STOCK PURCHASE AGREEMENT
AMONG
JIA, INC.
SUMMIT V, INC
AND
JENKON INTERNATIONAL, INC., A DELAWARE CORPORATION
AND
JENKON INTERNATIONAL, INC., A WASHINGTON CORPORATION
DATED AS OF APRIL 6, 2000
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS...............................................................................1
ARTICLE II - PURCHASE AND SALE OF SHARES..............................................................3
2.1 Purchase and Sale of Shares.........................................................3
2.2 Consideration for Shares............................................................3
2.2.1 Closing Payment..........................................................3
2.2.2 Note.....................................................................3
2.2.3 Escrow...................................................................3
2.3 Closing.............................................................................4
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS......................4
3.1 Shareholder Matters.................................................................4
3.1.1 Good Title...............................................................4
3.1.2 Authority................................................................5
3.1.3 Enforceability...........................................................5
3.1.4 No Approvals or Notices Required; No Conflicts...........................5
3.2 Company Organization; Good Standing; Corporate Authority; Enforceability............5
3.3 Capitalization......................................................................6
3.4 Subsidiaries and Affiliates.........................................................7
3.5 No Approvals or Notices Required; No Conflicts......................................7
3.6 Financial Statements; Obligations...................................................7
3.7 Action by Xxxxx Xxxxxxx.............................................................8
3.8 Accuracy of SEC Filings.............................................................8
3.9 Corporate Books and Records.........................................................8
3.10 Brokers or Finders..................................................................9
3.11 Bank Accounts.......................................................................9
3.12 Accuracy of Representations and Warranties..........................................9
3.13 Tax Consequences....................................................................9
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER..................................................9
4.1 Organization.......................................................................10
4.2 Enforceability.....................................................................10
4.3 No Approvals or Notices Required; No Conflicts With Instruments....................10
4.4 Claims and Legal Proceedings.......................................................10
STOCK PURCHASE AGREEMENT PAGE i
4.5 Tax Consequences...................................................................11
4.6 Accuracy of SEC Filings............................................................11
4.7 Accuracy of Representations and Warranties.........................................11
ARTICLE V - COVENANTS................................................................................11
5.1 Conduct of Business by the Company Pending the Closing.............................11
5.2 Access to Information; Confidentiality.............................................14
5.3 No Solicitation....................................................................14
5.4 Notification of Certain Matters....................................................17
5.5 Further Action.....................................................................17
5.6 Publicity..........................................................................18
ARTICLE VI - ADDITIONAL AGREEMENTS...................................................................18
6.1 Preparation of the Proxy Statement; Stockholders Meeting...........................18
6.2 Certain Expenses...................................................................18
6.3 Assignment of Intellectual Property............................
ARTICLE VII -CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER............................................19
7.1 Accuracy of Representations and Warranties.........................................19
7.2 Performance of Agreements..........................................................19
7.3 Opinion of Counsel for the Company and the Shareholders............................19
7.4 Consents to Sale of Shares.........................................................19
7.5 Officers' Certificate..............................................................20
7.6 Shareholder's Certificate..........................................................20
7.7 Material Adverse Change............................................................20
7.8 Approvals and Consents.............................................................20
7.9 Proceedings and Documents; Secretary's Certificate.................................20
7.10 Compliance With Laws...............................................................20
7.11 Legal Proceedings..................................................................20
7.12 Delivery of Certificates...........................................................21
7.14 Noncompetition Agreements..........................................................21
7.15 Waiver by Insiders.................................................................21
ARTICLE VIII - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS...............21
8.1 Accuracy of Representations and Warranties.........................................21
8.2 Performance of Agreements..........................................................22
8.3 Opinion of Counsel for Buyer.......................................................22
8.4 Officers' Certificate..............................................................22
8.5 Material Adverse Change............................................................22
STOCK PURCHASE AGREEMENT PAGE ii
8.6 Approvals and Consents.............................................................22
8.7 Proceedings and Documents; Secretary's Certificate.................................22
8.8 Compliance With Laws...............................................................23
8.9 Legal Proceedings..................................................................23
8.10 Fairness Opinion...................................................................23
8.11 Waiver by Insiders.................................................................24
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER.......................................................24
9.1 Termination........................................................................24
9.2 Effect of Termination..............................................................25
9.3 Amendment..........................................................................25
9.4 Waiver.............................................................................25
ARTICLE X - SURVIVAL AND INDEMNIFICATION.............................................................26
10.1 Survival...........................................................................26
10.2 Indemnification....................................................................26
10.2.1 Indemnification by the Shareholders.....................................26
10.2.2 Indemnification by Buyer................................................27
10.3 Limitations........................................................................27
10.4 Procedure for Indemnification......................................................28
10.4.1 Claim Notice............................................................28
10.4.2 Dispute Notice..........................................................28
10.4.3 Third-Party Claims......................................................28
10.5 Investigations; Waivers............................................................28
ARTICLE XI - GENERAL.................................................................................29
11.1 Expenses...........................................................................29
11.2 Specific Enforcement...............................................................30
11.3 Consequential Damages..............................................................30
11.4 Assignment.........................................................................30
11.5 Notices............................................................................31
11.6 Governing Law; Jurisdiction; Venue.................................................32
11.7 Successors and Assigns.............................................................32
11.8 Severability.......................................................................32
11.9 Entire Agreement; Counterparts.....................................................33
STOCK PURCHASE AGREEMENT PAGE iii
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is entered into as of
April 6, 2000 among JIA, Inc., a WASHINGTON, corporation ("BUYER"), Jenkon
International, Inc., a WASHINGTON corporation ("the SHAREHOLDER"), Jenkon
International, Inc., a DELAWARE corporation (the "PARENT"), and Summit V, Inc.,
a Washington corporation (the "COMPANY"). The Shareholder and Parent are
collectively referred to as the "SHAREHOLDERS." Shareholder is a wholly owned
subsidiary of Parent.
RECITALS
A. The Shareholder owns the Shares and desires and intends to sell
the Shares to Buyer at the price and on the terms and subject to the conditions
set forth below.
B. Buyer desires and intends to purchase the Shares from the
Shareholder at the price and on the terms and subject to the conditions set
forth below.
AGREEMENT
In consideration of the terms hereof and for good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
ARTICLE I - DEFINITIONS
1.1. "BALANCE SHEET": The balance sheet of the Company as of December
31, 1999.
1.2. "BUYER INDEMNIFIED PARTIES": As defined in Section 10.2.1.
1.3. "CLAIM": As defined in Section 10.2.1.
1.4. "CLAIM NOTICE": As defined in Section 10.4.2.
1.5. "CLOSING": As defined in Section 2.3.
1.6. "CLOSING AMOUNT": As defined in Section 2.2.1.
1.7. "CLOSING DATE": The date, time and place of Closing as specified
in Section 2.3.
1.8. "COMMON STOCK": As defined in Section 3.3(a).
STOCK PURCHASE AGREEMENT
1.9. "DISCLOSURE SCHEDULES": The Disclosure Schedules attached and
made a part hereof and which constitute in their entirety a representation and
warranty under Article III.
1.10. "ESCROW AGENT": As defined in Section 2.2.3.
1.11. "ESCROW AGREEMENT": As defined in Section 2.2.3.
1.12. "ESCROW AMOUNT": As defined in Section 2.2.3.
1.13. "FINANCIAL STATEMENTS": As defined in Section 3.6.
1.14. "GAAP": Generally accepted accounting principles in the United
States.
1.15. "INDEMNIFIED PARTIES": As defined in Section 10.2.2.
1.16. "KNOWLEDGE": Representations and warranties to a party's
knowledge mean that in acquiring such knowledge, the party representing and
warranting such knowledge need not make any inquiry or investigation.
1.17. "LOSSES": As defined in Section 10.2.1.
1.18. "MATERIAL": Material individually or in the aggregate.
1.19. "NOTE": As defined in Section 2.2.2.
1.20. "PARENT": As defined in the first paragraph.
