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AGREEMENT AND PLAN OF MERGER
by and among
XXXX.XXX, INC.
a Delaware corporation
LIQUIDMARKET, INC.
a Delaware corporation
and
XOOM ACQUISITION SUB II, INC.
a Delaware corporation
Dated as of July 26, 1999
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TABLE OF CONTENTS
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1. The Merger; Effective Time....................................................1
1.1 The Merger...........................................................1
1.2 Effective Time of the Merger.........................................2
1.3 The Merger Consideration.............................................2
1.4 Escrow...............................................................2
2. Purchaser and the Surviving Corporation.......................................3
2.1 Certificate of Incorporation of the Surviving Corporation............3
2.2 Bylaws of the Surviving Corporation..................................3
2.3 Directors and Officers of the Surviving Corporation..................3
3. Treatment of Stock and Company Options........................................3
3.1 Exchange of Stock....................................................3
3.2 Mechanics of Exchange................................................5
3.3 No Further Rights in Stock...........................................6
3.4 Closing..............................................................6
3.5 Supplementary Action.................................................6
3.6 Dissenting Shares....................................................6
4. Closing Conditions............................................................7
4.1 Conditions Precedent to Obligations of Purchaser
and Merger Sub.......................................................7
4.2 Conditions Precedent to Obligations of the Company
and the Selling Stockholders........................................10
5. Representations and Warranties of the Company................................11
5.1 Organization, Good Standing, Qualification..........................11
5.2 Certificate of Incorporation and Bylaws; Records....................11
5.3 Capitalization......................................................12
5.4 Authority; Binding Nature of Agreements.............................12
5.5 Non-Contravention; Consents.........................................13
5.6 Intellectual Property...............................................14
5.7 Proceedings; Orders.................................................15
5.8 Financial Statements................................................16
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5.9 Title to Assets.....................................................16
5.10 Contracts...........................................................17
5.11 Employees...........................................................17
5.12 Compliance with Legal Requirements..................................18
5.13 Governmental Authorizations.........................................18
5.14 Tax Matters.........................................................19
5.15 Securities Laws Compliance; Registration Rights.....................21
5.16 Finders and Brokers; Fees...........................................21
5.17 Environmental Compliance............................................22
5.18 Insurance...........................................................22
5.19 Related Party Transactions..........................................22
5.20 Absence of Changes..................................................23
5.21 Powers of Attorney..................................................24
5.22 Benefit Plans; ERISA................................................24
5.23 HSR Act Matters.....................................................26
5.24 Full Disclosure.....................................................26
5.25 Due Diligence Information...........................................27
6. Representations and Warranties of Purchaser and Merger Sub...................27
6.1 Organization, Good Standing, Authority;
Binding Nature of Agreement.........................................27
6.2 Investment Representations..........................................27
6.3 Purchaser Stock.....................................................28
6.4 Authority; Binding Nature of Agreements.............................28
6.5 Non-Contravention; Consents.........................................28
6.6 Finders and Brokers.................................................29
6.7 Reports and Financial Statements; Absence of Certain Changes........29
6.8 Compliance with Applicable Law......................................30
6.9 Complete Copies of Requested Reports................................30
6.10 Contracts...........................................................31
6.11 Tax Matters.........................................................31
7. Pre-Closing Covenants of the Company and the Selling Stockholders............32
7.1 Corporate Proceedings; Stockholder Approval.........................32
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7.2 Access and Investigation............................................33
7.3 Operation of Business...............................................33
7.4 Filings and Consents................................................34
7.5 Notification; Updates to Company Disclosure Schedule................35
7.6 No Negotiation......................................................35
7.7 Best Efforts........................................................36
8. Pre-Closing Covenants of Purchaser...........................................36
8.1 Corporate Proceedings...............................................36
8.2 Access and Investigation............................................37
8.3 Filings and Consents................................................37
8.4 Notification........................................................38
8.5 Best Efforts........................................................38
9. Other Agreements.............................................................38
9.1 Registration of Company Options.....................................38
9.2 Confidentiality.....................................................38
9.3 Public Disclosure...................................................38
9.4 Valuation Report....................................................39
9.5 No Inconsistent Action..............................................39
9.6 Terms of Employment of Critical Employees...........................39
9.7 Patent Opinions.....................................................39
9.8 Effect of Pre-Closing Covenants.....................................39
10. Termination..................................................................39
10.1 Termination Events..................................................39
10.2 Termination Procedures..............................................40
10.3 Effect of Termination...............................................40
10.4 Exclusivity of Termination Rights...................................40
11. Indemnification, etc.........................................................40
11.1 Survival of Representations and Covenants...........................40
11.2 Indemnification by the Selling Stockholders.........................41
11.3 Tax Indemnification by Purchaser....................................43
11.4 No Contribution.....................................................43
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11.5 Setoff..............................................................43
11.6 Defense of Third Party Claims.......................................43
11.7 Sole Remedy.........................................................44
11.8 Exercise of Remedies by Indemnitees Other than Purchaser and
by Selling Stockholders.............................................44
12. Miscellaneous................................................................45
12.1 Further Assurances..................................................45
12.2 Fees and Expenses...................................................45
12.3 Attorneys'Fees......................................................45
12.4 Taxes...............................................................45
12.5 Governing Law.......................................................46
12.6 Successors and Assigns..............................................47
12.7 Entire Agreement....................................................47
12.8 Separability........................................................47
12.9 Amendments..........................................................47
12.10 Notices.............................................................47
12.11 Publicity and Use of Confidential Information.......................49
12.12 Counterparts........................................................49
12.13 Delays or Omissions; Waivers........................................49
12.14 Remedies Cumulative; Specific Performance...........................50
12.15 Headings............................................................50
12.16 Construction........................................................50
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is entered into
as of July 26, 1999, by and among XXXX.XXX, INC., a Delaware corporation
("PURCHASER"), LIQUIDMARKET, INC., a Delaware corporation (the "COMPANY"),
XOOM ACQUISITION SUB II, INC., a Delaware corporation and a wholly-owned
subsidiary of Purchaser ("MERGER SUB"), the Company and Merger Sub sometimes
being hereinafter collectively referred to as the "CONSTITUENT CORPORATIONS,"
and the undersigned individuals and Entities (collectively, the "SELLING
STOCKHOLDERS"), acting through Xxxxxx Xxxxxx (the "HOLDER REPRESENTATIVE").
Certain capitalized terms in this Agreement are defined in EXHIBIT A.
RECITALS
A. The Board of Directors of Purchaser, Merger Sub and the Company each
have determined that it is in the best interests of their respective
stockholders, as the case may be, for Purchaser to acquire the
Company by the merger of Merger Sub with and into the Company upon
the terms, and subject to the conditions, set forth herein (the
"MERGER").
B. For federal income tax purposes, it is intended that the Merger
constitute a "reorganization," within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "CODE"), and
that each of Purchaser, Merger Sub and the Company be a "party to a
reorganization," within the meaning of Section 368(b) of the Code,
in respect of the Merger.
AGREEMENT
Purchaser, the Company, Merger Sub and the Selling Stockholders,
intending to be legally bound, agree as follows:
1. THE MERGER; EFFECTIVE TIME.
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.2 hereof), Merger Sub shall be merged
with and into the Company, with the Company as the surviving corporation in
such Merger (the "SURVIVING CORPORATION"), and the separate existence of
Merger Sub shall thereupon cease. The Merger shall have the effects set forth
in Section 251 of the General Corporation Law of the State of Delaware.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all property, rights, powers, privileges and franchises of
Merger Sub shall vest in the Company as the Surviving Corporation, and all
debts, liabilities and duties of Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation. Immediately following
the Effective Time, the Surviving Corporation shall be a wholly-owned
subsidiary of Purchaser.
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1.2 EFFECTIVE TIME OF THE MERGER.
The Merger shall become effective upon the completion of the filing
of a properly executed Certificate of Merger (the "CERTIFICATE OF MERGER")
with the Secretary of State of the State of Delaware, which filing shall be
made as soon as practicable after the Closing (as defined below). When used
in this Agreement, the term "EFFECTIVE TIME" with respect to the Merger shall
mean the date and time at which such Certificate of Merger has been accepted
for filing by the Secretary of State of Delaware.
1.3 THE MERGER CONSIDERATION.
(a) Subject to Section 1.3(b), Purchaser shall acquire all
of the outstanding shares of Common Stock and Company Preferred Stock, and
assume all of the Company Options, for an aggregate consideration equal to
1,061,008 shares of Purchaser Stock (the "MERGER CONSIDERATION"). Each
Selling Stockholder shall be allocated the portion of the Merger
Consideration set forth next to each such Selling Stockholder's name on
SCHEDULE I attached hereto in exchange for the shares of Common Stock (as
defined below) held by such Selling Stockholder.
(b) Notwithstanding the provisions of Section 1.3(a):
(i) if the product of (x) 1,061,008 times (y) the
Average Purchaser Stock Price exceeds $60,000,000, then the aggregate number
of shares of Purchaser Stock payable as Merger Consideration shall equal the
quotient of $60,000,000 and the Average Purchaser Stock Price;
(ii) if the product of (x) 1,061,008 times (y) the
Average Purchaser Stock Price is less than $40,000,000, then the aggregate
number of shares of Purchaser Stock payable as Merger Consideration shall
equal the quotient of $40,000,000 and the Average Purchaser Stock Price; and
(iii) if the Average Purchaser Stock Price is less than
$28.57, then Purchaser shall have the right, but not the obligation, to pay
the Merger Consideration calculated in accordance with Section 1.3(b)(ii),
but if Purchaser does not choose to do so, then either:
(A) the Selling Stockholders shall receive from
Purchaser a Merger Consideration consisting of, in the aggregate,
1,400,000 shares of Purchaser Stock; or
(B) the Company may terminate the Agreement
pursuant to the terms of Section 10.
1.4 ESCROW.
As a source for the payment of the Selling Stockholders'
indemnification obligations set forth herein and in the Escrow Agreement, and
as security for the completion of certain product development and other tasks
that are essential to the value of the assets of the Company, Purchaser will
deliver to Escrow Agent under an Escrow Agreement (the "ESCROW AGREEMENT")
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in substantially the form attached as EXHIBIT B, an amount equal to twenty
percent (20%) of the Merger Consideration (the "HOLDBACK AMOUNT").
2. PURCHASER AND THE SURVIVING CORPORATION.
2.1 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION.
The Certificate of Incorporation of Merger Sub as in effect at the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until duly amended in accordance with applicable law.
2.2 BYLAWS OF THE SURVIVING CORPORATION.
The Bylaws of Merger Sub as in effect at the Effective Time shall be
the Bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
2.3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
(a) The directors of Merger Sub at the Effective Time shall
be the initial directors of the Surviving Corporation and shall hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise
provided by law.
(b) The officers of the Company at the Effective Time shall
be the initial officers of the Surviving Corporation and shall hold office
from the Effective Time until removed or until their respective successors
are duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation and Bylaws of the Surviving Corporation, or as
otherwise provided by law.
3. TREATMENT OF STOCK AND COMPANY OPTIONS.
3.1 EXCHANGE OF STOCK.
At the Effective Time, by virtue of the Merger and without any
further action on the part of the holders thereof:
(a) The shares of Merger Sub common stock, $.0001 par
value, which shall be outstanding immediately prior to the Effective Time of
the Merger, shall be converted into the number of shares of common stock of
the Surviving Corporation equal to the number of shares of common stock of
Merger Sub then outstanding.
(b) Each share of common stock of the Company, par value
$0.001 per share (the "COMMON STOCK"), and each share of Company Preferred
Stock outstanding immediately prior to the Effective Time (such outstanding
shares hereinafter referred to collectively as the "STOCK") shall at the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive a portion of the
Merger Consideration equal to the number of shares of Purchaser Stock derived
by obtaining the quotient equal to (i) the Merger Consideration divided by
(ii) the sum of (x) the number of shares of Stock and (y) the
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number of shares of Common Stock that may be issued upon the exercise of the
outstanding Company Options (including Additional Employee Option Grants)
(such quotient, the "EXCHANGE RATIO").
(c) At the Effective Time, all Company Options shall be
assumed by Purchaser in accordance with provisions described below.
(i) At the Effective Time, each Company
Option, whether vested or unvested, shall be, in connection with the Merger,
assumed by Purchaser. Each Company Option so assumed by Purchaser under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Company's 1998 Stock Incentive Plan (the "OPTION
PLAN"), which Purchaser shall also assume, and/or as provided in the
respective option agreements governing such Company Option immediately prior
to the Effective Time, provided that (A) such Company Option shall be
exercisable for that number of whole shares of Purchaser Stock equal to the
product of the number of shares of Common Stock that were issuable upon
exercise of such Company Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Purchaser Stock and (B) the per share exercise price for the
Purchaser Stock issuable upon exercise of such assumed Company Option shall
be equal to the quotient determined by dividing the exercise price per share
of Common Stock at which such Company Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent.
(ii) Notwithstanding anything in this
Agreement to the contrary, in the event that the parties mutually agree that
additional incentives are necessary to ensure retention of certain Company
employees after the Effective Time, the Company and Purchaser shall, prior to
the Closing Date, make additional grants of Company Options ("ADDITIONAL
EMPLOYEE OPTION GRANTS") to such employees prior to the determination of the
Exchange Ratio; provided, HOWEVER, that the number of shares subject to
Additional Employee Option Grants granted pursuant to this Section 3.1(c)(ii)
shall not exceed two hundred twenty-five thousand (225,000) shares of Common
Stock.
(iii) It is the intention of the parties that
the Company Options assumed by Purchaser qualify following the Effective Time
as incentive stock options as defined in Section 422 of the Code to the
extent the Company Options qualified as incentive stock options immediately
prior to the Effective Time.
(iv) Following the Effective Time, Purchaser
will issue to each holder of an outstanding Company Option a document
evidencing the foregoing assumption of such Company Option by Purchaser.
(d) The Holdback Amount shall be held by the Escrow Agent
as provided for in Section 1.4 hereof and in the Escrow Agreement, and each
Selling Stockholder shall be paid such Selling Stockholder's allocable
portion of the Merger Consideration less such Selling Stockholder's pro rata
portion of the Holdback Amount upon the surrender of the certificates
formerly representing the Stock in accordance with Section 3.2 of this
Agreement.
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(e) No fraction of a share of Purchaser Stock shall be
issued in the Merger. In lieu of fractional shares, the Selling Stockholders,
upon surrender of their Certificates as set forth in Section 3.2, shall be
paid an amount in cash, without interest, rounded to the nearest cent,
determined by multiplying the fractional interest to which such Stockholder
would otherwise be entitled by the Average Purchaser Stock Price.
(f) The shares of Purchaser Stock issued in connection with
the Transactions will not be registered under the Securities Act. Such shares
may not be transferred or resold thereafter, except in compliance with the
terms of this Agreement and the other Transactional Agreements and following
registration under the Securities Act or in reliance on an exemption from
registration under the Securities Act.
3.2 MECHANICS OF EXCHANGE.
(a) At the Effective Time, each Selling Stockholder shall
be entitled to surrender the certificate or certificates that immediately
prior to the Effective Time represented the Stock (the "CERTIFICATES"), and
that were converted into the right to receive a portion of the Merger
Consideration, to Purchaser for cancellation in exchange for such Selling
Stockholder's allocable portion of the Merger Consideration as set forth on
SCHEDULE I attached hereto. It shall be a condition of payment that the
Certificates so surrendered shall be properly endorsed or otherwise in proper
form for transfer to Purchaser.
(b) From and after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing the Stock set forth on SCHEDULE I
attached hereto are presented to the Surviving Corporation for payment, they
shall be cancelled and exchanged for the applicable portion of the Merger
Consideration in accordance with the procedures set forth in this Section.
(c) At or prior to the Effective Time of the Merger,
Purchaser shall deliver to the Escrow Agent pursuant to the terms of the
Escrow Agreement shares of Purchaser Stock in an aggregate amount equal to
the Holdback Amount.
(d) In the event that any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
Selling Stockholder claiming such Certificate to be lost, stolen or
destroyed, Purchaser will issue or cause to be issued in exchange for such
lost, stolen or destroyed Certificate the portion of the Merger Consideration
for which the shares of Stock represented by the Certificate are exchanged in
accordance with this Section 3. When authorizing such issuance in exchange
therefor, Purchaser may, in its discretion and as a condition precedent to
the issuance thereof, require such Selling Stockholder to give Purchaser a
bond in such sum as it may direct as indemnity, or such other form of
indemnity, as it shall reasonably direct, against any claim that may be made
against Purchaser with respect to the Certificate alleged to have been lost,
stolen or destroyed.
(e) Purchaser may, at its option, meet its obligations
under this Section 3.2 through a bank or trust company selected by Purchaser
to act as exchange agent in connection with the Transactions.
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(f) If any certificate for Purchaser Stock is to be issued
in a name other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the
person requesting such exchange shall (i) pay to Purchaser any transfer or
other taxes required by reason of the issuance of certificates for such
securities in a name other than that of the registered holder of the
Certificate surrendered or (ii) establish to the satisfaction of Purchaser
that such tax has been paid or is not applicable.
