EXHIBIT 10.70
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
WARP TECHNOLOGY HOLDINGS, INC.,
BRISTOL TECHNOLOGY, INC.
AND
KENOSIA CORPORATION
June 10, 2005
PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of June 10, 2005, by and among Warp Technology Holdings, Inc. ("Warp" or
"Buyer"), Bristol Technology, Inc. ("Seller") and Kenosia Corporation (the
"Company").
BACKGROUND
Buyer desires to purchase, and Seller desires to sell, all of the
issued and outstanding shares of capital stock (the "Shares") of the Company,
free and clear of any Encumbrances, upon the terms and conditions set forth in
this Agreement (the "Transaction"). Seller is the sole holder of the Shares.
Intending to be legally bound, in consideration of the mutual
agreements and the respective covenants, agreements, representations and
warranties contained herein, and subject to the satisfaction of the terms and
conditions set forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
Unless otherwise defined, capitalized terms used herein shall have the
following meanings:
1.1 "ASSETS" shall mean all of the Company's assets utilized in
connection with the Business, including, but not limited to, all Intellectual
Property and all Accounts Receivable relating to the Business, whether presently
owned by the Company, Seller or otherwise.
1.2 "BOOKS AND RECORDS" shall mean all business, accounting and
operating records of the Company and Seller, as applicable, including the
organizational documents of the Company and Seller, as applicable.
1.3 "BUSINESS" shall mean the Company's business of developing,
marketing and selling and providing maintenance and support for the Company's
DataAlchemy and Knowledge Share products.
1.4 "CLOSING" shall have the meaning given to such term in Section
5.1.1. herein.
1.5 "CLOSING DATE" shall have the meaning given to such term in
Section 5.1.1. herein.
1.6 "CLOSING DATE PAYMENT" shall have the meaning given to such
term in Section 2.2.2.1 herein.
1.7 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.8 "CONSENT" shall mean any consent, approval, order or
authorization of, or any declaration, filing or registration with, or any
applicable, notice or report to, or any waiver by, or any other action (whether
similar or dissimilar to any of the foregoing), of, by or with, any Person,
which is necessary in order to take a specified action or actions in a specified
manner and/or to achieve a specified result.
1.9 "CONTRACTS" shall mean any written or oral contract,
agreement, instrument, order, arrangement, commitment or understanding of any
nature, including, without limitation, sales orders, purchase orders, leases,
subleases, data processing agreements, service agreements, maintenance
agreements, license agreements, sublicense agreements, loan agreements,
promissory notes, security agreements, pledge agreements, deeds, mortgages,
guaranties, indemnities, warranties, employment agreements, consulting
agreements, established through course of dealing or otherwise.
1.10 "COVERED TAXES" shall have the meaning given to such term in
Section 10.2.8 herein.
1.11 "DAMAGES" shall mean all claims, demands, losses, liabilities,
obligations, damages, expenses, actions, judgments, injunctions, orders,
decrees, taxes or fines, including, without limitation, interest, penalties and
reasonable attorneys', accountants' and experts' fees and costs of investigation
incurred as a result thereof.
1.12 "ENVIRONMENTAL LAWS" shall mean all applicable Laws (including
consent decrees and administrative orders) relating to the public health and
safety and protection of the environment, including those governing the use,
handling, storage, transportation and disposal or remediation of hazardous
substances.
1.13 "EMPLOYEE BENEFIT PLAN(S)" shall mean other than any
obligations pursuant to any Laws, (i) any Employee Welfare Plan or any Pension
Plan, (ii) any "multi-employer plan," as defined in Section 4001(a)(3) of ERISA
to which the Company has contributed or been obligated to contribute, and (iii)
any deferred compensation plan, severance pay, bonus plan, profit sharing plan,
stock option plan, employee stock purchase plan, and any other employee benefit
plan, agreement (other than employment agreements with individual employees,
arrangement or commitment maintained by the Company for the benefit of
Employees.
1.14 "EMPLOYEE WELFARE PLAN" shall mean other than any obligations
pursuant to any Laws, any "employee welfare benefit plan," as defined in Section
3(l) of ERISA, which the Company sponsors, or under which the Company may incur
any liability, and which covers any Employees, including each multi-employer
welfare benefit plan.
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1.15 "EMPLOYEES" shall have the meaning given to such term in
Section 3.12.4 herein.
1.16 "ENCUMBRANCES" shall mean any lien, superlien, security
interest, pledge, right of first refusal, mortgage, easement, covenant,
restriction, reservation, conditional sale, prior assignment, or other
encumbrance, claim, burden or charge of any nature or other right of third
parties.
1.17 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
1.18 "FINANCIAL STATEMENTS" shall have the meaning given to such
term in Section 3.8.1 herein.
1.19 "GAAP" shall mean generally accepted accounting principles as
in effect in the United States of America on the date hereof, consistently
applied.
1.20 "GOVERNMENTAL BODY" shall mean (i) any nation, state, county,
city or other jurisdiction of any nature, (ii) any federal, state, local,
municipal, foreign or other government (or any department, agency, or political
subdivision thereof), (iii) any governmental or quasi-Governmental Body of any
nature, or (iv) any body exercising executive, legislative, judicial, regulatory
or administrative actions of or pertaining to government.
1.21 "IDENTIFIED EMPLOYEES" shall mean the Employees listed on
Schedule 7.1.6 hereto.
1.22 "INDEBTEDNESS" shall mean (i) any liability for borrowed
money, including without limitation any liability evidenced by a note, (ii) any
obligation for the acquisition of property or assets, (iii) the sale or
factoring of any obligation under working capital or other debt facility, (iv)
any liability arising from a guarantee of another Person's borrowed money, (v) a
promissory note or similar instrument of indebtedness, (vi) any lease payments
due under leases constituting Contracts and which are required to be capitalized
in accordance with GAAP, and (vii) any liability for the payment of purchase
price from past acquisitions of the Company, or past acquisitions of other
businesses by the Company.
1.23 "INDEMNITEE" shall have the meaning given to such term in
Section 9.3 herein.
1.24 "INDEMNITOR" shall have the meaning given to such term in
Section 9.3 herein.
1.25 "INTELLECTUAL PROPERTY" shall mean, in connection with the
Business (i) any name, corporate name, domain name, fictitious name, trademark,
trademark application, service xxxx, service xxxx application, trade name, brand
name, product name, mask works, copyrights and patents (including registrations,
licenses, and applications pertaining thereto), symbol, slogan, trade secret,
know-how, Web site,
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design, logo, formula, invention, technology, Software, or other intangible
asset of any nature, whether in use, operational, active, under development or
design, non-operative, or inactive, owned, marketed, maintained, supported,
used, licensed or otherwise held for use by, or licensed to or with respect to
which rights are granted to, a Person, whether arising under statutory or common
law in any jurisdiction or otherwise, and includes, without limitation, any and
all Intellectual Property Rights in and to the foregoing.
1.26 "INTELLECTUAL PROPERTY RIGHT" shall mean any and all
intellectual property rights (throughout the universe, in all media, now
existing or created in the future, and for the entire duration of such rights)
arising under statutory or common law, contract, or otherwise, and whether or
not perfected, including without limitation, all (a) patents, reissues and
reexamined patents, and patent applications, whenever filed and wherever issued,
and all priority rights resulting from such applications; (b) rights associated
with works of authorship including, but not limited to, copyrights, moral
rights, copyright applications, copyright registrations, and rights to prepare
derivative works; (c) rights relating to the protection of trade secrets and
confidential information; (d) rights in trademarks, service marks, trade names,
logos, symbols, and the like; (e) rights analogous to those set forth in this
definition and any and all other proprietary rights relating to intangible
property; and (f) divisions, continuations, continuations-in-part, substitutes,
renewals, reissues and extensions of the foregoing (as and to the extent
applicable) now existing, hereafter filed, issued, or acquired.
1.27 "JUDGMENT" shall mean any order, writ, injunction, citation,
aware, decree, administrative order or agreement or other judgment of any nature
of any Governmental Body.
1.28 "KNOWLEDGE OF SELLER" and any similar phrase shall mean the
actual knowledge of Seller, including, without limitation Xxxxx Xxxxxxxxx, Xxx
Xxxxxxxxx and Xxxx Xxxxxxxx.
1.29 "LAWS" shall mean any and all case law, common law, and any
and all provisions of any federal, state, local or foreign laws, statutes,
rules, regulations, executive orders, codes, charters, constitutions, treaties,
ordinances or guidelines enacted, adopted, issued or promulgated by any
Governmental Body.
1.30 "LEASED REAL PROPERTY" shall have the meaning given to such
term in Section 3.13.2 herein.
1.31 "LEASES" shall mean all leases, subleases, licenses and other
lease agreements, together with all amendments, supplements and nondisturbance
agreements pertaining thereto, to which the Company is a party and pursuant to
which the Company leases, subleases or licenses any real property.
1.32 "LOSS" or "LOSSES" shall have the meaning given to such term
in Section 9.1 herein.
1.33 "MATERIAL ADVERSE EFFECT" shall mean any event, change,
circumstance or effect that has, or is reasonably likely to have, a material
adverse effect on the
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Business, operations, financial condition, or performance, taken as a whole, of
the Company, other than any event, change, circumstance or effect relating to
(i) any failure by the Company to meet internal projections or forecasts or
published revenue or earnings predictions for any period ending (or for which
revenues or earnings are released) on or after the date of this Agreement, (ii)
conditions affecting the industry in which the Company participates, the U.S.
economy as a whole or the capital markets in general or the markets in which the
Company operates which do not disproportionately affect the Company, (iii) any
change in accounting requirements or principles or any change in applicable Laws
or the interpretation thereof; (iv) financial, banking, or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index), (v) the announcement of the Agreement or any transactions
contemplated hereunder, the fulfillment of the parties' obligations hereunder or
the consummation of the transactions contemplated by this Agreement, or (vi) any
outbreak or escalation of hostilities or act of terrorism involving the United
States or any declaration of war by the U.S. Congress.
1.34 "MATERIAL CONTRACTS" shall have the meaning given to such term
in Section 3.14.
1.35 "MOST RECENT BALANCE SHEET" shall have the meaning given to
such term in Section 3.8.1.
1.36 "NET WORKING CAPITAL" shall mean the Company's (a) Accounts
Receivable (as defined in Section 3.15) (net of the allowance for doubtful
accounts reflected on the Financial Statements) plus (b) cash deposits held by
third parties, less (z) Accounts Payable (as defined below), (y) Accrued
Expenses (as defined below), and (x) Accrued Compensation (as defined below) and
related benefits including bonuses, commissions. "Accrued Expenses" shall mean
all expenses of the Company, including Taxes, relating to the Business that have
been accrued and unpaid as of the date of determination. "Accrued Compensation"
shall mean all accrued, but unpaid, compensation to Employees for services to
the Company, in their capacity as Employees, for a compensation time period
ending as of the date of determination but which is to be paid to such Employees
on a date occurring after the date of determination. "Accounts Payable" shall
mean the right to payments by third parties who have delivered goods or
performed services to the Company as of the date of determination, whether
billed or unbilled, and whether or not evidenced by any Contract. Specifically
excluded from Net Working Capital are (i) any inter-company obligations between
Seller and the Company, none of which shall exist as of the Closing Date, and
(ii) any cash of the Company.
1.37 "OBLIGATION" shall mean any debt, liability or obligation of
any nature (including with respect to the Company, any Obligations owed to any
Related Party), whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained,
known, unknown or otherwise.
1.38 "ORDINARY COURSE" means the ordinary course of business of the
Company consistent with past custom and practice (including with respect to
quantity and frequency).
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1.39 "PENSION PLAN" shall mean other than any obligations pursuant
to any Laws, any "employee pension benefit plan," as defined in Section 3(2) of
ERISA (including any "multiemployer plan," as defined in Section 3(37) of
ERISA), which the Company sponsors or to which the Company contributes or is
required to contribute, or under which the Company may incur any liability.
1.40 "PERMITS" shall mean all franchises, permits, licenses,
qualifications, rights-of-way, easements, municipal and other approvals,
authorizations, orders, consents and other rights from, and filings with, any
Governmental Body.
1.41 "PERSON" means an individual, a partnership (general or
limited), a corporation, an association, a limited liability company, a joint
stock company, a trust, an estate, a joint venture or an unincorporated
organization.
1.42 "PRE-CLOSING TAX PERIOD" shall have the meaning given to such
term in Section 10.1 herein.
