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EXHIBIT 99.1
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STOCK PURCHASE AGREEMENT
among:
SPATIAL TECHNOLOGY INC.,
a Delaware corporation;
INTERDATA ACCESS, INC.,
an Illinois corporation;
and
XXXXXX XXXXXXXX
XXXXXXXX XXXX
PROSTEP PRODUKTDATENTECHNOLOGIE GMBH
XXXXXXX XXXXXXXX
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Dated as of December 23, 1998
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TABLE OF CONTENTS
PAGE
Section 1. Sale and Purchase of Shares; Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Sale and Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2. Representations and Warranties of the Company
and the Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Due Organization; No Subsidiaries; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Articles of Incorporation and Bylaws; Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Capitalization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Bank Accounts; Receivables; Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.8 Equipment; Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.9 Proprietary Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.11 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.12 Compliance with Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.13 Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.15 Employee and Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.18 Sale of Products; Performance of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.20 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.21 Proceedings; Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.23 Authority; Binding Nature of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.24 Non-Contravention; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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2.25 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.26 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.27 Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.28 Securities Laws Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3. Representations and Warranties of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Execution, Delivery and Performance of Agreement; Authority . . . . . . . . . . . . . . . . . . . . 18
3.3 Purchaser's Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4. Certain Covenants of the Company and the Selling Shareholders . . . . . . . . . . . . . . . . . . . 19
4.1 Access and Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Operation of the Company's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Notification; Updates to Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 No Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5. Additional Covenants of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Filings and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.7 Termination of Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6. Conditions Precedent to Obligations of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Accuracy of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Agreements and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Termination of Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Termination of Derivative Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Securities Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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6.10 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.11 No Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.12 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.13 Confidentiality and Nondisclosure Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.14 Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.15 Corporate Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.16 Termination of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7. Conditions Precedent to Obligations of the Selling Shareholders . . . . . . . . . . . . . . . . . . 27
7.1 Accuracy of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.3 Agreements and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.4 No Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.5 Corporate Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Termination of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Post Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.1 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 Termination Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10. Indemnification, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 Survival of Representations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Indemnification by Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.3 Indemnification by the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.4 Threshold; Ceiling; Limitation on Additional Damages . . . . . . . . . . . . . . . . . . . . . . . . 31
10.5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.7 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.8 Exclusivity of Indemnification Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.9 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11. Registration of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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11.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.4 Transferability of Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.5 Rule 144 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.6 Amendment of Section 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 12. Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1 Selling Shareholders' Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2 ProSTEP's Agent for Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.4 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.7 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.8 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.11 Governing Law; Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.13 Remedies Cumulative; Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.14 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.15 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.17 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.19 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Allocation of Purchase Price and Issuance Instructions
Exhibit C - Form of Escrow Agreement
Exhibit D - Form of Non-Competition Agreement
Exhibit E - Form of Affiliate Agreement
Exhibit F-1 - Form of tax representation letter to be executed by the Company
Exhibit F-2 - Form of tax representation letter to be executed by the Purchaser
Exhibit G - Cross-license Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT("AGREEMENT") is made and entered into as
of December 23, 1998, by and among: SPATIAL TECHNOLOGY INC., a Delaware
corporation (the "PURCHASER"), InterData Access, Inc., an Illinois corporation
(the "COMPANY" or "XXX"), and the following parties (the "SELLING
SHAREHOLDERS"): Xxxxxx Xxxxxxxx, Xxxxxxxx Xxxx, ProSTEP Produktdatentechnologie
GmbH ("PROSTEP") and Xxxxxxx Xxxxxxxx. Certain capitalized terms used in this
Agreement are defined in Exhibit A.
RECITALS
A. The Selling Shareholders own an aggregate of 827.1 shares of
Common Stock (collectively, the "SHARES") of the Company, which constitute all
of the issued and outstanding capital stock and options, warrants or other
rights to purchase capital stock of the Company.
B. The Selling Shareholders wish to sell the Shares to Purchaser
on the terms set forth in this Agreement (the "ACQUISITION").
C. It is intended that the Acquisition qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (the "CODE"). For accounting purposes, it is
intended that the Acquisition be treated as a "pooling of interests."
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. SALE AND PURCHASE OF SHARES; RELATED TRANSACTIONS
1.1 SALE AND PURCHASE OF SHARES. At the Closing (as hereinafter defined),
the Selling Shareholders shall sell, assign, transfer and deliver the Shares to
the Purchaser, and the Purchaser shall purchase the Shares from the Selling
Shareholders on the terms and subject to the conditions set forth in this
Agreement.
1.2 PURCHASE PRICE.
(a) Subject to Section 1.4, at the Closing, by virtue of
the Acquisition and without any further action on the part of Spatial, XXX or
the Selling Shareholders, the outstanding shares of Common Stock of XXX (the
"XXX COMMON STOCK") shall be converted into the right to receive an aggregate
of 1,400,000 shares of Common Stock of Purchaser (the "PURCHASER COMMON
STOCK"), in accordance with the amounts set forth on Exhibit B hereto. The
Purchaser Common Stock to be issued pursuant to this Section 1.2(a) shall be
referred to as the "PURCHASE PRICE."
1.
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(b) Purchaser Common Stock representing ten percent (10%)of the
Purchase Price shall be deposited in escrow (the "ESCROW SHARES"), in accordance
with the amounts set forth on Exhibit B hereto and the terms of the Escrow
Agreement, substantially in the form attached hereto as Exhibit C, to be
delivered to the Selling Shareholders if and when such Escrow Shares are
released pursuant to the terms of the Escrow Agreement.
1.3 CLOSING.
(a) The closing of the sale of the Shares to the Purchaser (the
"CLOSING") shall take place at the offices of Xxxxxx Godward LLP, 0000 Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 on December 28, 1998 or at such
other place or time as the parties may agree (the "SCHEDULED CLOSING TIME").
(The date on which the Closing actually takes place is referred to in this
Agreement as the "CLOSING DATE").
(b) At the Closing:
(i) the Purchaser shall cause Norwest Bank
Minnesota, N.A. (the "TRANSFER AGENT") to deposit (whether by book entry or by
delivery of certificates) Purchaser Common Stock representing the Escrow Shares
with the Escrow Agent (as defined in the Escrow Agreement) in the amounts set
forth on Exhibit B hereto, to be held and disbursed solely for the purposes and
in accordance with the terms of the Escrow Agreement; and
(ii) the parties shall have executed and delivered
each of the agreements required to be executed and delivered pursuant to
Sections 6.4 and 7.3.
1.4 EXCHANGE OF CERTIFICATES.
(a) After the Closing, the Transfer Agent shall send to each
Selling Shareholder a letter of transmittal and instructions for use in
customary form and containing such provisions as may reasonably be required for
use in effecting the surrender of the certificates representing shares of XXX
Common Stock. Upon surrender of a certificate representing shares of XXX Common
Stock to the Transfer Agent for exchange, together with a duly executed letter
of transmittal and such other documents as may reasonably be requested by the
Transfer Agent, the holder of such certificate representing shares of XXX Common
Stock shall be entitled to receive in exchange therefor certificates
representing the number of shares of Purchaser Common Stock that such Selling
Shareholder has a right to receive as set forth on Exhibit B hereto and the XXX
stock certificate so surrendered shall be canceled. Until surrendered as
contemplated by this Section 1.4(a), each certificate of XXX Common Stock shall
be deemed, from and after the Closing Date, to represent only the right to
receive upon such surrender a certificate representing shares of Purchaser
Common Stock.
(b) No dividends or other distributions declared or made with
respect to Purchaser Common Stock with a record date after the Closing Date
shall be paid to the holder of any unsurrendered XXX stock certificate with
respect to the shares of Purchaser Common Stock represented thereby until such
Selling Shareholder surrenders such XXX stock certificate in accordance with
this Section 1.4.
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(c) The shares of Purchaser Common Stock to be issued in
the Acquisition shall be characterized as "restricted securities" for purposes
of Rule 144 under the Securities Act, and each certificate representing any of
such shares shall bear a legend identical or similar in effect to the following
legend (together with any other legend or legends required by applicable state
securities laws or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE."
1.5 TAX CONSEQUENCES. For federal income tax purposes, the Acquisition is
intended to constitute a reorganization within the meaning of Section
368(a)(1)(B) of the Code. The parties to this Agreement hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
1.6 ACCOUNTING TREATMENT. For accounting purposes, the Acquisition is
intended to be treated as a "pooling of interests."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS
Subject to the provisions of Section 10, the Company and the Selling
Shareholders, jointly and severally, represent and warrant, to and for the
benefit of the Purchaser Indemnitees, as follows:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois and has
all necessary power and authority: (i) to conduct its business in the manner
in which its business is currently being conducted; (ii) to own and use its
assets in the manner in which its assets are currently owned and used; and
(iii) to perform its obligations under all Contracts by which it is bound.
(b) The Company has not 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 name "InterData Access,
Inc." and the name under which the Company was originally incorporated, "IGES
Data Analysis Company."
(c) The Company is not, and has not been, required to be
qualified, authorized, registered or licensed to do business as a foreign
corporation in any jurisdiction, except where the failure to be so qualified,
authorized, registered or licensed has not had and will not have a Material
Adverse Effect on the Company.
3.
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(d) Part 2.1(d) of the Disclosure Schedule accurately
sets forth (i) the names of the members of the Company's board of directors and
(ii) the names and titles of the Company's officers. The Company's board of
directors has never established any committees.
(e) Except as set forth in Part 2.1(e) of the Disclosure
Schedule, the Company has no subsidiaries, and does not own, beneficially or
otherwise, any shares or other securities of, or any direct or indirect
interest of any nature in, any other Entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. The Company
has delivered to the Purchaser accurate and complete copies of: (1) the
Company's articles of incorporation and bylaws, including all amendments
thereto; (2) the stock records of the Company; and (3) 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 shareholders of the
Company and the board of directors of the Company. There has not been any
violation of any of the provisions of the Company's articles of incorporation
or bylaws or of any resolution adopted by the Company's shareholders or the
Company's board of directors; and, no condition or circumstance exists that is
reasonably likely to (with or without notice or lapse of time) constitute or
result directly or indirectly in such a violation. The stock records, minute
books and other corporate records of the Company are accurate, up-to-date and
complete and have been maintained in accordance with sound and prudent business
practices and all applicable Legal Requirements.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists
of one thousand (1,000) shares of Company Common Stock, no par value per share,
of which 827.1 shares have been issued and are outstanding. Part 2.3(a) of the
Disclosure Schedule sets forth the names of the Company's shareholders and the
number of shares of Common Stock owned of record by each such shareholder. The
Selling Shareholders together own all of the outstanding shares of capital
stock of the Company. All of the issued and outstanding shares of Company's
Common Stock (i) have been duly authorized and validly issued, (ii) are fully
paid and non-assessable and (iii) have been issued in full compliance with all
applicable securities laws and other applicable Legal Requirements. Except as
set forth in Part 2.3(a) of the Disclosure Schedule, none of the issued and
outstanding shares of the Company's Common Stock is subject to any repurchase
option or restriction on transfer (other than restrictions on transfer imposed
by virtue of applicable federal and state securities laws). The Company has
delivered true and correct copies of the stock certificates representing the
issued and outstanding shares of the Company's Common Stock.