(g) Notwithstanding anything in this Agreement to the
contrary, neither Purchaser nor any other party hereto shall be liable to a
holder of shares of Stock for any portion of the Merger Consideration, or
dividend on shares of Purchaser Stock issued as part of the Merger
Consideration, or in accordance with Section 3.1 the cash payment for any
fractional interests, that (i) is delivered to a public official pursuant to
applicable escheat laws following the passage of time specified therein or
(ii) has not been claimed by the holder pursuant to the procedures set forth
in this Section 3.2 by the second anniversary of the Closing Date.
3.3 NO FURTHER RIGHTS IN STOCK.
All cash, cash equivalents or securities received by each
Selling Stockholder pursuant to this Agreement shall be deemed to have been
delivered and received in full satisfaction of all rights pertaining to such
Selling Stockholder's shares of Stock. At the Effective Time of the Merger,
the Selling Stockholders shall cease to have any rights with respect to
shares of Stock, and their sole right shall be to receive the Merger
Consideration.
3.4 CLOSING.
The closing of the Transactions (the "CLOSING") shall take place at
the offices of Xxxxxxxx & XXXXXXXX LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000-0000 at 9:00 a.m., local time, on the later of (x) July 28,
1999 or (y) the second business day after the day on which all of the
conditions set forth in Sections 4.1 and 4.2 hereof are satisfied or waived,
or at such other date, time and place as the parties shall otherwise agree
(the date of such Closing, the "CLOSING DATE").
3.5 SUPPLEMENTARY ACTION.
If at any time after the Effective Time, any further assignments or
assurances in law or any other things are necessary or desirable to vest or
to perfect or confirm of record in the Surviving Corporation the title to any
property or rights of either Constituent Corporation, or otherwise to carry
out the provisions of this Agreement, the officers and directors of the
Surviving Corporation are hereby authorized and empowered on behalf of the
Constituent Corporations, in the name of and on behalf of either Constituent
Corporation as appropriate, to execute and deliver any and all things
necessary or proper to vest or to perfect or confirm title to such property
or rights in the Surviving Corporation, and otherwise to carry out the
purposes and provisions of this Agreement.
3.6 DISSENTING SHARES
(a) If holders of Stock are entitled to dissent from the
Merger and demand appraisal of the Stock under applicable law (each person
electing to exercise such rights, a
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"DISSENTING HOLDER"), any shares of Stock held by a Dissenting Holder as to
which appraisal has been so demanded in accordance with applicable law
("DISSENTING SHARES") shall not be exchanged as described in Section 3.1, but
shall from and after the Effective Time represent only the right to receive
such consideration as may be determined to be due such Dissenting Holder
pursuant to applicable law; PROVIDED, that each share of Stock held by a
Dissenting Holder who shall, after the Effective Time, withdraw its demand
for appraisal or lose its rights of appraisal with respect to such shares of
Stock, in either case pursuant to applicable law, shall not be deemed a
Dissenting Share, but shall be deemed to be converted, as of the Effective
Time, into the applicable portion of the Merger Consideration.
(b) The Company shall give Purchaser prompt notice of any
written demands for appraisal of any shares of Stock, withdrawals of such
demands or failures to perfect appraisal rights resulting in a loss of such
rights, and any other instruments received by the Company which relate to any
such demand for appraisal. The Company shall not voluntarily make any payment
with respect to any demands or potential demands for appraisal of Stock or
offer to settle or settle any such demands or potential demands. Purchaser
shall be responsible for any settlement of claims with respect to any
Dissenting Shares, which settlements may be paid in cash, Purchaser Stock or
such other consideration as Purchaser may determine, except as otherwise
required under applicable law.
4. CLOSING CONDITIONS.
4.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND MERGER
SUB.
Purchaser's and Merger Sub's obligations to consummate the Merger
and to take the other actions required to be taken by Purchaser and Merger
Sub at the Closing are subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Purchaser, in whole or in part, in accordance with Section 12.13):
(a) the representations and warranties made by the Holder
Representative, the Selling Stockholders and the Company in Section 5 hereof
or in any other Transactional Agreement shall have been true and accurate in
all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, without giving effect to
any Disclosure Schedule update;
(b) all covenants, agreements and conditions contained in
this Agreement or in any other Transactional Agreement to be observed by the
Holder Representative, the Selling Stockholders and/or the Company on or
prior to the Closing shall have been performed or complied with in all
material respects;
(c) the Selling Stockholders, the Holder Representative or
the Company, as the case may be, shall have delivered the following documents
to Purchaser:
(i) the Escrow Agreement, duly executed by
the Holder Representative;
(ii) a Registration Rights Agreement in the
form of EXHIBIT C (the "RIGHTS AGREEMENT"), duly executed by the Holder
Representative;
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(iii) the Employment and Non-Competition
Agreements substantially in the form of EXHIBIT D, duly executed by each of the
Critical Employees named therein;
(iv) one Investment Agreement, in the form of
EXHIBIT E hereto (the "INVESTMENT AGREEMENT") and one Stockholder Questionnaire,
in the form of EXHIBIT F hereto (the "STOCKHOLDER QUESTIONNAIRE"), from each
respective Selling Stockholder, duly executed and delivered by such Selling
Stockholder and the Holder Representative, together with such evidence as is
acceptable to Purchaser, in its sole discretion, confirming the status of each
Selling Stockholder as an "accredited investor" (as such term is used in the
Securities Act and the rules promulgated thereunder) or, in the case of a
Selling Stockholder who does not meet such criteria, the status of each Selling
Stockholder's representative or advisor with respect to the investment in
Purchaser Stock as a "purchaser representative" (as that term is defined in the
Securities Act and the rules promulgated thereunder);
(v) one Voting Agreement (the "VOTING
AGREEMENT") from each of the four individuals who beneficially owns the greatest
number of shares of Stock, in a form to be mutually agreed upon by the parties
hereto, pursuant to which each such Selling Stockholder agrees, subject to
certain conditions, to vote such Selling Stockholder's shares of Purchaser Stock
in favor of the NBC Transactions;
(vi) the legal opinion of Xxxx and Xxxx, LLP,
counsel to the Selling Stockholders and the Company, dated the Closing Date, in
substantially the form of EXHIBIT G;
(vii) a certificate (the "SELLING STOCKHOLDERS
CLOSING CERTIFICATE" and the "COMPANY CLOSING CERTIFICATE," respectively)
executed by the Holder Representative and a senior executive officer of the
Company, respectively, dated as of the Closing, and certifying to the
satisfaction of the conditions specified in Sections 4.1(a) and (b);
(viii) the written resignations of the members of
the Company Board;
(ix) written evidence reasonably satisfactory to
Purchaser and its counsel of the grant of Company Options (including any
Additional Employee Option Grants) to the employees of the Company as set forth
on SCHEDULE II attached hereto;
(x) written evidence reasonably satisfactory to
Purchaser and its counsel of the consent of all holders of the Company Preferred
Stock to a waiver of their rights to any liquidation or other preference to
which such holders would be entitled as a result of the Merger and an agreement
to receive pursuant to the Merger the same Merger Consideration per share as
holders of Common Stock;
(xi) written evidence reasonably satisfactory to
Purchaser and its counsel of the agreement by all Company Option holders to be
bound by the restrictions on sale of Purchaser Stock contained in Section 3.1 of
the Registration Rights Agreement.
(xii) written evidence reasonably satisfactory to
Purchaser and its counsel of the waiver by all Company Option holders and
holders of restricted Common Stock or other similar securities of the Company of
their right(s), if any, to acceleration of the vesting of their Company Options
or restricted Common Stock or other similar securities of the Company,
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as the case may be, as a result of the Transactions or any other event or
circumstance, and the acceptance in consideration of such waiver of (i) a six
(6) month acceleration in vesting of the Merger Consideration to be received
by such persons and (ii) such additional consideration as the Company and
Purchaser shall mutually agree; and
(xiii) such other documents reasonably satisfactory
to Purchaser as Purchaser may request in good faith for the purpose of (A)
evidencing the accuracy of any representation or warranty made by the Company or
the Selling Stockholders, (B) evidencing the compliance by the Company or the
Selling Stockholders with, or the performance by the Company or the Selling
Stockholders of, any covenant or obligation set forth in this Agreement or any
other Transactional Agreement, (C) evidencing the satisfaction of the conditions
set forth in this Section 4.1, or (D) otherwise facilitating the consummation or
performance of any of the Transactions;
(d) each of the Critical Employees shall have accepted
employment with Purchaser;
(e) to the satisfaction of Purchaser and its counsel, the
offer and sale of the Purchaser Stock pursuant to the terms of this Agreement
shall comply with an exemption from registration under the Securities Act and/or
any applicable federal or state securities laws and regulations;
(f) all corporate and other proceedings required to be taken
on the part of the Company and the Selling Stockholders in connection with this
Agreement, the Transactional Agreements and the Transactions, and all documents
incident thereto, shall be reasonably satisfactory in form and in substance to
Purchaser and its counsel;
(g) there shall not be Dissenting Shares constituting more
than one percent (1%) of the capital stock of the Company calculated on a
fully-diluted basis;
(h) Purchaser's Board of Directors and the Company's Board of
Directors and stockholders shall have ratified or approved the execution of this
Agreement and the other Transactional Agreements by Purchaser and shall have
approved the consummation of the Transactions;
(i) each of the Consents identified or required to be
identified in Part 5.5 of the Disclosure Schedule shall have been obtained and
shall be in full force and effect;
(j) there shall have been no material adverse change in the
Company's business, condition, assets, liabilities, operations, financial
performance or prospects, or any aspect or portion thereof (any such change or
similar effect, as the context requires, a "MATERIAL ADVERSE CHANGE" or
"MATERIAL ADVERSE EFFECT") since the date of this Agreement; and
(k) no Person shall have made or expressly threatened any
claim asserting that such Person (i) may be the holder or the beneficial owner
or, or may have the right to acquire or to obtain beneficial ownership of, any
capital stock or other securities of the Company, or (ii) may be entitled to all
or any portion of the Merger Consideration.
9
4.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE
SELLING STOCKHOLDERS.
The Company's obligation to take the actions required to be taken by
the Company at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by the
Company, in whole or in part, in accordance with Section 12.13):
(a) the representations and warranties made by Purchaser and
Merger Sub in Section 6 and in any other Transactional Agreement shall have been
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date;
(b) all covenants, agreements and conditions contained in this
Agreement or in any other Transactional Agreement to be observed by Purchaser
and Merger Sub on or prior to the Closing shall have been performed or complied
with in all material respects;
(c) Purchaser shall have delivered the following documents to
the Selling Stockholders, the Holder Representative and/or the Company, as the
case may be, duly executed by Purchaser:
(i) the Escrow Agreement;
(ii) the Rights Agreement;
(iii) the Employment and Non-Competition
Agreements;
(iv) the Investment Agreement;
(v) the legal opinion of Xxxxxxxx & Xxxxxxxx
LLP, counsel to Purchaser, dated the Closing Date, in substantially the form of
EXHIBIT H; and
(vi) a certificate (the "PURCHASER CLOSING
CERTIFICATE") executed by a senior executive officer of Purchaser, dated the
Closing Date and certifying to the satisfaction of the conditions specified in
Sections 4.2(a) and (b);
(d) all corporate and other proceedings required to be taken
on the part of Purchaser and Merger Sub in connection with the Transactions, and
all documents incident thereto, shall be reasonably satisfactory in form and in
substance to the Company and its counsel;
(e) there shall have been no change that would have a material
adverse effect on the business, condition assets, liabilities, operations,
financial performance or prospects, or any aspect or portion thereof, of
Purchaser and its subsidiaries, taken as a whole (any such change or similar
effect, as the context requires, a "PURCHASER MATERIAL ADVERSE CHANGE" or
"PURCHASER MATERIAL ADVERSE EFFECT") since the date of this Agreement; and
(f) Purchaser's Board of Directors, Company's Board of
Directors and the holders of all of the outstanding capital stock of the Company
shall have ratified or approved the
10
execution of this Agreement and the other Transactional Agreements by the
Company, the Holder Representative and/or the Selling Stockholders, as the
case may be, and shall have approved the consummation of the Transactions.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as specifically set forth in the disclosure schedule provided by
the Company and attached hereto as SCHEDULE III (the "COMPANY DISCLOSURE
SCHEDULE"), the parts of which are numbered to correspond to the Section numbers
of this Agreement, the Company hereby represents and warrants to each Indemnitee
as follows:
5.1 ORGANIZATION, GOOD STANDING, QUALIFICATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, is
qualified to conduct business and is in both corporate and tax good standing
under the laws of each jurisdiction in which the nature of its business or the
ownership or leasing of its properties requires such qualification. The Company
has the requisite corporate power and authority to own and operate its
properties and assets, and to carry out the provisions hereof and thereof, and
to carry on its business as currently conducted.
(b) The Company has never approved, or commenced any
proceeding, or made any election contemplating, the dissolution or liquidation
of the Company or the winding up or cessation of the Company's business or
affairs.
(c) The Company has no subsidiaries and does not own,
beneficially or otherwise, any shares or other securities of, or any other
direct or any other indirect interest of any nature in, any Entity.
5.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS.
(a) The Company has delivered to Purchaser accurate and
complete copies of:
(i) the Company's Certificate of Incorporation
and bylaws, including all amendments thereto, as presently in effect;
(ii) the stock records of the Company; and
(iii) the minutes and other records of the
meetings and other proceedings (including any actions taken by written consent
or otherwise without a meeting) of the stockholders of the Company, the Company
Board and all committees of the Company Board.
There have been no meetings or other proceedings of the stockholders of the
Company, the Company Board or any committee of the Company Board that are not
memorialized in such minutes or other records.
11
(b) The Company has never conducted any business under or
otherwise used, for any purpose or in any jurisdiction, any fictitious name,
assumed name, trade name or other name, other than the names listed on Part 5.2
of the Company Disclosure Schedule.
(c) There has not been any material violation of the
Company's Certificate of Incorporation or bylaws.
5.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
20,450,000 shares of capital stock, comprised of 15,000,000 shares of Common
Stock, of which 3,600,000 shares are issued and outstanding, and 5,450,000
shares of Preferred Stock, of which 3,200,000 are designated Series A
Convertible Preferred Stock, all of which are issued and outstanding, and
2,250,000 shares of Series B Convertible Preferred Stock, all of which are
issued and outstanding (collectively, the "COMPANY PREFERRED STOCK"). No other
shares of capital stock are issued or outstanding. All issued and outstanding
shares of the Company's capital stock have been duly authorized and validly
issued, are fully paid and nonassessable, and have been issued in full
compliance with all applicable securities laws and other applicable legal
requirements. SCHEDULE II accurately sets forth (i) the names of the
employees/consultants who have been granted Company Options (including
Additional Employee Option Grants); (ii) the number of Company Options held by
such employees as of the date of this Agreement; and/or (iii) the number of
Company Options to be granted to such employees/consultants prior to the
Closing.
(b) Except as set forth on SCHEDULE II or Part 5.3 of the
Company Disclosure Schedule, there is no:
(i) outstanding subscription, option, call,
warrant or right (whether or not currently exercisable) to acquire any shares of
the capital stock or other securities of the Company;
(ii) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any shares
of the capital stock or other securities of the Company; or
(iii) to the knowledge of the Company, condition
or circumstance that would reasonably be expected to result in a claim by any
Person to the effect that such Person is entitled to acquire or receive any
shares of capital stock or other securities of the Company.
(c) Except as set forth in Part 5.3 of the Company Disclosure
Schedule, the Company has never repurchased, redeemed or otherwise reacquired
(or agreed, committed or offered (in writing or otherwise) to repurchase, redeem
or otherwise reacquire) any shares of capital stock or other securities, except
from employees of the Company pursuant to the terms of the Option Plan and the
Company's forms of option agreement.
5.4 AUTHORITY; BINDING NATURE OF AGREEMENTS.
The Company has the corporate power and authority to enter into and to
perform its obligations under this Agreement and the other Transactional
Agreements to which it is or is
12
contemplated to be a party, and the execution, delivery and performance by
the Company of this Agreement and such Transactional Agreements have been
duly authorized by all necessary action on the part of the Company Board and
its stockholders. This Agreement and the other Transactional Agreements
constitute, or upon execution and delivery will constitute, the legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditor's
rights generally and by general principles of equity regardless of whether
such enforceability is considered in a proceeding in law or equity.
