial condition and results of operation,
changes in shareholders' equity and cash flow of the Company for the periods
referred to the Financial Statements. Since the dates of the Company Financial
Statements and except as set forth in Schedule 3.28, there have been no material
changes in the Company's accounting policies.
3.11 LIABILITIES AND OBLIGATIONS.
(a) Except as set forth in Schedule 3.11, the Company is not
liable for or subject to any liabilities except for:
(i) those liabilities reflected on the Interim Balance
Sheet and not previously paid or discharged;
(ii) those liabilities arising in the ordinary course of
its business consistent with past practice under any contract, commitment or
agreement specifically disclosed on any Schedule to this Agreement or not
required to be disclosed thereon because of the term or amount involved or
otherwise; and
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(iii) those liabilities incurred since the Balance Sheet
Date in the ordinary course of business consistent with past practice, which
liabilities are not, individually or in the aggregate, material.
(b) The Company is not a guarantor or otherwise liable for any
liability or obligation of any other person, entity or organization.
(c) For purposes of this Section 3.11, the term "liabilities"
shall include, without limitation, any direct or indirect liability,
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility that is accrued, absolute, contingent,
mature, unmature or otherwise and whether known or unknown, fixed or unfixed,
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured.
3.12 BOOKS AND RECORDS. The Company has made and kept books and
records and accounts that, in reasonable detail, accurately and fairly reflect
its activities. The Company has not engaged in any material transaction,
maintained any bank account or used any corporate funds except for transactions,
bank accounts and funds that have been and are reflected in its normally
maintained books and records.
3.13 BANK ACCOUNTS; POWERS OF ATTORNEY. Schedule 3.13 sets forth a
complete and accurate list as of the date of this Agreement, of:
(a) the name of each financial institution in which the
Company has any account or safe deposit box;
(b) the names in which such accounts or boxes are held;
(c) the types of such accounts;
(d) the name of each person authorized to draw thereon or have
access thereto; and
(e) the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the Company and a
description of the terms of such power.
3.14 ACCOUNTS AND NOTES RECEIVABLE. The Company has delivered to
Purchaser a complete and accurate list, as of the Balance Sheet Date, of the
accounts and notes receivable of the Company (including, without limitation,
receivables from and advances to employees and the Stockholders), which includes
an aging of all accounts and notes receivable showing amounts due in 30-day
aging categories (collectively, the "Accounts Receivable"). All Accounts
Receivable represent valid obligations arising from sales actually made or
services actually performed in the ordinary course of business. The Accounts
Receivable are current and collectible net of any respective reserves shown on
the Company's books and records (which reserves are adequate and calculated
consistent with past practice). There is no contest, claim or right of set-off
under any
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contract with any obligor of an Account Receivable relating to the amount or
validity of such Account Receivable.
3.15 PERMITS. The Company owns or holds all licenses, franchises,
permits and other governmental authorizations, including, without limitation,
permits, titles, licenses and franchises necessary for the continued operation
of its business as it is currently being conducted (the "Permits"). The Permits
are valid, and the Company has not received any notice that any governmental
authority intends to modify, cancel, terminate or fail to renew any Permit. No
present or former stockholder, officer, manager, member or employee of the
Company or any affiliate thereof, or any other person, firm, corporation or
other entity, owns or has any proprietary, financial or other interest (direct
or indirect) in any Permits. The Company has conducted and is conducting its
business in compliance with the requirements, standards, criteria and conditions
set forth in the Permits and other applicable orders, approvals, variances,
rules and regulations and is not in violation of any of the foregoing. The
transactions contemplated by this Agreement will not result in a default under,
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company by any Permit.
3.16 REAL PROPERTY.
(a) For purposes of this Agreement, "Real Property" means all
interests in real property other than Owned Real Property including, without
limitation, fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access and rights of way and all buildings and
other improvements thereon owned, leased, enjoyed or used by the Company,
together with any additions thereto or replacements thereof. "Owned Real
Property" means all Real Property owned by the Stockholders or any other person,
persons or business entities owned or controlled by the Stockholders which is
used in the conduct of the business and operations of the Company.
(b) The Company does not own and never has owned any Real
Property and there is no Owned Real Property. Schedule 3.16(b) contains a
complete and accurate description of all leased Real Property (including street
address). The Real Property listed in Schedule 3.16(b) includes all interests in
real property necessary to conduct the business and operations of the Company.
(c) Except as set forth in Schedule 3.16(c):
(i) The Real Property and all present uses and
operations of the Real Property comply with all applicable Laws (including,
without limitation, applicable statutes, rules, regulations, orders and
restrictions relating to zoning, land use, safety, health, employment and
employment practices and access by the handicapped), covenants, conditions,
restrictions, easements, disposition agreements and similar matters affecting
the Real Property. The Company has obtained all approvals of governmental
authorities (including certificates of use and occupancy, licenses and permits)
required in connection with the use, occupation and operation of the Real
Property.
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(ii) There are no parties other than the Company in
possession of any of the Real Property or any portion thereof, and there are no
leases, subleases, licenses, concessions or other agreements, written or oral,
granting to any party or parties the right of use or occupancy of any portion of
the Real Property or any portion thereof.
(iii) All real property Taxes and assessments that are
due and payable with respect to the Real Property have been paid or will be paid
at or prior to the Closing Date.
(iv) All oral or written leases, subleases, licenses,
concession agreements or other use or occupancy agreements pursuant to which the
Company leases from any other party any Real Property, including all amendments,
renewals, extensions, modifications or supplements to any of the foregoing or
substitutions for any of the foregoing (collectively, the "Leases") are valid
and in full force and effect. The Company has provided Purchaser with true and
complete copies of all of the Leases, all amendments, renewals, extensions,
modifications or supplements thereto and all material correspondence related
thereto, including all correspondence pursuant to which any party to any of the
Leases has declared a default thereunder or provided notice of the exercise of
any operation granted to such party under such Lease. The Leases and the
Company's interests thereunder are free of all Liens.
(v) None of the Leases requires the consent or approval
of any party thereto in connection with the consummation of the transactions
contemplated hereby.
3.17 PERSONAL PROPERTY.
(a) Schedule 3.17(a) sets forth a complete and accurate list
of all personal property included on the Interim Balance Sheet and all other
personal property owned or leased by the Company with a current book value in
excess of $5,000 both (i) as of the Balance Sheet Date and (ii) acquired since
the Balance Sheet Date, including in each case true, complete and correct copies
of leases for material equipment and an indication as to which assets are
currently owned, or were formerly owned, by the Stockholders or the Company.
(b) The Company currently owns or leases all personal property
necessary to conduct the business and operations of the Company as they are
currently being conducted.
(c) All of the material, machinery and equipment of the
Company, including that listed in Schedule 3.17(a), are in good working order
and condition, ordinary wear and tear excepted. All leases set forth in Schedule
3.17(a) are in full force and effect and constitute valid and binding agreements
of the Company, and the Company is not in breach of any of their terms. All
fixed assets used by the Company that are material to the operation of its
business are either owned by the Company or leased under an agreement listed in
Schedule 3.17(a).
3.18 INTELLECTUAL PROPERTY.
(a) Except as set forth in Schedule 3.18(a), the Company is
the true and lawful owner of, or is licensed or otherwise possesses legally
enforceable rights to use, the registered and
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unregistered Marks (defined below) listed in Schedule 3.18(a). Such Schedule
lists (i) all of the Marks registered in the United States Patent and Trademark
Office ("PTO") or the equivalent thereof in any state of the United States or in
any foreign country, and (ii) all of the unregistered Marks that the Company now
owns or uses in connection with its business. For purposes of this Section 3.18,
the term "Xxxx" shall mean all right, title and interest in and to any United
States or foreign trademarks, service marks and trade names now held by the
Company, including any registration or application for registration of any
trademarks and service marks in the PTO or the equivalent thereof in any state
of the United States or in any foreign country, as well as any unregistered
marks used by the Company and any trade dress (including logos, designs, company
names, business names, fictitious names and other business identifiers) used by
the Company in the United States or any foreign country.
(b) The Company is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights to use, all rights in
the Patents (defined below) listed in Schedule 3.18(b) and in the Copyrights
(defined below) listed in Schedule 3.18(b). Such Patents and Copyrights
constitute all of the Patents and Copyrights that the Company now owns or is
licensed to use. The Company owns or is licensed to practice under all patents
and copyright registrations that the Company now owns or uses in connection with
its business. For purposes of this Section 3.18, the term "Patent" shall mean
any United States or foreign patent to which the Company has title as of the
date of this Agreement, as well as any application for a United States or
foreign patent made by the Company; the term "Copyright" shall mean any United
States or foreign copyright owned by the Company as of the date of this
Agreement registered in the United States Copyright Office or the equivalent
thereof in any foreign county, as well as any application for a United States or
foreign copyright registration made by the Company.
(c) Except as set forth in Schedule 3.18(c), the Company owns
or is licensed to operate under and use all trade secrets, trade names,
franchises, technology, proprietary rights, know-how or similar rights
(collectively, "Other Rights"), including those set forth in Schedule 3.18(c),
that it owns, uses or practices under.