1.21. "PERSON": Any person, corporation, partnership, joint venture,
association, organization, other entity or governmental or regulatory authority.
1.22. "PURCHASE PRICE": The aggregate purchase price for the Shares,
as defined in Section 2.2.
1.23. "SHAREHOLDER": As defined in the first paragraph.
1.24. "SHAREHOLDERS": As defined in the first paragraph.
1.25. "SHAREHOLDER INDEMNIFIED PARTIES": As defined in Section 10.2.2.
1.26. "SHARES": The 5,000 shares of common stock of the Company to
be purchased by Buyer, representing 100% of the outstanding shares of the
Company.
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1.27. "SUBSIDIARY": When used in reference to any Person, shall mean
any corporation of which outstanding securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation are owned
directly or indirectly by such Person.
1.28. "TRANSACTION DOCUMENTS": This Agreement and each of the
agreements, certificates, instruments and documents executed or delivered
pursuant to the terms of this Agreement.
ARTICLE II - PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF SHARES
On the terms and subject to the conditions of this Agreement, Buyer
agrees to purchase the Shares from the Shareholder, and the Shareholder agrees
to sell the Shares to Buyer.
2.2 CONSIDERATION FOR SHARES
The aggregate purchase price for the Shares is $1,175,000 (the "PURCHASE
PRICE"), payable as set forth in this Section 2.2.
2.2.1 CLOSING PAYMENT
The sum of $500,000 (the "CLOSING AMOUNT") shall be paid by Buyer to the
Shareholder (a) through the release to the Shareholder of the $200,000 Escrow
Amount, as defined in section 2.2.3 below, and (b) by bank wire transfer of
$300,000, in each case at the Closing.
2.2.2 NOTE
At the Closing, the Buyer will deliver to the Shareholder a Note in the
principal amount of $675,000. The Note will be in form mutually acceptable to
Buyer and Shareholder, will bear interest at the rate of 10% per annum payable
quarterly in arrears, and all principal and interest will be due and payable one
year from the Closing Date. The Note will be secured by a pledge in form
reasonably satisfactory to Shareholders of 75,000 shares of the common stock of
Parent.
2.2.3 ESCROW
Within three business days of the date of this Agreement, Buyer will
deposit the sum of $200,000 (the "ESCROW AMOUNT") with a mutually satisfactory
escrow agent (the "ESCROW AGENT") to be held in escrow as evidence of financial
capacity and
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in accordance with a mutually satisfactory Escrow Agreement (the "ESCROW
AGREEMENT") to be entered into by Buyer, the Shareholder and the Escrow Agent.
2.3 CLOSING
The closing of the transactions contemplated herein (the "CLOSING")
shall be TWO days following stockholder approval by the stockholders of Parent
and shall be held at the office of Xxxxxxx Coie, 0000 XX Xxxxx Xxxxxx, Xxxxxxxx,
Xxxxxx 00000, at 9:00 A.M. local time, or such other time and date as Buyer and
the Shareholder shall agree (the "CLOSING DATE"). At the Closing, each of Buyer,
and the Shareholder shall take all such action and deliver all such funds,
documents, instruments, certificates and other items as may be required, under
this Agreement or otherwise, in order to perform or fulfill all covenants,
conditions and agreements on its part to be performed or fulfilled at or before
the Closing Date and to cause all conditions precedent to the other parties'
obligations under this Agreement to be satisfied in full.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDERS
To induce Buyer to enter into and perform this Agreement, and except as
is otherwise set forth in the Disclosure Schedules, which exceptions shall
specifically identify the paragraph or paragraphs of this Article III to which
such exceptions relate, and which shall constitute in its entirety a
representation and warranty under this Article III, the Company, the Shareholder
and the Parent jointly and severally represent and warrant to Buyer as of the
date of this Agreement and as of the Closing as follows in this Article III
(which representations and warranties shall survive the Closing as provided in
Article X).
3.1 SHAREHOLDER MATTERS
3.1.1 GOOD TITLE
The Shareholder is the beneficial and record owner of the Shares which
represent all of the issued and outstanding capital stock of the Company. Such
Shares are owned free and clear of any lien, encumbrance, restriction on sale,
transfer or voting (other than restrictions imposed by applicable securities
laws), preemptive right, option or other right to purchase and upon the
consummation of the sale of such Shares as contemplated hereby, Buyer will
acquire good title to such Shares, free and clear of any lien, encumbrance,
restriction on sale, transfer or voting (other than restrictions imposed by
applicable securities laws or those created by Buyer), preemptive right, option
or other right.
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3.1.2 AUTHORITY
Each of the Shareholders and the Parent has all requisite corporate
power, right and authority to enter into this Agreement and the other
Transaction Documents to which it is a party, to consummate the transactions
contemplated hereby and thereby, and the Shareholder has the power sell and
transfer such Shares without the consent or approval of any other Person.
3.1.3 ENFORCEABILITY
This Agreement has been, and the other Transaction Documents to which
any of the Shareholders is a party on the Closing will be, duly executed and
delivered by the Shareholders, and this Agreement is, and each of the other
Transaction Documents to which it is a party on the Closing will be, the legal,
valid and binding obligation of the Shareholders, enforceable against the
Shareholders in accordance with its terms.
3.1.4 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS
The execution, delivery and performance of this Agreement and the other
Transaction Documents by the Shareholders, and the consummation of the
transactions contemplated hereby and thereby, will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any provision of any law or any judgment, decree, order, regulation or rule of
any court, agency or other governmental authority applicable to the
Shareholders, (b) require any consent, approval or authorization of, or
declaration, filing or registration with, any Person other than (i) consent of
the stockholders of Parent (including, to the extent required, the filing and
approval of a proxy statement with the Securities and Exchange Commission), and
(ii) notification of the Nasdaq Stock Market, Inc. to the extent required under
its rules, (c) result in a default (with or without the giving of notice or
lapse of time, or both) under, acceleration or termination of, or the creation
in any party of the right to accelerate, terminate, modify or cancel, any
agreement, lease, note or other restriction, encumbrance, obligation or
liability to which the Company is a party or by which it is bound or to which
any assets of the Company are subject, or (d) result in the creation of any lien
or encumbrance upon the assets of the Shareholders, or upon any Shares or other
securities of the Company.
3.2 COMPANY ORGANIZATION; GOOD STANDING; CORPORATE AUTHORITY; ENFORCEABILITY
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Washington. The Company is duly
qualified to
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do business, and is in good standing in the states required due to (a) the
ownership or lease of real or personal property for use in the operation of the
Company's business or (b) the nature of the business conducted by the Company
except where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company. The Company has all requisite power,
right and authority to own, operate and lease its properties and assets, to
carry on its business as now conducted and as proposed to Buyer by the Company
to be conducted, to execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party, and to
carry out the transactions contemplated hereby and thereby.
All actions on the part of the Company and its officers and directors
necessary for the authorization, execution, delivery and performance of this
Agreement and the other Transaction Documents, the consummation of the
transactions contemplated hereby and thereby, and the performance of all of the
Company's obligations under this Agreement and the other Transaction Documents
have been taken or will be taken prior to the Closing. This Agreement has been,
and the other Transaction Documents to which the Company is a party on the
Closing will be, duly executed and delivered by the Company, and this Agreement
is, and each of the other Transaction Documents to which it is a party on the
Closing will be, a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
3.3 CAPITALIZATION
(a) The authorized capital stock of the Company consists of 50,000
shares of common stock, one dollar par value (the "COMMON STOCK").
(b) The issued and outstanding capital stock of the Company consists
and as of the Closing will consist solely of the Shares, which are and as of the
Closing will be held of record by the Shareholder. All shares of Common Stock
that are issued and outstanding are, and as of the Closing Date will be, duly
authorized and validly issued, fully paid and nonassessable, and issued in
compliance with all applicable federal, state and foreign securities laws.
Except for the Shareholder, no Person holds any interest in any of the Shares.