5.5 NON-CONTRAVENTION; CONSENTS.
Subject to the filing of the Certificate of Merger as required by the
General Corporation Law of the State of Delaware and compliance by Purchaser
with applicable securities laws in connection with the offer and sale of the
Purchaser Stock, the execution and delivery of this Agreement and the other
Transactional Agreements, and the consummation of the Transactions, by the
Company will not, directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a material
violation of (i) the Company's Certificate of Incorporation or bylaws, or (ii)
any resolution adopted by the Company Board or any committee thereof or the
stockholders of the Company;
(b) contravene, conflict with or result in a material
violation of, or give any Governmental Body or other Person the right to
exercise any remedy or obtain any relief (other than statutory dissenters'
rights) under, any legal requirement or any Order to which the Company or any
material assets owned or used by it are subject;
(c) cause any material assets owned or used by the Company to
be reassessed or revalued by any taxing authority or other Governmental Body;
(d) contravene, conflict with or result in a material
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by the Company or any of its employees
or that otherwise relates to the Company's business or to any of the material
assets owned or used by the Company;
(e) contravene, conflict with or result in a material
violation or material breach of, or material default under, any Company
Contract;
(f) give any Person the right to any payment by the Company or
give rise to any acceleration or change in the award, grant, vesting or
determination of options, warrants, rights, severance payments or other
contingent obligations of any nature whatsoever of the Company in favor of any
Person, in any such case as a result of the change in control of the Company or
otherwise resulting from the Transactions; or
(g) result in the imposition or creation of any encumbrance
upon or with respect to any material asset owned or used by the Company.
13
Except as set forth in Part 5.5 of the Company Disclosure Schedule and as
contemplated in this Agreement and the other Transactional Agreements, the
Company will not be required to make any filing with or give any notice to,
or obtain any Consent from, any Person in connection with the execution and
delivery of this Agreement and the other Transactional Agreements or the
consummation or performance of any of the Transactions.
5.6 INTELLECTUAL PROPERTY.
(a) Part 5.6 of the Company Disclosure Schedule sets forth a
complete list, in all material respects, of all patents, trademarks, copyrights,
registered maskworks, trade names and service marks, and any applications
therefor in respect of any of the foregoing, included in the Company's
Proprietary Assets, and specifies, where applicable, the jurisdictions in which
each such Proprietary Assets has been issued or registered or in which an
application for such issuance and registration has been filed, including the
respective registration or application numbers and the names of all registered
owners. Part 5.6 also sets forth a complete list of all material licenses,
sublicenses and other agreements as to which the Company is a party and pursuant
to which the Company or any other Person is currently authorized to use any of
the Company's Proprietary Assets (excluding object code and end-user licenses
granted to the Company as an end-user in the ordinary course of business that
permit use of software products without a right to modify, distribute or
sublicense the same ("END-USER LICENSES")) or other trade secret material to the
Company, and includes the identity of all parties thereto, a description of the
nature and subject matter thereof, the applicable royalty and the term thereof.
The Company is not in material violation of any license, sublicense or agreement
described on such list except such violations as do not materially impair the
Company's rights under such license, sublicense or agreement. Except as set
forth in Part 5.6 of the Company Disclosure Schedule, and except for any
consents to transfer required under any Company Contract, the execution and
delivery of this Agreement by the Company, and the consummation of the
transactions contemplated hereby, (i) will not cause the Company to be in
violation or default under any such license, sublicense or agreement, (ii) will
not entitle any other party to any such license, sublicense or agreement to
terminate or modify such license, sublicense or agreement or (iii) will not
require the Company to repay any funds already received by it from a third
party, except where the occurrence of any of (i) through (iii) would not have a
Material Adverse Effect.
(b) Except as set forth in Part 5.6 of the Company Disclosure
Schedule, the Company has all right, title and interest in and to and is the
sole and exclusive owner or licensee of (free and clear of any liens or
encumbrances), the Company's Proprietary Assets, and has sole and exclusive
rights (and is not contractually obligated to pay any compensation to any third
party in respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Company's
Proprietary Assets are being used.
(c) Except as set forth in Part 5.6 of the Company Disclosure
Schedule, no claims with respect to the Company's Proprietary Assets have been
asserted or, to the knowledge of the Company, are threatened by any person nor
are there any valid grounds, to the knowledge of the Company, for any bona fide
claims: (i) to the effect that the manufacture, sale, licensing or use of any of
the products of the Company as now manufactured, sold, licensed or used or
proposed in written form for manufacture, sale, licensing or use by the Company
infringes on any third party's Proprietary Assets; (ii) against the use by the
Company used in the Company's business
14
as currently conducted; or (iii) challenging the ownership by the Company,
validity or effectiveness of any of the Company's Proprietary Assets. To the
Company's knowledge, all registered patents, trademarks, service marks and
copyrights held by the Company, if any, are valid and subsisting.
(d) To the knowledge of the Company, there is no material
unauthorized use, infringement or misappropriation of any of the Company's
Proprietary Assets by any third party, including any employee or former employee
of the Company.
(e) None of the Company's Proprietary Assets or product of the
Company is subject to any outstanding decree, order, judgment, or stipulation
restricting in any manner the licensing thereof by the Company.
(f) The Company has not entered into any agreement under which
the Company is restricted from selling, licensing or otherwise distributing any
of its current or anticipated products to any class of customers, in any
geographic area, during any period of time or in any segment of the market.
(g) Each of the Company's current and former employees,
consultants and other agents with access to any of the Company's Proprietary
Assets has executed the Company's form of proprietary information and invention
agreement in substantially the form provided to Purchaser and its counsel.
5.7 PROCEEDINGS; ORDERS.
(a) There is no pending Proceeding, and, to the Company's
knowledge, no Person has threatened to commence any Proceeding:
(i) that names the Company as a party or as
a result of which the Company or its property or assets are reasonably likely
to be bound; or
(ii) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
any of the Transactions or the Company's ability to comply with or perform
its obligations and covenants under the Transactional Agreements, and, to the
knowledge of the Company, no event has occurred, and no claim, dispute or
other condition or circumstance exists, that might directly or indirectly
give rise to or serve as a basis for the commencement of any such Proceeding.
(b) The Company has delivered to Purchaser accurate and
complete copies of all pleadings, correspondence and other written materials to
which the Company has access that relate to the Proceedings identified in Part
5.7 of the Company Disclosure Schedule, if any.
(c) There is no Order to which the Company, or any of the
assets owned or used by the Company, is subject.
(d) To the Company's knowledge, no officer or employee of the
Company is subject to any Order that prohibits such officer or employee from
engaging in or continuing any conduct, activity or practice relating to the
Company's business.
15
5.8 FINANCIAL STATEMENTS.
(a) The Company has delivered to Purchaser the following
financial statements and notes (collectively, the "FINANCIAL STATEMENTS"), which
are attached as EXHIBIT I:
(i) the audited balance sheet of the Company as
of December 31, 1998, and the related audited statement of operations, changes
in stockholders' equity and cash flows of the Company for the period ended
December 31, 1998, together with the notes thereto; and
(ii) the unaudited balance sheet of the Company
as of June 30, 1999 (the "UNAUDITED INTERIM BALANCE SHEET"), and the related
unaudited statement of operations, changes in stockholders' equity and cash
flows of the Company for the three (3) months then ended.
(b) All the Financial Statements are accurate and complete in
all material respects, and the dollar amount of each line item included in the
Financial Statements is accurate in all material respects. The Financial
Statements are in accordance with the books and records of the Company and
present fairly the financial position of the Company as of the respective dates
thereof and the results of operations, changes in stockholders' equity and cash
flows of the Company for the periods covered thereby. The Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered, subject, in the case of the unaudited financial
statements, to normal recurring year-end adjustments, the effect of which will
not be material, and the absence of notes thereto.
(c) As of the date of this Agreement, the Company has no
Liabilities in excess of $25,000, individually or in the aggregate, except for
Liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet.
5.9 TITLE TO ASSETS.
(a) The Company owns all assets purported to be owned by it,
free and clear of any material encumbrances, except liens for current taxes and
assessments not delinquent.
(b) Each of the Company's assets is free of material defects
and deficiencies and in good condition and repair, consistent with its age and
intended use (ordinary wear and tear excepted).
(c) The Company does not own any real property or any interest
in real property, except for the leaseholds created under the real property
leases identified in Part 5.9(c) of the Company Disclosure Schedule (the "LEASED
PREMISES"). Part 5.9(c) of the Company Disclosure Schedule lists the premises
covered by said leases. The Company enjoys peaceful and undisturbed possession
of such premises.
(d) Part 5.9(d) of the Company Disclosure Schedule identifies
all tangible assets that are leased to the Company that have a value in excess
of $25,000. All leases pursuant to which the Company leases real or personal
property are valid and in full force and effect in
16
accordance with their respective terms and, to the knowledge of the Company,
there exists no default thereunder.
5.10 CONTRACTS.
(a) Part 5.10 of the Company Disclosure Schedule identifies
and describes each material Company Contract. The Company has delivered to
Purchaser accurate and complete copies of all Company Contracts identified in
Part 5.10 of the Company Disclosure Schedule, including all amendments thereto.
(b) Each Company Contract is currently valid and in full force
and effect, and is enforceable by the Company in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditor's rights generally and by general principles of equity
regardless of whether such enforceability is considered in a proceeding in law
or equity.
(c) The Company is not in material default under any Company
Contract, and, to the knowledge of the Company, (i) no Person has materially
violated or breached, or declared or committed any material default under, any
Company Contract; and (ii) the Company has not waived any of its rights under
any Company Contract.
(d) (i) The Company has never guaranteed or otherwise agreed
to cause, insure or become liable for, and has never pledged any of its assets
to secure, the performance or payment of any obligation or other Liability of
any other Person; and (ii) the Company has never been a party to or bound by any
material joint venture agreement, partnership agreement, profit-sharing
agreement, cost-sharing agreement, loss-sharing agreement or similar Contract.
(e) No Person is renegotiating any amount paid or payable to
the Company under any Company Contract or any other material term or provision
of any Company Contract.
(f) Part 5.10(f) of the Company Disclosure Schedule identifies
and provides an accurate and complete description of each proposed Company
Contract as to which any bid, offer, written proposal, term sheet or similar
document has been submitted to or received by the Company and is outstanding and
which would be material to the business or prospects of the Company.
(g) No party to any Company Contract has notified the Company
to the effect that the Company has failed to perform a material obligation
thereunder.
5.11 EMPLOYEES.
(a) Part 5.11(a) of the Company Disclosure Schedule contains a
list of all employees of the Company as of the date of the Agreement and their
respective titles and annualized compensation.
(b) Part 5.11(b) of the Company Disclosure Schedule contains a
list of Persons who are currently performing services for the Company business
and are classified as
17
"consultants" or "independent contractors," and the respective compensation
of each such "consultant" or "independent contractor."
(c) The Company has no collective bargaining agreements or
union contracts with any of its employees. To the knowledge of the Company,
there is no labor union organizing activity pending or threatened with respect
to the Company. The employment of each of the Company's employees is terminable
by the Company at will; and, except as set forth in Part 5.11(c) of the Company
Disclosure Schedule, no employee has any agreement or contract, written or
verbal, regarding his or her continued employment.
(d) To the Company's knowledge, (i) no employee of the
Company, nor any consultant with whom the Company has contracted, is in material
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company, and (ii) the continued employment by
the Company of its present employees, and the performance of the Company's
contracts with its independent contractors, will not result in any such
violation. The Company has not received any notice (written or otherwise)
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. To the
knowledge of the Company, no officer or key employee, or any group of employees,
has given notice of his, her or their intent to terminate his, her or their
employment with the Company, and no employee of the Company has received an
offer to join a business that is or likely would be competitive with the
Company's business.
5.12 COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) The Company is in full compliance with each legal
requirement that is applicable to it or to the conduct of its business or the
ownership or use of any of its assets, except where any noncompliance would not
have a Material Adverse Effect.
(b) The Company has not received, at any time, any notice from
any Governmental Body or any other Person regarding (i) any actual, alleged,
possible or potential violation of, or failure to comply with, any legal
requirement by the Company, or (ii) 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 relating to Hazardous Materials, except to the extent
noncompliance would not have a Material Adverse Effect.
5.13 GOVERNMENTAL AUTHORIZATIONS.
(a) Part 5.13 of the Company Disclosure Schedule identifies
each Governmental Authorization held by the Company. The Company has delivered
to Purchaser accurate and complete copies of all such Governmental
Authorizations, including all renewals thereof and all amendments thereto. Each
Governmental Authorization identified or required to be identified in Part 5.13
of the Company Disclosure Schedule is valid and in full force and effect.
18
(b) The Governmental Authorizations identified in Part 5.13 of
the Company Disclosure Schedule constitute all the Governmental Authorizations
necessary (i) to enable the Company to conduct its business in the manner in
which its business is currently being conducted, and (ii) to permit the Company
to own and use its assets in the manner in which they are currently owned and
used, except to the extent that any failure to obtain any Governmental
Authorization would not have a Material Adverse Effect.
5.14 TAX MATTERS.
(a) Except to the extent set forth in Part 5.14 of the Company
Disclosure Schedule, each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by the Company (whether pursuant to any Tax
Return or otherwise) has been duly paid in full on a timely basis. Any Tax
required to have been withheld or collected by the Company has been duly
withheld and collected, and (to the extent required) each such Tax has been paid
to the appropriate Governmental Body. The Company has complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto, in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other third party.
(b) Part 5.14 of the Company Disclosure Schedule accurately
identifies all Tax Returns required to be filed by or on behalf of the Company
with any Governmental Body with respect to any taxable period ending on or
before the Closing Date ("COMPANY RETURNS"). All Company Returns (i) have been,
or will be, filed when due, and (ii) have been, or will be when filed,
accurately and completely prepared pursuant to applicable law. All amounts shown
on the Company Returns to be due on or before the Closing Date, and all amounts
otherwise payable in connection with the Company Returns on or before the
Closing Date, have been paid on or before the Closing Date. The Company has
delivered to Purchaser copies of all Company Returns filed by or on behalf of
the Company or any other entity acquired by or merged into the Company prior to
the Closing Date.
(c) The Company's liability for unpaid Taxes for all periods
ending on or before the date of the Financial Statements does not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred taxes) reported in the Financial Statements.
The Company has established, in the Ordinary Course of Business, reserves
adequate for the payment of all Taxes for the period from December 31, 1998
through the Closing Date, and the Company has disclosed the dollar amount of
such reserves to Purchaser on or prior to the Closing Date.
(d) Part 5.14 of the Company Disclosure Schedule identifies
each examination or audit of any Company Return that has been conducted by any
Governmental Body. The Company has delivered to Purchaser copies of all audit
reports and similar documents (to which the Company has access) relating to
Company Returns. No extension or waiver of the limitation period applicable to
any of the Company Returns has been granted (by the Company or any other
Person), and no such extension or waiver has been requested from the Company.
(e) No claim or other Proceeding is pending or has been
threatened in writing or orally (formally or informally) against or with respect
to the Company in respect of any Tax.
19
The Company has not entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. The Company has not been, and will
not be, required to include any adjustment in taxable income for any tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or
any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to
the Closing. The Company has never been in a "consolidated group" within the
meaning of Treasury Regulations Section 1.1502-1(h), and is not liable for
Taxes incurred by any individual, trust, corporation, partnership or any
other Entity either as a transferee, pursuant to Treasury Regulations Section
1.1502-6, or pursuant to any other provision of federal, territorial, state,
local or foreign law or regulations. Except as set forth in Part 5.14 of the
Company Disclosure Schedule, the Company is not a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for United States federal income tax purposes. None of the assets
of the Company (i) directly or indirectly secures any debt the interest on
which is tax exempt under Section 103(a) of the Code or (ii) is "tax exempt
use property" within the meaning of Section 168(h) of the Code. The Company
has not participated in an international boycott as defined in Code Section
999. The Company does not have a "permanent establishment," as defined in any
applicable Tax treaty or convention of the United States of America, or fixed
place of business in any foreign country. The Company is not, nor has it ever
been, an "S corporation," within the meaning of Section 1361(a) of the Code.
(f) The Company is not party to any agreement, plan,
arrangement or other Contract covering any employee or independent contractor or
former employee or independent contractor of the Company that, individually or
collectively, could give rise directly or indirectly to the payment of any
amount that would not be deductible pursuant to Section 280G of the Code. Except
as set forth in Part 5.14 of the Company Disclosure Schedule, the Company is
not, and has never been, a party to or bound by any tax indemnity agreement,
tax-sharing agreement, tax allocation agreement or similar Contract, and has not
otherwise assumed the tax liability of any other Person under contract.
(g) The Company is not a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code and has not been
a United States real property holding corporation within the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(h) The Company has no net operating losses or other tax
attributes presently subject to limitation under Code Section 382, 383 or 384.
(i) All of the Selling Stockholders are "United States
persons," within the meaning of Section 7701(a)(30) of the Code.
(j) The Company's final 1999 U.S. income tax return to be
prepared pursuant to Section 12.4(b) will contain, in all material respects, an
accurate and complete description of the Company's tax basis in its assets, its
current and accumulated earnings and profits, its tax carryovers, and any tax
elections.
(k) The Company has not and will not prior to the Merger
redeem or make any extraordinary distribution (within the meaning of Treasury
Regulations Section 1.368-
20
1T(e)(1)(ii)(A)) with respect to any Company capital stock in connection with
the Merger; no "related person" of the Company (within the meaning of
Treasury Regulations Section 1.368-1(e)(3)) has purchased or will purchase
prior to the Effective Time any Company capital stock in connection with the
Merger.