(d) The Marks, Patents, Copyrights and Other Rights listed in
Schedules 3.18(a), 3.18(b) and 3.18(c) are referred to collectively herein as
the "Intellectual Property." The Intellectual Property owned by the Company is
referred to herein collectively as the "Company Intellectual Property." All
other Intellectual Property is referred to herein collectively as the "Third
Party Intellectual Property." Except as indicated in Schedule 3.18(d), the
Company has no obligations to compensate any person for the use of any
Intellectual Property nor has the Company granted to any person any license,
option or other rights to use in any manner any Intellectual Property, whether
or not requiring the payment of royalties.
(e) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any Third Party Intellectual Property license,
sublicense or agreement described in Schedule 3.18(a) and Schedule 3.18(b) or
Schedule 3.18(c). No claims with respect to the Company Intellectual Property or
Third Party Intellectual Property are currently pending or, to the knowledge of
the Company, are threatened by any person, nor, to the Company's knowledge, do
any grounds for any claims exist:
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(i) to the effect that the services provided by the Company or the sale,
licensing or use of any product as now used, sold or licensed or proposed for
use, sale or license by the Company infringes on any copyright, patent,
trademark, service xxxx or trade secret; (ii) against the use by the Company of
any trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the Company's
business as currently conducted by the Company; (iii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property or other
trade secret material to the Company; or (iv) challenging the Company's license
for, or legally enforceable right to use, the Third Party Intellectual Property.
To the Company's knowledge, there is no unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third party.
Except as set forth in Schedule 3.26(b), the Company has (x) not been sued or
charged in writing as a defendant in any claim, suit, action or proceeding which
involves a claim or infringement of trade secrets, any patents, trademarks,
service marks or copyrights and which has not been finally terminated or been
informed or notified by any third party that the Company may be engaged in such
infringement or (y) no knowledge of any infringement liability with respect to,
or infringement by, the Company of any trade secret, patent, trademark, service
xxxx or copyright of another.
3.19 MATERIAL CONTRACTS AND COMMITMENTS.
(a) Schedule 3.19(a) sets forth a complete and accurate list
of all Significant Customers and Significant Suppliers. For purposes of this
Agreement, "Significant Customers" are the twenty (20) customers that have
effected the most purchases, in dollar terms, from the Company during twelve
months ending on the Balance Sheet Date, and "Significant Suppliers" are the
twenty (20) suppliers who supplied the largest amount by dollar volume of
products or services to the Company during the twelve (12) months ending on the
Balance Sheet Date.
(b) Schedule 3.19(b) contains a complete and accurate list of
all contracts, commitments, leases, instruments, agreements, licenses or
permits, written or oral, to which the Company is a party or by which it or its
properties are bound (including, without limitation, contracts with customers,
joint venture or partnership agreements, contracts with any labor organizations,
employment agreements, consulting agreements, loan agreements, indemnity or
guaranty agreements, bonds, mortgages, options to purchase land or Liens) (i) to
which the Company and the Stockholders or any affiliate of the Company, the
Stockholders or any officer or director of the Company are parties ("Related
Party Agreements"); (ii) that may give rise to obligations or liabilities
exceeding, during the current term thereof, $10,000, or (iii) that may generate
revenues or income exceeding, during the current term thereof, $10,000
(collectively with the Related Party Agreements, the "Material Contracts"). The
Company has delivered to Purchaser true, complete and correct copies of the
Material Contracts.
(c) Except to the extent set forth in Schedule 3.19(c), (i)
none of the Company's Significant Customers has canceled or reduced or, to the
knowledge of the Company, is currently attempting or threatening to cancel or
reduce, any purchases from the Company, (ii) none of the Company's Significant
Suppliers has canceled or reduced or, to the knowledge of the Company, is
currently attempting to cancel or reduce, the supply of products or services to
the Company, (iii) the Company has complied with all of its commitments and
obligations and is not in default under
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any of the Material Contracts, and no notice of default has been received with
respect to any thereof, and (iv) there are no Material Contracts that were not
negotiated at arm's length. The Company has not received any material customer
complaints concerning its products and/or services.
(d) Each Material Contract is valid and binding on the Company
and is in full force and effect and is not subject to any default thereunder by
any party obligated to the Company pursuant thereto. The Company has obtained
all necessary consents, waivers and approvals of parties to any Material
Contracts which are required in connection with any of the transactions
contemplated hereby, or are required by any governmental agency or other third
party or are advisable in order that any such Material Contract remain in effect
without modification after the Closing and without giving rise to any right to
termination, cancellation or acceleration or loss of any right or benefit
("Third Party Consents"). All Third Party Consents are listed in Schedule
3.19(d).
3.20 GOVERNMENT CONTRACTS.
(a) The Company is not a party to any government contracts.
(b) The Company has not been suspended or debarred from
bidding on contracts or subcontracts for any agency or instrumentality of the
United States Government or any state or local government, nor, to the knowledge
of the Company, has any suspension or debarment action been threatened or
commenced.
3.21 INSURANCE. Schedule 3.21 sets forth a complete and accurate list,
as of the Balance Sheet Date, of all insurance policies carried by the Company
and all insurance loss runs or workers' compensation claims received for the
past two (2) policy years. The Company has made available to Purchaser true,
complete and correct copies of all current insurance policies, all of which are
in full force and effect. All premiums payable under all such policies have been
paid and the Company is otherwise in full compliance with the terms of such
policies. Such policies of insurance are of the type and in amounts customarily
carried by persons conducting businesses similar to that of the Company. To the
knowledge of the Company, there have been no threatened terminations of, or
material premium increases with respect to, any of such policies.
3.22 ENVIRONMENTAL MATTERS.
(a) Hazardous Material. No underground or aboveground storage
tanks and no amount of any substance that has been designated by any
governmental entity or by applicable federal, state, local or other applicable
law to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
properly and safely maintained (a "Hazardous Material"), are present in, on or
under any property, including the land and the improvements, ground water and
surface water
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thereof, that the Company or any of its predecessors in interest has at any time
owned, operated, occupied or leased. There are no underground and aboveground
storage tanks, and the capacity, age, and contents of such tanks, located on
Real Property leased by the Company.
(b) Hazardous Materials Activities. The Company has not
transported, stored, used, manufactured, disposed of or released, or exposed its
employees or others to, Hazardous Materials in violation of any law in effect on
or before the Closing Date, nor has the Company disposed of, transported, sold
or manufactured any product containing a Hazardous Material (collectively,
"Company Hazardous Materials Activities") in violation of any rule, regulation,
treaty or statute promulgated by any governmental entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.
(c) Permits and Compliance. The Company currently holds no
environmental approvals, permits, licenses, clearances and consents (the
"Environmental Permits") and no such Environmental Permits is necessary for the
conduct of the Company's business as it is currently being conducted or as it is
proposed to be conducted. The Company is in compliance in all material respects
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the laws of all
governmental entities relating to pollution or protection of health and the
environment or contained in any regulation, code, plan order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the knowledge of the Company, threatened concerning any
Environmental Permit, Hazardous Material or any Company Hazardous Materials
Activity. There are no past or present actions, activities, circumstances,
conditions, events or incidents that could involve the Company (or any person or
entity whose liability the Company has retained or assumed, either by contract
or operation of law) in any environmental litigation, give rise to any
environmental claim against the Company or impose upon the Company (or any
person or entity whose liability the Company has retained or assumed, either by
contract or operation of law) any environmental liability including, without
limitation, common law tort liability.
3.23 YEAR 2000 COMPLIANCE. The Company and its information systems and
software will continue to function without material impairment arising from any
reliability or difficulty in processing date information accurately before, on
or after January 1, 2000 (including leap years).
3.24 BENEFIT PLANS AND EMPLOYEE MATTERS.
(a) Definitions.
(i) "Benefit Arrangement" means any benefit
arrangement, obligation, or practice, whether or not legally enforceable, to
provide benefits (other than merely as salary or under a Benefit Plan), as
compensation for services rendered, to present or former directors, employees,
agents, or independent contractors, including, but not limited to, employment or
consulting agreements, severance agreements or policies, stay or retention
bonuses or compensation,
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executive or incentive compensation programs or arrangements, sick leave,
vacation pay, plant closing benefits, salary continuation for disability,
workers' compensation, retirement, deferred compensation, bonus, stock option or
purchase plans or programs, tuition reimbursement or scholarship programs,
employee discount programs, meals, travel, or vehicle allowances, any plans
subject to Code Section 125, and any plans providing benefits or payments in the
event of a change of control, change in ownership or effective control or sale
of a substantial portion (including all or substantially all) of the assets of
any business or portion thereof, in each case with respect to any present or
former employees, directors, or agents.
(ii) "Benefit Plan" has the meaning given in ERISA
Section 3(3), together with plans or arrangements that would be so defined if
they were not (i) otherwise exempt from ERISA by that or another section, (ii)
maintained under non-U.S. law, or (iii) individually negotiated or applicable
only to one person.
(iii) "Company Benefit Arrangement" means any Benefit
Arrangement the Company sponsors or maintains or with respect to which the
Company has or may have any current or future liability (whether actual,
contingent, with respect to any of its assets or otherwise), in each case with
respect to any present or former directors, officers, or employees of or service
providers to the Company.