(c) There are no outstanding rights of first refusal, preemptive
rights, options, warrants, conversion rights or other agreements, either
directly or indirectly, for the purchase or acquisition from the Company of any
of the Shares or other securities of the Company.
(d) The Company is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between any Persons,
that
STOCK PURCHASE AGREEMENT
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affects or relates to the voting or giving of written consents with respect
to any securities of the Company or the voting by any director of the Company.
3.4 SUBSIDIARIES AND AFFILIATES
The Company does not have, and has never had, any Subsidiaries. The
Company does not own, directly or indirectly, any ownership, equity, profits or
voting interest in, or otherwise control, any corporation, partnership, joint
venture or other entity, and has no agreement or commitment to purchase any such
interest.
3.5 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS
The execution, delivery and performance of this Agreement and the other
Transaction Documents by the Company, and the consummation of the transactions
contemplated hereby and thereby, will not (a) constitute a violation (with or
without the giving of notice or lapse of time, or both) of any provision of any
law or any judgment, decree, order, regulation or rule of any court, agency or
other governmental authority applicable to the Company, (b) require any consent,
approval or authorization of, or declaration, filing or registration with, any
Person other than (i) consent of the stockholders of Parent (including, to the
extent required, the filing and approval of a proxy statement with the
Securities and Exchange Commission), (ii) notification of the Nasdaq Stock
Market, Inc. to the extent required under its rules, and (iii) consent of the
landlord of the premises occupied by Summit V, (c) result in a default (with or
without the giving of notice or lapse of time, or both) under, acceleration or
termination of, or the creation in any party of the right to accelerate,
terminate, modify or cancel, any agreement, lease, note or other restriction,
encumbrance, obligation or liability to which the Company is a party or by which
it is bound or to which any assets of the Company are subject, (d) result in the
creation of any lien or encumbrance upon the assets of the Company, or upon any
Shares or other securities of the Company, (e) conflict with or result in a
breach of or constitute a default under any provision of the Articles or Bylaws
of the Company, or (f) invalidate or adversely affect any material permit,
license, authorization or status used in the conduct of the business of the
Company.
3.6 FINANCIAL STATEMENTS; OBLIGATIONS
The Company has delivered to Buyer (a) balance sheets and statements of
operations, shareholders' equity and cash flows of the Parent at and for the
fiscal years ended June 30, 1998, 1999, and accompanying notes, audited by BDO
Xxxxxxx, independent auditors and certified public accountants, and (b)
unaudited balance sheets and unaudited statements of operations and cash flows
of the Parent at and for
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the six month period ended December 31, 1999. All the foregoing financial
statements (including the notes thereto) are referred to as the "FINANCIAL
STATEMENTS". The Financial Statements have been prepared in conformity with GAAP
consistently applied throughout the periods covered, except as may be indicated
in the notes thereto, and present fairly the financial position, results of
operations and changes in financial position of the Parent at the dates and for
the periods indicated, subject, in the case of the unaudited financial
statements, to normal recurring period-end adjustments.
To the knowledge of Xxxxx Xxxxxxx, the Company has no liabilities or
obligations of any nature (absolute, accrued or contingent) that are not fully
reflected or reserved against in the Balance Sheet, as prescribed by GAAP and
the Financial Accounting Standards Board, except liabilities or obligations
incurred since the date of the Balance Sheet in the ordinary course of business
and consistent with past practice. The Company maintains and will continue to
maintain standard systems of accounting established and administered in
accordance with GAAP. The Company is not a guarantor, indemnitor, surety or
other obligor of any indebtedness of any other Person.
3.7 ACTION BY XXXXX XXXXXXX
Since June 30, 1999 Xxxxx Xxxxxxx has not entered into any contracts on
behalf of the Company or Jenkon International (UK) nor entered into any
employment agreement or arrangement on behalf of those entities except a bonus
arrangement with Xxxxx Xx Xxxxx.
3.8 ACCURACY OF SEC FILINGS
To the knowledge of Xxxxx Xxxxxxx, the filings made with the Securities
and Exchange Commission by the Parent (the "SEC Documents") do not contain a
misstatement of material fact concerning the Company, its operations and
financial condition or omit to state a fact necessary to make such statements
contained therein not misleading.
3.9 CORPORATE BOOKS AND RECORDS
The Company has furnished to Buyer true and complete copies of (a) the
Articles of Incorporation and Bylaws of the Company as currently in effect,
including all amendments thereto, (b) the minute books of the Company, and (c)
the stock transfer books of the Company. Such minutes reflect all meetings of
the Company's shareholders, Board of Directors and any committees thereof since
the Company's
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inception, and such minutes accurately reflect the events of and actions taken
at such meetings. Such stock transfer books accurately reflect all issuances and
transfers of shares of capital stock of the Company since its inception.
3.10 BROKERS OR FINDERS
The Company has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by or on behalf of the Company, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated hereby
other than such arranged or committed to by Buyer.
3.11 BANK ACCOUNTS
Disclosure Schedule 3.11 sets forth the names and locations of all
banks, trust companies, savings and loan associations and other financial
institutions at which the Company maintains safe deposit boxes or accounts of
any nature and the names of all Persons authorized to draw thereon, make
withdrawals therefrom or have access thereto.
3.12 ACCURACY OF REPRESENTATIONS AND WARRANTIES
To the knowledge of Xxxxx Xxxxxxx, none of the representations and
warranties of Buyer contained in this agreement is inaccurate, contains a
misstatement of material fact, or omits to state a fact necessary to make such
statements contained therein not misleading.
3.13 TAX CONSEQUENCES
Neither Parent nor Shareholder makes any representation or warranty with
respect to, and each expressly disclaims any responsibility for, any Tax
consequences to the Buyer arising out of the structure or terms of this
Agreement, or the negotiation or consummation hereof. The Buyer shall be solely
responsible for any such Tax consequences.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF BUYER
To induce the Company and the Shareholders to enter into and perform
this Agreement, Buyer represents and warrants to the Company and the
Shareholders as of the date of this Agreement and as of the Closing as follows
in this Article IV:
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4.1 ORGANIZATION
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the state of Washington. Buyer has all requisite
corporate power and authority to own, operate and lease its properties and
assets, to carry on its business as now conducted and as proposed to be
conducted, to execute, deliver and perform its obligations under this Agreement
and the other Transaction Documents to which it is a party, and to carry out the
transactions contemplated hereby and thereby.
4.2 ENFORCEABILITY
All corporate action on the part of Buyer and its officers, directors
and shareholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party, the consummation of the transactions contemplated hereby and thereby,
and the performance of all of Buyer's obligations under this Agreement and the
other Transaction Documents to which it is a party has been taken or will be
taken prior to the Closing. This Agreement has been, and the other Transaction
Documents to which Buyer is a party on the Closing will be duly executed and
delivered by Buyer, and this Agreement is, and each of the other Transaction
Documents to which Buyer is a party on the Closing will be, a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
4.3 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS
The execution, delivery and performance by Buyer of this Agreement and
the other Transaction Documents to which it is a party, and the consummation of
the transactions contemplated hereby and thereby, will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any provision of any law or any judgment, decree, order, regulation or rule of
any court, agency or other governmental authority applicable to Buyer, (b)
require Buyer to obtain any consent, approval or authorization of, or
declaration, filing or registration with, any Person, or (c) constitute a
violation of any provisions of Buyer's Articles of Incorporation or Bylaws.
4.4 CLAIMS AND LEGAL PROCEEDINGS
There is no claim, action, suit, arbitration, criminal or civil
investigation or proceeding pending or involving or, to Buyer's knowledge,
threatened against Buyer before or by any court or governmental or
nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other Person, that questions the
STOCK PURCHASE AGREEMENT
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validity of this Agreement or any action taken or to be taken by Buyer pursuant
to this Agreement or in connection with the transactions contemplated hereby.
4.5 TAX CONSEQUENCES
Buyer does not make any representation or warranty with respect to, and
expressly disclaims any responsibility for, any Tax consequences to the
Shareholder arising out of the structure or terms of this Agreement, or the
negotiation or consummation hereof. The Shareholder shall be solely responsible
for any such Tax consequences.