1.43 "PROCEEDING" shall mean any demand, claim, suit, action,
litigation, investigation, audit, administrative hearing or other proceeding of
any nature.
1.44 "PURCHASE PRICE" shall have the meaning given to such term in
Section 2.2 herein.
1.45 "RELATED PARTY" shall mean, with respect to any Person, any
partner, owner, equity owner, member, director, officer, manager, or controlling
Person of such Person.
1.46 "REPRESENTATIVE" shall mean any officer, director, principal,
shareholder, partner, member, attorney, accountant, advisor, agent, trustee,
employee or other representative of a party.
1.47 "SOFTWARE" shall mean any computer program, operating or other
system, application, firmware or software of any nature, whether operational,
active, under development or design, non-operational, or inactive (including,
without limitation, all object code, source code, comment code, algorithms,
processes, formulae, interfaces, navigational devices, menu structures or
arrangements, icons, operational instructions, scripts, commands, syntax, screen
designs, reports, designs, concepts, and visual expressions), technical manuals,
test scripts, user manuals and other documentation therefore, whether in
machine-readable form, programming language or any other language or symbols,
and whether stored, encoded, recorded or written on disk, tape, film, memory
device, paper or other media of any nature and any and all databases necessary
or appropriate to operate or in the use of any such computer program, operating
or other system, application, firmware or software.
1.48 "TANGIBLE PROPERTY" shall mean any furniture, fixtures,
leasehold improvements, vehicles, office equipment, computer equipment, other
equipment, machinery, tools, forms, supplies or other tangible personal property
of any nature.
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1.49 "TAX(ES)" shall mean, with respect to any Person, (i) all
income taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings, profits or selected items of income,
earnings or profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, alternative or add-on
minimum taxes, customs duties and other taxes, fees, assessments or charges of
any kind whatsoever, together with all interest and penalties, additions to tax
and other additional amounts imposed by any taxing authority (domestic or
foreign) on such Person (if any) and (ii) any liability for the payment of any
amount of the type described in clause (i) above as a result of (A) being a
"transferee" (within the meaning of Section 6901 of the Code or any other
applicable Law) of another Person, (B) being a member of an affiliated, combined
or consolidated group or (C) a contractual arrangement or otherwise.
1.50 "TAX RETURN" shall mean any return, report, information return
or other similar document or statement (including any related or supporting
information) filed or required to be filed with any Governmental Body in
connection with the determination, assessment or collection of any Tax or the
administration of any Laws, regulations or administrative requirements relating
to any Tax, including, without limitation, any information, return, claim for
refund, amended return or declaration of estimated Tax and all federal, state,
local and foreign returns, reports and similar statements.
ARTICLE II
THE TRANSACTION
2.1 Sale and Purchase of the Shares. On the Closing Date, subject
to the other terms and conditions of this Agreement, Seller shall sell,
transfer, assign and convey to Buyer, and Buyer shall purchase, all right, title
and interest in and to all of the Shares, owned beneficially and of record by
Seller, free and clear of any Encumbrances.
2.2 Purchase Price and Adjustments.
2.2.1 The total purchase price for the Shares (the
"Purchase Price") shall be an amount equal to One Million Eight Hundred Thousand
Dollars ($1,800,000), subject to adjustment, as provided below.
2.2.2 The Purchase Price shall be paid as follows:
2.2.2.1 Buyer shall wire $800,000 in immediately
available United States funds (the "Escrow Funds") to an escrow account of XX
Xxxxxx Xxxxx Bank on the date the Purchase Agreement is executed by the parties
and becomes a binding document on such parties, such Escrow Funds to be held in
such account and released to Seller at Closing (the "Closing Date Payment") or
otherwise shall be released in accordance with the terms of the Escrow
Agreement. Notwithstanding the foregoing, the amount of the Closing Date Payment
shall be reduced by an amount (the "Closing Date Payment Adjustment"), if
positive, equal to the sum of (i) the dollar amount all
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dividends or distributions made by the Company to the Seller from June 11, 2005
to and including the Closing Date, plus (ii) the dollar amount of all expenses
or payables of any party other than Company paid by the Company from June 11,
2005 to and including the Closing Date, less (iii) the Company's cash balance as
of the end of business on June 10, 2005.
2.2.2.2 Buyer shall pay the remainder of the
Purchase Price in two equal payments of $500,000 each, in cash, one such payment
on September 1, 2005 (the "September Payment") and one on January 31, 2006 (the
"January Payment").
2.2.3 Buyer shall deliver to Seller at Closing a
non-interest bearing, promissory note ("Note"), in the form attached hereto as
Exhibit A, evidencing the obligation by Seller to pay to Buyer the September and
January Payments. The Note shall be secured by a pledge of the Company's capital
stock, to be evidenced by a pledge agreement from Buyer in favor of Seller in
the form attached hereto as Exhibit B (the "Pledge Agreement").
2.2.4 Not later than thirty (30) days after the Closing
Date, Buyer shall calculate the Net Working Capital as of June 11, 2005 and
shall provide Seller with a written copy of such calculation. Such calculation
shall be definitive and binding upon the parties unless Seller shall give Buyer
written notice of its objection to such calculation within thirty days after the
receipt thereof (an "Objection Notice"). If Seller delivers an Objection Notice,
the parties shall negotiate in good faith to resolve all disputes regarding the
Net Working Capital. If the parties can not resolve such a dispute they shall
mutually agree upon a nationally or regionally recognized accounting firm to
determine the Net Working Capital, whose decision, absent manifest error, shall
be binding upon the parties.
2.2.5 To the extent the Net Working Capital as of June 11,
2005 is less than $77,760 (the amount of any such difference referred to as the
"Purchase Price Reduction Amount"), the Purchase Price, shall be reduced, dollar
for dollar, by the Purchase Price Reduction Amount. To the extent the Net
Working Capital as of the date hereof is greater than $95,040 (the amount of any
such difference referred to as the "Purchase Price Increase Amount") the
Purchase Price, shall be increased, dollar for dollar, by such amount. The
September Payment shall be reduced by amount equal to the Purchase Price
Reduction Amount, if any, and if the Purchase Price Reduction Amount is greater
than $500,000 then the September Payment shall be reduced to $0 and the January
Payment shall be reduced by the difference between the Purchase Price Reduction
Amount and $500,000. The amount of the Purchase Price Increase Amount, if any,
shall be paid at the time the September Payment is due.
2.2.6 Nothing contained in this Section 2.2 shall be
interpreted to limit the indemnification provisions contained in Section 9
hereof except that to the extent the Net Working Capital calculation includes an
amount for an item, such amount and item can not form the basis of a claim for
indemnification under Section 9.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
Knowing that Buyer is relying thereon, and as an inducement to Buyer to
consummate the transactions contemplated by this Agreement, the Company and
Seller, jointly and severally, represent and warrant to Buyer and covenant with
Buyer, as set forth below:
3.1 Organization and Existence. The Company and Seller are each a
corporation, duly incorporated and validly existing and as of the Closing Date
will be in good standing under the Laws of the jurisdiction of their
incorporation. The Company and Seller each have all requisite power and
authority to enter into and perform their respective obligations under this
Agreement and to consummate the transactions contemplated hereby. The Company
possesses the full corporate power and authority to: (i) own and use its Assets
in the manner in which such Assets are currently owned and used and (ii) own and
operate its Business and to carry on such Business as presently conducted. As of
the Closing Date, the Company will be duly qualified or registered to do
business in each jurisdiction where applicable Law requires such qualification
or registration except for such jurisdictions in which the failure to be so duly
qualified or registered would not have a Material Adverse Effect.
3.1.1 Except as set forth on Schedule 3.1, the Company does
not own any securities of any corporation or any other interest in any Person.
Except as set forth on Schedule 3.1, the Company has never acquired or succeeded
to all or any portion of the Assets or businesses of any other Person.
3.1.2 Schedule 3.1 sets forth for the Company, its: (i)
exact legal name; (ii) business form and jurisdiction and date of formation;
(iii) federal employer identification number; (iv) headquarters' address,
telephone number and facsimile number; (v) managers and officers, indicating all
current title(s) of each individual; (vi) all foreign jurisdictions in which it
is qualified or registered to do business, and the date it so qualified or
registered to do business in such jurisdiction; (vii) all fictitious, assumed or
other names of any type that are registered or used by it or under which it has
conducted business at any time since its incorporation and (viii) any name
changes.
3.1.3 Accurate and complete copies of the articles of
incorporation, bylaws and other organizational documents of the Company, each as
amended to date, and each of which are valid and effective, have been delivered
to Buyer.
3.2 Authority; Non-Contravention.
3.2.1 Except as set forth on Schedule 3.2, Seller and the
Company have the requisite power and authority to enter into this Agreement, to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
by the Company has been duly authorized by all necessary actions by Seller.
Except as set forth on Schedule 3.2, this Agreement constitutes the legal, valid
and binding agreement of the Company and Seller and is
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enforceable against Seller and the Company in accordance with its terms except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar Laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
3.2.2 Except as set forth on Schedule 3.2, neither the
execution, delivery and performance of this Agreement nor the consummation or
performance of any of the transactions contemplated hereby by the Company or
Seller will directly or indirectly (with or without notice or lapse of time):
3.2.2.1 contravene, conflict with or result in a
violation of (a) any of the provisions of the articles of incorporation, bylaws
or other organizational documents of the Company or Seller or (b) any resolution
adopted by Seller, the shareholders of Seller or board of directors or any
committee of the board of directors of the Company or Seller;
3.2.2.2 contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the transactions contemplated hereby or to exercise any remedy
or obtain any relief under, any Law or any Judgment to which the Company, Seller
or any of the Assets owned or used by the Company, is subject;
3.2.2.3 contravene, conflict with or result in a
violation of any of the terms or requirements of any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate or modify, any material Permit
that is held by the Company or that otherwise relates to the Business or to any
of the Assets owned or used by the Company;
3.2.2.4 contravene, conflict with or result in a
violation or breach of, or result in a default under any provision of, or any
Material Contract (as defined in Section 3.14) or collective bargaining
agreement to which the Company or Seller is a party or by which it is bound;
3.2.2.5 result in the imposition or creation of any
Encumbrance upon or with respect to any Asset owned or used by the Company; or
3.2.2.6 result in the disclosure or delivery to any
escrow holder or other Person of the source code for or relating to any past,
present or future product of the Company, or any portion or aspect of such
source code, or any proprietary information or algorithm contained in or
relating to any such source code.
3.2.3 Except as set forth on Schedule 3.2, the Company was
not, is not or will not be required to make any filing with or give any notice
to, or to obtain any Consent from, any Person in connection or performance of
any of the transactions contemplated hereby.
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3.3 Capital Stock and Ownership.
3.3.1 Schedule 3.3 sets forth the authorized capital
structure of the Company, including the number of Shares issued and outstanding.
Schedule 3.3 contains an accurate and complete list of: (i) the full legal name
and address of Seller and (ii) the certificate number of the certificate
representing the shares owned by Seller, if any. The Shares are the only
outstanding equity interest of the Company. Seller (i) is the sole record and
beneficial owner of the Shares and Seller has good and marketable title to such
Shares, free and clear of any Encumbrance; (ii) Seller has the ability to vote
all of the Shares at any shareholders' meeting, or by written consent in lieu of
any such meeting and (iii) has not appointed or granted any proxy or entered
into any agreement, contract, commitment or understanding with respect to any of
the Shares. Except as set forth on Schedule 3.3, there exists no right of first
refusal or other preemptive right with respect to the Shares.
3.3.2 All offerings, sales and issuances by the Company of
any shares of the Company's capital stock were conducted in compliance with all
applicable federal and state securities Laws and all other applicable Laws.
3.3.3 Except as set forth on Schedule 3.3, there is no:
3.3.3.1 (i) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any equity
interests or other securities of the Company; (ii) contract (including any
letter(s) of intent which may have been entered into by the Company, other than
the letter of intent dated May 28, 2005 in connection with the Transaction)
under which the Company is or may become obligated to sell assets and/or sell or
otherwise issue any equity interests or any other securities; (iii) pending or
previously asserted or threatened claim by any Person to the effect that such
Person is or was entitled to acquire or receive any equity interests or any
other securities of the Company; or (iv) condition or circumstance that may
directly or indirectly give rise to or provide a basis for the assertion of a
claim by any Person to the effect that such Person is or may be validly entitled
to acquire or receive any equity interests or other securities of the Company.