(iv) "Company Plan" means any Benefit Plan that the
Company maintains or has previously maintained or to which the Company is
obligated to make payments or has or may have any liability, in each case with
respect to any present or former employees of the Company.
(v) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and all regulations and rules issued
thereunder, or any successor law.
(vi) "ERISA Affiliate" means any person or entity that,
together with the entity referenced, would be or was at any time treated as a
single employer under Code Section 414 or ERISA Section 4001 and any general
partnership of which the entity is or has been a general partner.
(vii) "Multiemployer Plan" means any Benefit Plan
described in ERISA Section 3(37).
(viii) "Pension Plan" means any Benefit Plan subject to
Code Section 412 or ERISA Section 302 or Title IV (including any Multiemployer
Plan) or any comparable plan not covered by ERISA.
(ix) "Qualified Plan" means any Benefit Plan intended to
meet the requirements of Code Section 401(a), including any already terminated
plan.
(b) Schedule 3.24(b) contains a complete and accurate list of
all Company Plans and Company Benefit Arrangements.
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(c) With respect, as applicable, to Benefit Plans and Benefit
Arrangements:
(i) The Company has delivered true, correct, and
complete copies of the following documents with respect to each Company Plan and
Company Benefit Arrangement, to the extent applicable, to the Purchaser: (A) all
plan or arrangement documents, including but not limited to, trust agreements,
insurance policies, service agreements and formal and informal amendments to
each; (B) the most recent Forms 5500 or 5500C/R and any attached financial
statements and those for the prior three years and any related actuarial
reports; (C) the last Internal Revenue Service ("IRS") determination or opinion
letter, and the last IRS determination or opinion letter that covered the
qualification of the entire plan (if different); (D) summary plan descriptions,
summaries of material modifications, any prospectuses that describe the Company
Plans or Company Benefit Arrangements, and Statement of Financial Accounting
Standards Nos. 87, 106, and 112 reports; (E) the most recent written
descriptions of all non-written agreements relating to any such plan or
arrangement; (F) all notices the IRS, Department of Labor, or any other
governmental agency or entity issued to the Company within the four years
preceding the date of this Agreement; (G) employee manuals or handbooks
containing personnel or employee relations policies; and (H) any other documents
Purchaser has reasonably requested in writing;
(ii) The only Qualified Plans currently in operation are
the Mobeo profit-sharing 401(k) plan and trust. The Company has not maintained
or contributed to another Qualified Plan. The Qualified Plans qualify under
Code Section 401(a), and nothing has occurred with respect to the operation of
any Qualified Plans that could cause the loss of such qualification or
exemption or the imposition of any liability, Lien, penalty or tax under ERISA
or the Code on the Company; each Company Plan and each Company Benefit
Arrangement has been maintained substantially in accordance with its
constituent documents and with all applicable provisions of domestic and
foreign laws, including federal and state securities laws and any reporting and
disclosure requirements; with respect to each Company Plan, no transactions
prohibited by Code Section 4975 or ERISA Section 406 and no breaches of
fiduciary duty described in ERISA Section 404 have occurred; and no Company
Plan contains any security issued by the Company.
(iii) The Company has never sponsored or maintained or had
any liability (whether actual or contingent) with respect to any Pension Plan;
the Company has no liability (whether actual or contingent) with respect to any
Pension Plan maintained by any predecessor entity (or any of their ERISA
Affiliates); the Company neither has nor has ever had any ERISA Affiliates; the
Company has no liability (whether actual or contingent) with respect to any
Benefit Plan or Benefit Arrangement other than the Company Plans and Company
Benefit Arrangement or with respect to any Benefit Plan maintained, now or in
the past (or that should have been maintained), by any predecessor;
(iv) There are no pending claims (other than routine
benefit claims) or lawsuits that have been asserted or instituted by, against,
or relating to, any Company Plans or Company Benefit Arrangements, nor to the
Company's Knowledge is there any basis for any such claim or lawsuit. No Company
Plans or Company Benefit Arrangements are or have been under audit or
examination (nor has notice been received of a potential audit or examination)
by any domestic or foreign governmental agency or entity (including the IRS and
Department of Labor);
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and no matters are pending under the IRS's Employee Plans Compliance Resolutions
System or any successor or predecessor program;
(v) Except as set forth in Schedule 3.24(c)(vi), no
Company Plan or Company Benefit Arrangement contains any provision that would
accelerate or vest any benefit or require severance, termination or other
payments or trigger any liabilities as a result of the transactions this
Agreement contemplates; the Company has not declared or paid any bonus or
incentive compensation related to the transactions this Agreement contemplates;
and no payments under any Company Plan or Company Benefit Arrangement would,
individually or collectively, be nondeductible under Code Section 280G;
(vi) The Company has paid all amounts it is required to
pay as contributions to the Company Plans as of the Balance Sheet Date to the
extent due as of such Date; all benefits accrued under any unfunded Company Plan
or Company Benefit Arrangement will have been paid, accrued, or otherwise
adequately reserved in accordance with GAAP as of the Balance Sheet Date; all
monies withheld from employee paychecks for Company Plans have been transferred
to the relevant plan within the time applicable regulations specify;
(vii) The Company does not provide benefits through a
voluntary employee beneficiary association as defined in Code Section 501(c)(9);
(viii) All group health plans of the Company materially
comply with the requirements of Part 6 of Title I of ERISA ("COBRA"), Code
Section 5000, and the Health Insurance Portability and Accountability Act; the
Company has no material liability under or with respect to COBRA for its own
actions or omissions or those of any predecessor; no employee or former employee
(or beneficiary of either) of the Company is entitled to receive any benefits
for the Company, including, without limitation, death or medical benefits
(whether or not insured) beyond retirement or other termination of employment,
other than as applicable law requires.
(d) Schedule 3.24(d) contains the most recent quarterly
listing of workers' compensation claims and a schedule of workers' compensation
claims of the Company for the last three fiscal years.
(e) Schedule 3.24(e) sets forth an accurate list, as of the
date hereof, of all employees of the Company who earned more than $50,000 in
1998 or who may earn more than $50,000 in 1999, all officers and all directors,
and all employment agreements with such employees, officers, and directors and
the rate of compensation (and the portions thereof attributable to salary,
bonus, and other compensation respectively) of each such person as of (i) the
Balance Sheet Date and (ii) the date of this Agreement. The schedule also shows
totals accrued for vacation, sick leave, and incentive bonuses for all
employees.
(f) With respect to employees of and services providers to the
Company:
(i) The Company complies and has complied in all
material respects with all applicable domestic and foreign laws respecting
employment and employment practices, terms
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and conditions of employment and wages and hours, including without limitation
any such laws respecting employment discrimination, workers' compensation,
family and medical leave, the Immigration Reform and Control Act, and
occupational safety and health requirements, and no claims or investigations are
pending or, to the Company's Knowledge, threatened with respect to such laws,
either by private individuals or by governmental agencies; and all employees are
at-will except as set forth in Schedule 3.24(f);
(ii) The Company is not nor has it been engaged in any
unfair labor practice, and there is not now, nor within the past three years has
there been, any unfair labor practice complaint against the Company pending or,
to the Company's Knowledge, threatened, before the National Labor Relations
Board or any other comparable foreign or domestic authority or any workers'
council;
(iii) No labor union represents or has ever represented
the Company's employees and no collective bargaining agreement is or has been
binding against the Company. No grievance or arbitration proceeding arising out
of or under collective bargaining agreements or employment relationships is
pending, and no claims therefor exist or have, to the Company's Knowledge, been
threatened; no labor strike, lock-out, slowdown, or work stoppage is or has ever
been pending or threatened against or directly affecting the Company; and
(iv) All persons who are or were performing services for
the Company and are or were classified as independent contractors do or did
satisfy and have satisfied the requirements of law to be so classified, and the
Company has fully and accurately reported their compensation on IRS Forms 1099
when required to do so.
3.25 TAXES.
(a) For purposes of this Agreement:
(i) "Tax" (including with correlative meaning the terms
"Taxes") means (A) all foreign, federal, state, local and other income, gross
receipts, sales, use, ad valorem, value-added, intangible, unitary, transfer,
franchise, license, payroll, employment, estimated, excise, environmental,
stamp, occupation, premium, property, prohibited transactions, windfall or
excess profits, customs, duties or other taxes, levies, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts with respect thereto, (B) any liability
for payment of amounts described in clause (A) as a result of transferee
liability, of being a member of an affiliated, consolidated, combined or unitary
group for any period, or otherwise through operation of law and (C) any
liability for payment of amounts described in clause (A) or (B) as a result of
any tax sharing, tax indemnity or tax allocation agreement or any other express
or implied agreement to indemnify any other person for Taxes; and
(ii) The term "Tax Return" shall mean any return
(including any information return), report, statement, schedule, notice, form,
estimate or declaration of estimated tax relating to or required to be filed
with any governmental authority in connection with the determination,
assessment, collection or payment of any Tax.
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(b) (i) All Tax Returns required to be filed by or on
behalf of the Company have been filed (or an extension of the time to file has
been obtained that has not yet expired), and such Tax Returns as have been filed
are true, correct, and complete in all material respects.