4.6 ACCURACY OF SEC FILINGS
To the knowledge of Xxxxxx Xxxxxx and Xxxxxx Xxxxxx, the filings made
with the Securities and Exchange Commission by the Shareholder (the "SEC
Documents") do not contain a misstatement of material fact concerning the
Company, its operations and financial condition or omit to state a fact
necessary to make such statements contained therein not misleading.
4.7 ACCURACY OF REPRESENTATIONS AND WARRANTIES
To the knowledge of Xxxxxx Xxxxxx and Xxxxxx Xxxxxx, none of the
representations and warranties of Shareholders and the Company contained in this
Agreement are inaccurate, contain a misstatement of material fact, or omit to
state a fact necessary to make such statements contained therein not misleading.
ARTICLE V - COVENANTS
Between the date of this Agreement and the time of Closing, the parties
covenant and agree as set forth in this Article V.
5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING
Unless Buyer shall otherwise agree in writing, the business of the
Company shall be conducted only in, and the Company shall not take any action
except in, and the directors and officers of the Company and the Shareholders
shall cause the Company to be conducted in, the ordinary course of business and
in a manner consistent with past practice and in accordance with applicable law;
and the Company shall use its reasonable best efforts to preserve substantially
intact the business organization of the Company, to keep available the services
of the current directors, officers, employees and consultants of the Company and
to preserve the current relationships of the Company with customers, suppliers
and other persons with which
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the Company has significant business relations. By way of amplification and not
limitation, except as otherwise contemplated by this Agreement, the Company
shall not, between the date of this Agreement and the time of Closing, directly
or indirectly do, or propose to do, any of the following without giving Buyer
prior written notice of and receiving Buyer's prior written consent:
(a) amend or otherwise change its Charter or Bylaws;
(b) except as disclosed on Disclosure Schedule 5.1(b), issue, sell,
pledge, dispose of, grant, encumber or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of (i) any shares of capital stock of any
class of the Company, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom interest), of the
Company or (ii) any assets of the Company;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock property or otherwise, with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) or form any corporation,
partnership, other business organization or division thereof, or acquire
directly or indirectly any material amount of assets; (ii) except as
contemplated by this Agreement incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or make any
loans or advances, except in the ordinary course of business and consistent with
past practice which loans shall be on terms and conditions satisfactory to
Buyer; (iii) enter into any contract or agreement other than in the ordinary
course of business, consistent with past practice; (iv) authorize any single
capital expenditure that is in excess of $5,000 or capital expenditures that
are, in the aggregate, in excess of $25,000; or (v) enter into or amend any
contract, agreement, commitment or arrangement with respect to any matter set
forth in this subsection (e);
(f) enter into any employment, consulting or agency agreement, or
increase the compensation payable or to become payable to its officers,
employees or consultants, except for increases in accordance with existing
agreements or past practices for employees of the Company who are not officers
of the Company, or grant any severance or termination pay to, or enter into any
employment or severance
STOCK PURCHASE AGREEMENT
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agreement with, any director, officer or employee of the Company, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting policies or procedures (including, without limitation, procedures
with respect to the payment of accounts payable and collection of accounts
receivable);
(h) make any tax election inconsistent with past practices or settle
or compromise any material federal, state, local or foreign income tax
liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the Balance Sheet or subsequently incurred in the ordinary course of business
and consistent with past practice;
(j) enter into any equipment lease; or
(k) take or agree to take any action specified in Section 3.7, or
enter into any other material transaction other than those specified above; or
(l) agree to do any of the foregoing.
Notwithstanding anything to the contrary contained in this Agreement, neither
the Company nor the Shareholder shall have been deemed to have breached or
violated the provisions of this Section 5.1 with respect to any action taken by
the Company that is authorized, approved, effected or implemented by the Buyer,
Xxxxxx Xxxxxx or Xxxxxx Xxxxxx following the date of this Agreement, whether
pursuant to the terms of any Management Agreement between the Company,
Shareholders and Buyer (the "Management Agreement"), or otherwise.
Notwithstanding anything to the contrary contained in this Agreement, the
Management Agreement or any other agreements contemplated hereby or thereby,
Buyer agrees that it shall not cause or permit any action described in Section
5.1 to be taken without the express written consent of Shareholder, which
consent may only be signed by Xxxxx Xxxxxxx, or an independent member of the
Board of Directors of Shareholder; provided the Company is expressly
STOCK PURCHASE AGREEMENT
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authorized to borrow operating funds from Buyer or any other person to the
Company introduced by Buyer.
Notwithstanding anything to the contrary contained elsewhere in this Agreement,
the parties hereto acknowledge and agree that prior to Closing, Shareholder
shall cause all of the issued and outstanding shares of Jenkon International
Limited, a United Kingdom corporation (Jenkon U.K.) to be contributed to the
Company, so that at Closing, Jenkon U.K. shall be a wholly-owned subsidiary of
the Company. In this regard, Parent represents and warrants that other than
liabilities reflected on the financial statements of Parent filed with the
Securities and Exchange Commission, there are no liabilities or other
outstanding obligations of Jenkon U.K.
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY
From the date hereof to the time of Closing, the Company and the
Shareholders shall, and shall cause their representatives to, afford Buyer and
its representatives complete access at all reasonable times to the officers,
employees, agents, properties, offices and other facilities, books and records
of the Company and shall furnish Buyer with all financial, operating and other
data and information as Buyer may reasonably request and as such access is
necessary to the consummation of the transactions contemplated hereby.
5.3 NO SOLICITATION
(a) The Company and Shareholders shall not, nor shall they authorize
or permit any of their officers, directors or employees or any investment
banker, attorney or other advisor or representative retained by it to, directly
or indirectly, (i) solicit, initiate or encourage the submission of any Takeover
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; provided, however, that if, at any time prior to the Closing
Date either of the Boards of Directors of the Shareholders determines in good
faith that (i) after consultation with outside counsel that failure to do so
would create a substantial risk of liability for breach of its fiduciary duties
to its stockholders under applicable law and (ii) that such Takeover Proposal
constitutes a Superior Proposal (as hereinafter defined), the Company and
Shareholders may, in response to a written Takeover Proposal that was
unsolicited or that did not otherwise result from a breach of this Section
5.3(a), and subject to compliance with Section 5.3(c), (x) furnish information
with respect to the Company to any person pursuant to a customary and reasonable
confidentiality agreement no less favorable to the Company, and no less
STOCK PURCHASE AGREEMENT
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onerous to such person, than the confidentiality obligation contained herein and
(y) participate in negotiations regarding such Takeover Proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in the preceding sentence by any officer, director or employee of the
Company or Shareholders, or any investment banker, attorney or other advisor or
representative of the Company or Shareholders, acting on behalf of the Company
or Shareholders, shall be deemed to be a breach of this Section 5.3(a) by the
Company and Shareholders. The Company and Shareholders will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted prior to the date of this Agreement with respect to
any Takeover Proposal and request the return of all information provided to
third parties pursuant to one or more confidentiality agreements. For purposes
of this Agreement, "Takeover Proposal" means any proposal or offer from any
person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company (other than products of the Company)
or at least 20% interest in the total voting securities of the Company or any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the Company
or any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the transactions contemplated by this
Agreement.