3.3.4 Except as set forth on Schedule 3.3, the Company has
never repurchased, redeemed or otherwise reacquired any of its equity interests
or other securities.
3.4 Subsidiaries. The Company has no subsidiaries.
3.5 Financial, Corporation and Other Records.
3.5.1 Except as described on Schedule 3.5, the Books and
Records, together with the Books and Records of Seller, are and have been
properly prepared and maintained in form and substance adequate for preparing
audited financial statements in accordance with GAAP for the Seller and the
Company on a consolidated basis, and such Books and Records, together with the
Books and Records of Seller, fairly and accurately reflect (i) all of the Assets
and Obligations of the Company and Seller on a consolidated basis and (ii) all
of the Contracts and other transactions to which the Company is or was a party
or by which the Company or the Business or Assets of the Company is or was
affected.
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3.5.2 All contents of the minute books and stock books of
the Company have been delivered to Buyer. Such minute books and stock books
include (i) minutes of all meetings of the shareholders, board of directors and
any committees of the board of directors at which any material action was taken,
which minutes accurately record all material actions taken at such meetings;
(ii) accurate and complete written statements of all actions taken by the
shareholders, board of directors and any committees of the board of directors
without a meeting and (iii) accurate and complete records of the subscription,
issuance, transfer and cancellation of all shares of capital stock and all other
securities since the date of incorporation.
3.5.3 Schedule 3.5 contains an accurate and complete list
of all bank accounts and other accounts of the Company, and the names of all
officers, Employees or other individuals who have access thereto or are
authorized to make withdrawals therefrom or dispositions thereof. The Company
has no certificates of deposit, marketable securities, other investments, safe
deposit boxes, lock boxes or safes.
3.5.4 Without in any way limiting the foregoing, except as
described on Schedule 3.5, all Books and Records of the Company, together with
the Books and Records of Seller, (including case notes of any nature, recruiting
records and client files of any nature) are true, accurate and complete in all
material respects and have been prepared and maintained in accordance with all
applicable Laws (including any record-keeping, inventory and other requirements
and regulations of any federal or state governmental agency or other
Governmental Body).
3.5.5 The average of the Net Working Capital on the last
day of each of the thirteen calendar months from May 2004 to April 2005 is
$86,400.
3.6 Governmental Consents and Approvals. Except as set forth on
Schedule 3.6, and except to the extent that the absence thereof would not have a
Material Adverse Effect on the Company, no Permit, approval, consent or
authorization of, or declaration, filing, application, transfer or registration
with, any Governmental Body is required to be made or obtained by Seller or the
Company by virtue of the execution, delivery or performance of this Agreement or
the consummation of the transactions contemplated hereby in order to enable
Buyer to purchase the Shares and to permit the Company to continue the lawful
operation of its Business following the Closing Date in substantially the same
manner as it is presently conducted.
3.7 Compliance with Laws; Permits.
3.7.1 Except as set forth on Schedule 3.7, to the Knowledge
of Seller: (i) the Company is and has been in compliance in all material
respects with each Law that is applicable to it or to the conduct of its
Business or the ownership or use of any of its Assets, including, without
limitation (a) any licensing certification or approval, (b) any federal or state
securities laws and (c) any promulgations, interpretive advice or guidelines of
any court or Governmental Body, including the Securities Exchange Commission;
(ii) no event has occurred which remains unresolved, and no condition or
circumstance exists, that will (with or without notice or lapse of time)
constitute or result in a violation by the Company of, or a failure on the part
of the Company to comply with, any Judgment or Law; and (iii) the
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Company has not received, at any time, any notice or other communication (in
writing or otherwise) from any Governmental Body regarding (A) any actual,
alleged, possible or potential violation of, or failure to comply with, any
Judgment or Law, or (B) any actual, alleged, possible or potential obligation on
the part of the Company to undertake, or to bear all or any portion of the cost
of, any cleanup or any remedial, corrective or response action of any nature.
3.8 Financial Information.
3.8.1 Financial Statements. Except as set forth on Schedule
3.8, Seller has furnished to Buyer copies of the Company's (i) unaudited balance
sheet as of December 31, 2004 and December 31, 2003, and the related
consolidated statements of income for the fiscal years then ended, and (ii)
unaudited balance sheet as of April 30, 2005 (the "Most Recent Balance Sheet")
and the related statement of income for the four months then ended (the
"Financial Statements").
3.8.2 The Financial Statements: (a) are based upon the
Books and Records of the Company and information supplied by Seller; (b) present
fairly the financial position of the Company as of the respective dates thereof
with respect to all items of revenue and accounts payable and (c) were prepared
in a manner consistent with the Company's historic accounting practices applied
on a consistent basis, except as otherwise indicated. The Company has paid the
sales tax refund to Universal Studios, in the amount of $6,708.00, prior to June
10, 2005.
3.9 Assets.
3.9.1 Schedule 3.9 contains an accurate and complete list
of all of the Assets of the Company as reflected on the Most Recent Balance
Sheet, including: (i) Accounts Receivable, showing customer names and allowances
for doubtful accounts; and (ii) other current Assets, itemized by category and
with appropriate explanation.
3.9.2 Schedule 3.9 accurately identifies all Assets that
being leased or licensed to the Company.
3.9.3 Except as set forth on Schedule 3.9, the Company owns
and has good, valid and marketable title to, all of its respective Assets that
are purported to be owned by it and has the right to transfer all rights, title
and interest in such Assets, free and clear of any Encumbrance.
3.9.4 To the Knowledge of Seller, except for the Assets
listed on Schedule 3.9, no other Assets are necessary to market and sell and
provide maintenance and support for the Company's DataAlchemy and Knowledge
Share products.
3.10 Indebtedness. Except as set forth on Schedule 3.10,
as of the Closing Date, the Company has no outstanding Indebtedness.
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3.11 Undisclosed Liabilities.
3.11.1 Other than set forth on Schedule 3.11.1, the Company
does not have any liabilities or obligations (known, unknown, asserted,
unasserted, absolute, contingent, accrued, unaccrued, liquidated, unliquidated,
due, to become due, or otherwise, including any liability for Taxes) except (i)
liabilities which are reflected and reserved against in the Most Recent Balance
Sheet and (ii) liabilities arising under any of the Contracts listed on Schedule
3.14.
3.12 Absence of Certain Changes. Since April 30, 2005, there has
been no Material Adverse Effect. Without limiting the generality of the
foregoing, except as set forth on Schedule 3.12, since April 30, 2005 the
Company has not:
3.12.1 pledged, hypothecated, sold, assigned, licensed,
leased, transferred, disposed of, or agreed to sell, assign, license, lease,
transfer or dispose of, any of its Assets, or permitted any of its Assets to
become subject to any Encumbrance, other than in the Ordinary Course;
3.12.2 acquired any material assets, except in the Ordinary
Course, nor acquired or merged with any other business or Person;
3.12.3 suffered the destruction, damage or other loss
(whether or not covered by insurance) of any of its Assets material to the
conduct of the Business;
3.12.4 increased the salary or other compensation payable or
to become payable to any employee of the Company ("Employee(s)") or obligated
itself to pay any bonus or other additional salary or compensation to any
Employee;
3.12.5 other than with respect to at-will Employees, entered
into any employment Contract or collective bargaining Contract, or modified the
terms of any existing such Contract, or made any other change in employment
terms for any Employees;
3.12.6 terminated any Employees of the Company whose
responsibilities are material to the Company;
3.12.7 established, adopted, amended, modified, or
terminated any Employee Benefit Plan;
3.12.8 made any loan to, or entered into any other
transaction with, any Employees, other than the hiring of at-will Employees in
the Ordinary Course;
3.12.9 entered into any new Contract not in the Ordinary
Course;
3.12.10 waived, amended, modified, terminated or canceled any
Material Contract or right of the Company material to the Business, nor has any
third party taken any such action with respect to any Material Contracts;
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3.12.11 suffered any disposition or lapse of any Intellectual
Property, including, without limitation, the expiration of any applications for
registration of any Intellectual Property Rights;
3.12.12 licensed any Intellectual Property, other than to end
users or customers in the Ordinary Course;
3.12.13 made any material capital expenditures;
3.12.14 made any investment in, or any loan to, any other
Person;
3.12.15 created, incurred, assumed, or guaranteed any
Indebtedness;
3.12.16 entered into, satisfied or discharged any
Encumbrances or discharged or paid any Indebtedness or other Obligation to any
party other than in the Ordinary Course;
3.12.17 repurchased, redeemed or otherwise acquired any of
its securities;
3.12.18 sold or otherwise issued any securities;
3.12.19 changed any of its methods of accounting or
accounting practices, including tax reporting, or made any material tax
elections, in any respect or adopted and/or implemented any new accounting
policy and/or procedures;
3.12.20 amended its articles of incorporation, bylaws or
other organizational documents;
3.12.21 been a party to a merger, consolidation,
recapitalization, reclassification of shares, stock split or reverse stock;
3.12.22 mortgaged, pledged or transferred any security
interest in, or lien, created by the Company, with respect to any Assets (except
for tax liens for taxes not yet due and payable); or
3.12.23 instituted or settled any action or Proceeding
against the Company.
3.13 Real Property.
3.13.1 Owned Real Property. The Company does not own any
real property.
3.13.2 Leased Real Property. The Company does not lease any
real property and occupies a portion of the premises leased by Seller.
3.14 Material Contracts.
3.14.1 Schedule 3.14 sets forth a complete list of the
following Contracts (the "Material Contracts"): all (i) agreements for
Indebtedness to which the Company is a party; (ii) agreements or commitments to
make material capital expenditures; (iii) agreements
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to sell, lease or otherwise dispose of any material Assets of the Company, other
than in the Ordinary Course; (iv) agreements limiting the freedom of the Company
to compete in any line of business or in any geographic area or with any Person;
(v) Leases; (vi) joint venture agreements and partnership agreements to which
the Company is a party; (vii) any license from a third party to the Company for
Intellectual Property; (viii) Contracts involving the Company's investment in,
or any loan to, any other Person; (ix) other than with respect to at-will
Employees, employment agreements or loan agreements with any Employees; (x)
Contracts that involve payments or receipts of either (A) more than $10,000
annually or (B) $30,000 in the aggregate in future payments or receipts over the
life of such Contract; (xi) Contracts of value which default could have a
Material Adverse Effect; (xii) Contracts outside of the Ordinary Course and
(xiii) Contracts that require Consent or notice of assignment or will accelerate
or terminate on a change of control.
3.14.2 Each Material Contract is valid, binding and
enforceable against the Company where the Company is a party thereto, in
accordance with its term, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
laws, now or hereafter in effect, relating to or limiting creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity). To the
Knowledge of Seller, each Material Contract is valid, binding and enforceable
against the other parties thereto, in accordance with its terms. The Company is
not in default, violation or breach in any material respect under any Material
Contract, and no event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination, modification, or
acceleration, under such Material Contract. Except as disclosed on Schedule
3.14, each Material Contract shall be in full force and effect without penalty
in accordance with its terms immediately following the consummation of the
transaction contemplated hereby.
3.14.3 No party to a Material Contract is presently
renegotiating with the Company any amount paid or payable to the Company under
any Material Contract or any other term or provision of any Material Contract.
3.14.4 Except as set forth on Schedule 3.14, there are no
currently outstanding written proposals or written offers submitted by the
Company to any customer, prospect or other Person which, if accepted, would
result in a legally binding Contract of the Company involving an amount or
commitment exceeding $1,000 in any single case or an amount or commitment
exceeding $50,000 in the aggregate, other than proposals or offers to sell
products to customers of the Business.
3.15 Accounts Receivable.
3.15.1 All Accounts Receivable (as defined below) of the
Company arose in the Ordinary Course and are proper and valid, net of the
allowance for doubtful accounts reflected on the Financial Statements. There are
no refunds, discounts, rights of setoff, reasons for denial or assignments
affecting any such Accounts Receivable other than as set forth in the preceding
sentence or on Schedule 3.15. Proper amounts of deferred revenues appear on the
Books and Records of the Company, in accordance with GAAP, with respect to the
Company's (a) billed but unearned Accounts Receivable and (b) previously billed
and
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collected Accounts Receivable still unearned. "ACCOUNTS RECEIVABLE" shall mean:
(a) any right to payment for goods sold, leased or licensed or for services
rendered, whether or not it has been earned by performance, whether billed or
unbilled, and whether or not it is evidenced by any Contract; (b) any note
receivable; (c) any trade account receivable or (d) any other receivable or
right to payment of any nature generally considered an accounts receivable under
GAAP.