(ii) The Company has paid in full on a timely basis all
Taxes owed by it, whether or not shown on any Tax Return, other than Taxes that
are not yet due and Taxes which the Company is presently contesting in good
faith in appropriate proceedings that are described in item 4 of Schedule
3.26(b).
(iii) The amount of the Company's liability for unpaid
Taxes as of the dates of the Company Financial Statements did not exceed the
amount of the current liability accruals for Taxes (excluding reserves for
deferred Taxes) shown on such Company Financial Statements, and the amount of
the Company's liability for unpaid Taxes for all periods or portions thereof
ending on or before the Closing Date will not exceed the amount of the current
liability accruals for Taxes (excluding reserves for deferred Taxes) shown on
the Closing Financial Statements.
(iv) There is no action, suit, proceeding,
investigation, audit or claim now proposed or pending against or with respect to
the Company in respect of any Tax. No notice has been issued to the Company
regarding any action, suit, proceeding, investigation, audit or claim with
respect to any Tax.
(v) The Company has a taxable year ending on
December 31, in each year commencing 1989.
(vi) The Company has not agreed to, and is not and will
not be required to, make any adjustments under Code Section 481(a) as a result
of a change in accounting methods.
(vii) The Company has withheld and paid over to the
proper governmental authorities all Taxes required to have been withheld and
paid over and complied with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, independent contractor,
creditor or other third party.
(viii) The Company has not requested an extension of time
within which to file any Tax Return or pay any Tax or been granted any extension
or waiver of the statute of limitations period applicable to any Tax Return or
Tax, and all Tax Returns of the Company for the preceding three years have been
made available to and delivered to Purchaser.
(ix) There are (and as of immediately following the
Closing there will be) no Liens on the assets of the Company relating or
attributable to Taxes, other than Liens for Taxes not yet due and payable.
(x) To the Knowledge of the Company, there is no basis
for the assertion of any claim relating or attributable to Taxes which, if
adversely determined, would result in any
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Lien on the assets of the Company or otherwise have an adverse effect on the
Company or its business.
(xi) None of the Company's assets is treated as "tax
exempt use property" within the meaning of Section 168(h) of the Code.
(xii) There are no contracts, agreements, plans or
arrangements covering any employee or former employee of the Company that,
individually or collectively, could give rise to the payment of any amount (or
portion thereof) that would not be deductible pursuant to Section 280G, 404 or
162 of the Code.
(xiii) Neither the Company nor any direct or indirect
shareholder of the Company has filed a consent under Section 341(f) of the Code
or agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the
Company.
(xiv) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(xv) The Company is not, nor has it ever been, a party
to a tax sharing, tax indemnity or tax allocation agreement, and the Company has
not assumed the tax liability of any other person or entity under contract.
(xvi) The Company is not, nor has it ever been, a member
of an affiliated group filing a consolidated federal income Tax Return. The
Company does not, and will not have up to and including the Closing Date, any
interest in any other corporation with respect to which the Company owns a
majority of the common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
(xvii) The Company does not have any liability for the
Taxes of any individual or entity other than the Company under Section 1.1502-6
of the Treasury Regulations (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract or otherwise.
(xviii)The Company is not a party to any joint venture,
partnership or other arrangement that is treated as a partnership for federal
income tax purposes.
(c) Schedule 3.25(c) contains accurate and complete
descriptions of (i) the Company's basis in its assets; (ii) the amount of any
net operating loss, net capital loss, unused investment or other credit, unused
foreign tax or excess charitable contribution allocable to the Company; and
(iii) tax elections affecting the Company. The Company has no net operating
losses or other tax attributes presently subject to limitation under Section
382, 383 or 384 of the Code or the federal consolidated return regulations.
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3.26 CONFORMITY WITH LAW; LITIGATION.
(a) The Company has not violated any Laws or any order of any
court or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over it.
(b) Except as set forth in Schedule 3.26(b), there are no
claims, actions, suits or proceedings, pending or, to the knowledge of the
Company, threatened against or affecting the Company at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
it, and no notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received. There are no judgments, orders, injunctions,
decrees, stipulations or awards (whether rendered by a court or administrative
agency or by arbitration) against the Company or against any of its properties
or business.
3.27 RELATIONS WITH GOVERNMENTS. The Company has not made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for government office, nor has it otherwise taken any action that
would cause the Company to be in violation of the Foreign Corrupt Practices Act
of 1977, as amended, or any law of similar effect.
3.28 ABSENCE OF CHANGES. Since December 31, 1998, the Company has
conducted its business in the ordinary course, and there has not been:
(a) any change, by itself or together with other changes, that
has affected adversely, or is likely to affect adversely, the business,
operations, affairs, prospects, properties, assets, profits or condition
(financial or otherwise) of the Company;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties or business of the Company;
(c) except as set forth in Schedule 3.28(c), any change in the
authorized capital of the Company or in its outstanding securities or any change
in their ownership interests or any grant of any options, warrants, calls,
conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution
in respect of the capital stock, or any direct or indirect redemption, purchase
or other acquisition of any of the capital stock of the Company;
(e) except as set forth in Schedule 3.28(e), any increase in
the compensation, bonus, sales commissions or fee arrangements payable or to
become payable by the Company to any of its officers, directors, employees,
consultants or agents, except for ordinary and customary bonuses and salary
increases for employees in accordance with past practice, nor has the Company
entered into, amended or terminated any Company Benefit Arrangement, Company
Plan, employment, severance or other agreement relating to compensation or
fringe benefits;
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(f) any work interruptions, labor grievances or claims filed,
or any similar event or condition of any character, materially adversely
affecting the business or future prospects of the Company;
(g) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of the Company to any person,
including, without limitation, the Stockholders or their affiliates;
(h) except as set forth in Schedule 3.28(h), any cancellation,
forgiveness or release or agreement to cancel, forgive or release any
indebtedness or other obligation owing to the Company, including, without
limitation, any indebtedness or obligation of the Stockholders and their
affiliates;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside of
the ordinary course of business of the Company;
(k) any waiver of any material rights or claims of the
Company;
(l) except as set forth in Schedule 3.28(l), any breach,
amendment or termination of any Material Contract, agreement, license, Permit or
other right to which the Company is a party;
(m) any transaction by the Company outside the ordinary course
of business;
(n) except as set forth in Schedule 3.28(n), any capital
commitment by the Company, either individually or in the aggregate, exceeding
$10,000;
(o) except as set forth in Schedule 3.28(o), any change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by the Company or the revaluation by the Company
of any of its assets;
(p) any creation or assumption by the Company of any mortgage,
pledge, security interest or Lien or other encumbrance on any asset (other than
Liens arising under existing lease financing arrangements which are not material
and Liens for Taxes not yet due and payable);
(q) except as set forth in Schedule 3.28(q), any entry into,
amendment of, relinquishment, termination or non- renewal by the Company of any
contract, lease transaction, commitment or other right or obligation requiring
aggregate payments by the Company in excess of $10,000;
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29
(r) any loan by the Company to any person or entity, incurring
by the Company of any indebtedness, guaranteeing by the Company of any
indebtedness, issuance or sale of any debt securities of the Company or
guaranteeing of any debt securities of others;
(s) the commencement or notice or, to the knowledge of the
Company, threat of commencement, of any lawsuit or proceeding against, or
investigation of, the Company or any of its affairs; or
(t) negotiation or agreement by the Company or any officer or
employee thereof to do any of the things described in the preceding clauses (a)
through (s) (other than negotiations with Purchaser and its representatives
regarding the transactions contemplated by this Agreement).
3.29 DISCLOSURE. All written agreements, lists, schedules,
instruments, exhibits, documents, certificates, reports, statements and other
writings (including without limitation, the Discussion Memorandum prepared by
Xxxxxx, Xxxxx Xxxxx, Incorporated) furnished to Purchaser pursuant hereto or in
connection with this Agreement or the transactions contemplated hereby, are and
will be complete and accurate in all material respects. No representation or
warranty by the Stockholders or the Company contained in this Agreement, in the
Schedules attached hereto or in any certificate furnished or to be furnished by
the Stockholders or the Company to Purchaser in connection herewith or pursuant
hereto contains or will contain any untrue statement of a material fact or omits
or will omit to state any material fact necessary in order to make any statement
contained herein or therein not misleading. There is no fact known to the
Stockholders or the Company that has specific application to the Company (other
than general economic or industry conditions) and that materially adversely
affects or may threaten the assets, business, prospects, financial condition or
results of operations of the Company that has not been set forth in this
Agreement or any Schedule hereto.
3.30 BROKER. Sellers and their agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other payment in connection with this Agreement other than the
obligations incurred by the Stockholders (and not the Company) to Xxxxxx, Xxxxx
Xxxxx, Incorporated, as set forth in Schedule 3.30.
4. REPRESENTATIONS OF PURCHASER
To induce the Stockholders and the Company to enter into this Agreement
and consummate the transactions contemplated hereby, Purchaser represents and
warrants to the Stockholders and the Company as follows:
4.1 DUE ORGANIZATION. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its respective businesses in the places and in the manner as now
conducted, except where the failure to be so authorized or qualified would not
have a material adverse effect on the business, operations, affairs, prospects,
properties, assets, profits or condition (financial or otherwise) of Purchaser.