(b) Except as set forth in Part 2.3(b) of the Disclosure
Schedule, there is no: (i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire, or otherwise relating
to, 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; (iii) Contract under which the Company is or may
become obligated to sell or otherwise issue any shares of its capital stock or
any other securities; or (iv) condition or circumstance that may give rise to
or provide a basis for the assertion of 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.
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(c) Except as set forth in Part 2.3(c) of the Disclosure
Schedule, since December 1, 1996, the Company has not repurchased, redeemed or
otherwise reacquired any shares of capital stock or other securities. All
securities so reacquired by the Company were reacquired in full compliance with
(i) the applicable provisions of the Illinois Corporations Code and all other
applicable Legal Requirements and (ii) any requirements set forth in applicable
Contracts.
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Purchaser the following
financial statements and notes thereto (collectively, the "COMPANY FINANCIAL
STATEMENTS"):
(i) the unaudited balance sheets of the Company
as of December 31, 1997 and 1996, and the related unaudited statements of
income, statements of shareholders' equity and statements of cash flows of the
Company for the years then ended, together with the notes thereto; and
(ii) the unaudited balance sheet of the Company as
of November 30, 1998 (the "UNAUDITED INTERIM BALANCE SHEET") and the related
unaudited statement of income of the Company for the eleven months then ended.
(b) The Company Financial Statements present fairly the
financial position of the Company as of the respective dates thereof and the
results of operations and cash flows of the Company for the periods covered
thereby. The Company Financial Statements have been prepared in accordance
with the books and records of the Company.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since November 30, 1998:
(a) there has not been any material adverse change in the
Company's business, condition, assets, Liabilities, operations or financial
condition, and no event has occurred that will, or could reasonably be expected
to, have a Material Adverse Effect on the Company;
(b) there has not been any material loss, damage or
destruction to, or any material interruption in the use of, any of the
Company's assets (whether or not covered by insurance);
(c) 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 and has not repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities;
(d) the Company has not sold, issued or authorized the
issuance of (i) any capital stock or other security, (ii) any option, call,
warrant or right to acquire, or otherwise relating to, any capital stock or any
other security or (iii) any instrument convertible into or exchangeable for any
capital stock or other security;
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(e) there has been no amendment to the Company's articles
of incorporation or bylaws, and the Company has not effected or been a party to
any Acquisition Transaction, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(f) the Company has not formed any subsidiary or acquired
any equity interest or other interest in any other Entity;
(g) the Company has not made any capital expenditure
which is not reflected on the Unaudited Interim Balance Sheet, consistent with
the Company's past practices, which exceeds $25,000;
(h) the Company has not (i) entered into or permitted any
of the assets owned or used by it to become bound by any Company Contract or
(ii) amended or prematurely terminated, or waived any material right or remedy
under, any Company Contract to which it is or was a party or under which it has
or had any rights or obligations;
(i) the Company has not (i) acquired, leased or licensed
any right or other asset from any other Person, (ii) sold or otherwise disposed
of, or leased or licensed, any right or other asset to any other Person or
(iii) waived or relinquished any right (other than immaterial rights waived or
relinquished by the Company in the Ordinary Course of Business and consistent
with the Company's past practices);
(j) the Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable
or other indebtedness;
(k) the Company has not made any pledge of any of its
assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except for pledges of immaterial assets made in the Ordinary
Course of Business and consistent with the Company's past practices;
(l) the Company has not (i) lent money to any Person
(other than pursuant to routine business travel advances or reimbursement of
expenses made to employees in the Ordinary Course of Business), or (ii)
incurred or guaranteed any indebtedness for borrowed money;
(m) the Company has not (i) established, adopted or
amended any Employee Benefit Plan, (ii) paid any bonus or made any
profit-sharing or similar payment to any of its directors, officers or
employees or (iii) hired any new employee;
(n) the Company has not changed any of its methods of
accounting or accounting practices in any respect;
(o) the Company has not made any Tax election;
(p) the Company has not commenced or settled any
Proceeding;
6.
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(q) the Company has not entered into any material
transaction or taken any other material action outside the Ordinary Course of
Business or inconsistent with its past practices; and
(r) the Company has not agreed or committed to take any
of the actions referred to in clauses "(c)" through "(q)" above, except the
payment of bonuses to employees of the Company in an amount not to exceed five
percent (5%) of any such employee's annual base salary.
2.6 TITLE TO ASSETS.
(a) Except as set forth in Part 2.6(a) of the Disclosure
Schedule, the Company owns, and has good, valid and marketable title to, all
assets purported to be owned by it, including: (i) all assets reflected on the
Unaudited Interim Balance Sheet; (ii) all assets acquired by the Company since
November 30, 1998; (iii) all assets referred to in Parts 2.8 and 2.9 of the
Disclosure Schedule; and (iv) all other assets reflected in the Company's books
and records as being owned by the Company. Except as set forth in Part 2.6(a)
of the Disclosure Schedule, all of said assets are owned by the Company free
and clear of any liens or other Encumbrances, except for (x) any lien for
current taxes not yet due and payable and (y) minor liens that have arisen in
the Ordinary Course of Business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of the Company.
(b) Part 2.6(b) of the Disclosure Schedule identifies all
assets that are being leased or licensed to the Company.
2.7 BANK ACCOUNTS; RECEIVABLES; CUSTOMERS.
(a) Part 2.7(a) of the Disclosure Schedule provides
accurate and complete information with respect to each account maintained by or
for the benefit of the Company at any bank or other financial institution,
including (i) the name and location of the institution at which such accounts
is maintained, (ii) the name in which such account is maintained and the
account number of such account, (iii) a description of such account and the
purpose for which such account is used and (iv) the names of all individuals
authorized to draw on or make withdrawals from such account and any limitations
on such individuals' authorization. There are no safe deposit boxes or similar
arrangements maintained by or for the benefit of the Company.
(b) Part 2.7(b) of the Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable, notes
receivable and other receivables of the Company as of November 30, 1998.
Except as set forth in Part 2.7(b) of the Disclosure Schedule, all existing
accounts receivable of the Company (including those accounts receivable
reflected on the Unaudited Interim Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since November 30,
1998 and have not yet been collected) (i) represent valid obligations of
customers of the Company arising from bona fide transactions entered into in
the Ordinary Course of Business and (ii) to the Best Knowledge of the Company
and the Selling Shareholders, are current and will be collected in full when
due, without any counterclaim or set off, net of an allowance for doubtful
accounts not to exceed $25,000 in the aggregate.
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(c) Part 2.7(c) of the Disclosure Schedule identifies
each customer that is obligated to make payments to the Company in an aggregate
amount exceeding $25,000 per year. The Company has not received any notice or
other communication indicating that any customer or other Person identified in
Part 2.7(c) of the Disclosure Schedule intends or expects to cease dealing with
the Company or to effect a material reduction in the volume of business
transacted by such Person with the Company below historical levels.
2.8 EQUIPMENT; REAL PROPERTY.
(a) Part 2.8(a) of the Disclosure Schedule accurately
identifies all material items of equipment owned by or leased to the Company.
The items of equipment identified in Part 2.8(a) of the Disclosure Schedule are
adequate for the uses to which they are being put and are in adequate condition
and repair (ordinary wear and tear excepted) for the conduct of the Company's
business in the manner in which such business is currently being conducted.
(b) The Company does not own any real property or any
interest in real property, other than the leaseholds created under the real
property leases identified in Part 2.10(a) of the Disclosure Schedule. The
Company enjoys peaceful and undisturbed possession of such premises.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(1) of the Disclosure Schedule sets forth,
with respect to each Company Proprietary Asset that has been registered with
any Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Proprietary Asset and (ii)
the names of the jurisdictions covered by the applicable registration or
application. Part 2.9(a)(2) of the Disclosure Schedule identifies and provides
a brief description of all other Company Proprietary Assets owned by the
Company. Part 2.9(a)(3) of the Disclosure Schedule identifies and provides a
brief description of each Company Proprietary Asset licensed to the Company by
any Person (except for any Proprietary Asset that is licensed to the Company
under any third party software license generally available to the public at a
cost of less than $10,000) and identifies the license agreement or other
agreement under which such Proprietary Asset is being licensed to the Company.
Except as set forth in Part 2.9(a)(4) of the Disclosure Schedule, the Company
has good, valid and marketable title to all of the Proprietary Assets
identified in Parts 2.9(a)(1) and 2.9(a)(2) of the Disclosure Schedule, free
and clear of all liens and other Encumbrances and, to the Best Knowledge of the
Company and the Selling Shareholders, has a valid right to use all Proprietary
Assets identified in Part 2.9(a)(3) of the Disclosure Schedule. Except as set
forth in Part 2.9(a)(5) of the Disclosure Schedule, the Company is not
obligated to make any payment to any Person for the use of any Company
Proprietary Asset. Except as set forth in Part 2.9(a)(6) of the Disclosure
Schedule, the Company is free to use, modify, copy, distribute, sell, license
or otherwise exploit each of the Company Proprietary Assets on an exclusive
basis (other than Company Proprietary Assets consisting of software licensed to
the Company under third party licenses generally available to the public, with
respect to which the Company's rights are not exclusive).
8.