3.15.2 The collection practices employed by the Company have
not changed from the Ordinary Course since the date of the Most Recent Balance
Sheet.
3.15.3 There have been no unusual discounts or accelerations
in connection with any Accounts Receivable after the date of the Most Recent
Balance Sheet.
3.16 Tangible Property. The Company has good and marketable title
to all of its Tangible Property, free and clear of any Encumbrances, except as
set forth in the Most Recent Balance Sheet or on Schedule 3.16. Except as set
forth on Schedule 3.16, all of the Tangible Property of the Company is located
at the offices or facilities of the Company, and the Company has the full and
unqualified right to require the immediate return of any of its Tangible
Property which is not located at its offices or facilities.
3.17 Customers.
3.17.1 Schedule 3.17 sets forth a complete and accurate list
of the Company's customers, showing (i) renewable revenue by customer for 2003,
2004 and the period January to May 2005 and (ii) repeat business for DataAlchemy
customers for 2000 to 2004 and for the period January to May 2005.
3.17.2 Except as set forth on Schedule 3.17, the present
relationship of the Company with its customers is good, and the Company is not
experiencing any material problems with its customers.
3.18 Related Party and Affiliate Transactions. Except as set forth
on Schedule 3.18, there are no Contracts, understandings or arrangements of any
nature between or among the Company and any Related Party or other Person other
than the operational support provided by Seller. Except as provided for in the
License Agreement (as defined in Section 8.1.7), all such Contracts,
understandings and arrangements will terminate at Closing.
3.19 Software and Other Intellectual Property.
3.19.1 Schedule 3.19 contains an accurate and complete list
of all Intellectual Property and Software owned, marketed, licensed (in or out),
supported, maintained, used, under development, or held for use by the Company
that are material to the Business, and, in the case of Software, a product
description, the language in which it is written and the type of hardware
platform(s) on which it was designed to run.
3.19.2 Except as set forth on Schedule 3.19.2, the Company
(i) owns solely and exclusively, and has good and marketable title to, free and
clear of all Encumbrances, or
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(ii) otherwise has the full right to use in the manner in which the Company is
using, all of the Intellectual Property. Except to the extent already obtained,
no rights or permission of the Company, the Seller, or any other Person are
necessary to use, make, manufacture, reproduce, distribute, display, perform,
market, license, sell, offer to sell, modify, adapt, translate, enhance,
improve, update, or create derivative works based upon any Intellectual
Property, to the extent the Intellectual Property is (x) and Asset and (y) used,
made, manufactured, reproduced, distributed, displayed, performed, marketed,
licensed, sold, offered for sale, modified, adapted, translated, enhanced,
improved, updated, and/or with respect to which derivative works are created in
the conduct of the Business. None of the Intellectual Property owned by the
Company is registered in the name of any one or more Persons other than the
Company, including any one or more current or former owners, shareholders,
partners, directors, executives, officers, Employees, agents, or representatives
or Seller, nor does any such Person have any interest therein or right thereto,
including, but not limited to, the right to royalty payments.
3.19.3 None of the Intellectual Property which is an Asset
or past or current uses of the Intellectual Property that is an Asset, including
the preparation, distribution, marketing or licensing thereof, has violated or
infringed upon, or is violating or infringing upon, any Intellectual Property
Right or other proprietary right of any Person. None of the Intellectual
Property that is an Asset is subject to any Encumbrance or Judgment. No
Proceeding is pending or, to the Knowledge of Seller, is threatened, nor has any
claim or demand been made in writing, which challenges or challenged the
legality, validity, enforceability, use or exclusive ownership by the Company of
any or all of the Intellectual Property that is an Asset. To the Knowledge of
Seller, no Person is violating or infringing upon, or has violated or infringed
upon at any time, any Intellectual Properly Right or other right of the Company
or with regard to the Intellectual Property that is an Asset.
3.19.4 Other than licenses to customers and with respect to
Software of third parties, the Company has maintained all Intellectual Property
Rights with respect to the Intellectual Property that is an Asset.
3.19.5 Any and all licenses, sublicenses and other Contracts
covering or relating to any Software or other Intellectual Property that is an
Asset, or to which the Company is a party, or under which the Company uses any
Software (other than off-the-shelf software (including without limitation
open-source software) or other Intellectual Property, is legal, valid, binding,
enforceable and in full force and effect, and upon consummation of the
transactions contemplated hereby, will continue to be legal, valid, binding,
enforceable and in full force and effect on terms identical to those in effect
immediately prior to the consummation of the transactions contemplated hereby.
No Proceeding is pending or, to the Knowledge of Seller, is being or has been
threatened, nor has any claim or demand been made in writing, which challenges
the legality, validity, enforceability or ownership of any license, sublicense
or other Contract covering or relating to any Software or other Intellectual
Property that is an Asset.
3.19.6 Set forth on Schedule 3.19.6 are all Internet
second-level domain names related to or used or held for use in connection with,
the conduct of the Business or registered by the Company ("Domain Names"). The
Company is the registrant of all Domain
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Names, and all registrations of Domain Names are current until such dates as set
forth on Schedule 3.19.6. No action or activity has been taken or is pending to
challenge rights to, suspend, cancel or disable any Domain Name, the
registration therefor, or any right of the Company thereto (including the right
to use a Domain Name). Except as set forth on Schedule 3.19.6 the Company has
all right, title and interest to use on the Internet and otherwise as a
trademark and trade name, the Domain Names. Also set forth on Schedule 3.19.6
are all Intellectual Property with respect to which one or more registrations
have been awarded by or one or more applications have been filed with one or
more Governmental Bodies, the date of such registrations and applications, all
identification numbers given by all Governmental Bodies with regard to the
registrations and applications, and the jurisdictions with regard to which such
registrations were awarded and such applications were filed.
3.19.7 The Company is the sole owner of, and has good and
marketable title to, any and all right, title and interest in and to any and all
databases held for use or used in the Business, except to the extent such
database contains data owned by a customer or otherwise licensed from a third
party. Except with respect to third parties from whom content is licensed, no
Person other than the Company and its customers has any right or interest of any
kind or nature in or to such databases. To the Knowledge of Seller, no Person
(i) is violating or infringing upon, or has violated or infringed upon at any
time, any right of the Company in or to such databases or (ii) is breaching or
has breached at any time any duty or obligation owed to the Company in respect
of such databases. To the Knowledge of Seller, neither the past nor current use
of any such database or the information contained therein in the operation of
the Business (i) has violated or infringed upon, or is violating or infringing
upon, the rights of any Person, (ii) breaches any duty or obligation owed to any
Person or (iii) violates the privacy or any Law relating to the privacy of any
Person.
3.20 Employee Matters.
3.20.1 The Company is in compliance in all material respects
with all applicable Laws relating to employment practices. The Company has
delivered to Buyer accurate and complete copies of all current employee manuals
and handbooks, disclosure materials, policy statements and other materials
relating to the employment of its Employees.
3.20.2 Set forth on Schedule 3.20 is a list of all
employment agreements to which the Company is a party.
3.20.3 Schedule 3.20 contains an accurate and complete list
of: (i) all Employees (including any employee of the Company who is on a leave
of absence or on layoff status); (ii) their titles or responsibilities; (iii)
their dates of hire; (iv) their current salaries or wages and all bonuses,
commissions and incentives paid at any time during the past twelve months; (v)
their last compensation changes and the dates on which such changes were made;
and (vi) any specific bonus, commission or incentive plans or agreements for or
with them.
3.20.4 Except as limited by the specific and express terms
of any employment Contracts listed on Schedule 3.20 and except for any
limitations of general application which may be imposed under applicable
employment Laws, the Company has the right to terminate the employment of each
of its Employees at will and to terminate the
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engagement of any of its independent contractors without payment to such
employee or independent contractor other than for services rendered through
termination and without incurring any penalty or liability other than liability
for severance pay in accordance with the Company's disclosed severance pay
policy.
3.20.5 To the Knowledge of Seller, no currently employed
Identified Employee is a party to or is bound by any confidentiality agreement,
non-competition agreement or other Contract (with any Person) that will have an
adverse effect on (A) the performance by such Identified Employee of any of his
duties or responsibilities as an Employee, or (B) the Business. The definition
of "Knowledge of Seller", for purposes of this Section 3.20.5, shall not include
an Identified Employee.
3.20.6 There is no labor strike, dispute, slowdown, or
stoppage pending or, to the Knowledge of Seller, threatened against the Company.
The Company is not a party to or bound by any union or collective bargaining
agreement, nor is any such agreement currently being negotiated by or on behalf
of the Company.
3.20.7 Except as set forth on Schedule 3.20, there is no
unfair labor practice, charge or complaint of discrimination (including
discrimination based upon sex, age, marital status, race, national origin,
sexual preference, handicap or veteran status) or any other matter against or
involving the Company pending or, to the Knowledge of Seller, threatened before
the National Labor Relations Board, the Equal Employment Opportunity Commission
or any other Governmental Body pertaining to or involving Employees.
3.20.8 Except as set forth on Schedule 3.20 and except as
required by any Law, the Company has not entered into any severance Contract or
similar arrangement in respect of any Employee that will result in any
obligation (absolute or contingent) of the Company to make any payment to any
Employee following termination of employment or upon consummation of the
transactions contemplated by this Agreement.
3.21 Employee Benefit Plans.
3.21.1 Schedule 3.21 contains an accurate and complete list
and description of all of the (i) Seller's Employee Benefit Plans which Seller
sponsors, maintains or contributes to, is required to contribute to, or has or
could reasonably be expected to have any liability of any nature with respect
to, whether known or unknown, direct or indirect, fixed or contingent, for the
benefit of present or former employees of the Company; (ii) all Employees
affected or covered by Seller's Employee Benefit Plan and (iii) all Obligations
thereunder as of the Closing Date. Each such Employee Benefit Plan complies in
all material respects with the provisions of and has been administered in
compliance with its provisions, the provisions of ERISA and all other applicable
Laws. Without limiting the generality of the foregoing, no "prohibited
transaction" (as such term is defined in Section 4975 of the Code, or in Part 4
of Subtitle B of Title I of ERISA) has occurred with respect to any such
Employee Benefit Plan that could result in the imposition of material Taxes or
penalties on the Company, and the Company has never failed to make any
contribution to, or to make any payment under, any such Employee Benefit Plan
that it was required to make prior to Closing pursuant to the terms of such
Employee Benefit Plan or pursuant to applicable Law that could result in any
- 21 -
material liability to the Company. To the extent that Seller has accrued or
reserved for any contribution or payment under any such Employment Benefit Plan
in its Financial Statements, or the Most Recent Balance, it shall be not be
deemed a breach of the representations set forth in this Section.
3.21.2 With respect to Employee Benefit Plans, the Company
will have made, on or before the Closing Date, all payments required to be made
on or before the Closing Date and will have accrued (in accordance with GAAP) as
of the Closing Date all payments due but not yet payable as of the Closing Date,
so there will not have been, nor will there be, any Accumulated Funding
Deficiencies (as defined in ERISA or the Code) or waivers of such deficiencies.
3.21.3 There are no pending Proceedings that have been
asserted or instituted against any of the Employee Benefit Plans, the Assets of
any of the trusts under such plans, if any, the plan sponsor, the plan
administrator or any fiduciary of any such plan (other than routine benefit
claims). There are no investigations or audits by any Governmental Body of any
of the Company Employee Benefit Plans, any trusts under such plans, the plan
sponsor, the plan administrator or any fiduciary of any such plan that have been
instituted or, to the Knowledge of Seller, threatened.
3.22 Proceedings and Judgments. Except as set forth on Schedule
3.22, no Proceeding is currently pending or, to the Knowledge of Seller,
threatened, nor has any Proceeding occurred at any time during the three years
prior to the Closing Date, to which the Company is or was a party, or by which
the Company or any Assets or the Business is or was affected; (ii) no Judgment
is currently outstanding, nor has any Judgment been outstanding at any time
against the Company during the three years prior to the Closing Date, by which
the Company or any Assets or the Business is or was affected; and (iii) no
breach of contract, breach of warranty, tort, negligence, infringement, product
liability, discrimination, wrongful discharge, statutory or other claim or
charge of any nature has been asserted or, to the Knowledge of Seller,
threatened by or against the Company at any time during the three years prior to
the Closing Date.