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4.2 AUTHORIZATION; VALIDITY OF OBLIGATIONS. The representatives of
Purchaser executing this Agreement have all requisite corporate power and
authority to enter into and bind Purchaser to the terms of this Agreement.
Purchaser has the full legal right, power and corporate authority to enter into
this Agreement and to consummate the transactions contemplated hereby. This
Agreement is a legal, valid and binding obligation of Purchaser enforceable in
accordance with its terms.
4.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of, the
Limited Liability Company Agreement or Certificate of Limited Liability Company
of Purchaser;
(b) conflict with, or result in a default (or would constitute
a default but for any requirement of notice or lapse of time or both) under, any
document, agreement or other instrument to which Purchaser is a party or result
in the creation or imposition of any Lien on any of Purchaser's properties
pursuant to (i) any law or regulation to which Purchaser or any of its property
is subject or (ii) any judgment, order or decree to which Purchaser is bound or
any of its property is subject; or
(c) violate any law, order, judgment, rule, regulation, decree
or ordinance to which Purchaser is subject or by which Purchaser is bound.
4.4 BROKER. Purchaser and its members and agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to effect the transactions contemplated by
this Agreement is subject to the satisfaction or waiver, on or before the
Closing Date, of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
of the representations and warranties of the Stockholders and the Company
contained in this Agreement shall be true, correct and complete on and as of the
Closing Date; all of the terms, covenants, agreements and conditions of this
Agreement to be complied with, performed or satisfied by the Company and the
Stockholders on or before the Closing Date shall have been duly complied with,
performed or satisfied; and certificates to the foregoing effects dated the
Closing Date and signed on behalf of the Stockholders and the Company shall have
been delivered to Purchaser.
5.2 NO LITIGATION. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
Purchaser's proposed acquisition of the Company, or limiting or restricting
Purchaser's conduct or operation of the business of the Company (or its own
business) following the Closing shall be in effect, nor shall any proceeding
brought by an administrative agency or
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31
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending. There shall be no action,
suit, claim or proceeding of any nature pending or threatened against Purchaser,
the Company or their respective properties or any of their officers or
directors, which could materially and adversely affect the business, assets,
liabilities, financial condition, results of operations or prospects of the
Company.
5.3 OPINION OF COUNSEL. Purchaser shall have received an opinion from
counsel to the Stockholders and the Company, dated the Closing Date,
substantially in the form attached hereto as Exhibit 5.3.
5.4 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency or third party relating to the
consummation by the Company and the Stockholders of the transactions
contemplated hereby shall have been obtained and made, including without
limitation under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and all Third Party Consents, if applicable. Purchaser
shall have obtained all necessary consents and approvals pursuant to Purchaser's
Limited Liability Company Agreement for consummating the transactions
contemplated by this Agreement.
5.5 CHARTER DOCUMENTS. The Stockholders shall have delivered to
Purchaser (a) true, complete and correct copies of the Certificate of
Incorporation of the Company as currently in effect certified by an appropriate
authority in the state of its incorporation and (b) copies of the Bylaws of the
Company certified by the Secretary of the Company, and such documents shall be
in form and substance reasonably acceptable to Purchaser and its counsel.
5.6 EMPLOYMENT AGREEMENT. Xxxxxx Xxxxx shall have executed and
delivered an employment agreement and non-competition agreement (the"Employment
Agreement"), substantially in the form attached hereto as Exhibit 5.6.
5.7 ADVISORY SERVICES AGREEMENTS; CONFIDENTIALITY AGREEMENTS. Xxxxx
Xxxxxx and Xxxxxxx Xxxxxxx shall each have executed and delivered an advisory
and non-competition agreement (each an "Advisory Services Agreement" and
collectively the "Advisory Services Agreements"), substantially in the form
attached hereto as Exhibit 5.7.
5.8 CLOSING DELIVERIES. The Stockholders and the Company shall have
made such deliveries as are called for by this Agreement.
5.9 RESERVED.
5.10 FINANCING. Purchaser shall have obtained financing having terms
reasonably satisfactory to Purchaser and in an amount at least equal to the
Purchase Price and the expenses of the Purchaser incurred in connection with the
negotiation, preparation, execution and delivery of this Agreement and the
consummation of the transactions contemplated herein. Purchaser shall use
commercially reasonable efforts to obtain such financing and has no reason to
believe that it will not be able to obtain such financing.
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5.11 REPAYMENT OF ALL INDEBTEDNESS.
(a) Pursuant to Section 7.6 of this Agreement, Sellers shall
have repaid in full, or caused to be repaid in full, as applicable, all
indebtedness owed to the Company by any Stockholder, or relative of affiliate of
any Stockholder.
(b) Sellers shall have repaid in full, or caused to be repaid
in full, as applicable, all indebtedness owed to any person or entity by any
Stockholder, or relative of affiliate of any Stockholder, which has been secured
by a pledge of any Stockholder's Shares.
5.12 RESERVED.
5.13 OPTIONS. The Sellers shall cause each person with securities
convertible into capital stock of the Company (including without limitation
options and warrants) have delivered all such convertible securities to
Purchaser and all of those convertible securities shall have been marked
"canceled."
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS
AND THE COMPANY
The obligations of the Stockholders and the Company to effect the
transactions contemplated hereby are subject to the satisfaction or waiver, on
or before the Closing Date, of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
of the representations and warranties of Purchaser contained in this Agreement
shall be true, correct and complete on and as of the Closing Date; all of the
terms, covenants, agreements and conditions of this Agreement to be complied
with, performed or satisfied by Purchaser on or before the Closing Date shall
have been duly complied with, performed or satisfied; and a certificate to the
foregoing effects dated the Closing Date and signed by the President or any Vice
President of Purchaser shall have been delivered to the Stockholders.
6.2 NO LITIGATION. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
Purchaser's proposed acquisition of the Company, or limiting or restricting
Purchaser's conduct or operation of the business of the Company (or its own
business) following the Closing shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending. There shall be no action, suit, claim or proceeding of any nature
pending or threatened against Purchaser or the Company, their respective
properties or any of their officers or directors, that could materially and
adversely affect the business, assets, liabilities, financial condition, results
of operations or prospects of Purchaser and its subsidiaries taken as a whole.
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33
6.3 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency or third party relating to the consummation
by Purchaser of the transactions contemplated herein shall have been obtained
and made.
7. CERTAIN COVENANTS
7.1 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall give
prompt notice to the other parties hereto of (a) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of it contained herein to be
untrue or inaccurate in any material respect at or prior to the Closing and (b)
any material failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such party hereunder.
The delivery of any notice pursuant to this Section 7.1 shall not, without the
express written consent of the other parties, be deemed to (i) modify the
representations or warranties hereunder of the party delivering such notice,
(ii) modify the conditions set forth in Articles 5 and 6 or (iii) limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
7.2 UNPAID TAXES. The Stockholders jointly and severally covenant and
agree to reimburse promptly Purchaser for any amount by which the Company's
liability for unpaid Taxes for all periods or portions thereof ending on or
before the Closing Date exceeds the amount of the current liability accruals for
Taxes (excluding reserves for deferred Taxes) set forth on the Closing Financial
Statements.
7.3 TAX RETURNS. The Company shall prepare and timely file (or obtain
valid extensions with respect to the filing of) all Tax Returns required to be
filed by or on behalf of the Company between the Effective Date and the Closing
Date. Purchaser shall have a reasonable opportunity to review and consent to the
filing of such Tax Returns, which consent shall not be unreasonably withheld or
delayed. The Company shall timely pay all Taxes shown as due on the Tax Returns
described in this Section 7.3.
7.4 COOPERATION ON TAX MATTERS.
(a) Purchaser, the Company and the Stockholders shall
cooperate fully, as and to the extent reasonably requested by the other parties,
in connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other parties' request) the provision
of records and information that are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and the Stockholders agree (i) to
retain all books and records in their possession with respect to Tax matters
pertinent to the Company relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to the
extent notified by Purchaser or the Stockholders, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give the other parties
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other parties so request, the
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34
Company or the Stockholders, as the case may be, shall allow the other parties
to take possession of such books and records.
(b) Purchaser and the Stockholders further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, without
limitation, with respect to the transactions contemplated hereby).
7.5 CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid one-half by
the Stockholders and one-half by Purchaser. The parties will, at their own
expense, file all necessary Tax Returns and other documentation with respect to
all such transfer, documentary, sales, use, stamp, registration and other Taxes
and fees.
7.6 PAYMENT OF INDEBTEDNESS. Sellers shall cause all indebtedness
owed to the Company by any Stockholder, or relative or affiliate of any
Stockholder, to be paid in full prior to the Closing.
7.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 10.4, Sellers will not, and will cause each of
their representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Purchaser) relating to any
transaction involving the sale of the business or assets (other than the
ordinary course of business), or any of the capital stock of the Company, or any
merger, consolidation, business combination, or similar transaction.