15
(b) The Company has taken commercially reasonable
measures and precautions necessary to protect the confidentiality and value of
each Company Proprietary Asset (except Company Proprietary Assets whose value
would be unimpaired by public disclosure) and otherwise to maintain and protect
the value of all Company Proprietary Assets. Except as set forth in Part
2.9(b) of the Disclosure Schedule, the Company has not disclosed or delivered
to any Person, or permitted the disclosure or delivery to any Person, of (i)
the source code, or any portion or aspect of the source code, of any Company
Proprietary Asset or (ii) the object code, or any portion or aspect of the
object code, of any Company Proprietary Asset.
(c) None of the Company Proprietary Assets (except
Company Proprietary Assets on Part 2.9(a)(3)) infringe or conflict with any
Proprietary Asset owned or used by any other Person. To the Best Knowledge of
the Company and the Selling Shareholders, none of the Company Proprietary
Assets set forth on Part 2.9(a)(3) infringe or conflict with Proprietary Assets
owned or used by any Person. The Company has not at any time received any
written notice or other written communication, or to the Best Knowledge of the
Company and the Selling Shareholders, any oral notice or other oral
communication, of any such infringement or conflict. Except as set forth in
Part 2.9(c) of the Disclosure Schedule, the Company is not infringing,
misappropriating or making any unlawful use of, and the Company has not at any
time infringed, misappropriated or made any unlawful use of, or received any
notice or other communication of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person. To the Best Knowledge of the Company and the
Selling Shareholders, except as set forth in Part 2.9(c) of the Disclosure
Schedule, no other Person is infringing, misappropriating or making any
unlawful use of, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Company Proprietary Asset.
(d) The Company Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Company to conduct its business in
the manner in which such business has been and is being conducted. Except as
set forth in Part 2.9(d) of the Disclosure Schedule, (i) the Company has not
licensed any of the Company Proprietary Assets to any Person and (ii) the
Company has not entered into any covenant not to compete or Contract limiting
its ability to exploit fully any of its Proprietary Assets or to transact
business in any market or geographical area or with any Person.
(e) Except as set forth in Part 2.9(e) of the Disclosure
Schedule, the Company has not entered into and is not bound by any Contract
under which any Person has the right to distribute or license, on a commercial
basis, any Company Proprietary Asset including source code, object code or any
versions, modifications or derivative works of source code or object code in
any Company Proprietary Asset.
2.10 CONTRACTS.
(a) Part 2.10(a) of the Disclosure Schedule identifies
and provides a complete list of each Company Contract, except for any Excluded
Contract. The Company has delivered to the Purchaser accurate and complete
copies of all Company Contracts identified on Part 2.10(a) of the Disclosure
Schedule, including all amendments thereto. Each Company Contract is valid and
in full force and effect, and is enforceable by the Company in accordance with
its
9.
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terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(b) Except as set forth in Part 2.10(b) of the Disclosure Schedule:
(i) the Company has not violated or Breached, or
committed any default under, any Company Contract, and, to the Best Knowledge
of the Company and the Selling Shareholders, no other Person has violated or
otherwise Breached, or committed any default under, any Company Contract;
(ii) to the Best Knowledge of the Company and the
Selling Shareholders, no event has occurred, and no circumstance or condition
exists, that is reasonably likely to (with or without notice or lapse of time)
(A) result in a violation or other Breach of any of the provisions of any
Company Contract, (B) give any Person the right to declare a default or
exercise any remedy under any Company Contract, (C) give any Person the right
to accelerate the maturity or performance of any Company Contract or (D) give
any Person the right to cancel, terminate or materially modify any Company
Contract;
(iii) the Company has not received any written
notice or other communication regarding (i) any actual or possible violation or
Breach of, or default under, any Company Contract or (ii) any actual or
possible termination of any Company Contract; and
(iv) the Company has not waived, in writing, any
of its material rights under any existing Contract; and to the Best Knowledge
of the Company and the Selling Shareholders, the Company has not waived,
orally, any of its material rights under any existing Contract.
(c) The Contracts identified in Part 2.10(a) of the Disclosure
Schedule, together with the Excluded Contracts, collectively constitute all of
the Contracts necessary to enable the Company to conduct its business in the
manner in which its business is currently being conducted.
(d) The performance of the Company Contracts will not result in any
violation of or failure to comply with any Legal Requirement.
(e) Except as set forth in Part 2.10(e) of the Disclosure Schedule:
(i) the Company is not a guarantor nor otherwise
has an agreement to cause, insure or become liable for, and none of its assets
are being pledged to secure, the performance or payment of any obligation or
other Liability of any other Person; and
(ii) the Company is not a party to or bound by (A)
any joint venture agreement, partnership agreement, profit-sharing agreement,
cost-sharing agreement, loss-sharing agreement or similar Contract or (B) any
Contract that creates or grants to any Person, or provides for the creation or
grant of, any stock appreciation right, phantom stock right or similar right or
interest.
10.
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2.11 LIABILITIES.
(a) Except as set forth in Part 2.11(a) of the Disclosure
Schedule and except for (i) accounts payable or (ii) accrued salaries that have
been incurred by the Company in the Ordinary Course of Business since November
30, 1998, all Liabilities of the Company have been included in the
"liabilities" column of the Unaudited Interim Balance Sheet in accordance with
the books and records of the Company and its past practice.
(b) Part 2.11(b) of the Disclosure Schedule provides an
accurate and complete breakdown and aging of the Company's accounts payable as
of November 30, 1998 and (ii) provides an accurate and complete breakdown of
the Company's indebtedness as of the date of this Agreement.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in Part 2.12
of the Disclosure Schedule, the Company is, and has at all times since its
inception been, in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct of its business or the ownership or use of
any of its assets, except where the failure to comply with each such Legal
Requirements has not had and will not have a Material Adverse Effect on the
Company.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each Governmental Authorization held by the Company. The Company has
delivered to the Purchaser accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule, including all
renewals thereof and all amendments thereto. Each Governmental Authorization
identified or required to be identified in Part 2.13 of the Disclosure Schedule
is valid and in full force and effect. The Company and its employees are, and
have at all times been, in full compliance with all of the terms and
requirements of each Governmental Authorization identified or required to be
identified in Part 2.13 of the Disclosure Schedule, except where the failure to
comply with any such Governmental Authorization has not had and will not have a
Material Adverse Effect on the Company. The Governmental Authorizations
identified in Party 2.13 of the Disclosure Schedule constitute all Governmental
Authorizations necessary to enable the Company to conduct its business in the
manner in which its business is currently being conducted.
2.14 TAX MATTERS.
(a) Except as set forth in Part 2.14(a) of the 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 and on a timely basis. Any Tax required
to have been withheld or collected by the Company, including with respect to
employees, has been duly withheld and collected; and (to the extent required)
each such Tax has been paid to the appropriate Governmental Body.
(b) Part 2.14(b) of the 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
11.
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filed, accurately and completely prepared in full compliance with all
applicable Legal Requirements. All amounts shown on the Company Returns to be
due on or before the Closing Date have been or will be paid on or before the
Closing Date. The Company has delivered to the Purchaser accurate and complete
copies of all Company Returns filed since January 1, 1993.
(c) There are no contingent Liabilities for Taxes with
respect to all periods through the dates thereof, except Taxes due in the
Ordinary Course of Business for the calendar year 1998. The Company will
establish, in the Ordinary Course of Business, reserves adequate for the
payment of all Taxes for the period from November 30, 1998 through the Closing
Date, and the Company will disclose the dollar amount of such reserves to the
Purchaser on or prior to the Closing Date.
(d) Except as set forth in Part 2.14(d) of the Disclosure
Schedule, there have been no examinations or audits of any Company Return, and,
to the Best Knowledge of the Company and the Selling Shareholders, no such
examination or audit has been proposed or scheduled by any Governmental Body.
The Company has delivered to the Purchaser accurate and complete copies of all
audit reports and similar documents (to which the Company has access) relating
to the Company Returns.
(e) Except as set forth in Part 2.14(d) of the Disclosure
Schedule, no claim or Proceeding is pending or, to the Best Knowledge of the
Company and the Selling Shareholders, has been threatened against the Company
in respect of any Tax. There are no unsatisfied Liabilities for Taxes
(including Liabilities for interest, additions to tax and penalties thereon and
related expenses) with respect to any notice of deficiency or similar document
received by the Company. There are no liens for Taxes upon any of the assets
of the Company, except liens for current Taxes not yet due and payable. The
Company has not entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code.
(f) To the Best Knowledge of the Company and the Selling
Shareholders, there is no 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 or Section 162 of the Code. 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.
2.15 EMPLOYEE AND LABOR MATTERS.
(a) Part 2.15(a) of the Disclosure Schedule accurately
sets forth, with respect to each employee of the Company (including any
employee of the Company who is on a leave of absence or on layoff status): the
name of such employee and the date as of which such employee was originally
hired by the Company; the aggregate dollar amount of the compensation
(including wages, salary, commissions, director's fees, fringe benefits,
bonuses, profit-sharing payments and other payments or benefits of any type)
received by such employee from the Company with respect to services performed
since January 1, 1998 and any increase in such employee's compensation for
fiscal 1998 in excess of five percent (5%); and such employee's annualized base
compensation as of the date of this Agreement. There is no employee of the
Company who is not fully available to perform work because of long-term
disability or other leave (excluding normal sick days).
12.
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(b) Part 2.15(b) of the Disclosure Schedule identifies
and provides an accurate and complete description of each Current Benefit Plan
and any other salary, bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance pay, termination pay, hospitalization,
medical, insurance, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program or agreement sponsored, maintained, contributed to
or required to be contributed to by the Company for the benefit of any current
or former employee of the Company (collectively, the "PLANS").
(c) Except as set forth in Part 2.15(c) of the Disclosure
Schedule, the Company is not a party to or bound by any employment agreement,
and has never been a party to or bound by, any union contract, collective
bargaining agreement or similar Contract.
(d) Except as set forth in Part 2.15(d) of the Disclosure
Schedule, the employment of each of the Company's employees is terminable by
the Company at will, subject to applicable Legal Requirements. The Company
never delivered to employees any employee manuals or handbooks, disclosure
materials or policy statements relating to the employment of the current and
former employees of the Company.
(e) To the Best Knowledge of the Company and the Selling
Shareholders, except as set forth in Part 2.15(e) of the Disclosure Schedule,
(i) no employee of the Company intends to terminate his or her employment with
the Company and (ii) no employee of the Company is a party to or is bound by
any confidentiality agreement, noncompetition agreement or other Contract (with
any Person) that may have a Material Adverse Effect on (A) the performance by
such employee of any of his or her duties or responsibilities as an employee of
the Company or (B) the Company's business or operations.