3.22.1 As to each matter described on Schedule 3.22,
accurate and complete copies of all pertinent and material pleadings, judgments,
orders, correspondence and other legal documents have been delivered to Buyer.
3.22.2 To the Knowledge of Seller, no officer or Employee of
the Company is subject to any Judgment that prohibits such officer or Employee
from engaging in or continuing any conduct, activity or practice relating to the
Business. There are no proposed Judgments against the Company.
3.23 Taxes.
3.23.1 Except as set forth on Schedule 3.23, the Company and
each Subsidiary (i) has timely paid or caused to be paid all Taxes required to
be paid by it through the date hereof and as of the Closing Date (including any
Taxes shown due on any Tax Return); (ii) has filed or caused to be filed in a
timely and proper manner (within any applicable
- 22 -
extension periods) all Tax Returns required to be filed by it with the
appropriate taxing authority in all jurisdictions in which such Tax Returns are
required to be filed; and all Tax Returns filed on behalf of the Company and
each Subsidiary were complete and correct in all material respects; and (iii)
has not requested or caused to be requested any extension of time within which
to file any Tax Return, which any such Tax Return has not since been filed.
3.23.2 Neither the Company nor any Subsidiary has any
liability for the Taxes of any Person (other than the Company or any Subsidiary)
under Treasury Regulation Section 1.1502-6 (or any corresponding provision of
state, local or foreign Tax law), or as a transferee or successor, or by
contract, or otherwise.
3.23.3 The Company has previously delivered true, correct
and complete copies of all federal and state income Tax Returns filed by or on
behalf of the Company for the years 2001-2003.
3.23.4 Except as set forth in Schedule 3.23.4, since January
1, 2001: neither the Company nor any Subsidiary has been notified by the
Internal Revenue Service or any other taxing authority that any issues have been
raised (and no such issues are currently pending) by the Internal Revenue
Service or any other taxing authority in connection with any Tax Return filed by
or on behalf of the Company or any Subsidiary; there are no pending Tax audits
and no waivers of statutes of limitations have been given or requested with
respect to the Company or any Subsidiary; no Tax liens have been filed against
the Company or any Subsidiary; no unresolved deficiencies or additions to Taxes
have been proposed, asserted, or assessed against the Company or any Subsidiary.
3.23.5 Full and adequate accrual has been made (A) in the
Books and Records of the Company and each Subsidiary, respectively, for all
Taxes currently due and all accrued Taxes not yet due and payable by the Company
and each Subsidiary, respectively, as if they were stand-alone corporations for
all periods ending on or prior to the date of the Most Recent Balance Sheet, and
(B) on the Books and Records of the Company and each Subsidiary for all Taxes
payable by the Company and each Subsidiary, respectively, as if they were
stand-alone corporations for all periods beginning after the date of the Most
Recent Balance Sheet.
3.23.6 Neither the Company nor any Subsidiary has incurred
any liability for Taxes from and after the date of the Most Recent Balance Sheet
other than Taxes incurred in the ordinary course of business and consistent with
past practices.
3.23.7 Neither the Company nor any Subsidiary has been a
"personal holding company" within the meaning of Section 542 of the Code.
3.23.8 The Company and each Subsidiary has complied in all
material respects with all applicable Laws relating to the collection or
withholding of Taxes (such as sales Taxes or withholding of Taxes from the wages
of employees).
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3.23.9 Neither the Company nor any Subsidiary has incurred
any liability to make any payments either alone or in conjunction with any other
payments that:
(i) shall be non-deductible under, or would otherwise
constitute a "parachute payment" within the meaning of,
Section 280G of the Code (or any corresponding provision of
state, local or foreign income Tax Law); or
(ii) are or may be subject to the imposition of an
excise Tax under Section 4999 of the Code.
3.23.10 Neither the Company nor any Subsidiary has agreed to
(nor has any other Person agreed to on its behalf) and is not required (other
than as a result of the transactions contemplated by this Agreement) to make any
adjustments or changes on, before or after the Closing Date to its accounting
methods pursuant to Section 481 of the Code, and the Internal Revenue Service
has not proposed any such adjustments or changes in the accounting methods of
the Company.
3.23.11 No claim has been made within the last three years by
any taxing authority in a jurisdiction in which the Company or any Subsidiary
does not file Tax Returns that the Company or such Subsidiary is or may be
subject to taxation by that, jurisdiction.
3.23.12 The consummation of the transactions hereunder will
not trigger the realization or recognition of intercompany gain or income to the
Company under the Federal consolidated return regulations with respect to
Federal, state, or local taxes.
3.23.13 Neither the Company nor any Subsidiary has engaged in
a transaction, which is a "listed transaction" within the meaning of Treasury
Regulation Section 1.6011-4(b)(2).
3.24 Permits. The Company holds all material Permits necessary for
the lawful operation of its Business as presently conducted, and all such
Permits are in full force and effect.
3.25 Insurance. Schedule 3.25 contains an accurate list of all
insurance policies in effect on the date hereof relating to the Company. All
such policies are valid, outstanding and enforceable. The Company has not
received notice of any actual or threatened modification or cancellation of any
such insurance. Except as set forth on Schedule 3.26, there are no pending
claims under any insurance policies. These insurance policies will not provide
coverage for the Company upon completion of the transactions contemplated
herein.
3.26 Brokers and Finders. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any Person acting on behalf of the Company or Seller, for
any brokerage or finders' commission, fee or similar compensation.
3.27 Questionable Payments. To the Knowledge of Seller, none of the
directors, executives, officers, representatives, agents or Employees of the
Company
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(when acting in such capacity or otherwise on behalf of the Company): (i) has
used or is using any corporate funds for illegal contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (ii)
has used or is using any corporate funds for any direct or indirect unlawful
payments to any foreign or domestic government officials or employees; (iii) has
violated or is violating any provision of the Foreign Corrupt Practices Act of
1977; (iv) has established or maintained, or is maintaining, any unlawful or
unrecorded fund of corporate monies or other corporate properties; (v) has made
at any time during the three years prior to the Closing Date any false or
fictitious entries on the Books and Records of the Company; or (vi) has made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature using corporate funds or otherwise on behalf of any of the Company.
3.28 Environmental Matters.
The Company has at all times been in compliance in all material
respects with applicable Environmental Laws in respect to the Leased Real
Properties. The Company has not received any notice from any governmental agency
in connection with any environmental issues arising out of or relating to the
Leased Real Property. There are no pending civil, criminal or administrative
proceedings against the Company under any Environmental Laws arising out of
relating to the condition of any of the Leased Properties or the Company's
activities thereon. Except as set forth on Schedule 3.28, to the Knowledge of
Seller, no underground or above ground storage tanks, active or abandoned, are
present at any Leased Real Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the Laws of the state of Nevada. The Company
is duly qualified or registered to do business in each jurisdiction where
applicable Law requires such qualification or registration except for such
jurisdictions in which the failure to be so duly qualified or registered would
not have a Buyer Material Adverse Effect.
4.2 Authorization. Buyer has the requisite power and authority to
enter into this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby by Buyer have been duly authorized by all necessary action
on the part of Buyer.
4.3 Agreement. Buyer's execution, delivery and performance of this
Agreement and the agreements contemplated hereby, and its consummation and
performance hereunder of the transactions contemplated by this Agreement and
under related agreements: (i) have been duly authorized by all necessary
corporate actions by its board of directors; (ii) do not constitute a violation
of or default under its articles of incorporation or bylaws; (iii) do not
constitute a default or breach (immediately or after the
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giving of notice, passage of time or both) under any Contract to which Buyer is
a party or by which Buyer is bound; (iv) do not constitute a violation of any
Law or Judgment that is applicable to it or to its business or assets, or to the
transactions contemplated by this Agreement; and (v) do not require the Consent
of any Governmental Body or Person other than Buyer's lender(s). This Agreement
constitutes the valid and legally binding agreement of Buyer, enforceable
against it in accordance with its terms.
4.4 No Conflict or Violation. Neither the execution and delivery
of this Agreement by Buyer nor the consummation of the transactions contemplated
hereby, will result in (i) a violation of, or a conflict with, Buyer's
organizational documents or any subscription, members' or similar agreements or
understandings to which Buyer is a party; (ii) a violation by Buyer of any
applicable Law or (iii) a violation by Buyer of any order, judgment, writ,
injunction, decree or award to which Buyer is a party or by which Buyer is bound
or affected.
4.5 Consents and Approvals. No consent, permit, approval or
authorization of, or declaration, filing, application, transfer or registration
with, any Governmental Body, or any other Person is required to be made or
obtained by Buyer by virtue of the execution, delivery or performance of this
Agreement.
4.6 Financing. Buyer has the necessary financial resources
currently available to it to pay the Purchase Price as and when such amounts are
due to Seller.
4.7 Litigation. There are no claims, demands, causes of action,
actions, suits or proceedings or, to the knowledge of Buyer, investigations
pending or threatened against Buyer at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau or agency, domestic or foreign, which could reasonably be expected to
have a material adverse effect on Buyer's ability to close this transaction or
to pay the Purchase Price.
4.8 Disclosure and Investigation. Buyer has had an opportunity to
ask questions of and receive answers from the Company and Seller concerning the
terms and conditions of this Agreement and to obtain any additional information
relating to the Business of the Company. Buyer has conducted such investigation
of the Company as it has deemed necessary in order to make an informed decision
concerning the transactions contemplated hereby. Buyer has received the
documents, records, reports and other materials identified in this Agreement and
the schedules delivered herewith. Buyer has not relied upon any oral information
or statement by Seller or the Company or their representatives. Buyer has no
outstanding questions remaining or other pending requests relating to its due
diligence investigation of the Company.
4.9 Brokers and Finders. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any Person acting on behalf of Buyer in such manner as to
give rise to any claim against Seller or the Company for any brokerage or
finders' commission, fee or similar compensation.
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ARTICLE V
CLOSING
5.1.1 Closing. The Closing shall take place at 10.00 a.m.,
Philadelphia, Pennsylvania time, on or about July 1, 2005 or such later date as
all of the conditions in Articles 7 and 8 are fulfilled or waived, but in no
event shall the Closing be later than July 15, 2005, at the offices of Klehr,
Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx, LLP, or at such other time and place
mutually agreeable to the parties. The date on which Closing occurs is referred
to herein as the Closing Date.
5.1.2 General Procedure. At the Closing, each party shall
deliver to the party entitled to receipt thereof the documents required to be
delivered pursuant to Article IX hereof and such other documents, instruments
and materials (or complete and accurate copies thereof, where appropriate) as
may be reasonably required in order to effectuate the intent and provisions of
this Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for the receiving party.
ARTICLE VI
COVENANTS
6.1 Access to Information.
6.1.1 The Company and Seller shall give Buyer and its
designated representatives, upon reasonable notice and at mutually agreeable
times, access to all of the properties and Assets and customers of the Company
and to all of the Company's documents, Books and Records relating to its current
and past operations and Business and to make copies thereof and permit such
representatives to interview and question the Customer's employees. Buyer will
not reveal any confidential data and/or information supplied by the Company
except to its management, counsel, accountants, insurance representatives,
investment and commercial bankers and like agents, for purposes relating to the
evaluation and consummation of the transactions contemplated by this Agreement,
and in the event the transactions contemplated by this Agreement are not
consummated, such data and information will be returned to the Company and will
be held confidential by those to whom it is disclosed.
6.1.2 Provided Buyer and Buyer's representatives have
signed reasonable confidentiality agreements protecting the confidential
information of Seller, Seller shall give Buyer access to Seller's Books and
Records as they relate to the Company after the Closing, during regular business
hours upon not less than two (2) business days' notice, as necessary, in order
for Buyer to prepare tax filings and audits and in connection with debt or
equity financings.