(l) After the Merger, the Company will hold at least ninety
percent (90%) of the fair market value of its net assets and at least seventy
percent (70%) of the fair market value of its gross assets held immediately
prior to the Merger. For purposes hereof, amounts paid by the Company to
dissenters, amounts paid by the Company to shareholders who receive cash or
other property, amounts used by the Company to pay reorganization expenses, and
all redemptions and distributions (except for regular, normal dividends) made by
the Company will be included as assets of the Company immediately prior to the
Merger.
(m) The Liabilities of the Company, if any, and the
Liabilities to which the assets of the Company are subject, if any, were or will
be incurred by the Company in the Ordinary Course of Business.
(n) The Company and each of the Selling Stockholders will pay
any of their own expenses incurred in connection with the Merger.
(o) The Company is not under the jurisdiction of a court in a
"title 11 or similar case," within the meaning of Section 368(a)(3)(A) of the
Code.
(p) The Company is not an investment company for purposes of
Section 368(a)(2)(F) of the Code.
(q) The Company's business conducted immediately before the
Effective Time will be its "historic business" and its assets held immediately
before the Effective Time will be its "historic business assets" for purposes of
Section 368 of the Code.
5.15 SECURITIES LAWS COMPLIANCE; REGISTRATION RIGHTS.
The Company has complied with all applicable federal and state
securities laws in connection with all offers and sales of securities issued
by the Company prior to the date of this Agreement. Except as set forth in
Part 5.15 of the Company Disclosure Schedule, the Company has not heretofore
granted any other purchaser of its securities the right to require the
Company to register any securities under the Securities Act or to qualify for
any exemption thereunder.
5.16 FINDERS AND BROKERS; FEES.
(a) Neither the Company nor any person acting on behalf of the
Company has engaged any finder, broker, intermediary or any similar person in
connection with the Transactions.
(b) The Company has not entered into a contract or other
agreement that provides that a fee shall be paid to any Person or Entity if the
Transactions are consummated.
21
5.17 ENVIRONMENTAL COMPLIANCE.
To the knowledge of the Company, the Company is and has been at all
times in compliance in all respects with all Environmental Laws, except where
the failure to so comply would not have a Material Adverse Effect.
5.18 INSURANCE.
(a) Part 5.18 of the Company Disclosure Schedule sets forth
each insurance policy maintained by or at the expense of, or for the benefit of,
the Company:
(b) The Company has delivered to Purchaser copies of all of
the insurance policies identified in Part 5.18 of the Company Disclosure
Schedule (including all renewals thereof and endorsements thereto) and binders
relating thereto.
(c) Each of the policies identified in Part 5.18 of the
Company Disclosure Schedule is in full force and effect. All of the information
contained in the applications submitted in connection with said policies was (at
the times said applications were submitted) accurate and complete, and all
premiums and other amounts owing with respect to said policies have been paid in
full on a timely basis. Each of the policies identified in Part 5.18 of the
Company Disclosure Schedule will continue in full force and effect following the
Closing, and the Company has paid all premiums due, and has otherwise performed
all of its obligations, under each policy to which it is a party or that
provides coverage to it or any of its directors or officers in connection with
their performance of services to the Company.
(d) There is no pending claim under or based upon any of the
policies identified in Part 5.18 of the Company Disclosure Schedule, and, to the
Company's knowledge, no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any such claim.
(e) The Company has not received:
(i) any notice or other communication (in
writing or otherwise) regarding the actual or possible cancellation or
invalidation of any of the policies identified in Part 5.18 of the Company
Disclosure Schedule or regarding any actual or possible adjustment in the amount
of the premiums payable with respect to any of said policies; or
(ii) any notice or other communication (in
writing or otherwise) regarding any actual or possible refusal of coverage
under, or any actual or possible rejection of any claim under, any of the
policies identified in Part 5.18 of the Company Disclosure Schedule.
5.19 RELATED PARTY TRANSACTIONS.
(a) No Related Party has, and no Related Party has at any time
since December 31, 1998, had, any direct or indirect material interest of any
nature in any material asset of the Company or any Company Contract, except in
such Related Party's capacity as a director, employee, officer or stockholder of
the Company.
22
(b) No Related Party is, or has at any time since December 31,
1998, been, indebted to the Company for an amount, individually or in the
aggregate, in excess of $25,000.
(c) Since December 31, 1998, no Related Party has entered
into, or has had any direct or indirect material financial interest in, any
Company Contract, transaction or business dealing of any nature involving the
Company, except in such Related Party's capacity as a director, employee,
officer or stockholder of the Company.
(d) To the Company's knowledge, no Related Party is competing,
or has at any time since December 31, 1998, competed, directly or indirectly,
with the Company in any market served by the Company.
5.20 ABSENCE OF CHANGES.
Since March 31, 1999:
(a) there has not been any Material Adverse Change, and, to
the knowledge of the Company, no event has occurred that is reasonably likely to
have a Material Adverse Effect;
(b) the Company has not declared, accrued, set aside or paid
any dividend or made any other distribution in respect of any shares of capital
stock;
(c) the Company has not amended its Certificate of
Incorporation or Bylaws and has not effected or been a party to any Acquisition
Transaction, recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(d) the Company has not made any individual capital
expenditure in excess of $50,000
(e) the Company has not pledged or hypothecated any of its
material assets or otherwise permitted any of its material assets to become
subject to any encumbrance;
(f) the Company has not made any loan or advance in excess of
$25,000 to any Person;
(g) the Company has not paid any bonus or made any
profit-sharing or similar payment to, or increased the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees in excess of $5,000
individually or $10,000 in the aggregate;
(h) there has been no resignation or termination of employment
of any officer or Critical Employee of the Company;
(i) there has been no borrowing or agreement to borrow by the
Company or material change in the contingent obligations of the Company by way
of guaranty, endorsement, indemnity, warranty or otherwise or grant of a
mortgage or security interest in any property of the Company;
23
(j) the Company has not discharged any encumbrance or
discharged, paid or forgiven any indebtedness or other Liability in excess of
$25,000, individually or in the aggregate, except for accounts payable that (i)
are reflected as current liabilities in the "liabilities" column of the
Unaudited Interim Balance Sheet or have been incurred by the Company since the
date of the Unaudited Interim Balance Sheet in the Ordinary Course of Business
and (ii) have been discharged or paid in the Ordinary Course of Business;
(k) the Company has not released or waived any material right
or claim;
(l) the Company has not changed any of its methods of
accounting or accounting practices in any material respect;
(m) the Company has not received notice that there has been a
loss of, or cancellation of a material order by, any customer of the Company;
and
(n) the Company has not agreed, committed or offered (in
writing or otherwise), and has not attempted, to take any of the actions
referred to in clauses (b) through (m) above.
5.21 POWERS OF ATTORNEY.
The Company has not given a power of attorney to any Person.
5.22 BENEFIT PLANS; ERISA.
(a) Part 5.22 of the Company Disclosure Schedule lists (i) all
"employee benefit plans" within the meaning of Section 3(3) of ERISA, (ii) all
material employment agreements, including, but not limited to, any individual
benefit arrangement, policy or practice with respect to any current or former
employee or director of the Company or Member of the Controlled Group, and (iii)
all other material employee benefit, bonus or other incentive compensation,
stock option, stock purchase, stock appreciation, severance pay, lay-off or
reduction in force, change in control, sick pay, vacation pay, salary
continuation, retainer, leave of absence, educational assistance, service award,
employee discount, fringe benefit plans, arrangements, policies or practices,
whether legally binding or not, which the Company or any Member of the
Controlled Group maintains, contributes to or has any obligation to or liability
for (collectively, the "PLANS").
(b) None of the Plans is a Defined Benefit Plan, and neither
the Company nor any Member of the Controlled Group has ever sponsored,
maintained or contributed to, or ever been obligated to contribute to, a Defined
Benefit Plan that could reasonably be expected to result in a material amount of
liability under Title IV of ERISA.
(c) None of the Plans is a Multiemployer Plan, and neither the
Company nor any Member of the Controlled Group has ever contributed to, or ever
been obligated to contribute to, a Multiemployer Plan that could reasonably be
expected to result in a material amount of liability under Title IV of ERISA.
(d) The Company does not maintain or contribute to any welfare
benefit plan which provides health benefits to an employee after the employee's
termination of employment
24
or retirement except as required under Section 4980B of the Code and Sections
601 through 608 of ERISA, or other applicable law.
(e) Each Plan that is an "employee benefit plan," as defined
in Section 3(3) of ERISA, complies in all material respects by its terms and in
operation with the requirements provided by any and all statutes, orders or
governmental rules or regulations currently in effect and applicable to the
Plan, including but not limited to ERISA and the Code.
(f) All reports, forms and other documents required to be
filed with any government entity with respect to any Plan (including, without
limitation, summary plan descriptions, Forms 5500 and summary annual reports)
have been timely filed and are accurate.
(g) Each Plan intended to qualify under Section 401(a) of the
Code is the subject of a favorable determination letter issued by the Internal
Revenue Service that provides that it so qualifies through the last day of the
"TRA 86 Remedial Amendment Period," as such term is defined in Section 3.02 or
Revenue Procedure 96-55. To the Company's knowledge, nothing has occurred since
the date of the Internal Revenue Service's favorable determination letter that
could adversely affect the qualification of the Plan and its related trust. The
Company and each Member of the Controlled Group have timely and properly applied
for a written determination by the Internal Revenue Service on the qualification
of each such Plan and its related trust under Section 401(a) of the Code, as
amended by the Tax Reform Act of 1986 and subsequent legislation enacted through
the date hereof, and Section 501 of the Code.
(h) All contributions owed for all periods ending prior to the
Closing Date (including periods from the first day of the current plan year to
the Closing Date) under any Plan have been or will be made prior to the Closing
Date by the Company in accordance with past practice and the recommended
contribution in any applicable actuarial report.
(i) All insurance premiums have been paid in full, subject
only to normal retrospective adjustments in the ordinary course, with regard to
the Plans for plan years ending on or before the Closing Date.
(j) With respect to each Plan:
(i) no prohibited transactions (as defined in
Section 406 or 407 of ERISA or Section 4975 of the Code) have occurred for which
an exemption is not available that could reasonably be expected to result in a
material amount of liability to the Company;
(ii) no actions or claims (other than routine
claims for benefits made in the ordinary course of Plan administration for which
Plan administrative review procedures have not been exhausted) are pending,
threatened or, to the knowledge of the Company, imminent against or with respect
to the Plan, any employer who is participating (or who has participated) in the
Plan or any fiduciary (as defined in Section 3(21) of ERISA) of the Plan that
could reasonably be expected to result in a material amount of liability to the
Company;
(iii) no facts exist which could give rise to any
such action or claim; and
25
(iv) the Plan provides that it may be amended or
terminated at any time and, except for benefits protected under Section 411(d)
of the Code, all benefits payable to current, terminated employees or any
beneficiary may be amended or terminated by the Company at any time without a
material amount of liability.
(k) Neither the Company nor any Member of the Controlled Group
has any Plan-related liability or is threatened with any liability (whether
joint or several) (i) for any excise tax imposed by Section 4971, 4975, 4976,
4977 or 4979 of the Code, or (ii) for a fine under Section 502 of ERISA that
could reasonably be expected to result in a material amount of liability to the
Company.
(l) All the "group health plans" (as defined in Section 607(1)
or 733(a)(1) of ERISA or Section 4980B(g)(2) of the Code) that are part of the
Plans listed in the Company Disclosure Schedule are in material compliance with
the continuation of group health coverage provisions contained in Section 4980B
of the Code and Sections 601 through 608 of ERISA.
(m) Copies of all documents creating or evidencing any Plan
listed in the Company Disclosure Schedule, and all reports, forms and other
documents required to be filed with any governmental entity (including, without
limitation, summary plan descriptions, Forms 5500 and summary annual reports for
all plans subject to ERISA), have been delivered or made available to Purchaser.
There are no negotiations, demands or proposals which are pending or have been
made which concern matters now covered, or that would be covered, by any Plan
listed in the Company Disclosure Schedule.
(n) All expenses and liabilities relating to contributions
required by law and the terms of the Plans described in the Company Disclosure
Schedule have been, and on the Closing Date will be, fully and properly accrued
on the Company's books and records and disclosed in accordance with GAAP and in
Plan financial statements.
5.23 HSR ACT MATTERS.
The Company is its own "ultimate parent entity" as such term is defined
in 16 C.F.R. Section 801.1(a)(3). The Company, on a consolidated basis, does not
engage in manufacturing within the meaning of 16 C.F.R. Section 801.1(j). The
Company, on a consolidated basis, does not have assets with an aggregate book
value of $10,000,000 or more based on its most recent regularly prepared balance
sheet. This representation is made solely for the purpose of determining the
applicability to the transactions contemplated by this Agreement of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
5.24 FULL DISCLOSURE.
(a) Neither this Agreement (including all Schedules and
Exhibits hereto), nor any of the Transactional Agreements, contains any untrue
statement of material fact; and none of such documents omits to state any
material fact necessary to make any of the representations, warranties or other
statements or information contained therein when read collectively not
misleading.
26
(b) There is no fact within the knowledge of the Company
(other than publicly known facts relating exclusively to political or economic
matters of general applicability that will adversely affect all comparable
Entities) that may (i) have a Material Adverse Effect or (ii) affect the ability
of the Selling Stockholders or the Company to comply with or perform any
covenant or obligation under this Agreement or any of the other Transactional
Agreements to which it is contemplated to be a party.
(c) All the information set forth in the Company Disclosure
Schedule is accurate and complete in all material respects.
5.25 DUE DILIGENCE INFORMATION.
The Company has provided Purchaser and Purchaser's representatives with
full and complete access to all of the Company's records and other documents and
data, and has produced all documents and related materials in response to the
reasonable requests of Purchaser.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB.
Except as set forth in the disclosure schedule provided by Purchaser
attached hereto at SCHEDULE IV (the "PURCHASER DISCLOSURE SCHEDULE") Purchaser
and Merger Sub, jointly and severally, hereby represent and warrant to the
Selling Stockholders as follows:
6.1 ORGANIZATION, GOOD STANDING, AUTHORITY; BINDING NATURE OF
AGREEMENT.
(a) Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, is
qualified to conduct business and is in both corporate and tax good standing
under the laws of each jurisdiction in which the nature of its business or the
ownership or leasing of its properties requires such qualification. Purchaser
has the requisite corporate power and authority to own and operate its
properties and assets and to carry on its business as currently conducted.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, is
qualified to conduct business and is in both corporate and tax good standing
under the laws of each jurisdiction in which the nature of its business or the
ownership or leasing of its properties requires such qualification. Merger Sub
has the requisite corporate power and authority to own and operate its
properties and assets and to carry on its business as currently conducted.
Merger Sub was created solely to effect the Transactions.
6.2 INVESTMENT REPRESENTATIONS.
(a) Purchaser understands that the Stock has not been
registered under the Securities Act. Purchaser also understands that the Stock
is being offered and sold pursuant to an exemption from registration contained
in the Securities Act based in part upon Purchaser's representations contained
in this Section 6.2.
(b) Purchaser is entering into the Transactions for
Purchaser's own account for investment only, and not with the current intention
of making a public distribution of the Stock.
27
(c) Purchaser represents that by reason of its, or of its
management's business or financial experience, Purchaser has the capacity to
protect its own interests in connection with the Transactions contemplated in
this Agreement and the other Transactional Agreements. Purchaser is able to bear
the loss of its entire investment in the Company. Purchaser is not a
corporation, partnership or other entity specifically formed for the purpose of
consummating this transaction.
(d) Purchaser is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D promulgated under to the Securities Act.
6.3 PURCHASER STOCK.
The Purchaser Stock to be issued to the Selling Stockholders and upon
exercise of the Company Options assumed by Purchaser, when issued in connection
with this Agreement and the other Transactional Agreements, will be duly
authorized, validly issued and nonassessable.
6.4 AUTHORITY; BINDING NATURE OF AGREEMENTS.
(a) The execution, delivery and performance of this Agreement,
the Transactional Agreements, and all other agreements and instruments
contemplated to be executed and delivered by Purchaser or Merger Sub, as the
case may be, in connection herewith have been duly authorized by all necessary
action on the part of Purchaser and Merger Sub and their respective board of
directors.
(b) This Agreement, the Transactional Agreements, and all
other agreements and instruments contemplated to be executed and delivered by
Purchaser and Merger Sub each constitute the legal, valid and binding obligation
of Purchaser and Merger Sub, enforceable against Purchaser and Merger Sub in
accordance with their terms, except to the extent that enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally and by
general principles of equity regardless of whether such enforceability is
considered in a proceeding in law or equity.