2.16 BENEFIT PLANS. The Company has never established, adopted, maintained,
sponsored, contributed to, participated in or incurred any Liability with
respect to any Employee Benefit Plan.
2.17 ENVIRONMENTAL MATTERS. The Company is and has at all times been in
compliance in all material respects with all applicable Environmental Laws,
except for any non-compliances which have been cured. The Company possesses all
permits and other Governmental Authorizations required under applicable
Environmental Laws and the Company is and has at all times been in compliance in
all material respects with the terms and requirements of all such Governmental
Authorizations, except for any non-compliances which have been cured.
13.
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2.18 SALE OF PRODUCTS; PERFORMANCE OF SERVICES. Except as set forth in Part
2.18 of the Disclosure Schedule, no customer or other Person has, at any time
since January 1, 1996, asserted or threatened to assert in writing any claim
against the Company (other than claims that have been resolved satisfactorily at
no material cost to the Company) under or based upon (i) any warranty provided
by or on behalf of the Company, or (ii) any services performed by the Company.
2.19 INSURANCE.
(a) Part 2.19(a) of the Disclosure Schedule accurately
sets forth, with respect to each insurance policy maintained by or at the
expense of, or for the direct or indirect benefit of, the Company: (i) the name
of the insurance carrier that issued such policy and the policy number of such
policy; (ii) the annual premium payable with respect to such policy, and the
cash value (if any) of such policy; (iii) and a description of any claims
pending, and any material claims that have been asserted in the past, with
respect to such policy. The Company has delivered to the Purchaser accurate
and complete copies of all of the insurance policies identified in Part 2.19(a)
of the Disclosure Schedule (including all renewals thereof and endorsements
thereto) and all of the pending applications identified in Part 2.19(a) of the
Disclosure Schedule.
(b) Each of the policies identified in Part 2.19(a) of
the Disclosure Schedule is valid, enforceable and in full force and effect, and
has been issued by an insurance carrier that, to the Best Knowledge of the
Company and the Selling Shareholders, is solvent, financially sound and
reputable. 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.
(c) Except as set forth in Part 2.19(c) of the Disclosure
Schedule, there is no pending claim under or based upon any of the policies
identified in Part 2.19(a) of the Disclosure Schedule; and, to the Best
Knowledge of the Company and the Selling Shareholders, no event has occurred,
and no condition or circumstance exists, that is reasonably likely (with or
without notice or lapse of time) to give rise to or serve as a basis for any
such claim.
(d) The Company has never received (i) any written notice
or other communication regarding the actual or possible cancellation or
invalidation of any of the policies identified in Part 2.19(a) of the
Disclosure Schedule or regarding any actual or possible adjustment in the
amount of the premiums payable with respect to any of said policies (except for
premium increases in the Ordinary Course of Business); or (ii) any written
notice or other communication 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 2.19(a) of the Disclosure Schedule.
2.20 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.20 of the
Disclosure Schedule:
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(a) no Related Party has, and no Related Party has at any
time since January 1, 1997 had, any interest of any nature in any asset used in
or otherwise relating to the business of the Company;
(b) no Related Party is, or has at any time since January
1, 1997 been, indebted to the Company;
(c) since January 1, 1997, no Related Party has entered
into, or has had any direct or indirect financial interest in, any material
Contract, transaction or business dealing of any nature involving the Company;
(d) to the Best Knowledge of the Company and the Selling
Shareholders, no current officer, director or employee of the Company is
competing, directly or indirectly, with the Company in any market served by the
Company;
(e) no Related Party has any claim or right against the
Company; and
(f) to the Best Knowledge of the Company and the Selling
Shareholders, no event has occurred, and no condition or circumstance exists,
that is reasonably likely (with or without notice or lapse of time) directly or
indirectly to give rise to or serve as a basis for any claim or right in favor
of any Related Party against the Company.
2.21 PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.21(a) of the Disclosure
Schedule, there is no pending Proceeding, and to the Best Knowledge of the
Company and the Selling Shareholders, no Person has threatened to commence any
Proceeding. Except as set forth in Part 2.21(a) of the Disclosure Schedule, to
the Best Knowledge of the Company and the Selling Shareholders, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
is reasonably likely directly or indirectly to give rise to or serve as a basis
for the commencement of any such Proceeding.
(b) To the Best Knowledge of the Company and the Selling
Shareholders, there is no proposed Order that, if issued or otherwise put into
effect, (i) is likely to have an adverse effect on the Company's business,
condition, assets, liabilities, operations or financial condition or on the
ability of the Company to comply with or perform any covenant or obligation
under any of the Transactional Agreements or (ii) is likely to have the effect
of preventing, delaying, making illegal or otherwise interfering with any of
the Transactions.
2.22 CERTAIN PAYMENTS, ETC. The Company and each officer, employee, agent
or other Person associated with or acting for or on behalf of the Company, has
not at any time, directly or indirectly: (a) used any corporate funds (i) to
make any unlawful political contribution or gift or for any other unlawful
purpose relating to any political activity, (ii) to make any unlawful payment to
any governmental official or employee, or (iii) to establish or maintain any
unlawful or unrecorded fund or account of any nature; (b) made any false or
fictitious entry, or failed to make any entry that should have been made, in any
of the books of account or other records of the Company.
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2.23 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under each of the Transactional Agreements to which the Company is
or may become a party. This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements will constitute the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.24 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.24 of the
Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of
(i) any of the provisions of the Company's certificate of incorporation or
bylaws or (ii) any resolution adopted by the Company's shareholders or the
Company's board of directors;
(b) contravene, conflict with or result in a violation
of, or give any Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or any Order to which
the Company, or any of the assets owned or used by the Company, is subject;
(c) contravene, conflict with or result in a 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 assets owned or
used by the Company;
(d) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any Company Contract;
(e) give any Person the right to (i) declare a default or
exercise any remedy under any Company Contract, (ii) accelerate the maturity or
performance of any Company Contract or (iii) cancel, terminate or modify any
Company Contract; or
(f) result in the imposition or creation of any
Encumbrance upon or with respect to any asset owned or used by the Company.
Except as set forth in Part 2.24 of the Disclosure Schedule, neither the
Company nor any of the Selling Shareholders was, is or will be required to make
any filing with or give any notice to, or to obtain any Consent from, any
Person in connection with the execution and delivery of any of the
Transactional Agreements or the consummation or performance of any of the
Transactions.
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2.25 BROKERS. Neither the Company nor any of the Selling Shareholders has
employed any broker, agent or finder or incurred any Liability for any brokerage
fees, agents' commissions or finders' fees in connection with the Transactions,
and the Selling Shareholders shall indemnify the Purchaser Indemnitees with
respect to any Claim which any Person engaged by the Company or any Selling
Shareholder may make with respect to the subject matter of the Transactional
Agreements.
2.26 FULL DISCLOSURE.
(a) This Agreement does not (i) contain any
representation, warranty or information that is false or misleading with
respect to any material fact or (ii) omit to state any material fact necessary
in order to make the representations, warranties and information of or with
respect to the Company and the Selling Shareholders contained and to be
contained herein (in light of the circumstances under which such
representations, warranties and information were or will be made or provided)
not false or misleading.
(b) All of the information set forth in the Disclosure
Schedule is accurate and complete in all material respects.
(c) The Company has provided the Purchaser and
Purchaser's representatives with full and complete access to all of the
Company's records and other documents and data.
2.27 SELLING SHAREHOLDERS. Each Selling Shareholder, severally and not
jointly, represents that (i) he, she or it has good and valid title to the
number of shares of capital stock of the Company set forth on Part 2.3(a) of the
Disclosure Schedule, free and clear of all liens, encumbrances, equities or
claims, (b) he, she or it has the absolute and unrestricted right, power and
authority to enter into and to perform his, her or its obligations under each of
the Transactional Agreements to which such Selling Shareholder is or may become
a party, (c) this Agreement constitutes his, her or its legal, valid and binding
obligation, enforceable against such Selling Shareholder in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies and (d) upon the
execution of each of the other Transactional Agreements at the Closing, each of
such other Transactional Agreements will constitute the legal, valid and binding
obligation of such Selling Shareholder, enforceable against such Selling
Shareholder in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
2.28 SECURITIES LAWS MATTERS. Each Selling Shareholder understands that the
Purchaser Common Stock has not been registered under the Securities Act and that
the Purchaser Common Stock is being offered and sold pursuant to an exemption
from registration contained in the Securities Act, based in part upon the
Selling Shareholders' representations contained in this Agreement. Each Selling
Shareholder hereby severally and not jointly represents and warrants as follows:
(a) REQUISITE POWER AND AUTHORITY. Each Selling
Shareholder has substantial experience in evaluating and investing in private
placement transactions of securities
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in companies similar to the Purchaser so that he is capable of evaluating the
merits and risks of his investment in the Purchaser and has the capacity to
protect his own interests. Each Selling Shareholder represents that by reason
of his business or financial experience, he has the capacity to protect his own
interests in connection with the Transactions. Further, each Selling
Shareholder is aware of no publication of any advertisement in connection with
the Transactions. Each Selling Shareholder must bear the economic risk of this
investment until the Purchaser Common Stock is registered pursuant to the
Securities Act in accordance with the provisions of Section 10 herein. Each
Selling Shareholder has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions.
(b) PURCHASER INFORMATION. Each Selling Shareholder has
had an opportunity to discuss the Purchaser's business, management and
financial affairs, both as currently conducted and as proposed to be conducted
following the Acquisition, with directors, officers and management of the
Purchaser and has had the opportunity to review the Purchaser's operations and
facilities. Each Selling Shareholder has also had the opportunity to ask
questions of, and receive answers from, the Purchaser and its management
regarding the terms and conditions of this investment.
(c) ACQUISITION FOR OWN ACCOUNT. Each Selling
Shareholder is acquiring the Purchaser Common Stock for his own account for
investment only, and not with a view towards their distribution.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Subject to the provisions of Section 10 and except as set forth on the
Purchaser Disclosure Schedule delivered herewith, the Purchaser represents and
warrants to the Selling Shareholders as follows:
3.1 DUE ORGANIZATION. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary power and authority to conduct its business in the manner
in which its business is currently being conducted and to own and use its assets
in the manner in which its assets are currently owned and used.