6.2 Conduct of the Business Pending Closing. Between the date
hereof and the Closing hereunder, the Company will:
6.2.1 not take any action which would render untrue any of
the representations or warranties of the Company and the Seller herein
contained, and not omit to
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take any action within its power, the omission of which would render untrue any
such representation or warranty;
6.2.2 conduct its Business in the Ordinary Course;
6.2.3 not enter into any Contract with any party, other
than Contracts entered into in the Ordinary Course, and not amend, modify or
terminate any Contract other than in the Ordinary Course without the prior
written consent of Buyer;
6.2.4 use commercially reasonable efforts to preserve its
business intact, to keep available the services of its Employees, and to
preserve its relationships with its customers and others with whom it deals
consistent with past practice;
6.2.5 not reveal, orally or in writing, to any party, other
than Buyer and Buyer's authorized agents, any of the business procedures and
practices followed by it in the conduct of its Business or any technology used
in the conduct of its Business;
6.2.6 maintain in full force and effect all of the
insurance policies listed on Schedule 3.25 and make no change in any insurance
coverage without the prior written consent of Buyer;
6.2.7 keep the premises occupied by it and all of its
equipment and other tangible personal property in good order and repair and
perform all necessary repairs and maintenance within normal time frames of
scheduled maintenance;
6.2.8 continue to maintain all of its usual Books and
Records in accordance with its past practices and not to make any material Tax
elections;
6.2.9 not amend its articles or incorporation, bylaws or
other organizational documents;
6.2.10 not declare or make any dividend or other payment on
or with respect to the Shares except to the extent such payment is properly
accounted for in the Closing Date Payment Adjustment, redeem or otherwise
acquire any securities or issue any securities or any, option, warrant or right
relating thereto;
6.2.11 not pay any bonuses to any of its Employees, other
than in the Ordinary Course;
6.2.12 not waive any right or cancel any claim;
6.2.13 not increase the compensation or the rate of
compensation payable to any of its Employees without the prior written approval
of the Buyer;
6.2.14 maintain its entity existence and not merge or
consolidate with any other entity;
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6.2.15 comply with all provisions of any Contract applicable
to it and all applicable Laws consistent with past practices;
6.2.16 except with Buyer's consent, not make any capital
expenditures in excess of $5,000 per expenditure and/or $30,000 in the
aggregate;
6.2.17 neither discuss nor negotiate with any other Person
or entity the sale or other transfer, or Encumbrance, of the Assets or the
capital stock of the Company;
6.2.18 deposit all funds received into the Company's
principal bank account and will pay all expenses of the Company from such
account; and
6.2.19 use commercially reasonable efforts to effectuate the
transactions contemplated by this Agreement, and to do all things whatsoever
necessary and proper to effect the transactions and agreements contemplated
herein.
6.3 Payment on Account of Contract. Between the date hereof and up
until and after the Closing hereunder, Seller shall immediately remit any
payment it receives on account of a Contract with a customer relating to the
Business to the Company.
6.4 Product Development; Competition. Seller shall not directly or
indirectly sell or develop products that are functionally similar or that would
compete with the current products of the Company.
6.5 Governmental Permits and Approvals. The Company and the Seller
shall use their commercially reasonable efforts to obtain all Permits and
approvals from any Governmental Body required to be obtained by the Seller
and/or the Company and/or the Buyer for the lawful consummation of the
transactions contemplated hereby, and to take all steps necessary to transfer or
have reissued to Buyer any governmental licenses, approvals or permits by
Closing.
6.5.1 Consents and Approvals. Without in any way limiting
the provisions contained in Section 6.3 herein, the Company and the Seller shall
use commercially reasonable efforts to secure approvals and Consents from any
third parties necessary to the consummation of the transactions contemplated
hereby or contemplated by any instrument, document or agreement contemplated
hereby. Seller shall use its best efforts to obtain the approval of this
Agreement and the transactions contemplated herein from its shareholders.
6.6 Reasonable Efforts. Buyer shall use commercially reasonable
efforts to effectuate the transactions contemplated by this Agreement, and to do
all things whatsoever necessary and proper to effect the transactions and
agreements contemplated herein.
6.7 Confidentiality. No party shall use any information or data
obtained in connection with the negotiation of the transactions contemplated by
this Agreement for any purpose other than to pursue and further the consummation
of such transactions.
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ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions Precedent to Closing of Buyer. Each and every
obligation of Buyer to enter into the Transaction and complete the Closing is
subject, at Buyer's option, to the fulfillment and satisfaction of each of the
following conditions:
7.1.1 The representations and warranties of the Company and
Seller contained in this Agreement will be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. The shareholders of Seller shall have
approved this Agreement and the transactions contemplated herein. The Schedules
to this Agreement will be complete, accurate and current on and as of the
Closing Date. Seller and the Company will have performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by them on or prior to the Closing Date. Seller and the Company will have
delivered to Buyer a certificate, dated the Closing Date and signed by the
[Presidents] of the Company and Seller to the foregoing effect;
7.1.2 No action, suit or proceeding will have been
instituted before any court or Governmental Body or instituted or threatened by
any Person which could materially affect the Assets, Obligations, financial
condition or prospects of the Company or restrain or prevent the carrying out of
the transactions contemplated hereby or seek damages in connection with such
transactions;
7.1.3 All necessary approvals and/or filings for the
transactions contemplated hereby to be obtained and/or made by the Company and
Seller will have been obtained and/or made, as the case may be, and shall be in
full force and effect;
7.1.4 Neither of Xxxx Xxxxxxxx or Xxxx XxXxxxx shall have
died or become permanently disabled in a manner that makes it unlikely they will
be able to continue to perform their responsibilities with the Company;
7.1.5 The deliveries set forth in Section 8.1 shall have
occurred; and
7.1.6 All directors of the Company shall have resigned as
of the Closing Date.
7.2 CONDITIONS PRECEDENT TO CLOSING OF THE COMPANY AND SELLER.
Each and every obligation of the Company and Seller to enter into the
Transaction and complete the Closing is subject, at their option, to the
fulfillment and satisfaction of each of the following conditions:
7.2.1 The representations and warranties of Buyer contained
in this Agreement will be true and correct on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date. Buyer
will have performed and complied with all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date. Buyer will have delivered to Seller a certificate, dated the Closing Date
and signed by the Presidents of Buyer to the foregoing effect;
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7.2.2 All necessary approvals and/or filings for the
transactions contemplated hereby to be obtained and/or made by Buyer will have
been obtained and/or made, as the case may be, and shall be in full force and
effect;
7.2.3 No action, suit or proceeding will have been
instituted before any court or government body or restricted or threatened by
any person which could materially prevent the carrying out of the transactions
contemplated hereby; and
7.2.4 No material adverse effect shall have occurred to
Buyer's business, operations, or financial condition from the March 31, 2005 to
the Closing Date, to the extent such effect would make it unlikely that Buyer
would be able to pay the Purchase Price; and
7.2.5 The deliveries set forth in Section 8.2 shall have
occurred.
ARTICLE VIII
DELIVERIES AT CLOSING
8.1 THE COMPANY'S AND SELLER'S DELIVERIES AT CLOSING. The Company
and Seller, as applicable, shall deliver to Buyer at Closing:
8.1.1 An Assignment of Shares or stock power assigning all
of the Shares owned by Seller to Buyer.
8.1.2 Good standing certificate or the equivalent for the
Company, dated no earlier than ten (10) days before the Closing Date, from the
jurisdiction of incorporation.
8.1.3 A certified copy of the articles of incorporation,
and each amendment thereto, of the Company, from the secretary of state of the
jurisdiction in which the Company is incorporated.
8.1.4 A true and correct copy of the Company's bylaws, and
each amendment thereto.
8.1.5 Copies of the resolutions duly adopted by the board
of directors of the Company authorizing the Company to execute, deliver and
perform this Agreement and to consummate the transactions contemplated by this
Agreement, certified by an officer of the Company as in full force and effect,
without modification or rescission, on and as of the Closing Date.
8.1.6 Certificate of the Secretary of the Company as to the
incumbency and signatures of the officers of the Company executing this
Agreement.
8.1.7 The License Agreement executed by Seller in the form
attached hereto as Exhibit D (the "License Agreement"), pursuant to which Seller
shall make available to Buyer for the Company's use, the space that Seller
currently utilizes to conduct its Business at Seller's headquarters at Old
Ridgebury Road, Danbury, Connecticut.
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8.1.8 Duly executed resignations of each member of the
board of directors of the Company.
8.1.9 The minute books, equity transfer books and seal of
the Company.
8.1.10 Receipt acknowledging Buyer's payment to Seller of
the Closing Payment.
8.1.11 All keys to safe deposit boxes of the Company and
authorized forms to change (i) the permitted users of the safe deposit boxes and
(ii) permitted users and authorized persons for banking relationships.
8.1.12 Seller and the Company Mutual Release duly executed
by Seller and the Company in the form attached hereto as Exhibit E.
8.1.13 All other agreements, certificates, instruments,
financial statement certifications and documents reasonably requested by Buyer
in order to fully consummate the transactions contemplated by this Agreement and
carry out the purposes and intent of this Agreement.
8.2 BUYER'S DELIVERIES AT CLOSING. Buyer shall deliver to Seller
at Closing:
8.2.1 Wire transfers of immediately available United States
federal funds in the amounts equal to the Closing Payment to Seller, to be wired
pursuant to Seller's wire instructions.
8.2.2 The Note and the Pledge Agreement, both executed by
Buyer.
8.2.3 The Confidentiality Agreement executed by Buyer.
8.2.4 The License Agreement executed by Buyer.
8.2.5 Copies of the resolutions duly adopted by the board
of directors of Buyer, authorizing Buyer to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby, certified by
an officer of Buyer as in full force and effect, without modification or
rescission, on and as of the Closing Date.
8.2.6 A certificate of the Secretary of Buyer as to the
incumbency and signatures of the officers of Buyer executing this Agreement.
8.2.7 All other agreements, certificates, instruments and
documents reasonably requested by the Company and Seller in order to fully
consummate the transactions contemplated by this Agreement and carry out the
purposes and intent of this Agreement.
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ARTICLE IX
INDEMNIFICATION
9.1 Survival of Representations and Warranties. All
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive until January
1, 2007, except for all representations and warranties made by Seller under
Sections 3.3, 3.23 and 3.28, which shall survive the Closing through the date of
the applicable statute of limitations.
9.2 Indemnification by Seller and the Company. Seller and the
Company (for purposes of this Section 9, Seller and the Company shall
collectively be referred to as the "Seller Group"), jointly and severally, shall
indemnify, defend and hold harmless Buyer, its officers, directors, employees,
agents, representatives, affiliates and Buyer's successors and assigns (each a
"Buyer Indemnified Party" or, collectively, "Buyer Indemnified Parties") from
and against any and all actions, suits, claims, demands, debts, liabilities,
obligations, losses, Damages, costs and expenses, including reasonable
attorney's fees and court costs ("Loss", or "Losses"), arising out of or caused
by, directly or indirectly, any of the following; provided, the determination of
Losses shall be made without regard to any materiality qualification:
9.2.1 any violation or breach of any representation or
warranty of Seller and the Company contained in this Agreement;
9.2.2 any failure of Seller and/or the Company to perform,
fulfill or satisfy any covenant or agreement contained herein or in any
certificate, schedule, document, or other writing delivered by Seller or the
Company pursuant to this Agreement; and
9.2.3 other than for Taxes incurred in the Ordinary Course
for taxable periods ending on the Closing Date, to the extent set forth on the
Most Recent Balance Sheet, any liabilities for Taxes of Seller or the Company
for which the Company has liability, including as a transferee or successor, by
contract or otherwise for Taxable Periods ending on or prior to the Closing
Date.
9.3 Indemnification by Buyer. Buyer shall indemnify, defend and
hold harmless Seller and the Company (but the indemnification obligation
benefiting the Company under this Section 9.3 shall expire upon the occurrence
of the Closing) and their respective officers, directors, employees, agents,
representatives (including executors, administrators and personnel
representatives) and successors and assigns (each a "Seller Indemnified Party"
or, collectively, "Seller Indemnified Parties"), from and against any and all
Losses, arising out of or caused by, directly or indirectly, any or all of the
following:
9.3.1 any violation or breach of any representation or
warranty of Seller and the Company contained in this Agreement; and
9.3.2 any failure of Seller and the Company to perform,
fulfill or satisfy any covenant or agreement contained herein or in any
certificate, schedule, document, or other writing delivered by Seller or the
Company pursuant to this Agreement.
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9.4 Limitations on Indemnification.
9.4.1 Deductible. Notwithstanding anything else herein to
the contrary, other than the last sentence of Section 9.4.2 hereof, both the
Buyer Indemnified Parties and the Seller Indemnified Parties shall only be
entitled to indemnification pursuant to Section 9.2 and 9.3, respectively, to
the extent that the aggregate amount of the Buyer Indemnified Parties or the
Seller Indemnified Parties, as the case may be, Losses exceeds Twenty-Five
Thousand Dollars ($25,000) (the "Deductible"). In the event the aggregate Losses
under Section 9.2 exceed the Deductible, then Seller Group shall indemnify,
defend, and save harmless the Buyer Indemnified Parties for all Losses in excess
of the Deductible up to the amount of the Cap (defined below). In the event the
aggregate Losses under Section 9.3 exceed the Deductible, then Buyer shall
indemnify, defend, and save harmless the Seller Indemnified Parties for all
Losses in excess of the Deductible up to the amount of the Cap.