(b) Except as expressly permitted by this Section 5.3, neither the
Boards of Directors of the Shareholders nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Buyer, the approval or recommendation by such Boards of Directors or any such
committee of this Agreement, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) cause the Company or Shareholders to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (an "Acquisition Agreement") with respect to any
Takeover Proposal. Notwithstanding the foregoing, prior to the Closing Date,
either of the Boards of Directors of Shareholders, to the extent either
determines in good faith after consultation with outside legal counsel that
failure to do so would create a substantial risk of liability for breach of its
fiduciary duties to the Parent's stockholders under applicable law, may withdraw
or modify its approval or recommendation of this Agreement or the Merger or
recommend any Superior Proposal (as hereinafter defined), in each case at any
time after the third business day following Buyer's receipt of written notice (a
"Notice of Superior Proposal") advising Buyer that the Board of Directors of one
of the Shareholders has received a Superior Proposal, specifying the identity of
the person making the Takeover Proposal and the material terms and conditions of
the Superior Proposal (it being understood that any amendment to the price or
material terms of a
STOCK PURCHASE AGREEMENT
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Superior Proposal shall require an additional Notice of Superior Proposal and an
additional three business day period thereafter to the extent permitted under
applicable law). In addition, prior to the Closing Date, either of the Boards of
Directors of Shareholders, to the extent it determines in good faith, after
consultation with outside legal counsel, that failure to do so would result in a
substantial risk of liability for breach of its fiduciary duties to its
stockholders under applicable law, may cause the Shareholders to terminate this
Agreement (and concurrently with or after such termination, if it so chooses,
cause the Company to enter into an Acquisition Agreement with respect to a
Superior Proposal). For purposes of this Agreement, a "Superior Proposal" means
any bona fide written proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or equities, more than 50%
of the voting power of the Company Common Stock or all or substantially all the
assets of the Company and otherwise on terms which the Boards of Directors of
the Shareholders determine in good faith judgment (after consultation with a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders than the transactions contemplated by this Agreement.
(c) In addition to the obligations of the Shareholders set forth in
paragraphs (a) and (b) of this Section 5.3, the Company promptly shall within 24
hours after receipt advise Buyer orally and in writing of any request for
nonpublic information which either of the Shareholders reasonably believes could
lead to a Takeover Proposal or of any Takeover Proposal, or any inquiry with
respect to or which either of the Shareholders reasonably believes could lead to
any Takeover Proposal, the identity of the person making such Takeover Proposal
and the material terms and conditions of such request, Takeover Proposal or
inquiry. The Shareholders will keep Buyer promptly informed in all material
respects of the status and details (including amendments or proposed amendments)
of any such Takeover Proposal or inquiry.
(d) Nothing contained in this Section 5.3 or elsewhere in this
Agreement shall prohibit the Parent from (i) taking and disclosing to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the stockholders of
Parent required by applicable laws; provided that the Shareholders shall not,
except in accordance with the provisions of Section 5.3(b), withdraw or modify,
or propose to withdraw or modify, its recommendation of the Merger or approve or
recommend, or propose to approve or recommend, a Takeover Proposal.
STOCK PURCHASE AGREEMENT
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5.4 NOTIFICATION OF CERTAIN MATTERS
The Company and/or the Shareholders shall give prompt written notice to
Buyer, and Buyer shall give prompt written notice to the Company and/or the
Shareholders, of (a) the occurrence or nonoccurrence of any event which would be
likely to (i) cause any representation or warranty of the Company and/or the
Shareholders or Buyer, respectively, contained in this Agreement to be
materially untrue or inaccurate or (ii) result in the material failure to
satisfy a closing condition in Article VII or VIII; (b) any material failure of
the Company and/or the Shareholders or Buyer, respectively, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it or them; and (c) any written communication from any Person alleging that the
consent of such Person may be required in connection with the transactions
contemplated by this Agreement; provided, however, that the delivery of any
notice pursuant to this Section 5.4 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
5.5 FURTHER ACTION
Upon the terms and subject to the conditions hereof, each of the parties
shall (a) make promptly its respective filings, and thereafter make any other
required submissions, under applicable laws with respect to the transactions
contemplated hereby and shall cooperate with the other parties with respect to
such filings and submissions and (b) use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby, including, without limitation, using its reasonable best efforts to
obtain all shareholder consents as well as waivers, licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts as are necessary for the consummation of the
transactions contemplated hereby and to fulfill the conditions to the closing of
the sale of the Shares to Buyer. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, each party to this Agreement shall use its reasonable best efforts to
take all such action. None of Buyer, the Company or the Shareholders will
undertake any course of action inconsistent with this Agreement or that would
make any representations, warranties or agreements made by such party in this
Agreement untrue or any conditions precedent to this Agreement unable to be
satisfied at or prior to the Closing.
STOCK PURCHASE AGREEMENT
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5.6 PUBLICITY
None of the parties shall disclose, make or issue, or cause to be
disclosed, made or issued, any statement or announcement concerning this
Agreement or the transactions contemplated hereby to any third parties (other
than its officers, directors, employees, authorized representatives, legal
advisors and financial advisors who need to know such information in connection
with carrying out or facilitating the transactions contemplated hereby) without
the prior written consent of the other parties, except as required by law or any
listing or other agreement with any public securities trading exchange or market
to which Buyer is a party and after providing written notice to the other
parties of such required disclosure.
ARTICLE VI - ADDITIONAL AGREEMENTS
6.1 PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS MEETING
As soon as practicable following the date of this Agreement, the Parent
shall prepare and file with the SEC a Proxy Statement relating to the
Transaction and seeking approval of the Transaction by stockholders of Parent.
The Parent will use its reasonable efforts to cause the Proxy Statement to be
mailed to its stockholders as promptly as practicable. Buyer shall furnish all
information concerning itself to Parent as may be reasonably requested in
connection with any such action and the preparation, filing and distribution of
the Proxy Statement.
6.2 CERTAIN EXPENSES
Shareholder will promptly, upon receipt of billing therefor from Buyer,
reimburse Buyer for expenses, including transportation, lodging and meals
incurred by Xxxxxxxx XxXxxxx in providing assistance to Shareholder and its
shareholders in Israel in connection with Shareholder's proxy statement.
6.3 ASSIGNMENT OF DOMAIN NAMES AND MARKS
For good and valuable consideration, receipt of which is hereby
acknowledged, Shareholders hereby assign to Company all rights, title and
interest in and to the domain names and marks, registered or unregistered,
identified in Exhibit A attached hereto, together with the good will associated
thereto, including, the right to recover for damages and profits for past
infringements thereof. Shareholders agree to execute and deliver at the request
of Company, all papers, instruments, and assignments, and to perform any and all
other reasonable acts Company may require, including recordation of the
assignment, in order to vest all Shareholders' rights, title, and interest in
and to the said domain names and marks in Company and/or to provide
STOCK PURCHASE AGREEMENT
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evidence to support any of the foregoing in the event such evidence is deemed
necessary by Company, to the extent such evidence is in the possession or
control of Shareholders.
ARTICLE VII - CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to perform and observe the covenants,
agreements and conditions to be performed and observed by it at or before the
Closing shall be subject to the satisfaction of the following conditions, which
may be expressly waived only in writing signed by Buyer:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
Each of the representations and warranties of the Company and the
Shareholders contained in this Agreement and the other Transaction Documents to
which each is a party (including applicable Exhibits or Disclosure Schedules)
shall be true and correct as of the date hereof and at and as of the Closing
Date as though made on that date; except to the extent such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true and correct as of the specified date.
7.2 PERFORMANCE OF AGREEMENTS
The Company and the Shareholders shall have performed all obligations
and agreements and complied with all covenants and conditions contained in this
Agreement or any other Transaction Document to be performed and complied with by
them at or prior to the Closing.
7.3 OPINION OF COUNSEL FOR THE COMPANY AND THE SHAREHOLDERS
Buyer shall have received the opinion of Jeffer, Xxxxxxx Xxxxxx &
Xxxxxxx LLP, counsel for the Company and the Shareholders, dated the Closing
Date, in form and substance reasonably acceptable to Buyer.
7.4 CONSENTS TO SALE OF SHARES
The Company shall have received and shall have delivered to Buyer
written consents to the sale of the Shares from each of the parties (other than
the Company) to those agreements, leases, notes or other documents set forth as
requiring such consent
STOCK PURCHASE AGREEMENT
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on the Disclosure Schedules, which consents shall be satisfactory in all
respects to Buyer in its sole and absolute discretion.