3.2 EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT; AUTHORITY. The
Purchaser has the full legal right, power and authority to enter into this
Agreement and the related agreements referred to herein to which it is a party
and to carry out the Transactions. All proceedings required to be taken by the
Purchaser to authorize the execution, delivery and performance of the
Transactional Agreements to which it is a party have been properly taken. Each
of the Transactional Agreements to which the Purchaser is a party constitute
valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. The execution, delivery or performance of this Agreement by
the Purchaser will not, with or without the giving of notice or the passage of
time, or both, conflict with, result in a material breach of, or a default,
right to accelerate or loss of rights under, any provision of
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Purchaser's corporate documents or any agreement to which the Purchaser is a
party or Legal Requirement by which the Purchaser or any its properties may be
bound or materially affected.
3.3 PURCHASER'S COMMON STOCK. The Purchaser's Common Stock will, upon
delivery to the Selling Shareholders, be duly authorized, validly issued, fully
paid and nonassessable, with no personal liability attaching to the ownership
thereof (except as otherwise set forth herein), other than liabilities imposed
upon stockholders generally by the provisions of the Delaware General
Corporation Law and will not be subject to any other restrictions, except as may
be imposed by applicable law.
3.4 BROKERS AND FINDERS. Neither the Purchaser nor any person acting on its
behalf has employed any broker, agent or finder or incurred any Liability for
any brokerage fees, agents' commissions or finders' fees in connection with the
Transactions, and the Purchaser shall indemnify the Selling Shareholders with
respect to any Claim which any Person engaged by the Purchaser may make with
respect to the subject matter of the Transactional Agreements.
3.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Purchaser has delivered to the Company accurate
and complete copies of each report, registration statement (on a form other
than Form S-8) and definitive proxy statement filed by the Purchaser with the
SEC between October 17, 1996 and the date of this Agreement (the "PURCHASER SEC
DOCUMENTS"). Each of the Purchaser SEC Documents (i) complies in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be); and (ii) when read together as a whole and as updated
by subsequent reports or filings made prior to the Closing Date, which have
been made available to the Selling Shareholders, does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements contained in
the Purchaser SEC Documents: (i) complied as to form in all material respects
with the published rules and regulations of the SEC applicable thereto; (ii)
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered, except as may be indicated in the notes to such financial
statements and (in the case of unaudited statements) as permitted by Form 10-Q
of the SEC, and except that unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end audit adjustments
(which will not, individually or in the aggregate, be material in magnitude);
and (iii) fairly present the consolidated financial position of Purchaser and
its subsidiaries as of the respective dates thereof and the consolidated
results of operations of Purchaser and its subsidiaries for the periods covered
thereby.
SECTION 4. CERTAIN COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS
4.1 ACCESS AND INVESTIGATION. The Company and the Selling Shareholders
shall ensure that, at all times during the Pre-Closing Period:
(a) The Company and its Representatives provide the
Purchaser and its Representatives with access, during normal business hours
upon reasonable notice and in a manner which shall not interfere with the
operations of the Company, to the Company's Representatives, personnel and
assets and to all existing books, records, Tax Returns, work papers and other
documents and information relating to the Company;
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(b) The Company and its Representatives provide the
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 the Purchaser may request in good faith; and
(c) The Company and its Representatives compile and
provide the Purchaser and its Representatives with such additional financial,
operating and other data and information regarding the Company as the Purchaser
may request in good faith. Without limiting the generality of the foregoing,
during the Pre-Closing Period, the Company shall promptly provide the Purchaser
with copies of:
(i) all material operating and financial reports
prepared by the Company for its senior management, including copies of the
unaudited monthly balance sheets of the Company and the related unaudited
monthly statements of operations, statements of shareholders' equity and
statements of cash flows;
(ii) any written materials or communications sent
by or on behalf of the Company to its shareholders generally;
(iii) any material notice, document or other
communication sent by or on behalf of the Company to any party to any Company
Contract or sent to the Company by any party to any Company Contract (other
than any communication that relates solely to commercial transactions between
the Company and the other party to any such Company Contract and that is of the
type sent in the Ordinary Course of Business);
(iv) any written notice, report or other document
filed with or sent to any Governmental Body in connection with the Acquisition
or any of the other Transactions; and
(v) any material written notice, report or other
document received by the Company from any Governmental Body.
4.2 OPERATION OF THE COMPANY'S BUSINESS. The Company and the Selling
Shareholders shall ensure that, during the Pre-Closing Period:
(a) the Company conducts its operations exclusively in
the ordinary course and in the same manner as such operations have been
conducted prior to the date of this Agreement;
(b) the Company uses its commercially reasonable efforts
to preserve intact its current business organization, keep available the
services of its current officers and employees and maintain its relations and
goodwill with all suppliers, customers, landlords, creditors, employees and
other Persons having business relationships with the Company;
(c) the Company shall keep in full force all insurance
policies identified in Part 2.19 of the Disclosure Schedule;
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(d) the Company's officers confer regularly, upon
request, with the Purchaser concerning operational matters and otherwise report
regularly, upon request, to Purchaser concerning the status of the Company's
business, condition, assets, Liabilities, operations and financial condition;
(e) the Company immediately notifies the 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;
(g) the Company does not sell or otherwise issue any
shares of capital stock or any other securities;
(h) neither the Company nor any of the Selling
Shareholders amend the Company's certificate of incorporation or bylaws, and
does not effect or permit the Company to become a party to any Acquisition
Transaction, recapitalization, reclassification, reclassification of shares,
stock split, reverse stock split or similar transaction;
(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 that are made in the Ordinary Course of
Business and that do not exceed $10,000 in the aggregate;
(k) the Company does not enter into any transaction or
take any other action that is reasonably likely to cause or constitute a Breach
of any representation or warranty made by the Company;
(l) the Company does not (i) acquire, lease or license
any right or other asset from any other Person, (ii) sell or otherwise dispose
of, or lease or license, any right or other asset to any other Person or (iii)
waive or relinquish any right;
(m) the Company does not (i) lend money to any Person or
(ii) incur, assume or otherwise become subject to any Liability, except for
current Liabilities incurred in the Ordinary Course of Business;
(n) the Company does not establish, adopt or amend any
Employee Benefit Plan and does not pay or agree to pay any bonus or make any
profit-sharing or similar payment to, or increase the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees (except for regularly
scheduled salary increases in the Ordinary Course of Business), provided, that,
the Company may pay a bonus to the employees of the Company in an amount not to
exceed five percent (5%) of any such employee's annual base salary;
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(o) the Company does not change any of its methods of
accounting or accounting practices in any respect;
(p) the Company does not make any Tax election;
(q) the Company does not commence or settle any
Proceeding, except in the Ordinary Course of Business;
(r) the Company does not enter into any transaction or
take any other action of the type referred to in Section 2.5;
(s) the Company does not enter into any transaction or
take any other action outside the Ordinary Course of Business; and
(t) the Company shall not agree or commit to take any of
the actions described in clauses "(f)" through "(s)" of this Section 4.2.
4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Company and/or the
Selling Shareholders shall promptly notify the Purchaser in writing of:
(i) the discovery by the Company or the Selling
Shareholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that caused or
constitutes a Breach of any representation or warranty made by the Company or
any of the Selling Shareholders in this Agreement;
(ii) any event, condition, fact or circumstance
that occurs, arises or exists after the date of this Agreement and that would
cause or constitute a Breach of any representation or warranty made by the
Company or any of the Selling Shareholders in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement;
(iii) any Breach of any covenant or obligation of
the Company or any of the Selling Shareholders; and
(iv) any event, condition, fact or circumstance
that would make the timely satisfaction of any of the conditions set forth in
Section 6 or Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Disclosure Schedule, or if any such event, condition, fact or circumstance
would require such a change assuming the Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Selling Shareholders shall promptly deliver to
the Purchaser an update to the Disclosure Schedule specifying such change.
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4.4 NO NEGOTIATION. During the Pre-Closing Period, neither the Company nor
the Selling Shareholders shall, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry,
proposal or offer from any Person (other than the Purchaser) relating to a
possible Acquisition Transaction;
(b) participate in any discussions or negotiations or
enter into any agreement with, or provide any non-public information to, any
Person (other than the Purchaser) relating to or in connection with a possible
Acquisition Transaction; or
(c) consider the merits of any unsolicited inquiry,
proposal or offer from any Person (other than the Purchaser) relating to a
possible Acquisition Transaction.
The Selling Shareholders shall promptly notify the Purchaser in writing of any
inquiry, proposal or offer relating to a possible Acquisition Transaction that
is received by the Company or any of the Selling Shareholders during the Pre-
Closing Period.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Acquisition and the other transactions contemplated by
this Agreement and (b) shall use his or its best efforts to obtain each Consent
(if any) required to be obtained (pursuant to any applicable Legal Requirement
or Contract, or otherwise) by such party in connection with the Acquisition or
any of the other transactions contemplated by this Agreement. The Company shall
promptly deliver to the Purchaser a copy of each such filing made, each such
notice given and each such Consent obtained by the Company during the
Pre-Closing Period.
5.2 PUBLIC ANNOUNCEMENTS.
(a) During the Pre-Closing Period, neither the Company
nor any of the Selling Shareholders shall (and the Company shall not permit any
of its Representatives to) issue any press release or make any public statement
regarding this Agreement or the Acquisition, or regarding any of the other
transactions contemplated by this Agreement, without the Purchaser's prior
written consent.
(b) During the Pre-Closing Period, the Purchaser will
consult with the Company prior to issuing any press release or making any
public statement regarding the Acquisition (unless the Purchaser reasonably
determines that the Purchaser is required, by virtue of any applicable Legal
Requirement, to issue any such press release or make any such public statement
under circumstances that make it infeasible or impractical to consult with the
Company).
5.3 POOLING OF INTERESTS. During the Pre-Closing Period, the Company shall
not take any action that could have an adverse effect on the ability of the
Purchaser to account for the Acquisition as a "pooling of interests."
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5.4 AFFILIATE AGREEMENTS. Each Selling Shareholder shall execute and
deliver to the Purchaser, and the Company shall use its best efforts to cause
any other Person that could reasonably be deemed to be an "affiliate" of the
Company for purposes of the Securities Act to execute and deliver to the
Purchaser, as promptly as practicable after the execution of this Agreement, an
Affiliate Agreement in the form of Exhibit F.