9.4.2 Cap. From and after the Closing Date, the maximum
liability of the Seller Group on the one hand, and the Buyer on the other hand,
for all Losses or otherwise with respect to the subject matter of this Agreement
and the transactions contemplated hereby is, and shall be limited to, Five
Hundred Thousand Dollars ($500,000) (the "Cap"). Notwithstanding anything to the
contrary contained herein, (i) Losses as a result of a breach by the Company or
Seller of the covenants contained in Section 6.2 hereof (ii) claims for payment
of the full amounts due and owing under the Note, shall not be subject to the
Deductible and the Cap.
9.4.3 Use of the Note to Pay Losses. Buyer agrees that any
Losses payable by Seller Group to the Buyer Indemnified Parties pursuant to this
Article 9 shall first be satisfied from the September Payment if such payment
has not been made and then from the January Payment if such payment has not been
made. Notwithstanding anything else herein to the contrary, Buyer shall have no
right of offset against the payments due pursuant to the Note unless all the
provisions of this Article 9 have been complied with and Buyer shall not delay
in making any payment otherwise due Seller under the Note pending resolution of
any dispute between Seller and Buyer.
9.4.4 The parties shall use commercially reasonable
efforts to collect the proceeds of any insurance which would have the effect of
reducing any Losses. To the extent any Loss of an Indemnitee is reduced by
receipt of payment (i) under insurance policies which are not subject to
retroactive adjustment or other reimbursement to the insurer in respect of such
payment, or (ii) from third parties not affiliated with the Indemnitee, such
payments (net of the expenses of the recovery thereof) shall be credited against
any such Losses, and, if indemnification payments shall have been received prior
to the collection of such proceeds, the Indemnitee shall remit to the Indemnitor
the amount of such proceeds (net of the cost of collection thereof) to the
extent of indemnification payments received in respect of such Losses.
9.4.5 In the absence of fraud, from and after the Closing
Date, the remedies provided for in this Article 9 (and as limited by this
Article 9) shall be the sole remedies of any Indemnitee in respect of any
claims, howsoever denominated, arising out of this Agreement or relating in any
way to the subject matter hereof, and shall preclude assertion by an Indemnitee
of any other rights or the seeking of any other remedies against any
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Indemnitor with respect to the matters covered by the indemnification provisions
contained in this Article 9 or otherwise relating in any manner to the subject
matter hereof.
9.4.6 Notwithstanding anything in this Agreement to the
contrary, no claim for indemnification may be made by a Buyer Indemnified Party
and no indemnification shall be required to the extent that the Losses sustained
or incurred by such Buyer Indemnified Party for which indemnification is sought
were (i) accrued or reflected on the Most Recent Balance Sheet or (ii) accrued
or reflected in the final determination of the Net Working Capital as of the
Closing Date.
9.5 Indemnification Procedures. With respect to each event,
occurrence or matter (an "Indemnification Matter") as to which Buyer or any
member of the Seller Group, as the case may be, (the "Indemnitee") is entitled
to indemnification from the Seller Group or Buyer, as the case may be, (the
"Indemnitor") under Section 9.1:
9.5.1 Within ten (10) days after the Indemnitee receives
written documents underlying the Indemnification Matter or, if the
Indemnification Matter does not involve a third party action, suit, claim or
demand, promptly after the Indemnitee first has actual knowledge of the
Indemnification Matter, the Indemnitee shall give notice to the Indemnitor of
the nature of the Indemnification Matter and the amount demanded or claimed in
connection therewith ("Indemnification Notice"), together with copies of any
such written documents.
9.5.2 If a third party action, suit, claim or demand is
involved, then, upon receipt of the Indemnification Notice, the Indemnitor
shall, at its expense and through counsel of its choice, promptly assume and
have sole control over the litigation, defense or settlement ("Defense") of the
Indemnification Matter, except that (i) the Indemnitee may, at its option and
expense and through counsel of its choice, participate in (but not control) the
Defense; (ii) if the Indemnitee reasonably believes that the handling of the
Defense by the Indemnitee may have a material adverse effect on the Indemnitee,
its business or financial condition, or its relationship with any customer,
prospect, supplier, employee, consultant, agent or representative, then the
Indemnitee may, at its option and expense and through counsel of its choice,
assume control of the Defense, provided that the Indemnitor shall be entitled to
participate in the Defense at its expense and through counsel of its choice;
(iii) the Indemnitor shall not consent to any Judgment, or agree to any
settlement, without the Indemnitee's prior written consent, which shall not be
unreasonably withheld; and (iv) if the Indemnitor does not promptly assume
control over the Defense or, after doing so, does not continue to prosecute the
Defense in good faith, the Indemnitee may, at its option and through counsel of
its choice, but at the Indemnitor's expense, assume control over the Defense. In
any event, the Indemnitor and the Indemnitee shall fully cooperate with each
other in connection with the Defense, including by furnishing all available
documentary or other evidence as is reasonably requested by the other.
9.5.3 All amounts owed by the Indemnitor to the Indemnitee
(if any) shall be paid in full within ten (10) business days after a final
Judgment (after allowing Indemnitor the option of exhausting all possible
appeals) determining the amount owed is rendered, or after a final settlement or
agreement as to the amount owed is executed. If the amounts
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owed by the Indemnitor to the Indemnitee are not paid when due, interest shall
accrue on such amount at the rate of eight percent (8%) per annum compounded
until paid in full.
9.6 Intentional Misrepresentation. Notwithstanding any other
provision hereof to the contrary, any claims of fraud shall not be limited by
any survival period contained in this Agreement or any limit on indemnification
or remedy contained in this Agreement.
ARTICLE X
TAX MATTERS
10.1 Section 338(h)(10) Election
10.1.1 Seller shall join Buyer in a timely election under
Section 338(h)(10) of the Code (and under any comparable provision of state or
local law under which such an election is permissible) for the Company (the
"Election"). For purposes of the preceding sentence, an election under a state
or local law that gives results similar to those that would obtain as a result
of an election under Section 338(h)(10) of the Code shall be treated as a
comparable provision.
10.1.2 The parties hereto recognize that the Election will
result in the sale of the Shares pursuant to this Agreement being treated as a
sale of assets by the Company for federal income tax purposes (and possibly
under any comparable provision of state or local law under which such an
election is permissible).
10.2 Responsibility for Taxes and Returns.
10.2.1 Covered Taxes shall be the sole responsibility of
Seller If any tax authority seeks to collect any Covered Tax from the Company,
Buyer, or any corporation which is included in a consolidated, combined, or
unitary Tax Return of Buyer, Seller shall indemnify and hold harmless such
Person from which such Covered Tax is sought to be collected from any liability
in respect of such Covered Tax, and any reasonable expenses (including
reasonable attorneys' fees) incurred in connection with any Proceeding relating
to such Covered Tax. Such indemnification shall not be subject to the
Indemnification Cap.
10.2.2 The extent to which Taxes for a taxable period that
includes but does not end on the close of business on the Closing Date are
treated as Taxes for the period ending on the close of business on the Closing
Date shall be determined as follows: (i) Taxes measured in whole or in part by
net or gross income and Taxes relating to specific transactions shall be
apportioned on the basis of a closing of the books of the entity liable for such
Tax at the close of business on the Closing Date; and (ii) all other Taxes shall
be prorated according to the ratio of the number of days in such taxable period
prior to and including the Closing Date to the number of days in such taxable
period. If Seller and Buyer are unable to resolve any dispute regarding the
application of the principles of this Section 10.2.2, the matter shall be
referred for determination as promptly as possible to a mutually agreed upon
accounting firm, whose determination shall be binding on the parties in the
absence of fraud.
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10.2.3 For purposes of federal income taxes, the Company
shall close its books as of the close of business on the Closing Date. All items
of income, deduction or credit for the period ending on the Closing Date
(including the items resulting from the deemed sale referred to in Section
10.1.2) shall be reported by Seller on its consolidated federal income tax
return for its taxable year within which the Closing Date occurs. All such items
for the period beginning on the day after the Closing Date shall be reported on
the consolidated federal income tax return of the affiliated group that includes
the Company and Buyer.
10.2.4 For purposes of any state or local income tax with
respect to which it is required or permitted to do so, the Company shall close
its books in a manner comparable to that described in Section 10.2.3 above.
10.2.5 Seller and Buyer shall cooperate, and Buyer shall
cause the Company to cooperate, in the closing of the books of the Company and
the proper reporting of items on the tax returns referred to in this Section
10.2.
10.2.6 With respect to a Tax Return of the Company that is
due after the Closing Date and includes a Covered Tax, not less than thirty (30)
days before the due date of such return, Buyer shall furnish Seller a copy of
the return and a statement of the amount of such Covered Tax. If Seller agrees
with such Tax Return and Buyer's statement, Seller shall pay such amount to
Buyer not later than five (5) days before the due date of the return. If Seller
does not agree with Buyer's statement, Seller shall give (i) notice to Buyer not
later than twenty (20) days before the due date of the return of the specific
reason or reasons Seller does not so agree and (ii) a statement of the amount of
Tax that in Seller's opinion is a Covered Tax. In such case, Seller and Buyer
promptly shall confer and attempt to resolve the disagreement, and, not later
than five (5) days before the due date of the return, Seller shall pay to Buyer
any portion of the amount set forth in Buyer's statement with which Seller
agrees. Nothing in this Section 10.2.6 shall relieve Seller of responsibility
for a Covered Tax because Seller has disagreed with Buyer's statement, and any
amount that ultimately is determined to be a Covered Tax pursuant to the
preceding provisions of Section 10.2 but initially was paid by Buyer or the
Company shall bear interest at the rates in effect from time to time under
Section 6621(a)(1) of the Code from the date the amount actually was paid by
Buyer or the Company until the date that Seller pays Buyer for such Covered Tax.
10.2.7 If an adjustment by a taxing authority of one or more
items on a Tax Return does not give rise to an immediate increase in Taxes as a
result of the availability of losses or credits that were created or received in
a taxable period after the Closing Date to offset the effect of the adjustment,
then the indemnification hereunder with respect to such adjustment shall be made
at the time that the affected taxpayer or its successor otherwise would have
been able to use such losses or credits to reduce Taxes had it not been for such
adjustment, notwithstanding any limitation of time contained in this Agreement.
10.2.8 "Covered Taxes" means all Taxes of the Company for
periods ending on or prior to the close of business on the Closing Date in
excess of the reserve for Taxes included in Net Working Capital (as such reserve
may be adjusted pursuant to the provisions of Section 2.2.4, whether by
agreement of the parties or by the decision of the agreed upon accounting firm).
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10.3 Tax Agreements and Arrangements. Effective on the date of this
Agreement, all agreements and arrangements pursuant to which the Company makes a
payment of Tax with respect to a consolidated, combined or unitary group that
includes a corporation other than the Company are terminated with respect to the
Company, and the Company shall not have any accrued or future liability under
any such agreement or arrangement.
10.4 Tax Proceedings. Buyer shall inform Seller of the commencement
of any audit, examination or proceeding ("Tax Contest") relating in whole or in
part to Taxes for which Buyer may be entitled to indemnity from Seller under
this Agreement. Seller shall be entitled to control, in good faith, all
proceedings taken in connection with such Tax Contest; provided, however, that
(i) Seller shall promptly notify Buyer in writing of its intention to control
such Tax Contest, (ii) in the case of a Tax Contest relating to Taxes of the
Company for a taxable period beginning before and ending after the Closing Date,
Seller and Buyer shall jointly control all proceedings taken in connection with
any such Tax Contest, and (iii) if any Tax Contest could reasonably be expected
to have an adverse effect on Buyer, the Company, or any of their affiliates in
any taxable period beginning after the Closing Date, the Tax Contest shall not
be settled or resolved without Buyer's consent, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, if notice is
given to Seller of the commencement of any Tax Contest and Seller does not,
within ten (10) Business Days after Buyer's notice is given, give notice to
Buyer of its election to assume the defense thereof, Seller shall be bound by
any determination made in such Tax Contest or any compromise or settlement
thereof effected by Buyer. The failure of Buyer to give reasonably prompt notice
of any Tax Contest shall not release, waive or otherwise affect Seller's
obligations with respect thereto except to the extent that Seller can
demonstrate actual loss and prejudice as a result of such failure. Buyer, the
Company and their affiliates shall use their reasonable efforts to provide the
Seller with such assistance as may be reasonably requested by Seller in
connection with a Tax Contest controlled solely or jointly by the Seller.