7.8 OPERATION OF THE COMPANY. Between the Effective Date and the
Closing Date, Sellers:
(a) shall conduct the business of the Company only in the
ordinary course of business;
(b) shall use their best efforts to preserve intact the
current business organization of the Company, keep available the services of the
current officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Company;
(c) shall confer with Purchaser concerning operational matters
of a material nature;
(d) shall otherwise report periodically to Purchaser
concerning the status of the business, operations and finances of the Company;
(e) shall not make any Tax election other than in the ordinary
course of business and consistent with past practice, change any Tax election,
adopt any Tax accounting method other than in the ordinary course of business
and consistent with past practice, change any Tax accounting
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35
method, enter into any closing agreement, settle any Tax claim or assessment, or
consent to any Tax claim or assessment; and
(f) except as otherwise expressly permitted by this Agreement,
shall not without prior consent of Purchaser, take any affirmative action, or
fail to take any reasonable action within their or its control, as a result of
which any of the changes or events listed in Section 3.28 is likely to occur.
7.9 ACCESS TO INFORMATION. Subject to the terms of the
Confidentiality Agreements described in Section 10.2, between the date of this
Agreement and the Closing Date, Sellers will, and will cause each of their
respective representatives to, (a) afford Purchaser and its representatives and
prospective lenders and their representatives (collectively "Purchaser's
Advisors") full and free access to the Company's personnel, properties,
contracts, books and records, and other documents and data, (b) furnish
Purchaser and Purchaser's Advisors with copies of all such contracts, books and
records, and other existing documents and data as Purchaser may reasonably
request, and (c) furnish Purchaser and Purchaser's Advisors with such additional
financial, operating, and other data and information as Purchaser may reasonably
request.
7.10 FIRPTA CERTIFICATION. The Stockholders shall cause the Company to
furnish to Purchaser at or before the Closing a certification satisfying the
requirements of sections 1.897-2(h) and 1.1445-2(c)(3) of the Treasury
Regulations that the Shares are not United States real property interests,
together with a properly executed notice suitable for filing with the Internal
Revenue Service as described in section 1.897-2(h)(2) of the Treasury
Regulations.
7.11 EMPLOYMENT AGREEMENT AND ADVISORY AGREEMENTS.
(a) As consideration for the execution and delivery of
acceptable Advisory Services Agreements, Purchaser will issue to Xxxxx Xxxxxx
One Hundred Thousand (100,000) options to purchase units in the Purchaser and to
Xxxxxxx Xxxxxxx Twenty Five Thousand (25,000) options to purchase units in the
Purchaser. Collectively, the One Hundred Twenty Five Thousand (125,000) options
to purchase units in the Purchaser to be issued to Xxxxxx and Xxxxxxx are
referred to as the "Options." The Options shall be subject to the following
terms and conditions:
(i) the exercise price shall be Fifteen Dollars ($15)
per unit;
(ii) the Options shall vest in full at closing; and
(iii) the Options shall be exercisable at any time within
five (5) years of the Closing, provided however, that if the Purchaser issues
securities to the public in an initial public offering (an "IPO"), then the
options will expire on the earlier to occur of eighteen months after the date of
the IPO or on the fifth anniversary following the Closing.
7.12 BROKER'S FEES. Stockholders jointly and severally will
indemnify and hold Purchaser harmless from any payment alleged to be due for any
brokerage or finder's fee or agents'
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36
commission or other payment in connection with this Agreement to be due by or
through Sellers as a result of the action of Sellers or its officers or agents.
7.13 OTHER DOCUMENTS. Sellers shall deliver such other documents as
Purchaser may reasonably request for the purpose of evidencing the accuracy of
Sellers' representations and warranties, evidencing the performance by any
Seller of, or the compliance by any Seller with, any covenant or obligation
required to be performed or complied with by such Seller facilitating the
consummation or performance of the transactions contemplated under this
Agreement.
7.14 SETTLEMENT. Following the Closing, the Purchaser will cause the
Company to use commercially reasonable efforts to settle the claim by Reuters
described in Schedule 3.26(b) on terms that are as favorable to the Company as
can be achieved by the Company.
8. INDEMNIFICATION
8.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders
jointly and severally covenant and agree to indemnify, defend, protect and hold
harmless Purchaser and its respective officers, directors, employees,
stockholders, assigns, successors and affiliates, including without limitation,
the Company (individually, an "Aether Indemnified Party" and collectively, the
"Aether Indemnified Parties") from, against and in respect of:
(a) all liabilities, losses, claims, (including, without
limitation, third party claims) damages, punitive damages, causes of action,
lawsuits, administrative proceedings (including informal proceedings),
investigations, audits, demands, assessments, adjustments, judgments, settlement
payments, deficiencies, penalties, fines, interest (including interest from the
date of such damages) and costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements of every kind, nature and
description) (collectively, "Damages") suffered, sustained, incurred or paid by
the Aether Indemnified Parties in connection with, resulting from or arising out
of, directly or indirectly:
(i) any breach of any representation or warranty of the
Stockholders or the Company set forth in this Agreement or any schedule or
certificate, delivered by or on behalf of any of the Stockholders or the Company
in connection herewith;
(ii) any nonfulfillment of any covenant or agreement on
the part of the Stockholders or, prior to the Closing Date, the Company, in this
Agreement;
(iii) the business, operations or assets of the Company
prior to the Closing Date or the actions or omissions of the Company's
directors, officers, shareholders, employees or agents prior to the Closing
Date, except as otherwise disclosed in the Company Financial Statements;
(iv) reserved;
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37
(v) failure of the Company to collect at least 95% of
its accounts receivable reflected on the Closing Financial Statements in the
ordinary course of business; or
(vi) any litigation or other claims of any kind brought
against the Company or Purchaser arising out of acts or omissions of the Company
or the Stockholders prior to Closing, including, without limitation, those
matters set forth in Schedule 3.26(b).
(b) any and all Damages incident to any of the foregoing or to
the enforcement of this Section 8.1.
Provided the Closing occurs, each Stockholder waives any right of
contribution, indemnification or other similar right against (a) the Company
arising out of the Seller's representations, warranties, covenants and
agreements contained herein; and (b) Purchaser or the Company arising out of the
Charter Documents or any other contractual obligation of the Company or any
Company Benefit Arrangement or Company Plan. The Stockholders agree that any (i)
fraud claim of Purchaser arising out of or relating to the transactions
contemplated by this Agreement or (ii) any claim of Purchaser for contribution
arising out of or relating to a third party claim for which the Stockholders may
be individually liable under a theory of "piercing the corporate veil" or
otherwise or as fiduciaries under any Company Benefit Arrangement or Company
Plan may be asserted directly and fully against the Stockholders without the
need for any claim against or joinder of the Company, provided that Purchaser
must prove the elements of such claim.
8.2 LIMITATION AND EXPIRATION. Notwithstanding anything in this
Agreement to the contrary:
(a) there shall be no liability for indemnification under Section
8.1 unless, and solely to the extent that, the aggregate amount of Damages
exceeds $50,000 (the "Indemnification Threshold"); provided, however, that no
Indemnification Threshold shall apply with respect to recovery of (i) Damages
arising out of any breaches of the covenants of the Stockholders set forth in
this Agreement or representations made in Section 3.4 (capital stock of the
Company), 3.5 (transactions in capital stock), 3.19 (significant customers;
material contracts and commitments), 3.24 (benefit plans and employment
matters), 3.25 (taxes) or 3.26 (conformity with law; litigation) or (ii) Damages
described in items 1, 4 and 5 of Schedule 3.26(b), although the entire amount of
such Damages shall be applied to the calculation of the Indemnification
Threshold with respect to those Damages not exempt from the Indemnification
Threshold by this proviso; and provided further that if the aggregate amount of
Damages exceeds the Indemnification Threshold, then the Stockholders shall
reimburse the Aether Indemnified Parties for the entirety of all Damages and the
Indemnification Threshold shall be disregarded.
(b) the aggregate amount of the Stockholders' liability under
this Section 8 shall not exceed the Purchase Price; provided, however, that the
Stockholders' liability for Damages arising out of any breaches of the covenants
of the Stockholders set forth in this Agreement or the representations made in
Section 3.4 (capital stock of the Company), 3.5 (transactions in capital stock),
3.24 (benefit plans and employment matters) or 3.25 (taxes) or Damages described
in Section 8.1(a)(iii) or (vi) shall not be subject to such limitation;
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(c) the indemnification obligations under this Article 8 or in
any certificate or writing furnished in connection herewith shall terminate on
the latest to occur of the events described in the following clauses (i), (ii)
and (iii) of this Section 8.2(c):
(i) (1) except as to representations, warranties and
covenants specified in clause (i)(2) of this Section 8.2(c), the second
anniversary of the Closing Date, or
(2) with respect to representations, warranties
and covenants contained in Sections 3.24 (benefit plans and employment matters),
3.25 (taxes), 7.2, 7.3, 7.4 and 7.5 (certain tax matters) and the
indemnifications set forth in Section 8.1(a)(iii) or (vi), on the date that is
six (6) months after the expiration of the longest applicable federal or state
statute of limitation (including extensions thereof);
(ii) the final resolution of claims or demands (a
"Claim") pending as of the relevant dates described in clause (i) of this
Section 8.2(c) (such claims referred to as "Pending Claims"), except that the
indemnification obligation with regard to the New York state tax claim and the
Reuters claim referred to in Schedule 3.26(b) shall only survive for two years
following the Closing Date; and
(iii) with respect to representations and warranties
contained in Section 3.4 (capital stock of the Company), there shall be no
limitation.