6.5 NON-CONTRAVENTION; CONSENTS.
The execution and delivery of this Agreement and the other
Transactional Agreements, and the consummation of the Transactions, by Purchaser
and Merger Sub will not, directly or indirectly (with or without notice or lapse
of time):
(a) contravene, conflict with or result in a material
violation of (i) Purchaser and Merger Sub's Certificate of Incorporation or
bylaws, or (ii) any resolution adopted by Purchaser and Merger Sub Board or any
committee thereof or the stockholders of Purchaser and Merger Sub;
(b) contravene, conflict with or result in a material
violation of, or give any Governmental Body the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any legal
requirement or any Order to which Purchaser and Merger Sub or any material
assets owned or used by it are subject;
28
(c) cause any material assets owned or used by Purchaser and
Merger Sub to be reassessed or revalued by any taxing authority or other
Governmental Body;
(d) contravene, conflict with or result in a material
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by Purchaser or Merger Sub or any of
their respective employees or that otherwise relates to Purchaser and Merger
Sub's business or to any of the material assets owned or used by Purchaser and
Merger Sub;
(e) contravene, conflict with or result in a material
violation or material breach of, or material default under, any Purchaser
Contract;
(f) give any Person the right to any payment by Purchaser or
Merger Sub or give rise to any acceleration or change in the award, grant,
vesting or determination of options, warrants, rights, severance payments or
other contingent obligations of any nature whatsoever of Purchaser or Merger Sub
in favor of any Person, in any such case as a result of the change in control of
Merger Sub or otherwise resulting from the Transactions; or
(g) result in the imposition or creation of any material
encumbrance upon or with respect to any material asset owned or used by
Purchaser and Merger Sub.
Except as set forth in Part 6.5 of the Purchaser Disclosure Schedule and as
contemplated in this Agreement and the other Transactional Agreements, Purchaser
and Merger Sub will not be required to make any filing with or give any notice
to, or obtain any Consent from, any Person in connection with the execution and
delivery of this Agreement and the other Transactional Agreements or the
consummation or performance of any of the Transactions.
6.6 FINDERS AND BROKERS.
Purchaser and Merger Sub will indemnify the Selling Stockholders and
the Company and hold them harmless from any liability or expense arising from
any claim for brokerage commissions, finder's fees or other similar compensation
based upon any agreement, arrangement or understanding made by or on behalf of
Purchaser or Merger Sub.
6.7 REPORTS AND FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES.
(a) Purchaser has filed all reports required to be filed with
the SEC pursuant to the Exchange Act, if any, since its initial public offering
on December 9, 1998 (all such reports, including those to be filed prior to the
Closing Date, collectively, the "PURCHASER SEC REPORTS"), and has previously
furnished or made available to the Company true and complete copies of all the
Purchaser SEC Reports filed, if any, with respect to periods ending after
December 9, 1998 (including any exhibits thereto) and will promptly deliver to
the Company any Purchaser SEC Reports filed between the date hereof and the
Effective Time. All of such Purchaser SEC Reports complied at the time they were
filed in all material respects with applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations thereunder. None of such
Purchaser SEC Reports, as of their respective dates (as amended through the date
hereof), contained or, with respect to Purchaser SEC Reports filed after the
date hereof, will contain any untrue statement of a material fact or omitted
or, with respect to Purchaser SEC Reports filed
29
after the date hereof, will omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
financial statements of Purchaser included in the Purchaser SEC Reports
comply in all material respects with the published rules and regulations of
the SEC with respect thereto, and such audited financial statements (i) were
prepared from the books and records of Purchaser, (ii) were prepared in
accordance with GAAP applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and (iii) present
fairly the financial position of Purchaser as of the dates thereof and the
results of operations and cash flows for the periods then ended. The
unaudited financial statements included in the Purchaser SEC Reports comply
in all material respects with the published rules and regulations of the SEC
with respect thereto; and such unaudited financial statements (i) were
prepared from the books and records of Purchaser, (ii) were prepared in
accordance with GAAP, except as otherwise permitted under the Exchange Act
and the rules and regulations thereunder, on a consistent basis (except as
may be indicated therein or in the notes or schedules thereto) and (iii)
present fairly the financial position of Purchaser as of the dates thereof
and the results of operations and cash flows (or changes in financial
condition) for the periods then ended, subject to normal year-end adjustments
and any other adjustments described therein or in the notes or schedules
thereto. The foregoing representations and warranties shall also be deemed to
be made with respect to all filings made with the SEC on or before the
Effective Time.
(b) Except as specifically contemplated by this Agreement or
reflected in the Purchaser SEC Reports, since March 31, 1999 there has not been
(i) any change or event having a Purchaser Material Adverse Effect, (ii) any
declaration, setting aside or payment of any dividend or distribution with
respect to the common stock of Purchaser other than consistent with past
practices, or (iii) any material change in Purchaser's accounting principles,
procedures or methods.
6.8 COMPLIANCE WITH APPLICABLE LAW.
Except as disclosed in the Purchaser SEC Reports filed prior to the
date of this Agreement, Purchaser holds all licenses, franchises, permits,
variances, exemptions, orders, approvals and authorizations necessary for the
lawful conduct of its business under and pursuant to, and the business of
Purchaser is not being conducted in violation of, any provision of any federal,
state, local or foreign statute, law, ordinance, rule, regulation, judgment,
decree, order, concession, grant, franchise, permit or license or other
governmental authorization or approval applicable to Purchaser, except to the
extent that the failure or violation would not in the aggregate have a Purchaser
Material Adverse Effect.
6.9 COMPLETE COPIES OF REQUESTED REPORTS.
Purchaser has delivered or made available (through public sources or
directly) true and complete copies of each document that has been reasonably
requested by the Company or its counsel in connection with their legal and
accounting review of Purchaser.
30
6.10 CONTRACTS.
(a) Except as set forth in Part 6.10 of the Purchaser
Disclosure Schedule, no Purchaser Contracts have come into existence since March
31, 1999, that have not previously been filed with the SEC, that will be
required to be filed as exhibits to Purchaser's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1999.
(b) Purchaser has previously made available for inspection and
copying to the Company complete and correct copies (or, in the case of oral
contracts, a complete and correct description) of each Purchaser Contract (and
any amendments or supplements thereto) listed on Part 6.10 of the Purchaser
Disclosure Schedule. Except as set forth on Part 6.10 of the Purchaser
Disclosure Schedule, (i) each Purchaser Contract (including any Purchaser
Contract filed with the Purchaser SEC Reports) listed is in full force and
effect, (ii) neither Purchaser nor, to its knowledge, any other party is in
material default under any such Purchaser Contract, and no event has occurred
which constitutes, or with the lapse of time or the giving of notice or both
would constitute, a material default, (iii) to the knowledge of Purchaser, there
are no material disputes or disagreements between Purchaser and any other party
with respect to any such Purchaser Contract and (iv) each other party to each
such Purchaser Contract has consented or been given notice (or prior to the
Closing Date shall have consented or been given notice), where such consent or
the giving of such notice is necessary, sufficient that such Purchaser Contract
shall remain in full force and effect following the consummation of the
Transactions, without material modification in the rights or obligations of
Purchaser thereunder.
6.11 TAX MATTERS.
(a) Except with respect to the NBC Transactions, Purchaser has
no plan or intention to cause the Company to issue additional shares of stock
after the Merger, or take any other action, that would result in the Purchaser
losing Control of the Company.
(b) Purchaser has no plan or intention, following the Merger,
to liquidate the Company; to merge the Company with or into any other
corporation; to sell, distribute or otherwise dispose of the capital stock of
the Company; or to cause the Company to sell or otherwise dispose of any of its
assets (or of any of the assets acquired from Merger Sub) except for
dispositions made in the Ordinary Course of Business or transfers permitted
under Section 368(a)(2)(C) of the Code or prescribed by Treasury Regulations
under Section 368 of the Code.
(c) Following the Merger, the historic business of the Company
will be continued, or a significant portion of the Company's historic business
assets will be used in a business.
(d) Neither the Purchaser nor any "related person" with
respect to Purchaser (within the meaning of Treasury Regulations Section
1.368-1(e)(3)) owns or has at any time during the past years owned any capital
stock of the Company.
(e) Except for (I) repurchases or redemptions of Purchaser
Stock that are consistent with past practices and purchase programs that were
not created or modified in connection with the Merger, (II) possible repurchases
of unvested shares of employees or consultants in connection with the
termination of their services, and (III) possible reacquisitions
31
of Purchaser Stock pursuant to the Escrow Agreement, neither the Purchaser or
any "related person" with respect to the Purchaser (within the meaning of
Treasury Regulations Section 1.368-1(e)(3)) has any plan or intention to
repurchase or redeem any of the Purchaser Stock to be issued in the Merger in
exchange for shares of Company capital stock.
(f) Purchaser is not an investment company for purposes of
Section 368(a)(2)(F) of the Code.
7. PRE-CLOSING COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS.
7.1 CORPORATE PROCEEDINGS; STOCKHOLDER APPROVAL.
The Company shall (i) ensure that resolutions (in form satisfactory to
Purchaser) of the Company Board approving or adopting, as applicable, all
necessary further action of the Company Board, this Agreement, the other
Transactional Agreements and the Transactions and recommending approval by the
Company's stockholders of the Agreement, the other Transactional Agreements and
the Transactions, are passed as necessary pursuant to applicable law, and (ii)
use Best Efforts to ensure that the stockholders of the Company take all
necessary action to approve or adopt, as applicable, the Merger. In furtherance,
and not in limitation of the foregoing:
(a) the Company, acting through the Company Board, shall, in
accordance with all applicable legal requirements and its Certificate of
Incorporation and Bylaws (i) promptly and duly call, give notice of, convene and
hold as soon as practicable a meeting (or solicit an action by written consent
in lieu thereof) of its stockholders for the purpose of voting to approve and
adopt the Merger and this Agreement and the other Transactional Agreements to
which the Company is a party, and (ii) recommend approval and adoption of the
Merger and this Agreement and the other Transactional Agreements to which the
Company is a party by the Company's stockholders and include in the Information
Statement such recommendation, and take all lawful action to solicit such
approval. The Company shall consult with Purchaser as to the timing and
procedures of such meeting (or consent solicitation); and
(b) the Company will cooperate fully with respect to all
requests by Purchaser to facilitate the preparation and mailing of the
Information Statement. The Company shall furnish Purchaser with all information
concerning the Company, its capital stock, the Selling Stockholders, the holders
of the Company Options and other matters, and shall take all other actions, as
Purchaser may reasonably request in connection with the Information Statement.
Such information provided by the Company shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. Whenever the
Company obtains any knowledge of any event which should be set forth in an
amendment or a supplement to the Information Statement, the Company will
promptly inform Purchaser and will cooperate in mailing to the Selling
Stockholders such amendment or supplement.
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7.2 ACCESS AND INVESTIGATION.
The Company shall ensure that, at all times during the Pre-Closing
Period:
(a) The Company and its representatives provide Purchaser and
its representatives with such copies of existing books, records, Tax Returns,
work papers and other documents and information relating to the Company as
Purchaser may reasonably request in good faith; and
(b) The Company and its representatives compile and provide
Purchaser and its representatives with such additional financial, operating and
other data and information regarding the Company as Purchaser may reasonably
request in good faith.
7.3 OPERATION OF BUSINESS.
Except as otherwise contemplated by this Agreement and Section 5.3(b)
of the Company Disclosure Schedule, the Company shall ensure that, during the
Pre-Closing Period:
(a) the Company conducts its operations in the Ordinary Course
of Business and in the same manner as such operations have been conducted prior
to the date of this Agreement;
(b) the Company preserves intact its current business
organization, keeps available the services of its current officers and employees
and maintains its relations and goodwill with all suppliers, customers,
landlords, creditors, licensors, licensees, employees and other Persons having
business relationships with the Company;
(c) the Company keeps in full force all insurance policies
identified in Part 5.18 of the Company Disclosure Schedule;
(d) the Company's officers confer regularly with Purchaser
concerning operational matters and otherwise report regularly to Purchaser
concerning the status of the Company's business, condition, assets, liabilities,
operations, financial performance and prospects;
(e) the Company immediately notifies Purchaser of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
(f) the Company does not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock, and does not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities, except for shares for which the Company has a
repurchase right under the Option Plan;
(g) the Company does not sell or otherwise issue (or grant any
warrants, options or other rights to purchase) any shares of capital stock or
any other securities, other than options to purchase up to the number of shares
of Common Stock pursuant to the Option Plan set forth on SCHEDULE II attached
hereto, or unless approved in advance in writing by Purchaser;
(h) the Company does not amend its Certificate of
Incorporation or Bylaws, and does not effect or become a party to any
Acquisition Transaction, recapitalization,
33
reclassification of shares, stock split, reverse stock split or similar
transaction, or enter into any transaction or take any other action of the
type referred to in Section 5.20(c) through (n);
(i) the Company does not form any subsidiary or acquire any
equity interest or other interest in any other Entity;
(j) the Company does not make any capital expenditure, except
for capital expenditures made in the Ordinary Course of Business that, when
added to all other capital expenditures made on behalf of the Company during the
Pre-Closing Period, do not exceed $25,000, unless approved in advance in writing
by Purchaser;
(k) the Company does not enter into, or permit any of the
material assets owned or used by the Company to become bound by, any Contract;
(l) the Company does not incur, assume or otherwise become
subject to any Liability, except for current liabilities incurred in the
Ordinary Course of Business, unless approved in advance in writing by Purchaser;
(m) the Company does not establish or adopt any Employee
Benefit Plan, and does not pay any bonus or make any profit-sharing or similar
payment to, or materially increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees;
(n) the Company does not change any of its methods of
accounting or accounting practices in any respect;
(o) the Company does not make any Tax election;
(p) the Company does not commence any Proceeding without the
prior written consent of Purchaser; and
(q) the Company does not agree, commit or offer (in writing or
otherwise) or attempt to take any of the actions described in the preceding
clauses of this Section 7.3.
7.4 FILINGS AND CONSENTS.
The Company and the Holder Representative shall ensure that:
(a) each filing or notice required to be made or given
(pursuant to any applicable legal requirement, Order or Contract, or otherwise)
by the Company or the Selling Stockholders in connection with the execution and
delivery of any of the Transactional Agreements or in connection with the
consummation or performance of any of the Transactions (including each of the
filings and notices identified in Part 5.5 of the Company Disclosure Schedule)
is made or given as soon as possible after the date of this Agreement;
(b) each Consent required to be obtained (pursuant to any
applicable legal requirement, Order or Contract, or otherwise) by the Company or
the Selling Stockholders in connection with the execution and delivery of any of
the Transactional Agreements or in
34
connection with the consummation or performance of any of the Transactions
(including each of the Consents identified in Part 5.5 of the Company
Disclosure Schedule) is obtained as soon as possible after the date of this
Agreement and remains in full force and effect through the Closing Date;
(c) the Company promptly delivers to Purchaser a copy of each
filing made, each notice given and each Consent obtained by the Company or the
Selling Stockholders during the Pre-Closing Period; and
(d) during the Pre-Closing Period, the Company and its
representatives cooperate with Purchaser and with Purchaser's representatives,
and prepare and make available such documents and take such other actions as
Purchaser may request in good faith, in connection with any filing, notice or
Consent that Purchaser or Merger Sub is required or elects to make, give or
obtain.
7.5 NOTIFICATION; UPDATES TO COMPANY DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Company and the Holder
Representative shall promptly notify Purchaser in writing of:
(i) the discovery by the Company or the Selling
Stockholders of any event, condition, fact or circumstance that constitutes a
material breach of any representation or warranty made by the Company or the
Selling Stockholders in this Agreement or in any of the other Transactional
Agreements; and
(ii) any event, condition, fact or circumstance
that may make the timely satisfaction of any of the conditions set forth in
Section 4.1 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 7.5(a) requires any change in the
Company Disclosure Schedule or Information Statement, or if any such event,
condition, fact or circumstance would require such a change assuming the Company
Disclosure Schedule were dated as of the date of the occurrence, existence or
discovery of such event, condition, fact or circumstance, then the Company and
the Selling Stockholders shall promptly deliver to Purchaser an update to the
Company Disclosure Schedule (a "COMPANY DISCLOSURE SCHEDULE UPDATE") or to the
Information Statement (an "INFORMATION STATEMENT UPDATE") specifying such
change. Such Company Disclosure Schedule Update or Information Statement Update
shall be deemed to supplement or amend the Company Disclosure Schedule or
Information Statement for the purpose of (i) determining the accuracy of any of
the representations and warranties made by the Company or the Selling
Stockholders in this Agreement or any of the Transactional Agreements as of the
Closing or (ii) determining whether the conditions set forth in Section 4.1 have
been satisfied, unless objected to in writing by Purchaser.