10.5 Section 338(h)(10) Purchase Price Allocation. As soon as
practicable after the Closing, but in any case within ninety (90) days, Seller
and Buyer shall confer with the aim of agreeing to an allocation (the
"Allocation") of the Purchase Price among the assets of the Company deemed
purchased pursuant to the Election, or, at a minimum among the classes of assets
as required by Code Section 1060. If Seller and Buyer are unable to agree upon
or resolve any dispute regarding the Allocation, the matter shall be referred
for determination as promptly as possible to a mutually agreed upon public
accounting firm, whose determination shall be binding on the parties in the
absence of fraud. Each of Seller and Buyer shall report, and to the extent
relevant shall cause each person controlled by it to report, the tax
consequences of such sale in a manner consistent with the Allocation, and shall
not take any position inconsistent therewith.
10.6 Retention of Records; Cooperation.
10.6.1 Access and Assistance. Following the Closing Date,
Buyer shall and shall cause the Company and any Subsidiary to give the Seller
and its authorized representatives access during reasonable business hours upon
prior written notice to the books
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and records of the Company (and permit Sellers and their agents and/or
representatives to make copies thereof) to the extent relating to periods prior
to or including the Closing Date as the Seller may reasonably request for
purposes of preparing Tax Returns and conducting proceedings relating to Taxes,
and Seller shall do the same for Buyer. Buyer, the Company, the Seller and their
affiliates will provide each other with such assistance as may reasonably be
requested by any of them in connection with the preparation of any Tax Return,
any audit or other examination by any taxing authority, any judicial or
administrative proceedings relating to liability for Taxes, or any other claim
arising under this Agreement, and each will retain and provide the others with
any records or information that may be relevant to any such Tax Return, audit or
examination, proceeding or claim. Such assistance shall include making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder and shall include providing
copies of any relevant Tax Returns and supporting work schedules which
assistance shall be provided without charge except for reimbursement of
reasonable out-of-pocket expenses. Buyer will or will cause the Company and its
Subsidiaries to retain, until all appropriate statutes of limitation (including
any extensions) expire, copies of all Tax Returns of the Company and its
Subsidiaries supporting work schedules and other records or information which
may be relevant to such Tax Returns, and will not destroy or otherwise dispose
of such materials without first providing Seller with a reasonable opportunity
to review and copy such materials, and Seller shall do the same for Buyer.
10.6.2 Seller and Buyer agree to retain all documents and
other records for the appropriate period of time as set forth in Treasury
Regulation Section 1.6011-4(g) which relate to any transaction described therein
in which the Company has participated.
10.7 Refunds. All refunds, plus interest thereon, for Taxes for
periods ending on or prior to the Closing Date shall be the property of the
Seller and any such refunds, plus any interest earned in connection with such
refunds, shall be paid to the Seller by the Company or any Subsidiary, as
applicable, promptly upon receipt.
10.8 Amended Returns, etc. None of Buyer, its affiliates, the
Company, or any Subsidiary of the Company shall file any amended Tax Return for
the Company or any of its Subsidiaries with respect to any taxable period ending
on or before the Closing Date, unless the Company and any such Subsidiary
indemnify and hold Seller harmless from and against any potential adverse Tax
effect with respect to any such amended Tax Return, provided, however, no such
indemnification shall apply if such amended return is required by Law.
10.9 Transfer and Similar Taxes. All real property transfer taxes,
other transfer, documentary, sales, use, registration, stamp and similar Taxes
and fees (including any penalties and interest) incurred in connection with the
transactions contemplated by this Agreement shall be borne by Buyer.
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10.10 NOL Carrybacks. Any net operating loss shown on any income Tax
Return for a period ending on or prior to the Closing Date shall, to the extent
permitted by Law, be carried back to other periods ending prior to the Closing
Date and the refunds generated thereby, if any, shall be for the benefit of the
Seller as provided in Section 10.7 hereof.
ARTICLE XI
TERMINATION
11.1 Right to Terminate. Notwithstanding anything to the contrary
set forth in this Agreement, this Agreement may be terminated and the
transactions contemplated herein abandoned at any time prior to the Closing:
(i) by mutual consent of Buyer, on the one hand, and
Seller on the other;
(ii) by Buyer, on the one hand, or Seller, on the other
hand, if the Closing shall not have occurred by July 15, 2005, provided,
however, that the right to terminate this Agreement under this Section 11.1
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date (except as set forth in (vi) below);
(iii) by Buyer, on the one hand, or Seller on the other
hand, if a court of competent jurisdiction shall have issued an order, decree or
ruling permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable;
(iv) by Seller if Buyer (x) breaches its representations
and warranties in any material respect or (y) fails to comply in any material
respect with any of its covenants or agreements contained herein; or
(v) by Buyer if Seller and/or the Company (x) breach
their representations and warranties in any material respect or (y) fail to
comply in any material respect with any of its covenants or agreements contained
herein.
11.2 Effect of Termination. In the event of termination of this
Agreement by either Buyer or Seller as provided above, the provisions of this
Agreement shall immediately become void and of no further force and effect
(other than this Section 11.2 and Sections 6.7 (Confidentiality), 9.4
(Limitations on Indemnification), 12.2 (Fees and Expenses) and 12.13
(Controlling Law), which shall each survive the termination of this Agreement),
and there shall be no liability on the part of any of Buyer or Seller to one
another, except for knowing or willful breaches of this Agreement prior to the
time of such termination.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Publicity. At all times before the Closing Date, without the
prior written consent (which consent shall not be unreasonably withheld) of the
other parties hereto, none of the parties hereto shall issue any announcement,
press release, public statement or other information to the press or any third
party with respect to this Agreement or the transactions contemplated hereby;
provided, however, that nothing contained herein shall prevent any party hereto,
at any time, from furnishing any required information to any Governmental Body
or from issuing any announcement, press release, public statement or other
information to the press or any third party with respect to the Agreement or the
transaction contemplated hereby (after consulting with the other parties hereto
at least one day prior to furnishing such information or issuing such
announcement, press release or public statement) if required by Law or any stock
exchange or inter-dealer quotation system on which the securities of a party are
traded.
12.2 Fees and Expenses. Except with respect to indemnification
claims, which shall be governed by Article 9, Buyer shall pay all of the fees
and expenses incurred by it, and Seller shall pay all of the fees and expenses
incurred by Seller and the Company, in negotiating and preparing this Agreement
(and all other Contracts and documents executed in connection herewith or
therewith) and in consummating the transactions contemplated hereby.
12.3 Further Assurances. Each party to this Agreement shall
execute, acknowledge and deliver any further documents and instruments and take
any other action consistent with the terms of this Agreement that may reasonably
be requested by the other party for the purpose of giving effect to the
transactions contemplated by this Agreement, whether before, concurrent with or
after the consummation of the transactions contemplated hereby.
12.4 Notices. All notices, consents or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or one
business day after being sent by a nationally recognized overnight delivery
service, postage or delivery charges prepaid or five business days after being
sent by registered or certified mail, return receipt requested, postage charges
prepaid. Notices also may be given by facsimile and shall be effective on the
date transmitted if confirmed within 48 hours thereafter by a signed original
sent in one of the manners provided in the preceding sentence. Notices to be
sent prior to the Closing shall be sent as follows:
IF TO SELLER:
Bristol Technology, Inc.
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx, President
Facsimile No.: (000) 000-0000
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WITH A COPY TO:
Xxxxxxx & Xxxxxx, LLP
000 Xxxxxxx Xxxx.
Xxxxxxxx XX, 00000
Attn: Xxxxxxx X. Xxxxxxx, Esquire
Facsimile No.: (000) 000-0000
IF TO BUYER:
Warp Technology Holdings, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
WITH A COPY TO:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx, LLP
000 X. Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esquire
Facsimile No.: (000) 000-0000
12.5 Reliance by Buyer. Notwithstanding the right of Buyer to
investigate the Business, Assets and financial condition of the Company, and
notwithstanding any knowledge obtained or obtainable by Buyer as a result of
such investigation, Buyer has the unqualified right to rely upon, and have
relied upon, each of the representations and warranties made by Seller and the
Company in this Agreement or pursuant hereto. The Company and Seller have the
unqualified right to rely upon each of the representations and warranties made
by Buyer pursuant to this Agreement. The representations and warranties are
bargained for assurances.
12.6 Entire Understanding. This Agreement, together with the
Exhibits and Schedules hereto, state the entire understanding among the parties
with respect to the subject matter hereof, and supersede all prior oral and
written communications and agreements, and all contemporaneous oral
communications and agreements, with respect to the subject matter hereof,
including all confidentiality letter agreements and letters of intent previously
entered into among some or all of the parties hereto. No amendment or
modification of this Agreement shall be effective unless in writing and signed
by the party against whom enforcement is sought.
12.7 Assignment. This Agreement shall bind, benefit, and be
enforceable by and against Buyer, Seller and the Company and their respective
successors and assigns. No party shall in any manner assign any of its rights or
obligations under this Agreement without the express prior written consent of
the other parties.
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12.8 Waivers and Amendment. This Agreement may be amended,
supplemented, modified and/or rescinded only through an express written
instrument signed by the parties or their respective successors and permitted
assigns. Except as otherwise expressly provided herein, no waiver with respect
to this Agreement shall be enforceable unless in writing and signed by the party
against whom enforcement is sought. Except as otherwise expressly provided
herein, no failure to exercise, delay in exercising, or single or partial
exercise of any right, power or remedy by any party, and no course of dealing
between or among any of the parties, shall constitute a waiver of, or shall
preclude any other or further exercise of, any right, power or remedy.
12.9 Severability. If any provision of this Agreement is construed
to be invalid, illegal or unenforceable, then the remaining provisions hereof
shall not be affected thereby and shall be enforceable without regard thereto.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
12.11 Headings. Section and subsection headings in this Agreement
are for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect its interpretation.
12.12 References. All words used in this Agreement shall be
construed to be of such number and gender as the context requires or permits.
12.13 Controlling Law. This agreement is made under, and shall be
construed and enforced in accordance with, the laws of the state of Connecticut
applicable to agreements made and to be performed solely therein, without giving
effect to principles of conflicts of law.
12.14 Successors and Assigns; No Third Party Beneficiary. Each of
the terms, provisions, and obligations of this Agreement shall be binding upon,
shall inure to the benefit of, and shall be enforceable by the parties and their
respective legal representatives, successors and permitted assigns. Nothing in
this Agreement will be construed as giving any Person, other than the parties to
this Agreement and their successors and permitted assigns, any right, remedy or
claim under, or in respect of, this Agreement or any provision hereof.
12.15 Facsimile Signatures. This Agreement and any other document or
agreement executed in connection herewith (other than any document for which an
originally executed signature page is required by law) may be executed by
delivery of a facsimile copy of an executed signature page with the same force
and effect as the delivery of an originally executed signature page. In the
event any party delivers a facsimile copy of a signature page to this Agreement
or any other document or agreement executed in connection herewith, such party
shall deliver an originally
- 43 -
executed signature page upon request; provided, however, that the failure to
deliver any such originally executed signature page shall not affect the
validity of the signature page delivered by facsimile, which has and shall
continue to have the same force and effect as the originally executed signature
page.
12.16 Warranty of Authority. Each of the entities signing this
Agreement warrants and represents that the individual signing on behalf of such
entity is duly authorized and empowered to enter into this Agreement and bind
such entity hereto.
12.17 Neutral Construction. In view of the fact that each of the
parties hereto have been represented by their own counsel and this Agreement has
been fully negotiated by all parties, the legal principle that ambiguities in a
document are construed against the draftsperson of that document shall not apply
to this Agreement.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first set forth above.
WARP TECHNOLOGY HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chief Legal Officer
BRISTOL TECHNOLOGY, INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------
Name: Xxxxx Xxxxxxxxx
Title: CEO
KENOSIA CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
-------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
[SIGNTURE PAGE TO STOCK PURCHASE AGREEMENT]
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