5.5 TAX MATTERS. At or prior to the Closing, (a) the Company shall execute
and deliver to Xxxxxx Godward LLP and to Lison & Xxxxxxx, P.C. a tax
representation letter, substantially in the form of Exhibit G-1, and (b) the
Purchaser shall execute and deliver to Xxxxxx Godward LLP and to Lison &
Xxxxxxx, P.C. a tax representation letter, substantially in the form of Exhibit
G-2. The Company and the Selling Shareholders will use all of their respective
reasonable efforts to cause the transactions contemplated hereby to qualify as a
reorganization under the provisions of Section 368(a)(1)(B) of the Code and will
not take any action after the Acquisition is effected that could reasonably be
expected to cause the Acquisition to lose its tax-free status. All parties
hereto agree to file this Agreement with their respective federal income tax
returns for the year in which the Acquisition closes and to comply with the
reporting requirements of United States Treasury Regulations Section 1.368-3, if
applicable.
5.6 BEST EFFORTS. During the Pre-Closing Period, (a) the Company and the
Selling Shareholders shall use their best efforts to cause the conditions set
forth in Section 6 to be satisfied on a timely basis and (b) the Purchaser shall
use its best efforts to cause the conditions set forth in Section 7 to be
satisfied on a timely basis.
5.7 TERMINATION OF EMPLOYEE PLANS. At the Closing, the Company shall
terminate all bonus plans and shall terminate other benefit plans as reasonably
requested by the Purchaser under which any of its employees or former employees
may have any rights and, at Purchaser's request, shall use its best efforts to
ensure that no employee or former employee of the Company has any rights
thereunder and that any Liabilities of the Company thereunder (including any
such Liabilities relating to services performed prior to the Closing) are fully
extinguished.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to effect the Transactions are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Purchaser, in whole or in part,
in accordance with Section 11.14):
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Company and the Selling Shareholders in this Agreement
shall have been accurate in all material respects as of the date of this
Agreement, and shall be accurate in all material respects as of the Scheduled
Closing Time as if made at the Scheduled Closing Time.
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that the
Company or any of the Selling Shareholders is required to comply with or to
perform at or prior to the Closing shall have been complied with and performed
in all material respects.
6.3 CONSENTS. All Consents required to be obtained in connection with the
Transactions (including the Consents identified in Part 2.24 of the Disclosure
Schedule) shall have been obtained and shall be in full force and effect.
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6.4 AGREEMENTS AND DOCUMENTS. The Purchaser shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) the Escrow Agreement, substantially in the form of
Exhibit C;
(b) non-competition agreement, substantially in the form
of Exhibit D, executed by Xxxxxxx Xxxxxxxx, which non-competition agreement
shall have a duration of three (3) years;
(c) non-competition agreements, substantially in the form
of Exhibit D, executed by each of Xxxxxx Xxxxxxxx, Xxxxxxxx Xxxx and Xxxx Toco,
which non-competition agreements shall have a duration of one (1) year;
(d) Affiliate Agreements, substantially in the form of
Exhibit E, executed by each of the Selling Shareholders and by any other Person
who could reasonably be deemed to be an "affiliate" of the Company for purposes
of the Securities Act;
(e) A Tax Representation Letter, substantially in the
form of Exhibit F-1, executed by the Company;
(f) a legal opinion of Lison & Xxxxxxx, P.C., dated as of
the Closing Date, in a form reasonably acceptable to the Purchaser;
(g) written resignations of all officers and directors of
the Company, effective as of the Closing Date;
(h) a letter from KPMG Peat Marwick LLP, dated as of the
Closing Date, confirming that the Purchaser may account for the Acquisition as
a "pooling of interests" in accordance with GAAP, Accounting Principles Board
Opinion No. 16 and all published rules, regulations and policies of the SEC;
(i) an Employment Agreement, by and between the Company
and Xxxxxxx Xxxxxxxx, in a form reasonably acceptable to such parties.
(j) a certificate executed by each of the Selling
Shareholders and containing the representation and warranty of each such
Selling Shareholder that (i) each of the representations and warranties made by
the Company and the Selling Shareholders in this Agreement is accurate in all
material respects as of the Closing Date as if made on the Closing Date and
(ii) the conditions set forth in this Section 6 have been duly satisfied (the
"SELLING SHAREHOLDERS' CLOSING CERTIFICATE");
(k) such other documents as the Purchaser may reasonably
request in good faith for the purpose of (i) evidencing the accuracy of any
representation or warranty made by the Company or the Selling Shareholders,
(ii) evidencing the compliance by the Company or the Selling Shareholders with,
or the performance by the Company or the Selling Shareholders of, any covenant
or obligation set forth in this Agreement, (iii) evidencing the compliance with
any applicable federal or state securities law, (iv) evidencing the
satisfaction of any condition set forth in this Section 6 or (iv) otherwise
facilitating the consummation or performance of any of the Transactions;
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(l) a legal opinion of Xxxxx & XxXxxxxx, dated as of the
Closing Date, in a form reasonably acceptable to the Purchaser;
(m) a cross-license agreement between ProSTEP and XXX,
substantially in the form attached hereto as Exhibit G; and
(n) a Termination of Source Code Escrow Agreement, in a
form reasonably acceptable to the Purchaser.
6.5 EMPLOYEES. A sufficient number of the Company's employees shall have
accepted an offer of employment by the Purchaser in good faith as the Purchaser
deems reasonably necessary to continue the development of the Company's
products. Such employees shall have executed the Purchaser's standard form of
proprietary information and inventions agreement.
6.6 NO MATERIAL ADVERSE CHANGE. Except for adverse changes that result
from general economic conditions, there shall have been no material adverse
change in the Company's business, condition, assets, liabilities, operations and
financial condition since the date of this Agreement.
6.7 TERMINATION OF EMPLOYEE PLANS. The Company shall have provided the
Purchaser with evidence, satisfactory to the Purchaser, as to the termination of
the plans referred to in Section 5.7.
6.8 TERMINATION OF DERIVATIVE SECURITIES. Any outstanding rights to
acquire shares of capital stock of the Company shall be terminated in full prior
to the Closing Date.
6.9 SECURITIES LAW COMPLIANCE. All applicable requirements of the
Securities Act and any applicable state securities laws shall have been
satisfied.
6.10 CUSTOMERS. The Purchaser shall have confirmed, in a manner reasonably
satisfactory to the Purchaser, the Company's existing customer relationships.
6.11 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the
Acquisition shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Acquisition that makes consummation of the Acquisition
illegal.
6.12 NO PROCEEDINGS. No Person shall have commenced or threatened to
commence any Proceeding challenging or seeking the recovery of a material amount
of damages in connection with the Acquisition or seeking to prohibit or limit
the exercise by the Purchaser of any material right pertaining to its ownership
of the Shares.
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6.13 CONFIDENTIALITY AND NONDISCLOSURE AGREEMENTS. Each employee of the
Company, and each consultant to the Company, shall have executed and delivered
to the Company a proprietary information and inventions agreement in a form
reasonably satisfactory to the Purchaser relating to the intellectual property
of the Company.
6.14 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the Transactions and all documents and instruments incident to
such Transactions shall be reasonably satisfactory in substance and form to the
Purchaser.
6.15 CORPORATE APPROVALS. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of the XXX, Purchaser and the Selling Shareholders (including all necessary
approval by the shareholders of ProSTEP).
6.16 TERMINATION OF AGREEMENTS. The Company shall have provided the
Purchaser with evidence, reasonably satisfactory to the Purchaser, that the
following agreements have been terminated:
(a) the Employment Agreement, by and between the Company
and Xxxx Xxxxx, dated as of February 1, 1997, including any severance
provisions contained therein which shall be rendered null and void and of no
further force and effect following the Closing;
(b) the Stock Option Agreement, by and between the
Company and Xxxx Xxxxx, dated as of February 1, 1997, shall be rendered null
and void and of no further force and effect following the Closing;
(c) the Employment Agreement, by and between the Company
and Xxx Xxxxxx, effective as of January 1, 1998, including any severance
provisions contained therein which shall be rendered null and void and of no
further force and effect following the Closing; and
(d) the Software Escrow Agreement, by and among National
Software Escrow, Inc., the Company, Xxxxxxx Xxxxxxxx and ProSTEP, dated as of
January 1, 1997 (the "SOFTWARE AGREEMENT").
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING
SHAREHOLDERS
The obligations of the Selling Shareholders to effect the Transactions
are subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by the Agent (as defined in
Section 11.1), in whole or in part, in accordance with Section 11.14):
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Purchaser in this Agreement shall have been accurate in
all material respects as of the date of this Agreement, and shall be accurate in
all respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
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7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
the Purchaser is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed in all material respects.
7.3 AGREEMENTS AND DOCUMENTS. The Selling Shareholders shall have
received the following agreements and documents:
(a) the Escrow Agreement, substantially in the from of
Exhibit C;
(b) a Tax Representation Letter, substantially in the
form of Exhibit F-2, executed by the Purchaser;
(c) a legal opinion of Xxxxxx Godward LLP, dated as of
the Closing Date, in a form reasonably acceptable to the Selling Shareholders;
(d) a side letter regarding the confidentiality of
ProSTEP (the "Side Letter"), in a form acceptable to ProSTEP; and
(e) an Employment Agreement, by and between Purchaser and
Xxxxxxx Xxxxxxxx, in a form reasonably acceptable to such parties.
7.4 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the
Acquisition shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Acquisition that makes consummation of the Acquisition
illegal.
7.5 CORPORATE APPROVALS. This Agreement and the consummation of the
Transactions shall have been approved by all necessary corporate action on the
part of the Purchaser.
SECTION 8. COVENANTS
8.1 TERMINATION OF AGREEMENTS. Effective upon the Closing, without any
further action on the part of the Purchaser, XXX or the Selling Shareholders,
the following shall occur:
(a) the Shareholders Agreement, by and among the Company,
the Selling Shareholders and Xxxxxxxx Xxxxxx, dated as of January 1, 1997,
shall be terminated in its entirety, except for the first sentence of Section
2.09 which shall continue in full force and effect;
(b) the Employment Agreement, by and between the Company
and Xxxxxxx Xxxxxxxx, dated as of January 1, 1997, including all severance
provisions contained therein, shall be terminated in its entirety and shall be
rendered null and void and of no further force and effect; and
(c) the Irrevocable Proxies granted in favor of ProSTEP
and Xxxxxxx Xxxxxxxx by Xxxxxx Xxxxxxxx and Xxxxxxxx Xxxx shall be terminated
in their entirety.