7.5 OFFICERS' CERTIFICATE
Buyer shall have received a certificate of the Chief Executive and the
chief financial officer of the Company, dated the Closing Date, certifying that
the conditions set forth in Sections 7.1, 7.2, 7.4, 7.7 and 7.9 have been
fulfilled.
7.6 SHAREHOLDER'S CERTIFICATE
Buyer shall have received a certificate of each the Shareholders,
executed on behalf of such Shareholder by its Chief Executive Officer and chief
financial officer, dated the Closing Date, certifying that the conditions set
forth in Sections 7.1, 7.2, 7.4, 7.7 and 7.9 have been fulfilled.
7.7 MATERIAL ADVERSE CHANGE
Since the date hereof and through the Closing, there shall not have
occurred (or be threatened) any material adverse change (a) in the business,
operations, assets, liabilities, earnings, condition (financial or other), or
prospects of the Company or (b) with respect to the Shareholders and the Shares,
and no material adverse change shall have occurred (or be threatened) in any
domestic or foreign laws or regulations affecting the Company or in any third
party contractual or other business relationships of the Company.
7.8 APPROVALS AND CONSENTS
All transfers of permits or licenses and all approvals, applications or
notices to public agencies, federal, state, local or foreign, the granting or
delivery of which is necessary for the consummation of the transactions
contemplated hereby or for the continued operation of the Company as set forth
in the Disclosure Schedules, shall have been obtained, and all waiting periods
specified by law shall have passed. All other consents, approvals and notices
material to the consummation of the transactions contemplated by this Agreement
and referred to in the Disclosure Schedules shall have been obtained or
delivered. All such transfers, approvals, and consents shall be satisfactory in
all respects to Buyer in its sole and absolute discretion.
7.9 PROCEEDINGS AND DOCUMENTS; SECRETARY'S CERTIFICATE
All corporate and other proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions
STOCK PURCHASE AGREEMENT
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shall have been approved by counsel to Buyer, and Buyer shall have received a
certificate of the Secretary of the Company and each of the Shareholders, as to
the authenticity and effectiveness of the actions of the Board of Directors of
the Company and each of the Shareholders authorizing the sale of the Shares and
the other transactions contemplated by this Agreement and the other Transaction
Documents to which the Company or any of the Shareholders is a party, and such
other documents as are reasonably specified by counsel to Buyer.
7.10 COMPLIANCE WITH LAWS
The consummation of the transactions contemplated by this Agreement
shall be legally permitted by all laws and regulations to which Buyer is
subject.
7.11 LEGAL PROCEEDINGS
No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement, and
no litigation, investigation or administrative proceeding shall be pending or
threatened that would enjoin, restrain, condition or prevent consummation of
this Agreement or the transactions contemplated hereby.
7.12 DELIVERY OF CERTIFICATES
The Shareholder shall deliver to Buyer at Closing certificates
representing the Shares, duly endorsed for transfer on the Company's books.
7.14 NONCOMPETITION AGREEMENTS
Xxxxx Xxxxxxx shall have entered into a two-year noncompetition
agreement reasonably acceptable to Buyer to the effect he will not compete with
the Company or Buyer as their businesses are now conducted.
7.15 WAIVER BY INSIDERS
Each of Xxxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxxx shall execute a
release, in a form and substance reasonably satisfactory to Buyer and the
Company, pursuant to which each of them releases Buyer, the Company and their
respective affiliates from and against any liability for loans, compensation and
other claims relating to or arising prior to the Closing Date (other than claims
arising under this Agreement or the Transaction Documents).
STOCK PURCHASE AGREEMENT
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ARTICLE VIII - CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE COMPANY AND THE
SHAREHOLDERS
The obligations of the Company and the Shareholders to perform and
observe the covenants, agreements and conditions to be performed and observed by
each of them at or before the Closing shall be subject to the satisfaction of
the following conditions, which may be expressly waived only in writing signed
by the Company and the Shareholders.
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
Each of the representations and warranties of Buyer contained in this
Agreement and the other Transaction Documents to which it is a party shall be
true and correct as of the date hereof and at and as of the Closing Date as
though made on that date, except to the extent such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true and correct as of the specified date.
8.2 PERFORMANCE OF AGREEMENTS
Buyer shall have performed all obligations and agreements and complied
with all covenants and conditions contained in this Agreement or any other
Transaction Document to be performed and complied with by it at or prior to the
Closing.
8.3 OPINION OF COUNSEL FOR BUYER
The Company and the Shareholders shall have received the opinion of
Xxxxxxx Coie LLP, counsel for Buyer, dated the Closing Date, in form and
substance reasonably acceptable to Company and the Shareholder.
8.4 OFFICERS' CERTIFICATE
The Shareholders shall have received a certificate of a Vice President
and another officer of Buyer, dated the Closing Date, certifying that the
conditions in Sections 8.1, 8.2, 8.5 and 8.6 have been fulfilled.
8.5 MATERIAL ADVERSE CHANGE
Since the date hereof and through the Closing, there shall not have
occurred any material adverse change in the business, operations, assets,
liabilities, earnings,
STOCK PURCHASE AGREEMENT
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condition (financial or other) of Buyer that would render Buyer unable to
perform its obligations under the Transaction Documents.
8.6 APPROVALS AND CONSENTS
All transfers of permits or licenses and all approvals, applications or
notices to public agencies, federal, state, local or foreign, required to be
obtained by Buyer for the consummation of the transactions contemplated hereby
shall have been obtained, and all waiting periods specified by law shall have
passed.
8.7 PROCEEDINGS AND DOCUMENTS; SECRETARY'S CERTIFICATE
All corporate and other proceedings in connection with the transactions
contemplated hereby and all documents and instruments incident to such
transactions shall have been approved by counsel to the Company and the
Shareholders and the Company and the Shareholders shall have received a
certificate of the Secretary of Buyer, as to the authenticity and effectiveness
of the actions of the Board of Directors of Buyer authorizing the purchase of
the Shares and the other transactions contemplated by this Agreement and the
other Transaction Documents to which Buyer is a party, and such other documents
as are reasonably specified by counsel to the Company and the Shareholders.
8.8 COMPLIANCE WITH LAWS
The consummation of the transactions contemplated by this Agreement
shall be legally permitted by all laws and regulations to which the Company and
the Shareholders are subject.
8.9 LEGAL PROCEEDINGS
No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement, and
no litigation, investigation or administrative proceeding shall be pending or
threatened that would enjoin, restrain, condition or prevent consummation of
this Agreement or the transactions contemplated hereby.
8.10 FAIRNESS OPINION
The Parent shall have received an opinion of a financial advisor
acceptable to it, substantially to the effect that the consideration to be
received by the Shareholder for the sale of the Shares pursuant to this
Agreement is fair, from a financial point of view, to the Shareholder.
STOCK PURCHASE AGREEMENT
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8.11 WAIVER BY INSIDERS
Each of Xxxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxxx shall execute a
release, in a form and substance reasonably satisfactory to Shareholders,
pursuant to which each of them releases Shareholders, the Company and their
affiliates from and against any liability for loans, compensation and other
claims relating to or arising prior to the Closing Date (other than claims
arising under this Agreement or the Transaction Documents).
ARTICLE IX - TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION
This Agreement may be terminated at any time prior to the Closing:
(a) by mutual written consent of the Shareholders, Company
and Buyer;
(b) by the Company or either of the Shareholders, if Buyer
shall have breached any of its representations, warranties or agreements;
(c) by Buyer, if the Company and/or either of the
Shareholders shall have breached any of its or their representations, warranties
or agreements;
(d) by either the Shareholder or Buyer:
(i) if the Closing has not occurred by June 30,
2000; provided, however, that the right to terminate this Agreement
under this subsection (d) 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;
(ii) if stockholder approval shall not have been
obtained at the stockholders meeting of Parent duly convened therefor or
at any adjournment or postponement thereof;
(iii) if prior to the Closing Date, the Board of
Directors of either of the Shareholders has made the determination
referred to in the penultimate sentence of Section 5.3(b); provided,
however, that neither the Company nor the Shareholders may terminate
this Agreement pursuant to this Section 9.1(d)(iii) unless and until
three business days have elapsed following
STOCK PURCHASE AGREEMENT
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delivery to Buyer of a Notice of Superior Proposal with respect to a
Superior Proposal by the Board of Directors of Parent.