8.3 INDEMNIFICATION PROCEDURES. All Claims for indemnification under
this Section 8 shall be asserted and resolved as follows:
(a) In the event that any Aether Indemnified Party has a Claim
against any party obligated to provide indemnification pursuant to Section 8.1
hereof (the "Indemnifying Party") which does not involve a Claim being asserted
against or sought to be collected by a third party, the Aether Indemnified Party
shall with reasonable promptness send a Claim Notice (defined below) with
respect to such Claim to the Indemnifying Party. If the Indemnifying Party does
not notify the Aether Indemnified Party within the Notice Period (defined below)
that the Indemnifying Party disputes such Claim, the amount of such Claim shall
be conclusively deemed a liability of the Indemnifying Party hereunder. In case
an objection is made in writing in accordance with this Section 8.3(a), the
Aether Indemnified Party shall have thirty (30) days to respond in a written
statement to the objection. If after such thirty (30) day period there remains a
dispute as to any Claims, the parties shall attempt in good faith for thirty
(30) days to agree upon the rights of the respective parties with respect to
each of such Claims. If the parties should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties.
(b) In the event that any Claim for which the Indemnifying
Party would be liable to an Aether Indemnified Party hereunder is asserted
against an Aether Indemnified Party by a third party, the Aether Indemnified
Party shall with reasonable promptness notify the Indemnifying Party of such
Claim, specifying the nature of such claim and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such Claim) (the "Claim Notice"). The
Indemnifying Party shall have 30 days from the receipt of the Claim
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39
Notice (the "Notice Period") to notify the Aether Indemnified Party (i) whether
or not such party disputes the liability to the Aether Indemnified Party
hereunder with respect to such Claim and (ii) if such party does not dispute
such liability, whether or not the Indemnifying Party desires, at the sole cost
and expense of the Indemnifying Party, to defend against such Claim; provided
that such party is hereby authorized (but not obligated) prior to and during the
Notice Period to file any motion, answer or other pleading and to take any other
action that the Indemnifying Party shall deem necessary or appropriate to
protect the Indemnifying Party's interests. In the event that the Indemnifying
Party notifies the Aether Indemnified Party within the Notice Period that the
Indemnifying Party does not dispute the Indemnifying Party's obligation to
indemnify hereunder and desires to defend the Aether Indemnified Party against
such Claim and except as hereinafter provided, such party shall have the right
to defend by appropriate proceedings, which proceedings shall be promptly
settled or prosecuted by such party to a final conclusion; provided that, unless
the Aether Indemnified Party otherwise agrees in writing, such party may not
settle any matter (in whole or in part) unless such settlement includes a
complete and unconditional release of the Aether Indemnified Party. If the
Aether Indemnified Party desires to participate in, but not control, any such
defense or settlement, the Aether Indemnified Party may do so at its sole cost
and expense. If the Indemnifying Party elects not to defend the Aether
Indemnified Party against such Claim, whether by failure of such party to give
the Aether Indemnified Party timely notice as provided above or otherwise, then
the Aether Indemnified Party, without waiving any rights against such party, may
settle or defend against any such Claim in the Aether Indemnified Party's sole
discretion, and the Aether Indemnified Party shall be entitled to recover from
the Indemnifying Party the amount of any settlement or judgment and, on an
ongoing basis, all indemnifiable costs and expenses of the Aether Indemnified
Party with respect thereto, including interest from the date such costs and
expenses were incurred.
(c) If at any time, in the reasonable opinion of the Aether
Indemnified Party, notice of which shall be given in writing to the Indemnifying
Party, any such Claim seeks material prospective or other relief which could
have a materially adverse effect on the assets, liabilities, Taxes, financial
condition, results of operations or business prospects of any Aether Indemnified
Party or any subsidiary, the Aether Indemnified Party shall have the right to
control or assume (as the case may be) the defense of any such Claim, and the
amount of any judgment or settlement and the reasonable costs and expenses of
defense shall be included as part of the indemnification obligations of the
Indemnifying Party hereunder. If the Aether Indemnified Party should elect to
exercise such right, the Indemnifying Party shall have the right to participate
in, but not control, the defense of such claim or demand at the sole cost and
expense of the Indemnifying Party.
(d) Nothing herein shall be deemed to prevent the Aether
Indemnified Party from making a claim, and an Aether Indemnified Party may make
a claim hereunder, for potential or contingent claims or demands; provided that
the Claim Notice sets forth the specific basis for any such potential or
contingent claim or demand to the extent then feasible and the Aether
Indemnified Party has reasonable grounds to believe that such a claim or demand
may be made.
(e) The Aether Indemnified Party's failure to give reasonably
prompt notice as required by this Section 8.3 of any actual, threatened or
possible claim or demand which may give rise to a right of indemnification
hereunder shall not relieve the Indemnifying Party of any liability
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that the Indemnifying Party may have to the Aether Indemnified Party unless the
failure to give such notice materially adversely prejudiced the Indemnifying
Party.
(f) The parties will make appropriate adjustments for any Tax
benefits, Tax detriments or insurance proceeds in determining the amount of any
indemnification obligation under Section 8; provided that no Indemnifying Party
shall be obligated to seek any payment pursuant to the terms of any insurance
policy.
8.4 SURVIVAL OF REPRESENTATIONS WARRANTIES AND COVENANTS. All
representations, warranties and covenants made by the Company, the Stockholders,
Purchaser in or pursuant to this Agreement or in any document delivered pursuant
hereto shall be deemed to have been made on the date of this Agreement (except
as otherwise provided herein). The representations of the Company and the
Stockholders will survive the Closing and will remain in effect until, and will
expire upon, the termination of the relevant indemnification obligation as
provided in Section 8.2. The representations of Purchaser will survive the
Closing and will remain in effect until, and will expire upon, the second
anniversary of the Closing Date. The covenants of the parties will survive the
Closing and expire in accordance with their terms.
8.5 REMEDIES CUMULATIVE. The remedies set forth in this Article 8 are
cumulative and shall not be construed to restrict or otherwise affect any other
remedies that may be available to the Aether Indemnified Parties under any other
agreement or pursuant to statutory or common law.
8.6 TAX CONTESTS.
(a) If any Aether Indemnified Party receives written notice
from any Tax authority of any audit, examination, claim or other administrative
or judicial proceeding relating to Taxes or Tax Returns (a "Tax Claim") with
respect to which the Indemnifying Party is required to provide indemnification
under this Agreement, the Aether Indemnified Party shall give prompt written
notice of such Tax Claim to the Indemnifying Party; provided, however, that the
failure to give such notice shall not affect the indemnification provided
hereunder except to the extent that the failure to give such notice materially
prejudices the Indemnifying Party.
(b) The Indemnifying Party shall have the right, at its own
expense, to control all proceedings and may make all decisions with respect to
any Tax Claim for any Taxable period ending on or before the Closing Date;
provided that the Aether Indemnified Party, and counsel of its own choosing,
shall have the right, at its own expense, to participate fully in all aspects of
the prosecution or defense of such Tax Claim; and provided further that the
Indemnifying Party shall not take any action to settle or otherwise conclude any
such Tax Claim without the prior written consent of the Aether Indemnified
Party. The Indemnifying Party must notify the Aether Indemnified Party in
writing within thirty (30) days after receiving notice of a Tax Claim pursuant
to Section 8.6(a) that the Indemnifying Party intends to exercise its right to
control the conduct of a Tax Claim described in this Section 8.6(b).
(c) If the Indemnifying Party does not exercise its right to
assume control of the proceedings and make decisions with respect to a Tax
Claim, the Aether Indemnified Party may,
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without waiving its rights to indemnification hereunder, take any action to
defend, settle or otherwise conclude the Tax Claim in such manner as it may deem
appropriate in its sole and absolute discretion. Purchaser shall have the right
to control and make all decisions with respect to any Tax Claim not described in
Section 8.6(b).
(d) In the event that the provisions of this Section 8.6
hereof and the provisions of Section 8.3(b) and (c) conflict or otherwise each
apply by their terms, this Section 8.6 shall govern all matters concerning Tax
Claims.
9. NONCOMPETITION AND CONFIDENTIALITY
9.1 EMPLOYMENT AGREEMENT; ADVISORY AGREEMENTS. The noncompetition and
confidentiality provisions of the Employment Agreement and Advisory Agreements
constitute a material part of the purchase and sale transaction contemplated by
this Agreement and are supported by adequate consideration.
10. GENERAL
10.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of Purchaser or the Company and the heirs, personnel representatives
and successors of the Stockholders.