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8.2 POST CLOSING COVENANTS. As soon as practicable following the Closing:
(a) the Company and the Selling Shareholders shall
terminate the Business Loan Agreement, by and between the Company and First
American Bank, dated as of February 13, 1998, and obtain a release of any
personal guarantee and security interest thereunder;
(b) the Company and the Selling Shareholders shall obtain
the consent of International Business Machine ("IBM") to the assignment of the
Original Provider Agreement, by and between the Company and IBM, dated as of
July 7, 1997; and
(c) the Company and the Selling Shareholders shall obtain
the consent of Xxxxxx Xxxxxxxxxxx to the assignment of the Graphics Software
Patent License Agreement, by and between the Company and Unisys, dated as of
August 12, 1997.
SECTION 9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by the Purchaser if (i) there is a material Breach of
any covenant or obligation of the Company or any of the Selling Shareholders or
(ii) the Purchaser reasonably determines that the timely satisfaction of any
condition set forth in Section 6 has become impossible (other than as a result
of any failure on the part of the Purchaser to comply with or perform any
covenant or obligation of the Purchaser set forth in this Agreement);
(b) by the Agent or ProSTEP if (i) there is a material
Breach of any covenant or obligation of the Purchaser or (ii) the Agent or
ProSTEP reasonably determines that the timely satisfaction of any condition set
forth in Section 7 has become impossible (other than as a result of any failure
on the part of the Company or any of the Selling Shareholders to comply with or
perform any covenant or obligation of the Company or the Selling Shareholders
set forth in this Agreement);
(c) by the Purchaser at or after the Scheduled Closing
Time if any condition set forth in Section 6 has not been satisfied by the
Scheduled Closing Time;
(d) by the Agent or ProSTEP at or after the Scheduled
Closing Time if any condition set forth in Section 7 has not been satisfied by
the Scheduled Closing Time;
(e) by the Purchaser if the Closing has not taken place
on or before December 31, 1998 (other than as a result of any failure on the
part of the Purchaser to comply with or perform any covenant or obligation of
the Purchaser set forth in this Agreement);
(f) by the Agent or ProSTEP if the Closing has not taken
place on or before December 31, 1998 (other than as a result of the failure on
the part of the Company or any of the Selling Shareholders to comply with or
perform any covenant or obligation of the Company or any of the Selling
Shareholders set forth in this Agreement); or
(g) by the mutual consent of the Purchaser, the Company,
the Agent and ProSTEP.
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9.2 TERMINATION PROCEDURES. If Purchaser wishes to terminate this
Agreement pursuant to Section 9.1(a), Section 9.1(c) or Section 9.1(e), the
Purchaser shall deliver to the Agent and ProSTEP a written notice stating that
the Purchaser is terminating this Agreement and setting forth a brief
description of the basis on which the Purchaser is terminating this Agreement.
If the Agent or ProSTEP wishes to terminate this Agreement pursuant to Section
9.1(b), Section 9.1(d) or Section 9.1(f), the Agent or ProSTEP, as applicable,
shall deliver to the Purchaser a written notice stating that the Agent is
terminating this Agreement and setting forth a brief description of the basis on
which the Agent is terminating this Agreement.
9.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 9.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) no party shall be relieved of any
obligation or Liability arising from any prior Breach by such party of any
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 12; and (c)
the Company and the Selling Shareholders shall, in all events, remain bound by
and continue to be subject to Section 5.2.
SECTION 10. INDEMNIFICATION, ETC.
10.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) The representations, warranties and covenants of each
party pursuant to this Agreement shall survive the Closing and shall expire on
the first anniversary of the Closing Date; provided, however, (i) that fraud
claims shall survive for the statute of limitations applicable to claims based
on such matters, (ii) claims under Sections 2.27 and 2.28 hereof shall survive
indefinitely and (iii) that if, at any time prior to the first anniversary of
the Closing Date, any party seeking indemnification under this Section 10 (an
"INDEMNIFIED PARTY") (acting in good faith) delivers to the party from whom
such indemnification is sought (an "INDEMNIFYING PARTY") a written notice
alleging the existence of a Breach of any of the representations and warranties
made by the Indemnifying Party or a Breach of any covenant contained herein
(and setting forth in reasonable detail the basis for such Indemnified Party's
belief that such a Breach may exist) and asserting a claim for recovery under
Section 10.2 or Section 10.3, whichever is applicable, based on such alleged
Breach, then the claim asserted in such notice shall survive the first
anniversary of the Closing until such time as such claim is fully and finally
resolved.
(b) The representations, warranties, covenants and
obligations of each Indemnifying Party, and the rights and remedies that may be
exercised by each Indemnified Party, shall not be limited or otherwise affected
by or as a result of investigation made by any Indemnified Party or any of
their Representatives.
(c) For purposes of this Agreement, each statement or
other item of information set forth in the Disclosure Schedule or in any update
to the Disclosure Schedule shall be deemed to be a representation and warranty
made by the Company and the Selling Shareholders in this Agreement.
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10.2 INDEMNIFICATION BY SELLING SHAREHOLDERS.
(a) Subject to the provisions of this Section 10, the
Selling Shareholders, jointly and severally, shall indemnify and hold harmless
each of the Purchaser Indemnitees from and against the amount of any Damages
incurred by any of the Purchaser Indemnitees directly or indirectly as a result
of (i) any Breach of a representation or warranty of the Company or any of the
Selling Shareholders contained in Section 2 hereof (other than Section 2.27 and
2.28) (as modified by the Disclosure Schedule delivered by the Company and the
Selling Shareholders on the date of this Agreement), (ii) any Breach of any
covenant or obligation contained herein or (iii) any Breach of any
representation or warranty made in the Selling Shareholders' Closing
Certificate.
(b) Each Selling Shareholder, severally and not jointly,
shall indemnify and hold harmless each of the Indemnitees from and against the
amount of any Damages incurred by any of the Indemnitees directly or indirectly
as a result of any Breach of the representations and warranties made by each
such Selling Shareholder in Sections 2.27 and 2.28 hereof.
(c) The Selling Shareholders acknowledge and agree that,
if there is any Breach as provided in Section 10.2(a) and (b), then the
Purchaser itself shall be deemed, by virtue of its ownership of the capital
stock of the Company, to have incurred Damages as result of such Breach or
Liability. Nothing contained in this Section 10.2(c) shall have the effect of
(i) limiting the circumstances under which the Purchaser may otherwise be
deemed to have incurred Damages for purposes of this Agreement, (ii) limiting
the other type of Damages that the Purchaser may deemed to have incurred
(whether in connection with any such Breach or Liability or otherwise) or (iii)
limiting the rights of the Company or any of the other Purchaser Indemnitees
under this Section 10.2.
10.3 INDEMNIFICATION BY THE PURCHASER. Subject to the provisions of this
Section 10, the Purchaser shall indemnify and hold harmless each of the XXX
Indemnitees from and against the amount of any Damages incurred by any of the
XXX Indemnitees directly or indirectly as a result of (i) any Breach of a
representation or warranty of the Purchaser contained in Section 3 hereof or in
any instrument delivered pursuant to this Agreement (each as modified by the
Disclosure Schedule delivered by the Purchaser on the date of this Agreement) or
(ii) any Breach of any covenant or obligation contained herein.
10.4 THRESHOLD; CEILING; LIMITATION ON ADDITIONAL DAMAGES.
(a) Subject to Section 10.3(b), an Indemnifying Party
shall not be required to make any payments pursuant to Section 10.2(a) or 10.3,
as applicable, until such time as the total amount of all Damages (including
the Damages arising from such Breach and all other Damages arising from any
other Breaches of any representations or warranties) that have been directly or
indirectly suffered or incurred by an Indemnified Party, or to which an
Indemnified Party has otherwise become subject, exceeds $50,000 in the
aggregate. At such time as the total amount of such Damages exceeds $50,000,
the Indemnified Party shall be entitled to be indemnified against the total
amount of such Damages exceeding $50,000 (subject to Section 10.3(b)). The
provisions of this Section 10.3(a) shall not apply to any willful misconduct,
fraud, bad faith or recklessness on the part of the Indemnifying Party.
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(b) Claims for Damages made by the Purchaser Indemnitees
or the XXX Indemnitees, as appropriate, pursuant to the provisions of Sections
10.2(a)(i) or 10.6, in the case of the Purchaser Indemnitees, or Section
10.3(i), in the case of the XXX Indemnitees, shall be limited to an amount
equal to $411,320.00; provided, that, each Selling Shareholder shall be liable
only up to the pro rata portion of such amount pertaining to that Selling
Shareholder, determined pursuant to Exhibit B attached hereto. The aggregate
of all Damages incurred by the Purchaser Indemnitees or the XXX Indemnitees, as
applicable, shall be limited to an amount equal to $1,000,000 for each party;
provided, that, each Selling Shareholder shall be liable only up to the pro
rata portion of such amount pertaining to that Selling Shareholder, determined
pursuant to Exhibit B attached hereto. The provisions of this Section 10.4(b)
shall not apply to (i) the agreements set forth in Section 1 or (ii) claims for
Damages pursuant to the provisions of Sections 10.2(b).
10.5 INTEREST. Any party that is required to indemnify an Indemnified
Party pursuant to this Section 10 with respect to any Damages shall also be
required to pay such Indemnified Party interest on the amount of such Damages
(for the period commencing as of the date on which such Indemnified Party first
incurred or otherwise became subject to such Damages and ending on the date on
which the applicable indemnification payment is made by such party) at a
floating rate equal to three (3) percentage points above the rate of interest
publicly announced by Bank of America, N.T. & S.A. from time to time as its
prime, base or reference rate. (For purposes of this Section 10.5, an Indemnifed
Party that suffers Damages by virtue of being required to pay any judgment or to
make any settlement payment to any third party with respect to any third party
claim against such Indemnified Party shall be deemed to have first become
subject to such Damages at the time such Indemnified Party pays such judgment or
makes such settlement payment.)