(e) by either the Company or Buyer if there shall be any law
or regulation that makes consummation of the sale of the Shares by the
Shareholder to Buyer illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Buyer or the Company from consummating the
sale of the Shares by the Shareholder to Buyer is entered and such judgment,
injunction, order or decree shall become final and nonappealable.
(f) by Buyer if (i) the Board of Directors of Parent or any
committee thereof shall have withdrawn or modified in a manner adverse to Buyer
its approval or recommendation of the sale or this Agreement or failed to
reconfirm its recommendation within 15 business days after a written request to
do so, or approved or recommended any Takeover Proposal or approved or
recommended any Takeover Proposal or (ii) the Board of Directors of Parent shall
have resolved to take any of the foregoing actions.
9.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement, the confidentiality
obligations under Section 5.2, and Sections 9.2, 11.1, 11.2, 11.3 and 11.6 shall
survive any such termination and nothing shall relieve any party from liability
for any breach. In addition, the following shall apply:
(a) In the event of the termination of this Agreement
pursuant to Section 9.1(a), or by the Company or one of the Shareholders
pursuant to Section 9.1(d), there shall be no further obligation on the part of
any party.
(b) In the event of the termination of this Agreement
pursuant to Section 9.1(e) or by the Buyer pursuant to Section 9.1(c), (d) or
(f), Company and the Shareholders shall promptly repay any amounts advanced by
Buyer to the Company.
9.3 AMENDMENT
Buyer, the Company and the Shareholders may amend, modify or supplement
this Agreement at any time, but only in writing duly executed on behalf of each
of the parties to be bound thereby.
STOCK PURCHASE AGREEMENT
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9.4 WAIVER
At any time prior to the Closing, any party may (a) extend the time for
the performance of any obligation or other act of any other party, (b) waive any
inaccuracy in the representations and warranties contained in any Transaction
Document, or (c) waive compliance with any agreement or condition in any
Transaction Document. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties to be bound.
The failure of any party at any time or times to require performance of any
provisions shall in no manner affect its right at a later time to enforce the
same. No waiver by any party of any condition or of any breach of any terms,
covenants, representations, warranties or agreements contained in this Agreement
shall be deemed to be a further or continuing waiver of any such condition or
breach in other instances or a waiver of any other condition or any breach of
any other terms, covenants, representations, warranties or agreements.
ARTICLE X - SURVIVAL AND INDEMNIFICATION
10.1 SURVIVAL
All representations and warranties contained in this Agreement or the
other Transaction Documents shall survive for a period of two years following
the Closing, except that the representations and warranties of the Company shall
terminate immediately after Closing. The covenants and agreements contained in
this Agreement that contemplate performance after the Closing shall survive the
Closing and shall continue until all obligations with respect thereto shall have
been performed or satisfied or shall have been terminated in accordance with
their terms.
10.2 INDEMNIFICATION
10.2.1 INDEMNIFICATION BY THE SHAREHOLDERS
The Shareholders shall jointly and severally indemnify and hold Buyer
and its affiliates (the "BUYER INDEMNIFIED PARTIES") harmless from and against,
and shall reimburse Buyer Indemnified Parties for, any and all losses, damages,
debts, liabilities, obligations, judgments, orders, awards, writs, injunctions,
decrees, fines, penalties, taxes, costs or expenses (including but not limited
to any legal and accounting fees and expenses) ("LOSSES") arising out of or in
connection with:
(a) any material inaccuracy in or other breach of any
representation or warranty made by the Company or either of the Shareholders in
this Agreement or in any other Transaction Document;
STOCK PURCHASE AGREEMENT
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(b) any material failure by the Company or the Shareholders
to perform or comply, in whole or in part, with any covenant or agreement in
this Agreement or any other Transaction Document to which it is a party; or
(c) any claim, demand, cause of action, suit, proceeding,
hearing or investigation ("CLAIM") by any person or entity for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person or entity directly or
indirectly with the Company, any of its officers, directors or employees, (other
than Xxxxxx Xxxxxx or Xxxxxx Xxxxxx) or the Shareholders, in connection with any
of the transactions contemplated by this Agreement or any other Transaction
Document, and all taxes relating to periods on or prior to the Closing Date.
10.2.2 INDEMNIFICATION BY BUYER
Buyer shall indemnify and hold the Shareholders (the "SHAREHOLDER
INDEMNIFIED PARTIES"; together with Buyer Indemnified Parties, the "INDEMNIFIED
PARTIES") harmless from and against, and shall reimburse the Shareholder
Indemnified Parties for, any and all Losses arising out of or in connection
with:
(a) any material inaccuracy in or other breach of any
representation or warranty made by Buyer in this Agreement or in any other
Transaction Document;
(b) any material failure by Buyer to perform or comply, in
whole or in part, with any covenant or agreement in this Agreement or any other
Transaction Document to which it is a party;
(c) any Claim by any person or entity for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person or entity directly or
indirectly with Buyer or any of its officers, directors or employees in
connection with any of the transactions contemplated by this Agreement or any
other Transaction Document, or
(d) any Claim by any person or entity relating to operation
of the Company's business from and after the Closing Date.
10.3 LIMITATIONS
Any claim for indemnification must be asserted as provided in Section
10.4 within two years from the Closing Date; otherwise, this Article X shall be
null, void and without effect.
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10.4 PROCEDURE FOR INDEMNIFICATION
10.4.1 CLAIM NOTICE
In the event that any Indemnified Party sustains or incurs any Losses in
respect of which indemnification may be sought pursuant to this Article X, such
Indemnified Party may assert a claim for indemnification by giving written
notice (the "CLAIM NOTICE") to the indemnifying party, which will describe in
reasonable detail the facts and circumstances on which the asserted claim for
indemnification is based. The Claim Notice will also specify how the Indemnified
Party intends to recover such funds pursuant to this Agreement. Unless the claim
described in the Claim Notice is contested by the indemnifying party by written
notice to the Indemnified Party of the amount of the claim that is contested,
given within 30 days of the receipt of the Claim Notice, the Indemnified Party
may recover such undisputed amount of the claim described in the Claim Notice.
10.4.2 DISPUTE NOTICE
If, within thirty (30) days of the receipt by the indemnifying party of
the Claim Notice, the indemnifying party contests in writing to the Indemnified
Party and the Escrow Agent (if such claim is against the Shareholder) that such
Loss constitutes an indemnifiable claim (the "DISPUTE NOTICE"), then the
Indemnified Party and the indemnifying party, acting in good faith, shall
attempt to reach agreement with respect to such claim.
10.4.3 THIRD-PARTY CLAIMS
With respect to claims for indemnification resulting from or in
connection with any legal proceeding commenced by a third party, the Indemnified
Party will give the Claim Notice to the indemnifying party no later than 20 days
prior to the time any initial answer or response to the asserted claim is
legally required under any applicable court or procedural rule. The indemnifying
party will, subject to the limitations set forth in Section 10.3, promptly
indemnify the Indemnified Party in accordance with the provisions of this
Article X and the Escrow Agreement.
10.5 INVESTIGATIONS; WAIVERS
An Indemnified Party's right to indemnification provided for in this
Article X will remain in effect notwithstanding any investigation at any time by
or on behalf of any party or any waiver by any party of any condition to such
party's obligations to consummate the transactions contemplated hereby.
STOCK PURCHASE AGREEMENT
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ARTICLE XI - GENERAL
11.1 EXPENSES
11.1.1 Whether or not the transactions contemplated by this Agreement
are consummated, each party shall each pay its own fees and expenses for the
negotiation, preparation and carrying out of this Agreement and the other
Transaction Documents (including legal and accounting fees and expenses);
provided, however, that, should any action be brought hereunder, the attorneys'
fees and expenses of the prevailing party shall be paid by the other party to
such action. The Shareholder shall pay any transfer or similar taxes that may be
payable in connection with the transactions contemplated by this Agreement.