7.6 NO NEGOTIATION.
Neither the Company nor the Selling Stockholders nor any of their
respective employees, directors, representatives, affiliates or advisors
(including, without limitation, legal, accounting,
35
financial and investment banking advisors) will directly or indirectly on
behalf of the Company or the Selling Stockholders:
(a) enter into any agreement (or grant any option or right) to
sell, transfer or otherwise dispose of the shares of capital stock or the assets
of the Company or issue any controlling interest in shares of capital stock of
the Company, directly or indirectly, to any person other than Company Options
and shares issuable upon exercise of the Company Options in the ordinary course;
(b) hold any discussion with, or provide any information to,
any person concerning the Company in connection therewith or provide any
information to, any person concerning the Company in connection therewith; or
(c) respond to any inquiry made by any person concerning a
proposed acquisition of any assets or capital stock of the Company, except to
advise such person that the Company has entered into this Agreement. The Company
and the Holder Representative, on behalf of the Selling Stockholders, further
agree to advise Purchaser immediately upon receiving any inquiry from any such
person. If the Company receives a bona fide offer concerning a proposed
acquisition of any assets or capital stock of the Company, the Company shall, in
addition to notifying Purchaser of the receipt of such offer, identify the
identity of the proposed buyer.
7.7 BEST EFFORTS.
During the Pre-Closing Period, the Company and the Selling Stockholders
shall (i) use their Best Efforts to (i) cause the conditions set forth in
Section 4.1 to be satisfied on a timely basis and (ii) complete the unaudited
balance sheet of the Company as of June 30, 1999, and the related unaudited
statement of operations, changes in stockholders' equity and cash flows of the
Company for the three (3) and six (6) months then ended, and shall not take any
action or omit to take any action, the taking or omission of which would or
could reasonably be expected to result in any of the representations and
warranties set forth in Section 5 of this Agreement becoming untrue, in any of
the conditions of Closing set forth in Section 4.1 not being satisfied or in the
business of the Company becoming materially less valuable.
8. PRE-CLOSING COVENANTS OF PURCHASER.
8.1 CORPORATE PROCEEDINGS.
(a) Purchaser shall ensure that resolutions (in form
satisfactory to Purchaser) of the Purchaser Board approving or adopting, as
applicable, all necessary further action of the Purchaser Board, this Agreement,
the other Transactional Agreements and the Transactions and, if required,
recommending approval by Purchaser's stockholders of the Agreement, the other
Transactional Agreements and the Transactions.
(b) Prior to or after the signing of this Agreement, Purchaser
will prepare an Information Statement (the "INFORMATION STATEMENT"), subject to
Section 7.1(b), and use its Best Efforts to cause the Information Statement and
any other disclosure documents deemed appropriate by Purchaser to be mailed to
Selling Stockholders in connection with obtaining the
36
approval of such Selling Stockholders of the Merger and this Agreement and
the other Transactional Agreements to which Purchaser is a party.
8.2 ACCESS AND INVESTIGATION.
Purchaser shall ensure that, at all times during the Pre-Closing
Period:
(a) Purchaser and its representatives provide the Company and
its representatives with free and complete access at reasonable times to
Purchaser's premises and assets and to all existing books, records, Tax Returns,
work papers and other documents and information relating to Purchaser;
(b) Purchaser and its representatives provide the Company and
its representatives with such copies of existing books, records, Tax Returns,
work papers and other documents and information relating to Purchaser as the
Company may request in good faith; and
(c) Purchaser and its representatives compile and provide the
Company and its representatives with such additional financial, operating and
other data and information regarding Purchaser as the Company may request in
good faith.
8.3 FILINGS AND CONSENTS.
Purchaser shall ensure that:
(a) each filing or notice required to be made or given
(pursuant to any applicable legal requirement, Order or Contract, or otherwise)
by Purchaser or Merger Sub in connection with the execution and delivery of any
of the Transactional Agreements or in connection with the consummation or
performance of any of the Transactions is made or given as soon as possible
after the date of this Agreement;
(b) each Consent required to be obtained (pursuant to any
applicable legal requirement, Order or Contract, or otherwise) by Purchaser or
Merger Sub in connection with the execution and delivery of any of the
Transactional Agreements or in connection with the consummation or performance
of any of the Transactions is obtained as soon as possible after the date of
this Agreement and remains in full force and effect through the Closing Date;
(c) Purchaser promptly delivers to the Company a copy of each
filing made, each material notice given and each material Consent obtained by
Purchaser or Merger Sub during the Pre-Closing Period; and
(d) during the Pre-Closing Period, Purchaser or Merger Sub and
the representatives of either cooperate with the Company and its
representatives, and prepare and make available such documents and take such
other actions as the Company may request in good faith, in connection with any
filing, notice or Consent that the Company is required or elects to make, give
or obtain.
37
8.4 NOTIFICATION.
During the Pre-Closing Period, Purchaser or Merger Sub shall promptly
notify the Company in writing of:
(a) the discovery by Purchaser of any event, condition, fact
or circumstance that constitutes a breach of any representation or warranty made
by Purchaser or Merger Sub in this Agreement or in any of the other
Transactional Agreements;
(b) any breach of any covenant or obligation of Purchaser or
Merger Sub; and
(c) any event, condition, fact or circumstance that may make
the timely satisfaction of any of the conditions set forth in Section 4.2,
impossible or unlikely.
8.5 BEST EFFORTS.
During the Pre-Closing Period, each of Purchaser or Merger Sub shall
use its Best Efforts to cause the conditions set forth in Section 4.2 to be
satisfied on a timely basis, and shall not take any action or omit to take any
action, the taking or omission of which would or could reasonably be expected to
result in any of the representations and warranties set forth in Section 6 of
this Agreement becoming untrue or in any of the conditions of Closing set forth
in Section 4.2 not being satisfied.
9. OTHER AGREEMENTS.
9.1 REGISTRATION OF COMPANY OPTIONS.
Purchaser agrees that as soon as reasonably practicable after the
Closing Date, but in no event later than fifteen (15) days following the Closing
Date, it will cause to be filed one or more registration statements on Form S-8
under the Securities Act, or amendments to its existing registration statements
on Form S-8, in order to register, if necessary, the shares of Common Stock of
Purchaser issuable upon exercise of the aforesaid converted Company Options.
9.2 CONFIDENTIALITY.
Each of the parties hereto hereby agrees to and reaffirms the terms and
provisions of the Mutual Nondisclosure Agreement by and between Purchaser and
the Company, dated as of June 15, 1999 (the "NONDISCLOSURE AGREEMENT").
9.3 PUBLIC DISCLOSURE.
Unless otherwise required by law (including, without limitation,
securities laws) or, as to Purchaser, by the rules and regulations of the
National Association of Securities Dealers, Inc., prior to the Effective Time,
no disclosure (whether or not in response to an inquiry) of the subject matter
of this Agreement or any Transactional Agreement shall be made by any party
hereto unless approved by Purchaser and the Company prior to release; PROVIDED,
that such approval shall not be unreasonably withheld, PROVIDED, FURTHER, that
the parties agree and understand that certain disclosures regarding the
Transactions may be made to (i) employees of
38
Purchaser and the Company, (ii) third parties whose consent or approval may
be required in connection with the Transactions, and (iii) the professional
advisors of Purchaser, the Company and the Selling Stockholders, in each case
without any prior written consent.
9.4 VALUATION REPORT.
The Company shall cooperate with Purchaser to prepare a report relating
to the valuation of the Company.
9.5 NO INCONSISTENT ACTION.
None of Purchaser, the Company or the Selling Stockholders shall take
any action inconsistent with the treatment of the Merger as a reorganization
under Section 368(a) of the Code. Notwithstanding any other provision of this
Agreement, the undertaking set forth in this Section 9.5 shall not expire.
9.6 TERMS OF EMPLOYMENT OF CRITICAL EMPLOYEES.
Purchaser and the Critical Employees shall agree to the employment
terms set forth in the forms of Employment and Non-Competition Agreement
attached hereto as EXHIBIT D.
9.7 PATENT OPINIONS.
The Company and the Holder Representative shall ensure that: (i) within
ten (10) days of the Closing Date, a request will have been made to the United
States Patent and Trademark Office for the prosecution history relating to the
patents specified in Exhibit A to the Escrow Agreement; and (ii) within thirty
(30) days of the Closing Date, the Supplemental Technology Description specified
in the same Exhibit A will have been delivered to the Company's patent counsel.
9.8 EFFECT OF PRE-CLOSING COVENANTS.
The pre-closing covenants of the Company, the Selling Stockholders and
Purchaser contained in Sections 7 and 8 shall be of no force or effect unless
the date hereof is not the Closing Date.
10. TERMINATION.
10.1 TERMINATION EVENTS.
This Agreement may be terminated prior to Closing:
(a) by Purchaser if there is a material breach of any covenant
or obligation of the Company or the Selling Stockholders under this Agreement or
any of the Transactional Agreements and such breach has not been cured within
ten (10) business days of after written notice of such breach is given to the
Company or the Holder Representative, as appropriate;
39
(b) by the Company if there is a material breach of any
covenant or obligation of Purchaser and such breach has not been cured within
ten (10) business days of after written notice of such breach is given to
Purchaser;
(c) by the Company pursuant to the provisions specified in
Section 1.3(b)(iii);
(d) by either Purchaser or the Company if the Closing has not
taken place on or before July 31, 1999; or
(e) by the mutual consent of Purchaser and the Company.
10.2 TERMINATION PROCEDURES.
If Purchaser wishes to terminate this Agreement pursuant to Section
10.1(a) or Section 10.1(d), Purchaser shall deliver to the Selling Stockholders
a written notice stating that Purchaser is terminating this Agreement and
setting forth a brief description of the basis on which Purchaser is terminating
this Agreement. If the Company wishes to terminate this Agreement pursuant to
Section 10.1(b), Section 10.1(c) or Section 10.1(d), the Company shall deliver
to Purchaser a written notice stating that the Company is terminating this
Agreement and setting forth a brief description of the basis on which the
Company is terminating this Agreement.
10.3 EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to Section 10.1, all further
obligations of the parties under this Agreement shall terminate; PROVIDED, that
each party shall remain liable for any breaches of this Agreement prior to its
termination and PROVIDED, FURTHER, that Sections 9.2, 9.3, 10, 12.2, 12.3 and
12.11 shall survive the termination of this Agreement.
10.4 EXCLUSIVITY OF TERMINATION RIGHTS.
Except to the extent termination occurs due to the bad faith of the
other party, the termination rights and obligations provided in this Section 10
shall be deemed to be exclusive. Subject to the provisions of Section 10.3, the
parties shall not have any other or further Liabilities to or with respect to
one another by reason of this Agreement or its termination.
11. INDEMNIFICATION, ETC.
11.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations, warranties, covenants and obligations
of each party (including the Selling Stockholders) set forth in this Agreement,
the Escrow Agreement, the Investment Agreement and the Registration Rights
Agreement shall survive the Closing Date, and any subsequent Acquisition
Transaction effected by or otherwise involving the Purchaser or the Company, to
the extent provided in this Section 11.1(a). All representations and warranties
(as well as covenants and obligations to be performed prior to the Closing Date)
of the parties in this Agreement, the Escrow Agreement, the Investment Agreement
and the Registration Rights Agreement shall terminate and have no further force
or effect on the Indemnification
40
Termination Date, unless earlier terminated pursuant to Section 10.1;
PROVIDED, HOWEVER, that any representation or warranty made herein or in the
Escrow Agreement, the Investment Agreement or the Registration Rights
Agreement, (i) the breach of which resulted from the commission of fraud or
an intentional misrepresentation or omission by a Selling Stockholder or (ii)
which a Selling Stockholder knew was false when made (each such Selling
Stockholder referred to in clause (i) and (ii) above, shall be referred to
herein as a "RESPONSIBLE STOCKHOLDER"), shall, solely with respect to such
Responsible Stockholder and in connection with such Responsible Stockholder's
indemnification obligations under Section 11 hereof, terminate and have no
further force or effect on the second anniversary of the Closing Date, and
any covenants or obligations under this Agreement or any of the other
Transactional Agreements to be performed after the Closing shall survive the
Closing as required for the completion of such covenants or obligations.
(b) The representations, warranties, covenants and obligations
of the respective parties, and the rights and remedies that may be exercised by
any of them, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by, or the knowledge of, any
of the parties or any of their respective representatives.
(c) For purposes of this Agreement, although each statement or
other item of information set forth in the Company Disclosure Schedule qualifies
the specific representation and warranty to which such information refers, all
such statements and other items of information set forth in the Company
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company in this Agreement.
(d) The representations, warranties, covenants and obligations
of the Company or the Selling Stockholders in this Agreement or any other
Transactional Agreement (other than the Employment and Non-Competition
Agreements) are made to Purchaser and for the benefit of each Indemnitee (as
defined in Section 11.2(a) below).
11.2 INDEMNIFICATION BY THE SELLING STOCKHOLDERS.
(a) Subject to the remainder of this Section 11.2 and Section
11.7, and to the extent of each Selling Stockholder's pro rata share of the
Indemnification Portion, the Selling Stockholders covenant and agree to defend,
indemnify and hold harmless Purchaser, and each of its officers, directors,
employees, agents and representatives (collectively, the "INDEMNITEES" and
individually each an "INDEMNITEE") from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages which are suffered or
incurred by any of the Indemnitees (regardless of whether or not such Damages
relate to any third party claim) directly or indirectly arising or resulting
from or connected with any breach of any representation or warranty made by the
Company or the Selling Stockholders in this Agreement, the Escrow Agreement, the
Investment Agreement or the Registration Rights Agreement. Notwithstanding the
foregoing, each Responsible Stockholder shall be liable up to such Responsible
Stockholder's pro rata share of the Merger Consideration for Damages resulting
from (i) the commission of fraud or an intentional misrepresentation or omission
by such Responsible Stockholder in connection with the representations and
warranties contained in this Agreement, the Escrow Agreement, the Investment
Agreement or the Registration Rights Agreement or (ii) the breach of any
representation or warranty contained in this Agreement, the Escrow Agreement,
the Investment
41
Agreement or the Registration Rights Agreement which such Responsible
Stockholder knew was false when made.
(b) From and after the Closing Date, the Selling Stockholders
shall protect, defend, indemnify and hold harmless the Indemnitees from any and
all Taxes (including without limitation any obligation to contribute to the
payment of any Taxes determined on a consolidated, combined or unitary basis
with respect to a group of corporations that includes or included the Company)
that are (i) imposed on Purchaser or any member (other than the Company) of any
consolidated, unitary or combined group that includes or included the Company
and (ii) imposed on the Company in respect of its income, business, property or
operations or for which the Company may otherwise be liable (A) for any
Pre-Closing Period, (B) resulting by reason of the several liability of the
Company pursuant to Treasury Regulations Section 1.1502-6 or any analogous
state, local or foreign law or regulation or by reason of the Company having
been a member of any consolidated, combined or unitary group on or prior to the
Closing Date, (C) in respect of any taxable income included by the Company in a
Post-Closing Period that is attributable to income that is realized in a
Pre-Closing Period, including, in each case, the appropriate portion of a
Straddle Period, or (D) in respect of any Post-Closing Period, attributable to
any mandatory change in accounting method employed by the Company during any of
its previous taxable years, or (E) in respect of any Post-Closing Period,
attributable to any items of income or gain of a partnership reporting the
Company as a partner, to the extent such items are properly attributable to
periods of the partnership ending on or before the Closing Date; provided,
however, that the Selling Stockholder's liability under the foregoing provisions
of this paragraph shall be reduced as to any item to the extent that such item
was either (x) specifically reserved for in the Unaudited Interim Balance Sheet
or (y) satisfied through an estimated Tax payment by the Company after the date
of the Unaudited Interim Balance Sheet, provided that such payment is
attributable to a Post-Closing Period and, on or before the Closing, the Company
provides satisfactory evidence of such payment to Purchaser. Notwithstanding
anything to the contrary contained in this Agreement, (i) the representations,
warranties and covenants of the Company and the Selling Stockholders set forth
in Sections 5.14 and 12.4 hereof shall survive the execution and delivery hereof
and the Closing and continue until the expiration of the applicable statute of
limitations date (or any extensions thereof) and (ii) the aggregate liability of
each Selling Stockholder under this Section 11.2(b) shall not exceed such
Selling Stockholder's pro rata share of the Merger Consideration.
(c) After Closing, no Person shall be required to indemnify
any Indemnitee with respect to any claim for indemnification pursuant to Section
11.2(a) and 11.2(b) unless and until the aggregate amount of indemnifiable
Damages suffered by all Indemnitees subject to indemnification pursuant to this
Agreement exceeds $100,000 (the "BASKET"), and only to the extent such amount
exceeds the Basket. The aggregation of claims must reach the Basket only once,
and after such point the Indemnitees may seek indemnification for all claims in
excess of the Basket that may arise under this Section 11.2.
(d) Claims for indemnification under this Section 11.2 shall
be made first from the Indemnification Portion Escrow Account. The number of
shares of Purchaser Stock to be released to Purchaser pursuant to the terms of
the Escrow Agreement shall be calculated by dividing the dollar amount of the
Damages incurred by the Indemnitee by the Average Purchaser Stock Price.
42
(e) The Selling Stockholders are not required to make any
indemnification payment hereunder unless a claim is initiated in the manner set
forth in the Escrow Agreement prior to the termination date of such Selling
Stockholders' indemnification obligations specified in Section 11.2(a).