10.2 ENTIRE AGREEMENT. This Agreement (which includes the Schedules
and Exhibits hereto) sets forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby. It shall not be amended or
modified except by a written instrument duly executed by each of the parties
hereto. Any and all previous agreements and understandings between or among the
parties regarding the subject matter hereof, whether written or oral, are
superseded by this Agreement. Each of the Schedules to this Agreement is
incorporated herein by reference and expressly made a part hereof. The Company
and the Purchaser are also parties to the Non-Disclosure Agreement (two way)
between the Company and the Purchaser dated July 30, 1999, and the
Confidentiality Agreement dated July 30, 1999 among the Company, the Purchaser
and certain other parties, which Agreements shall survive execution and
delivery of this Agreement.
10.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by telefax) by the parties.
10.4 TERMINATION.
(a) Mutual Consent. This Agreement may be terminated at any
time prior to the Closing Date by mutual written agreement of Purchaser and the
Sellers.
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(b) Termination by Sellers. This Agreement may be terminated
and the stock purchase hereunder may be abandoned at any time prior to the
Closing by Sellers if there has been one or more breaches by Purchaser of any
representations, warranties, covenants, or agreements contained in this
Agreement; provided, however, that Sellers may not terminate this Agreement
pursuant to this Section 10.4(b) unless, within five (5) days of becoming aware
of such breach, Sellers have given written notice of such breach to Purchaser
and have provided Purchaser with fifteen (15) days to cure such breach.
(c) Termination by Purchaser. This Agreement may be terminated
and the stock purchase hereunder may be abandoned at any time prior to the
Closing Date by Purchaser if: (i) there has been one or more breaches by any of
the Sellers of any representations, warranties, covenants, or agreements
contained in this Agreement; provided, however, that Purchaser may not terminate
this Agreement pursuant to this Section 10.4(c)(i) unless, within five (5) days
of becoming aware of such breach, Purchaser has given written notice of such
breach to Seller and has provided Seller with fifteen (15) days to cure such
breach; or (ii) Purchaser fails to obtain satisfactory financing, as provided in
Section 5.10.
(d) Effect of Termination. In the event of the termination of
this Agreement pursuant to this Section 10.4, this Agreement shall forthwith
become void, and there shall be no liability or obligation on the part of any
party hereto or its officers, directors or stockholders. Notwithstanding the
foregoing sentence, (i) the provisions of this Section 10.4 shall remain in full
force and effect and survive any termination of this Agreement; (ii) each party
shall remain liable for any breach of this Agreement prior to its termination;
and (iii) in the event of termination of this Agreement pursuant to Section
10.4(c)(i), if due to(A) a material breach of a representation or warranty that
any Seller knows was incorrect when made or, with the exercise of reasonable
care, any Seller should have known was incorrect when made, or (B) an
intentional breach of any representation, warranty, covenant or agreement in
this Agreement by any Seller, then notwithstanding the provisions of Section
10.5 below, Sellers shall be liable to Purchaser to the extent of the expenses
incurred by Purchaser in connection with this Agreement and the transactions
contemplated hereby, as well as any damages in accordance with applicable Laws.
10.5 EXPENSES. The Stockholders (and not the Company) have and will
pay the fees, expenses and disbursements of the Stockholders, the Company, and
each of their agents, representatives, financial advisers, accountants and
counsel incurred in connection with the subject matter of this Agreement.
Purchaser has and will pay the fees, expenses and disbursements of Purchaser and
each of its agents, representatives, financial advisers, accountants and counsel
incurred in connection with the subject matter of this Agreement.
10.6 SPECIFIC PERFORMANCE; REMEDIES. Each party hereto acknowledges
that the other parties will be irreparably harmed and that there will be no
adequate remedy at law for any violation by any of them of any of the covenants
or agreements contained in this Agreement, including without limitation, the
noncompetition provisions reference in Section 9.1. It is accordingly agreed
that, in addition to any other remedies that may be available upon the breach of
any such covenants or agreements, each party hereto shall have the right to
obtain injunctive relief to restrain a breach
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or threatened breach of, or otherwise to obtain specific performance of, the
covenants and agreements contained in this Agreement.
10.7 NOTICES. Any notice, request, claim, demand, waiver, consent,
approval or other communication that is required or permitted hereunder shall be
in writing and shall be deemed given if delivered personally or sent by telefax
(with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
If to Purchaser to:
Aether Technologies International, L.L.C.
00000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Xx. Xxxxx Xxxx
with a required copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Xxxx Xxxxxx, Esq.
If to the Stockholders or the Company to:
Mobeo, inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Xx. Xxxxxxx Xxxxxxxx
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with a required copy to:
Piper & Marbury, L.L.P.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
10.8 GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of Maryland,
without regard to principles of conflicts of laws thereof.
10.9 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstances is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such person or circumstances in any other jurisdiction, shall
not be affected thereby, and to this end the provisions of this Agreement shall
be severable.
10.10 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. Except as set forth in
Section 8, no provision of this Agreement is intended, nor will be interpreted,
to provide or to create any third party beneficiary rights or any other rights
of any kind in any client, customer, affiliate, shareholder, employee, partner
of any party hereto or any other person or entity.
10.11 AMENDMENT; WAIVER. This Agreement may be amended by the parties
hereto at any time prior to the Closing by execution of an instrument in writing
signed on behalf of each of the parties hereto. Any extension or waiver by any
party of any provision hereto shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
10.12 OPERATION OF THE COMPANY. The Stockholders recognize that
Purchaser, as the owner of the Company, shall have the authority to exercise its
own good faith business judgment with regard to the operations of Purchaser and
its subsidiaries including, following the Closing, the Company. The Stockholders
acknowledge that such authority and control shall include, without limitation, a
determination of appropriate charges to the Company of charges incurred by the
Company, personnel decisions, expansion decisions, the use and nature of the
assets of the Company and the nature and amount of capital of the Company.
10.13 ARBITRATION.
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(a) Any disputes, controversies or claims between or among any of the
parties hereto arising out of, related to or in connection with this Agreement
("Disputes") shall be resolved by binding arbitration, which shall be
administered by the American Arbitration Association ("AAA") and shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"), as such Rules may be amended from time to
time, with the hearing locale to be the State of Maryland, unless some other
location and/or arbitrator are chosen by mutual consent of the parties.
(b) A single neutral arbitrator (the "Arbitrator") shall preside over
the arbitration and decide the Dispute (the "Decision"). The AAA shall use its
normal procedures pursuant to the Rules for selection of the Arbitrator.
(c) The Decision shall be binding, and the prevailing party may
enforce such decision in any court of competent jurisdiction.
(d) The parties shall cooperate with each other in causing the
arbitration to be held in as efficient and expeditious a manner as practicable
and, in this connection, to furnish such documents and make available such
persons as the Arbitrator may request.
(e) The parties have selected arbitration in order to expedite the
resolution of Disputes and to reduce the costs and burdens associated with
litigation. The parties agree that the Arbitrator should take these concerns
into account when determining whether to authorize discovery and, if so, the
scope of permissible discovery and other hearing and pre-hearing procedures.
(f) Without limiting any other remedies that may be available under
applicable law, the Arbitrator shall have no authority to award punitive
damages.
(g) The Arbitrator shall render a Decision within ninety (90) days
after accepting an appointment to serve as Arbitrator unless the parties
otherwise agree or the Arbitrator makes a finding that a party has carried the
burden of showing good cause for a longer period.
(h) Notwithstanding anything herein to the contrary, any of the
parties may seek a temporary restraining order or a preliminary injunction from
any court of competent jurisdiction in order to prevent immediate and
irreparable injury, loss or damage pending the selection of an arbitrator to
render a Decision on the ultimate merits of any Dispute.
(i) All proceedings and decisions of the Arbitrator shall be
maintained in confidence, to the extent legally permissible, and shall not be
made public by any party or any Arbitrator without the prior written consent of
all parties to the arbitration, except as may be required by law.
(j) Each party shall bear its own costs and attorneys' fees, and the
parties shall equally bear the fees, costs and expenses of the Arbitrator and
the arbitration proceedings; provided, however, that the Arbitrator may exercise
discretion to award costs and attorneys' fees to the prevailing party.
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46
10.14 MUTUAL DRAFTING. This Agreement is the mutual product of the
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
10.15 FURTHER REPRESENTATIONS. Each party to this Agreement
acknowledges and represents that it has been represented by its own legal
counsel in connection with the transactions contemplated by this Agreement, with
the opportunity to seek advice as to its legal rights from such counsel.
10.16 FURTHER ASSURANCES. Each of the Sellers and Purchaser will upon
request of the other, from time to time after the Closing, execute and deliver
and use their commercially reasonable best efforts to cause other persons to
execute and deliver, all such further documents and instruments and will do or
use its commercially reasonable best efforts to cause or be done such other acts
as a party may reasonably request more completely to consummate and make
effective the transactions contemplated by this Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the day and year first above written.
AETHER TECHNOLOGIES
INTERNATIONAL, L.L.C.
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name:
Title: President/CEO
MOBEO, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name:
Title: President
STOCKHOLDERS:
/s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
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47
/s/ Xxxxxxx Xxxxxxx
-----------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxx
-----------------------------
Xxxxxx Xxxxx
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48
SCHEDULE 1.2(a)(ii) -- REASONS FOR REFUNDING $200,000
Failure of any of the conditions set forth in Sections 5.1 through 5.8, 5.11 or
5.13.