11.1.2 In the event that this Agreement is terminated (i) by any party
hereto (A) pursuant to Section 9.1(d)(ii) and at or prior to the time of the
Stockholders Meeting a Takeover Proposal shall have been publicly announced or
(B) pursuant to Section 9.1(d)(iii), (ii) by Buyer pursuant to Section 9.1(f) or
(iii) by Buyer pursuant to Section 9.1(c) in respect of a willful and material
breach of a covenant or agreement by the Company or Shareholders, then in such
case Shareholders shall, promptly, but in no event later than two days after the
date of such termination, pay Buyer a fee equal to $200,000 plus all expenses of
Buyer incurred in connection with this Agreement in immediately available funds
by wire transfer (the "Termination Fee"). If this Agreement is terminated by any
party hereto pursuant to Section 9.1(d) (to the extent the Parent has
theretofore failed to hold the Stockholders Meeting in breach of its obligations
under Section 6.1, and prior to the date 12 months following the date of the
termination of this Agreement, the Company shall either (x) consummate a Company
Acquisition (as hereinafter defined) or (y) enter into a written Acquisition
Agreement providing for a Company Acquisition, then the Shareholders shall pay
the Termination Fee in the case of clause (x) concurrently with the consummation
of such Company Acquisition or in the case of clause (y) concurrently with the
consummation of the transaction subject to such Acquisition Agreement (whether
or not such transaction is consummated prior to the date 12 months following the
date of the termination of this Agreement, but only in the event that such
transaction subject to such Acquisition Agreement is in fact consummated).
Shareholders acknowledge that the agreements contained in this Section 11.1.2
are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, Buyer would not enter into this Agreement;
accordingly, if Shareholders fail promptly to pay the amounts due pursuant to
this Section 11.1.2, and, in order to obtain such payment, Buyer commences a
suit which results in a judgment against the Shareholders for the amounts set
forth in this Section 11.1.2, Shareholders shall pay to Buyer its reasonable
costs and expenses (including attorneys' fees and expenses) in connection with
such
STOCK PURCHASE AGREEMENT
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suit, together with interest on the amounts set forth in this Section 11.1.2 at
the prime rate of Bank of America N.T. & S.A. in effect on the date such payment
was required to be made. "Company Acquisition" shall mean any transaction or
series of related transactions involving (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or Shareholders pursuant to which the stockholders of the
Company immediately preceding such transaction or series of related transactions
hold less than 60% of the equity interests in the surviving or resulting entity
of such transaction or transactions (other than the transactions contemplated by
this Agreement); (ii) a sale by the Company of assets (excluding inventory and
used equipment sold in the ordinary course of business) representing in excess
of 40% of the fair market value of the Company's business immediately prior to
such sale; or (iii) the acquisition by any person or group (including without
limitation by way of a tender offer or an exchange offer or issuance by the
Company), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of 40% or more of the then outstanding shares of capital
stock of the Company.
11.1.3 If the Agreement is terminated by Buyer pursuant to Section
9.1(d)(ii)or (iii) or Section 9.1 (f) then, in addition to any fee payable
pursuant to Section 11.1.3, the Shareholders shall, promptly, but in no event
later than two business days after the date of such termination, pay Buyer a fee
equal to $100,000.
11.2 SPECIFIC ENFORCEMENT
The parties expressly agree that they will be irreparably damaged if
this Agreement is not specifically enforced. Upon a breach or threatened breach
of the terms, covenants and/or conditions of this Agreement by any party, Buyer,
the Company and the Shareholders shall, in addition to all other remedies, be
entitled to a temporary or permanent injunction, without showing any actual
damage, and/or a decree for specific performance, in accordance with the
provisions of this Agreement.
11.3 CONSEQUENTIAL DAMAGES
No party shall be liable to the other parties for any special, indirect,
incidental or consequential damages resulting from any breach of this Agreement.
11.4 ASSIGNMENT
This Agreement shall not be assigned by operation of law or otherwise,
except that Buyer may assign all or any of its rights and obligations to any of
its affiliates. In
STOCK PURCHASE AGREEMENT
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the event of any such permitted assignment, Buyer shall guarantee the
performance of such obligations by such assignee.
11.5 NOTICES
Unless otherwise provided, any notice under this Agreement shall be
given in writing and shall be deemed effectively given (a) upon personal
delivery to the party to be notified, (b) upon confirmation of receipt by fax by
the party to be notified, (c) one business day after deposit with a reputable
overnight courier, prepaid for overnight delivery and addressed as set forth in
(d), or (d) three days after deposit with the U.S. Post Office, postage prepaid,
registered or certified with return receipt requested and addressed to the party
to be notified at the address indicated for such party below, or at such other
address as such party may designate by 10 days' advance written notice to the
other parties given in the foregoing manner.
TO BUYER:
JIA, INC.
0000 XX 00xx Xx., Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
XXXXXXX COIE LLP
0000 XX Xxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
TO THE COMPANY:
SUMMIT V, INC.
0000 XX 00xx Xx., Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxxxx
with a copy to:
STOCK PURCHASE AGREEMENT
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XXXXXX XXXXXXX XXXXXX & MARMARO
2121 Avenue of the Stars
Xxx Xxxxxxx, XX 00000
Facsimile: 000-000-00000
Attention: Xxxxxx Xxxxxxxxx
TO THE SHAREHOLDERS:
JENKON INTERNATIONAL,
0000 XX 00xx Xx., Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxxxx
with a copy to:
XXXXXX XXXXXXX XXXXXX & XXXXXXX
2121 Avenue of the Stars
Xxx Xxxxxxx, XX 00000
Facsimile: 000-000-00000
Attention: Xxxxxx Xxxxxxxxx
11.6 GOVERNING LAW; JURISDICTION; VENUE
This Agreement shall be governed by and construed under the laws of the
state of Washington without regard to principles of conflict of laws. Any
dispute among the parties relating to or arising out of this Agreement shall be
settled by binding arbitration pursuant to the rules of the American Arbitration
Association. Such arbitration shall take place in Vancouver, Washington and the
parties irrevocably consent to the jurisdiction and venue of the state and
federal courts located in Xxxxx County, Washington in connection with any action
relating to the enforcement of any arbitral award.
11.7 SUCCESSORS AND ASSIGNS
The terms and conditions of this Agreement shall inure to the benefit of
and be binding on the respective successors and assigns of the parties.
11.8 SEVERABILITY
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement, and
the balance
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of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
11.9 ENTIRE AGREEMENT; COUNTERPARTS
This Agreement constitutes the entire agreement among the parties with
respect to this subject matter and supersedes all prior agreements and
undertakings, both written and oral, among the parties with respect to this
subject matter including the Stock Purchase Agreement dated March 15, 2000 among
the same parties. This Agreement may be executed in two or more counterparts,
which together shall constitute one instrument.
[SIGNATURE PAGE FOLLOWS]
STOCK PURCHASE AGREEMENT
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
JIA, INC.
By
----------------------------
Its
---------------------------
SUMMIT V, INC.
By
----------------------------
Its
---------------------------
JENKON INTERNATIONAL, INC. (DELAWARE)
By
----------------------------
By
----------------------------
Its
---------------------------
JENKON INTERNATIONAL, INC. (WASHINGTON)
By
----------------------------
By
----------------------------
Its
---------------------------
STOCK PURCHASE AGREEMENT
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EXHIBIT A
TRADEMARKS:
Direct Selling Today
Jenkon
Now!
Summit V
PENDING TRADEMARKS:
JOL (stands for Jenkon On-Line)
DOMAIN NAMES:
xxxxxx.xxx
xxxxxx.xxx
xxxxxxxxxx.xxx
xxxxxx-xxx.xxx
STOCK PURCHASE AGREEMENT