11.3 TAX INDEMNIFICATION BY PURCHASER.
Purchaser shall indemnify and hold the Selling Stockholders harmless
from and against the following Taxes with respect to the Company: (a) except as
described in Section 11.2(b), any and all Taxes for any taxable period beginning
or deemed to begin after the Closing Date, due or payable by the Company or
Purchaser (except to the extent such Taxes arise or result from a breach of
representations or warranties provided for in Section 5.14 or in Section 3.1 of
the Investment Agreement); or (b) any and all Taxes attributable to acts or
transactions of the Company occurring on the Closing Date but after the Closing
and not in the Ordinary Course of Business.
11.4 NO CONTRIBUTION.
It is the intention of the parties that after the Closing the remedy
for Purchaser or any Indemnitee seeking indemnification from the Selling
Stockholders hereunder shall be a remedy solely against the Selling Stockholders
and not against the Company; accordingly, the Selling Stockholders agree to
waive any right of contribution or right of indemnity between the Company and
such Selling Stockholder in connection with any indemnification obligation of
such Selling Stockholder to any Indemnitee arising under the Transactional
Agreements or otherwise in connection with any of the Transactions. The Selling
Stockholders further acknowledge that the waivers, acknowledgments and
agreements of such Selling Stockholders contained in this Section are an
essential inducement to Purchaser in entering into this Agreement and agreeing
to consummate the Transactions.
11.5 SETOFF.
In addition to any rights of setoff or other rights that any Person may
have at common law or otherwise, each Person shall have the right to set off any
amount that may be owed to it by the other under this Section 11 against any
amount otherwise specifically payable by such Person by the terms of this
Agreement.
11.6 DEFENSE OF THIRD PARTY CLAIMS.
In the event of the assertion or commencement by any Person of any
claim or Proceeding (whether against Purchaser, the Company, the Selling
Stockholders, any other Indemnitee or any other Person) with respect to which a
party hereto may become obligated hereunder to indemnify, hold harmless,
compensate or reimburse any Indemnitee pursuant to this Section 11, the party to
be indemnified (the "INDEMNIFIED PARTY") shall reasonably promptly, but in any
event within thirty (30) days following the Indemnified Party's actual knowledge
thereof, notify the Person providing the indemnification hereunder (the
"INDEMNIFYING PARTY") of such claim or Proceeding by providing notice to the
Holder Representative. In any such event, the Indemnified Party may proceed with
the defense of such claim or Proceeding and the Indemnifying Party shall bear
and pay all reasonable costs and expenses (including attorneys fees and costs)
in
43
connection with the Indemnified Party's defense of any such claim or
Proceeding (whether or not incurred by the Indemnified Party); PROVIDED, that
all such expenses paid by the Selling Stockholders, combined with any other
indemnification, will in no event exceed the respective indemnification
limitations set forth in Section 11.2(a).
If the Indemnified Party so proceeds with the defense of any such claim
or Proceeding:
(a) all expenses reasonably incurred and relating to the
defense of such claim or Proceeding (whether or not incurred by the Indemnified
Party) shall be borne and paid exclusively by the Indemnifying Party;
(b) the Indemnifying Party shall make available to the
Indemnified Party any documents and materials in the possession or control of
the Indemnifying Party that may be necessary to the defense of such claim or
Proceeding;
(c) the Indemnified Party shall keep the Holder Representative
informed of all material developments and events relating to such claim or
Proceeding;
(d) the Selling Stockholders shall have the right to
participate in the defense of such claim or Proceeding at their own expense; and
(e) the Indemnified Party shall not settle, adjust or
compromise such claim or Proceeding without the prior written consent of the
Selling Stockholders or the Holder Representative, which consent shall not be
unreasonably withheld.
Notwithstanding the foregoing, the Selling Shareholders shall have the
right (but not the obligation), at their own expense, to control, defend,
settle, compromise or prosecute in any manner any audit, examination,
investigation, hearing or other proceeding with respect to any Company Return
involving only periods ending on or before the Closing Date; PROVIDED, HOWEVER,
that the Selling Shareholders shall not settle, or compromise any such audit,
etc. without the Purchaser's timely and reasonable prior written consent.
11.7 SOLE REMEDY.
Other than rights to equitable relief, the sole remedy available to any
Indemnitee or other Person for breaches of this Agreement or the other
Transactional Agreements shall be limited to the rights set forth in this
Section 11. The maximum aggregate amounts payable by the Company or the Selling
Stockholders, as the case may be, to any and all Indemnitees for any and all
Damages arising out of, or in connection with, this Agreement, any Transactional
Agreement, any certificate, any other document delivered, or any of the
Transactions, are the amounts specified as limitations in Section 11.2(a)
hereof. In no event will any other Person except the named Indemnitees have any
rights to any payments whatsoever.
11.8 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PURCHASER AND
BY SELLING STOCKHOLDERS.
Except with respect to the indemnification rights of the Selling
Stockholders set forth in Section 11.3, no Person other than an Indemnitee (or
any successor or assignee thereof) shall be
44
permitted to assert any indemnification claim or exercise any other remedy
under this Agreement unless Purchaser, the Company and the Selling
Stockholders (or any successor assignee thereof) shall have consented to the
assertion of such indemnification claim or the exercising of such other
remedy.
12. MISCELLANEOUS.
12.1 FURTHER ASSURANCES.
Each party hereto shall execute and/or cause to be delivered to each
other party hereto such instruments and other documents, and shall take such
other actions, as such other party may reasonably request (prior to, at or after
the Closing) for the purpose of carrying out or evidencing any of the
Transactions.
12.2 FEES AND EXPENSES.
Subject to the provisions of this Agreement (including the
indemnification and other obligations of the Selling Stockholders pursuant to
Section 11), each party shall bear and pay all fees, costs and expenses that
have been incurred or that are in the future incurred by or on behalf of such
party in connection with the Transactions; PROVIDED, that, the Selling
Stockholders shall bear and pay all fees, costs and expenses incurred on behalf
of the Company in connection with the negotiation of this Agreement and the
Transactional Agreements in excess of $160,000, and any such excess shall be
paid out of the Indemnification Portion.
12.3 ATTORNEYS' FEES.
If any legal action or other legal proceeding (including arbitration)
relating to the Transactions or the enforcement of any provision of any of the
Transactional Agreements is brought against any party hereto, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled), including any fees incurred with respect to the production of a
Patent Opinion.
12.4 TAXES.
(a) The Selling Stockholders shall be responsible for sales,
use and transfer taxes, including but not limited to any value added, stock
transfer, gross receipts, stamp duty and real, personal or intangible property
transfer taxes, due by reason of the consummation of the Merger, including but
not limited to any interest or penalties in respect thereof.
(b) The Selling Stockholders shall cause the Company's
accountants to prepare and the Company to timely file and pay amounts owed with
respect to all Company Returns not already filed for the Company for all tax
periods ended or ending on or before the Closing Date (the "Final Returns"), and
shall pay the Company's accountants for such preparation and filing. The Final
Returns shall be prepared in a manner consistent with previously filed Company
Returns. The Selling Stockholders (or their authorized representative) shall
send a copy of all Final Returns to Purchaser for its review and comment and, if
required, appropriate execution, at least fifteen (15) days prior to the filing
thereof.
45
(c) Purchaser shall prepare and timely file or shall cause to
be prepared and timely filed all other Tax Returns with respect to the Company
and any of its businesses, assets, or operations, provided that any Tax Return
to be prepared and filed by Purchaser for a Straddle Period shall be prepared on
a basis consistent with the last previous similar Tax Return ("STRADDLE
RETURNS"). Prior to filing any Straddle Return, at the written request of a
Selling Stockholder (or its authorized representative), Purchaser shall make the
Straddle Return available to a Selling Stockholder for its review and comment at
the offices of Purchaser or such other office designated by Purchaser.
(d) The parties agree that if the Company is permitted but not
required under applicable Tax laws to treat the Closing Date as the last day of
a taxable period, they shall treat such day as the last day of a taxable period.
Any Taxes for a Straddle Period with respect to the Company shall be apportioned
for purposes of Sections 11.3 and 12.4 between the portion of the period ending
on the Closing Date and the portion of the period commencing on the day
immediately following the Closing Date based on the actual operations of the
Company during such portions of the periods, and each such portion of such
period shall be deemed to be a taxable period (whether or not it is in fact a
taxable period).
12.5 GOVERNING LAW.
(a) This Agreement is to be construed in accordance with and
governed by the laws of the State of California (as permitted by Section 1646.5
of the California Civil Code or any similar successor provision), without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the State of California to the rights and duties of
the parties.
(b) Any legal action or other legal proceeding relating to
this Agreement or any other Transactional Agreement or the enforcement of any
provision of this Agreement or any other Transactional Agreement may be brought
or otherwise commenced in any state or federal court located in the County of
San Francisco, California. Each Selling Stockholder and each party to this
Agreement:
(i) expressly and irrevocably consents and
submits to the jurisdiction of each state and federal court located in the
County of San Francisco, California (and each appellate court located in the
State of California) in connection with any such legal proceeding;
(ii) agrees that each state and federal court
located in the County of San Francisco, California shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any state or
federal court located in the County of San Francisco, any claim that such party
is not subject personally to the jurisdiction of such court, that such legal
proceeding has been brought in an inconvenient forum, that the venue of such
proceeding is improper or that this Agreement or any other Transactional
Agreement or the subject matter of this Agreement or any Transactional Agreement
may not be enforced in or by such court.
46
(c) Notwithstanding the foregoing, if any Proceeding is
commenced against any Indemnitee by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnitee may proceed against each
Selling Stockholder in such court or other tribunal with respect to any
indemnification claim or other claim arising directly or indirectly from or
relating directly or indirectly to such Proceeding or any of the matters alleged
therein or any of the circumstances giving rise thereto.
(d) Nothing contained in Section 12.5(b) or (c) shall be
deemed to limit or otherwise affect the right of any Indemnitee to commence any
legal proceeding or otherwise proceed against the Company or any Selling
Stockholder in any other forum or jurisdiction.
12.6 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto and the Indemnitees
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of the Stock from time to time. None of the parties hereto may assign
any of its or their rights or obligations hereunder to any other party (by
contract, operation of law or otherwise) without the prior written consent of
the other, which consent shall not be unreasonably withheld, and any attempted
assignment in violation thereof shall be void and of no effect.
12.7 ENTIRE AGREEMENT.
The Transactional Agreements, the Nondisclosure Agreement, the
Schedules and the Exhibits thereto and the other documents contemplated
expressly thereby constitute the full and entire understanding and agreement
among the parties thereto with regard to the subjects hereof and thereof and
supersede all prior agreements and understandings among or between any of the
Parties relating to the subject matter hereof and thereof.
12.8 SEPARABILITY.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
12.9 AMENDMENTS.
This Agreement may be amended or modified only upon the mutual written
consent of the Holder Representative, the Company and Purchaser. Any amendment
or modification effected pursuant to this Section 12.9 shall be binding upon the
Selling Stockholders, the Company, Purchaser and Merger Sub.
12.10 NOTICES.
Any notice or other communication required or permitted to be delivered
to any party under this Agreement shall be in writing and shall be deemed
properly delivered, given and received when delivered (by hand, by registered
mail, by courier or express delivery service or
47
by telecopier during business hours) to the address or telecopier number set
forth beneath the name of such party below (or to such other address or
telecopier number as such party shall have specified in a written notice
given to the other parties hereto), with a confirming copy of any notice by
telecopier sent promptly by hand, registered mail, courier or express
delivery service:
if to the Company:
LiquidMarket, Inc.
0000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxx Groult
Telecopier: 000-000-0000
with a copy to:
Xxxx & Xxxx, LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxx, Esq.
Telecopier: 617-526-5000
if to the Holder Representative, to its address set forth on the signature page
hereof;
if to Purchaser:
XXXX.xxx, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Aji, Esq.
Telecopier: 000-000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx Xxxx, Esq.
Telecopier: 000-000-0000
SNAP! LLC
Xxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Telecopier: 000-000-0000
48
National Broadcasting Company, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Vice President, Corporate Law
Telecopier: 000-000-0000
12.11 PUBLICITY AND USE OF CONFIDENTIAL INFORMATION.
(a) Notwithstanding anything to the contrary contained in any
agreement among the parties hereto, Purchaser shall have the right to disclose
the Company's financial statements and related information, the terms of this
Agreement and the identity of the Company to potential investors of Purchaser,
through the use of printed offering materials or otherwise or as otherwise
required by applicable legal requirements.
(b) The Company and the Selling Stockholders, on the one hand,
and Purchaser, on the other, shall keep strictly confidential, and shall not
use, or disclose to any other Person, any non-public document or other
information in the Company's or the Selling Stockholders' possession, on the one
hand, and in Purchaser's possession, on the other, that relates directly or
indirectly to the business of the Company, Purchaser or any affiliate of
Purchaser; PROVIDED, THAT Purchaser or the Selling Stockholders may disclose
such non-public information as required by any applicable law or rule to which
Purchaser or the Selling Stockholders is subject, including the Exchange Act and
the rules of the National Association of Securities Dealers, Inc.
(c) Neither the Company nor the Selling Stockholders shall
issue or disseminate any press release or other publicity concerning any of the
Transactions, or permit any press release or other publicity concerning any of
the Transactions to be issued or otherwise disseminated by or on behalf of the
Company or the Selling Stockholders without Purchaser's prior written consent,
and the Company and the Selling Stockholders shall continue to keep the terms of
this Agreement and the other Transactional Agreements strictly confidential.
12.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
12.13 DELAYS OR OMISSIONS; WAIVERS.
(a) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise or waiver of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly
49
executed and delivered on behalf of such Person; and any such waiver shall
not be applicable or have any effect except in the specific instance in which
it is given.
12.14 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.
All remedies, either under this Agreement or by law or otherwise
afforded to the parties hereto, shall be cumulative and not alternative. Each of
the parties agrees that:
(a) in the event of any breach or threatened breach by a party
of any covenant, obligation or other provision set forth in this Agreement, the
other party shall be entitled (in addition to any other remedy that may be
available to it) to (i) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (ii) an injunction restraining such breach or threatened breach;
and
(b) neither Purchaser nor any other Indemnitee, on the one
hand, nor the Selling Stockholders, on the other, shall be required to provide
any bond or other security in connection with any such decree, order or
injunction or in connection with any related action or Proceeding.
12.15 HEADINGS.
The underlined headings contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.
12.16 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise specified, all references in this
Agreement to "Sections," "Exhibits" and "Schedules" are intended to refer to
Sections of this Agreement and Exhibits and Schedules to this Agreement.
50
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT AND
PLAN OF MERGER as of the date set forth in the first paragraph hereof.
COMPANY: LIQUIDMARKET, INC.
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx H. Groult
Title: Chief Executive Officer
PURCHASER: XXXX.XXX, INC.
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Financial Officer
MERGER SUB: XOOM ACQUISITION SUB II, INC.
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Financial Officer
HOLDER REPRESENTATIVE:
ADDRESS:
By: /s/ Xxxxxx Xxxxxx
------------------------------------
000 Xxxxxxxx Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
51
INDEX OF SCHEDULES AND EXHIBITS
Schedule I Schedule of Selling Stockholders
Schedule II Schedule of Company Options
Schedule III Company Disclosure Schedule
Schedule IV Purchaser Disclosure Schedule
Exhibit A Certain Definitions
Exhibit B Form of Escrow Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Forms of Employment and Non-Competition Agreement
Exhibit E Form of Investment Agreement
Exhibit F Form of Stockholder Questionnaire
Exhibit G Form of Legal Opinion of Xxxx and Xxxx, LLP, counsel to the
Selling Stockholders and the Company
Exhibit H Form of Legal Opinion of Xxxxxxxx & Xxxxxxxx LLP, counsel to
Purchaser
Exhibit I Financial Statements of the Company
52
AGREEMENT AND PLAN OF MERGER
SCHEDULE I
SCHEDULE OF SELLING STOCKHOLDERS
53
AGREEMENT AND PLAN OF MERGER
SCHEDULE II
SCHEDULE OF OPTIONS
54
AGREEMENT AND PLAN OF MERGER
SCHEDULE III
COMPANY DISCLOSURE SCHEDULE
55
AGREEMENT AND PLAN OF MERGER
SCHEDULE IV
PURCHASER DISCLOSURE SCHEDULE
56
AGREEMENT AND PLAN OF MERGER
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of this Agreement:
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale or other disposition of all or any portion of the
Company's business or assets (other than in the Ordinary
Course of Business);
(b) the issuance, sale or other disposition of (i) any capital
stock of the Company, (ii) any option, call, warrant or
right (whether or not immediately exercisable) to acquire
any capital stock of the Company, or (iii) any security,
instrument or obligation that is or may become convertible
into or exchangeable for any capital stock of the Company; or
(c) any merger, consolidation, business combination, share
exchange, reorganization or similar transaction involving
the Company.
ADDITIONAL EMPLOYEE OPTION GRANTS. "Additional Employee Option
Grants" shall have the meaning specified in Section 3.1(c)(ii).
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger
to which this EXHIBIT A is attached (including the Disclosure Schedule and
all other schedules and exhibits attached thereto), as it may be amended from
time to time.
AVERAGE PURCHASER STOCK PRICE. "Average Purchaser Stock Price" shall
mean (a) $47.125, in the event that the Merger Consideration is calculated in
accordance with Section 1.3(a) or (b) the lesser of (i) the average closing
price of Purchaser Stock on the Nasdaq National Stock Market for the
twenty-seven (27) trading days ending on the last trading day prior to the
Closing Date or (ii) the average closing price of Purchaser Stock on the
Nasdaq National Stock Market for the five (5) trading days ending on the last
trading day prior to the Closing Date, for purposes of the calculations in
Section 1.3(b)(i) or 1.3(b)(ii), and in the event that, as a result of such
calculations, the Merger Consideration is determined pursuant to Section
1.3(b)(i), (ii) or (iii).
BASKET. "Basket" shall have the meaning specified in Section 11.2(b).
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
Person desiring to achieve a particular result would use in order to ensure
that such result is achieved as expeditiously as possible.
CERTIFICATE OF MERGER. "Certificate of Merger" shall have the
meaning specified in Section 1.2.
57
CERTIFICATES. "Certificates" shall have the meaning specified in
Section 3.2(a).
CLOSING. "Closing" shall have the meaning specified in Section 3.4.
CLOSING DATE. "Closing Date" shall have the meaning specified in
Section 3.4.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
COMMON STOCK. "Common Stock" shall have the meaning specified in
Section 3.1(b).
COMPANY. "Company" shall mean LiquidMarket, Inc., a Delaware
corporation.
COMPANY BOARD. "Company Board" shall mean the members of the board
of directors of the Company.
COMPANY CLOSING CERTIFICATE. "Company Closing Certificate" shall
have the meaning specified in Section 4.1(c)(vii).
COMPANY CONTRACT. "Company Contract" shall mean any contract listed
on the Disclosure Schedule.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall
have the meaning specified in the introductory paragraph to Section 5.
COMPANY DISCLOSURE SCHEDULE UPDATE. "Company Disclosure Schedule
Update" shall have the meaning specified in Section 7.5(b).
COMPANY OPTIONS. "Company Options" shall refer to those options
granted by the Company, or proposed to be granted prior to the Closing Date,
to purchase shares of the Common Stock of the Company as set forth on
SCHEDULE II attached hereto.
COMPANY PREFERRED STOCK. "Company Preferred Stock" shall have the
meaning specified in Section 5.3(a).
COMPANY RETURNS. "Company Returns" shall have the meaning specified
in Section 5.14(b).
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental
Authorization).
CONSTITUENT CORPORATIONS. "Constituent Corporations" shall refer to
the Company and Merger Sub.
CONTRACT. "Contract" shall mean, with respect to any Person, any
written or oral or other contract, arrangement or other agreement to which
such Person is a party or by which its properties or assets may be bound or
affected or under which it or its respective business, properties or assets
receive benefits.
58
CONTROL. "Control" shall consist of direct ownership of stock
possessing at least eighty percent (80%) of the total combined voting power
of all classIes of stock entitled to vote and at least eighty percent (80%)
of the total number of shares of each other class of stock of the corporation.
CRITICAL EMPLOYEES. "Critical Employees" shall refer to Xxxxxxxx
Groult and Xxxxxxxx Xxxxxx, each of whom are considered by Purchaser to be
critical to success of the Company's business operations.
DAMAGES. "Damages" shall include any loss, damage, injury, decline
in value, lost opportunity, Liability, settlement, judgment, award, fine,
penalty, Tax, fee (including any legal fee resulting from, but not limited
to, the defense of third party claims pursuant to Section 11.5 of this
Agreement, expert fee, accounting fee or advisory fee), charge, cost
(including any cost of investigation) or expense of any nature.
DEFINED BENEFIT PLAN. "Defined Benefit Plan" shall mean either a
plan described in Section 3(35) of ERISA or a plan subject to the minimum
funding standards set forth in Section 302 of ERISA and Section 412 of the
Code.
DISSENTING HOLDER. "Dissenting Holder" shall have the meaning
specified in Section 3.6(a).
DISSENTING SHARES. "Dissenting Shares" shall have the meaning
specified in Section 3.6(a).
EFFECTIVE TIME. "Effective Time" shall have the meaning specified in
Section 1.2.
EMPLOYMENT AND NON-COMPETITION AGREEMENT. "Employment and
Non-Competition Agreement" shall refer to the employment contract by and
between Purchaser and each of the Critical Employees substantially in the
forms attached at EXHIBIT D.
END-USER LICENSES. "End-User Licenses" shall have the meaning
specified in Section 5.6.
ENTITY. "Entity" shall mean any corporation (including any non
profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust or company (including any
limited liability company or joint stock company).
ENVIRONMENTAL LAW. "Environmental Law" shall mean any federal,
state, local or foreign legal requirement relating to pollution or protection
of human health or the environment.
ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
ESCROW ACCOUNT. "Escrow Account" shall have the mean the account
into which the Holdback Amount is deposited.
ESCROW AGENT. "Escrow Agent" shall refer to USBank Trust, N.A.
59
ESCROW AGREEMENT. "Escrow Agreement" shall have the meaning
specified in Section 1.4.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
EXCHANGE RATIO. "Exchange Ratio" shall have the meaning specified in
Section 3.1(b).
FINAL RETURNS. "Final Returns" shall have the meaning specified in
Section 12.4(b).
FINANCIAL STATEMENTS. "Financial Statements" shall have the meaning
specified in Section 5.8(a).
GAAP. "GAAP" shall mean generally accepted accounting principles.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any:
(a) permit, license, certificate, franchise, approval, consent,
permission, clearance, waiver, certification, designation,
registration, qualification or authorization issued,
granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any legal
requirement; or
(b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, province, territory, county,
municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other
government; or
(c) individual, Entity or body exercising, or entitled to
exercise, any executive, legislative, judicial,
administrative, regulatory, police, military or taxing
authority or power of any nature.
HAZARDOUS MATERIALS. "Hazardous Materials" shall mean any substance,
chemical, waste or other material which is listed, defined or otherwise
identified as hazardous or toxic, or which is otherwise regulated, under any
legal requirement, as well as any asbestos, polychlorinated biphenyls
("PCBs"), petroleum, petroleum product or by-product, crude oil, natural gas,
natural gas liquids, liquefied natural gas, or synthetic gas useable for
fuel, and "source," "special nuclear," and "by-product" material as defined
in the Atomic Energy Act of 1954, 42 U.S.C. Sections 2011 et seq.
HOLDBACK AMOUNT. "Holdback Amount" shall have the meaning specified
in Section 1.4.
HOLDER REPRESENTATIVE. "Holder Representative" shall have the
meaning specified in the first paragraph hereof.
60
INDEMNIFICATION PORTION. "Indemnification Portion" shall have the
meaning specified in Section 1.1 of the Escrow Agreement.
INDEMNIFICATION PORTION ESCROW ACCOUNT. "Indemnification Portion
Escrow Account" shall have the meaning specified in Section 1.1 of the Escrow
Agreement.
INDEMNIFICATION TERMINATION DATE. "Indemnification Termination Date"
shall have the meaning specified in Section 3.2 of the Escrow Agreement.
INDEMNIFIED PARTY. "Indemnified Party" shall have the meaning
specified in Section 11.6.
INDEMNIFYING PARTY. "Indemnifying Party" shall have the meaning
specified in Section 11.6.
INDEMNITEE. "Indemnitee" shall have the meaning specified in Section
11.2(a).
INFORMATION STATEMENT. "Information Statement" shall have the
meaning specified in Section 8.1(b).
INFORMATION STATEMENT UPDATE. "Information Statement Update" shall
have the meaning specified in Section 7.5(b).
INVESTMENT AGREEMENT. "Investment Agreement" shall have the meaning
specified in Section 4.1(c)(iv).
LEASED PREMISES. "Leased Premises" shall mean the premises and
facilities identified in Part 5.9(d) of the Disclosure Schedule.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any contingent or indirect liability),
regardless of whether such debt, obligation, duty or liability would be
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
MATERIAL ADVERSE CHANGE. "Material Adverse Change" shall have the
meaning specified in Section 4.1(j).
MATERIAL ADVERSE EFFECT. "Material Adverse Effect" shall have the
meaning specified in Section 4.1(j).
MEMBER OF THE CONTROLLED GROUP. "Member of the Controlled Group"
shall mean each trade or business, whether or not incorporated, which would
be treated as a single employer with the Company under Section 4001 of ERISA
or Section 414(b), (c), (m) or (o) of the Code.
MERGER. "Merger" shall have the meaning specified in Recital A.
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MERGER CONSIDERATION. "Merger Consideration" shall have the meaning
specified in Section 1.3.
MERGER SUB. "Merger Sub" shall refer to XOOM Acquisition Sub II,
Inc., a Delaware corporation.
MERGER SUB BOARD. "Merger Sub Board" shall refer to the board of
directors of Merger Sub.
MILESTONES. "Milestones" shall have the meaning specified in Section
1.1 of the Escrow Agreement.
MULTIEMPLOYER PLAN. "Multiemployer Plan" shall mean a plan described
in Section 3(37) of ERISA.
NBC. "NBC" shall mean the National Broadcasting Company, Inc.
NBC AGREEMENTS. "NBC Agreements" shall mean the Agreement and Plan
of Contribution and Merger, dated as of May 9, 1999, as amended and restated
through the date hereof, with the Purchaser and others, and an Agreement and
Plan of Contribution, Investment and Merger dated as of May 9, 1999, as
amended and restated through date hereof, with NBC and others pursuant to
which the existing businesses of Purchaser and certain assets of NBC and
others will be combined.
NBC TRANSACTIONS. "NBC Transactions" shall mean those transactions
contemplated by the NBC Agreements.
NONDISCLOSURE AGREEMENT. "Nondisclosure Agreement" shall have the
meaning specified in Section 9.2.
OPTION PLAN. "Option Plan" shall have the meaning specified in
Section 3.1(c)(i).
OPTION POOL. "Option Pool" shall mean the number of shares of Common
Stock reserved for the grant of options (whether or not such options are then
outstanding) under the Option Plan as of the Closing Date.
ORDER. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling,
subpoena, writ or award that is or has been issued, made,
entered, rendered or otherwise put into effect by or under
the authority of any court, administrative agency or other
Governmental Body or any arbitrator or arbitration panel; or
(b) Contract with any Governmental Body that is or has been
entered into in connection with any Proceeding.
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ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of the
Company shall not be deemed to have been taken in the "Ordinary Course of
Business" unless:
(a) such action is recurring in nature, is consistent with the
Company's past practices and is taken in the ordinary course
of the Company's normal day to day operations;
(b) such action is taken in accordance with sound and prudent
business practices;
(c) such action is not required to be authorized by the
Company's stockholders, the Company Board or any committee
of the Company Board and does not require any other separate
or special authorization of any nature; and
(d) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special
authorization, in the ordinary course of the normal day to
day operations of other Entities that are engaged in
businesses similar to the Company's business.
PATENT OPINION. "Patent Opinion" shall have the meaning specified in
the Milestones attached at Exhibit A to the Escrow Agreement.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PLANS. "Plans" shall have the meaning specified in Section 5.22(a).
POST-CLOSING PERIOD. "Post-Closing Period" means any taxable period
(or portion thereof) beginning after the close of business on the Closing
Date.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall mean the period from
the date of this Agreement until the Closing Date.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), hearing,
inquiry, audit or investigation that is or has been commenced, brought,
conducted or heard by or before, or that otherwise has involved or would
reasonably be expected to involve, any Governmental Body or any arbitrator or
arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service xxxx (whether registered or unregistered), service
xxxx application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know how,
franchise, system, computer software, invention, design, blueprint,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset.
PURCHASER. "Purchaser" shall mean XXXX.xxx, Inc., a Delaware
corporation.
PURCHASER BOARD. "Purchaser Board" shall refer to the board of
directors of Purchaser.
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PURCHASER CLOSING CERTIFICATE. "Purchaser Closing Certificate" hall
have the meaning specified in Section 4.2(c)(v).
PURCHASER CONTRACT. "Purchaser Contract" shall refer to those
contracts required by Regulation S-K to be filed in connection with the
Purchaser SEC Reports.
PURCHASER DISCLOSURE SCHEDULE. "Purchaser Disclosure Schedule" shall
have the meaning specified in the introductory paragraph to Section 6.
PURCHASER MATERIAL ADVERSE CHANGE. "Purchaser Material Adverse
Change" shall have the meaning specified in Section 4.2(e).
PURCHASER MATERIAL ADVERSE EFFECT. "Purchaser Material Adverse
Effect" shall have the meaning specified in Section 4.2(e).
PURCHASER OPTIONS. "Purchaser Options" shall refer to those options
granted by Purchaser, or proposed to be granted by Purchaser, to purchase
shares of Purchaser Stock under the Purchaser Option Plan.
PURCHASER OPTION PLAN. "Purchaser Option Plan" shall refer to the
1998 Stock Incentive Plan of Purchaser.
PURCHASER SEC REPORTS. "Purchaser SEC Reports" shall have the
meaning specified in Section 6.7(a).
PURCHASER STOCK. "Purchaser Stock" shall refer to the Common Stock
of Purchaser, par value $.0001 per share, to be issued in connection with the
Transactions.
RELATED PARTY. Each of the following shall be deemed to be a
"Related Party":
(a) the Selling Stockholders;
(b) each individual who is, or who has at any time been, an
officer of the Selling Stockholders or the Company;
(c) each member of the family of each of the individuals
referred to in clause (b) above; and
(d) any Entity (other than the Selling Stockholders or the
Company) in which any one of the Persons referred to in
clause (a), (b) or (c) above holds (or in which more than
one of such individuals collectively hold), beneficially or
otherwise, a material voting, proprietary or equity interest.
RESPONSIBLE STOCKHOLDER. "Responsible Stockholder" shall have the
meaning specified in Section 11.1(a).
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RIGHTS AGREEMENT. "Rights Agreement" shall refer to that certain
Registration Rights Agreement by and among Purchaser and the Selling
Stockholders substantially in the form of EXHIBIT C attached hereto.
SEC. "SEC" shall mean the Securities and Exchange Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
SELLING STOCKHOLDERS. "Selling Stockholders" shall refer to those
individuals and Entities listed on SCHEDULE I hereto.
SELLING STOCKHOLDERS CLOSING CERTIFICATE. "Selling Stockholders
Closing Certificate" shall have the meaning specified in Section 4.1(c)(vii).
STOCKHOLDER QUESTIONNAIRE. "Stockholder Questionnaire" shall have
the meaning specified in Section 4.1(c)(iv).
STRADDLE PERIOD. "Straddle Period" means any taxable period that
includes (but does not end on) the Closing Date.
STRADDLE RETURNS. "Straddle Returns" shall have the meaning
specified in Section 12.4(c).
STOCK. "Stock" shall have the meaning specified in Section 3.1(b).
SURVIVING CORPORAITION. "Surviving Corporation" shall have the
meaning specified in Section 1.1.
TAX. "Tax" shall mean any tax (including any income tax, franchise
tax, capital gains tax, estimated tax, gross receipts tax, value added tax,
surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use
tax, property tax, business tax, occupation tax, inventory tax, occupancy
tax, withholding tax or payroll tax), levy, assessment, tariff, impost,
imposition, toll, duty (including any customs duty), deficiency or fee, and
any related charge or amount (including any fine, penalty or interest), that
is, has been or in the future may be (a) imposed, assessed or collected by or
under the authority of any Governmental Body, or (b) payable pursuant to any
tax sharing agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule,
notice, notification, form, election, certificate or other document or
information that is, has been or in the future may be filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection or payment of any
Tax or in connection with the administration, implementation or enforcement
of or compliance with any legal requirement relating to any Tax.
TRANSACTION EXPENSES. "Transaction Expenses" shall mean all fees,
costs and expenses including, without limitation all attorneys' fees, that
have been incurred or that are in the future
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incurred by or on behalf of the Company or the Selling Stockholders in
connection with the sale of the Stock and the preparation, execution and
delivery of the Transactional Agreements.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean the
Agreement, the Rights Agreement, the Employment and Non-Competition
Agreement, the Escrow Agreement, the Investment Agreement, the Voting
Agreement, the Selling Stockholders and Company Closing Certificates, the
Purchaser Closing Certificate, and all other agreements, certificates and
instruments executed or contemplated to be executed by any of the parties
hereto in connection with the Transactions.
TRANSACTIONS. "Transactions" shall mean (a) the execution and
delivery of this Agreement and the other Transactional Agreements and (b) all
the transactions contemplated by this Agreement and the other Transactional
Agreements.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet"
shall have the meaning specified in Section 5.8(a)(ii).
VOTING AGREEMENT. "Voting Agreement" shall have the meaning
specified in Section 4.1(c)(v).
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