10.6 DEFENSE OF THIRD PARTY CLAIMS. Subject to the provisions of Section
10.4, in the event of the assertion or commencement by any Person of any claim
or Proceeding (whether against the Company, against any other Purchaser
Indemnitee any other Person) with respect to which any of the Selling
Shareholders may become obligated to indemnify, hold harmless, compensate or
reimburse any Purchaser Indemnitee pursuant to this Section 10, the Purchaser
shall have the right, at its election, to proceed with the defense of such claim
or Proceeding on its own. If the Purchaser so proceeds with the defense of any
such claim or Proceeding:
(a) all expenses relating to the defense of such claim or
Proceeding (whether or not incurred by the Purchaser) shall be borne and paid
exclusively by the Selling Shareholders;
(b) the Selling Shareholders shall make available to the
Purchaser any documents and materials in the possession or control of any of
the Selling Shareholders that may be necessary to the defense of such claim or
Proceeding;
(c) the Purchaser shall keep the Agent and ProSTEP
informed of all material developments and events relating to such claim or
Proceeding; and
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(d) the Purchaser shall have the right to settle, adjust
or compromise such claim or Proceeding with the consent of the Agent and
ProSTEP; provided, however, that such consent shall not be unreasonably
withheld.
10.7 SETOFF. In addition to any rights of setoff or other rights that an
Indemnified Party may have at common law or otherwise, an Indemnified Party
shall have the right to set off any amount that may be owed to any Indemnifiying
Party under this Section 10 against any amount otherwise payable by any
Indemnifying Party.
10.8 EXCLUSIVITY OF INDEMNIFICATION REMEDIES. The Purchaser Indemnitees and
XXX Indemnitees, as applicable, shall have no claim or cause of action, whether
in contract, tort, under statute or otherwise, for monetary damages arising out
of, or relating to, this Agreement apart from the right to indemnification
pursuant to this Section 10, other than claims or causes of action based on
fraud.
10.9 PAYMENT.
(a) In the event any Selling Shareholder shall have
liability (for indemnification or otherwise) under this Section 10, such
Selling Shareholder may elect to satisfy such liability by delivering to the
Purchaser Indemnitees shares of Purchaser Common Stock, properly endorsed for
transfer to the Purchaser Indemnitees, which shall have an aggregate value
equal to such indemnification obligation determined by valuing the shares of
Purchaser Common Stock at $2.938 per share.
(b) In the event the Purchaser shall have liability (for
indemnification or otherwise) under this Section 10, the Purchaser may elect to
satisfy such liability by issuing to the XXX Indemnitees shares of Purchaser
Common Stock, registered in the names of the Selling Shareholders (in
accordance with the amounts set forth on Exhibit B), which shall have an
aggregate value equal to such indemnification obligation determined by valuing
the shares of Purchaser Common Stock at $2.938 per share.
SECTION 11. REGISTRATION OF SHARES
11.1 REGISTRATION STATEMENT.
(a) Within sixty (60) days after the Closing Date, the
Purchaser shall use its reasonable best efforts to file with the SEC a
registration statement on Form S-3 (the "REGISTRATION STATEMENT") with respect
to the shares of Purchaser Common Stock received in the Acquisition by each
Participating Holder (as defined in Section 10.1(c)), including the Escrow
Shares. The Purchaser undertakes that it will file such Registration Statement
with the SEC not later than ninety (90) days following the Closing Date. The
Purchaser shall use its best efforts (i) to cause the Registration Statement to
be declared effective by the SEC as soon thereafter and (ii) to keep such
Registration Statement effective until the completion of the sale of the
Purchaser Common Stock by the Selling Shareholders.
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(b) The Purchaser shall (at its own expense):
(i) prepare and file with the SEC such amendments
to the Registration Statement and such supplements to the prospectus as may be
required in order to comply with the applicable provisions of the Securities
Act;
(ii) furnish to each Participating Holder such
numbers of copies of a prospectus conforming to the requirements of the
Securities Act as it may reasonably request in order to facilitate the
disposition of the shares covered by the Registration Statement;
(iii) use its reasonable best efforts to register
and qualify the shares covered by the Registration Statement under the
securities laws of such states as the Participating Holders may reasonably
request, provided, however, that the Purchaser shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any of such states; and
(iv) notify each Participating Holder at any time
when a prospectus relating to the Registration Statement is required to be
delivered under the Securities Act as a result of the occurrence of any event
which results in the prospectus included in the Registration Statement, as then
in effect, to contain an untrue statement of a material fact or to omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made.
(c) Notwithstanding anything to the contrary contained
herein, no Person who receives Purchaser Common Stock in the Acquisition shall
have any rights under this Section 10 unless such Person executes a written
agreement satisfactory in form and content to the Purchaser confirming that
such Person wishes to be allowed to sell Purchaser Common Stock pursuant to the
Registration Statement and agrees to be bound by the provisions of this Section
10. (A Person who receives Purchaser Common Stock in the Acquisition and who
executes and delivers such an agreement is referred to in this Section 10 as a
"PARTICIPATING HOLDER.")
(d) Notwithstanding anything to the contrary contained
herein, all of the Purchaser's obligations under this Section 10.1 (including
its obligation to file the Registration Statement) shall terminate and expire
as of the earliest date on which any shares of Purchaser Common Stock issued in
the Acquisition can be sold pursuant to Rule 144 under the Securities Act.
11.2 EXPENSES. The Purchaser shall bear all fees and expenses incurred in
connection with any registration under this Section 10, including without
limitation all registration, qualification, filing, printers' and accounting
fees, except that each Participating Holder shall bear its proportionate share
of all amounts payable to underwriters for discounts and commissions.
11.3 INDEMNIFICATION.
(a) The Purchaser agrees to indemnify, to the extent
permitted by law, each Participating Holder, its respective directors and
officers and each Person who controls such
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Participating Holder (within the meaning of the Securities Act) against all
Damages suffered by such Person as a result of any untrue or alleged untrue
statement of material fact contained in the Registration Statement or in the
related prospectus or preliminary prospectus (or in any amendment thereof or
supplement thereto) or as a result of any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such untrue statement or omission or
alleged untrue statement or omission results from or is contained in any
information furnished in writing to the Purchaser by such Participating Holder
for use therein or results from such Participating Holder's failure to deliver
a copy of a Registration Statement or related prospectus (or any amendment
thereof or supplement thereto) after the Purchaser has furnished such
Participating Holder with a sufficient number of copies thereof.
(b) In connection with each Registration Statement, each
Participating Holder (i) shall furnish to the Purchaser in writing such
information and affidavits as the Purchaser reasonably requests for use in
connection with such Registration Statement or the related prospectus and (ii)
to the extent permitted by law, will indemnify the Purchaser, its directors and
officers and each Person who controls the Purchaser (within the meaning of the
Securities Act) against all Damages resulting from any untrue or alleged untrue
statement of material fact contained in such Registration Statement or in the
related prospectus or preliminary prospectus (or in any amendment thereof or
supplement thereto) or from any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission or
alleged untrue statement or omission results from or is contained in any
information or affidavit furnished in writing by such Participating Holder.
(c) Any Person entitled to indemnification under this
Section 10 will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and (ii) unless in the
indemnified party's reasonable judgment a conflict of interest exists between
the indemnified party and the indemnifying party with respect to such claim,
permit the indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any consent to
the entry of any judgment or any settlement made by the indemnified party
without the indemnifying party's consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will pay the fees and expenses of
only one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest exists between such indemnified party and any
other indemnified party with respect to such claim (in which case the
indemnifying party will pay the fees and expenses of additional counsel).
11.4 TRANSFERABILITY OF REGISTRATION RIGHTS. The rights of Participating
Holders under this Section 10 shall be transferable in connection with: (a) a
transfer by will or intestacy; and (b) estate planning transfers consisting of
gifts to the spouse or issue of the transferor or to a charity qualified under
Section 501(c)(3) of the Code. Additionally, the rights of the Selling
Shareholders under this Section 10 may be assigned by a Selling Shareholder to a
transferee or assignee who acquires at least 250,000 shares of Purchaser Common
Stock, or a lesser amount provided that such transferee or assignee acquires all
of the shares of Purchaser Common Stock
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held by such Selling Shareholder; provided, however, (i) the transferor shall,
within ten (10) days after such transfer, furnish to the Purchaser written
notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned
and (ii) such transferee shall agree to be subject to all restrictions set
forth in this Section 10.
11.5 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations promulgated by the SEC which may at any time
permit the sale of Purchaser Common Stock to the public without registration,
the Purchaser shall file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder (or, if the Purchaser is not required to file such reports, it
will, upon request of any Participating Holder, make publicly available such
information so long as necessary to permit sales under Rule 144 under the
Securities Act), and it shall take further action as any Selling Shareholder may
reasonably request, all to the extent required from time to time to enable such
Participating Holder to sell Purchaser Common Stock without registration under
the Securities Act within the limitation of Rule 144 under the Securities Act
(or any similar rule or regulation hereafter adopted by the SEC). Upon the
request of any Participating Holder, the Purchaser shall deliver to such
Participating Holder a written statement confirming that the Purchaser has
complied with the foregoing requirements.
11.6 AMENDMENT OF SECTION 11. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Section 11 may be amended by
the Purchaser at any time with the consent of the holders of sixty percent (60%)
of the shares of Purchaser Common Stock subject to the Registration Statement
(which consent shall not be unreasonably withheld).
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 SELLING SHAREHOLDERS' AGENT.
(a) The Selling Shareholders, except ProSTEP (the
"INDIVIDUAL SELLING SHAREHOLDERS"), hereby irrevocably nominate, constitute and
appoint Xxxxxxx Xxxxxxxx as the agent and true and lawful attorney-in-fact of
the Individual Selling Shareholders (the "AGENT"), with full power of
substitution, to act in the name, pace and stead of the Individual Selling
Shareholders for purposes of executing any documents and taking any actions
that the Agent may, in his sole discretion, determine to be necessary,
desirable or appropriate in connection with any of the Transactional Agreements
or any of the Transactions on behalf of the Individual Selling Shareholders.
Xxxxxxx Xxxxxxxx hereby accepts his appointment as Agent.
(b) The Individual Selling Shareholders hereby grant to
the Agent full authority to execute, deliver, acknowledge, certify and file on
behalf of the Individual Selling Shareholders (in the name of any or all of the
Individual Selling Shareholders or otherwise) any and all documents that the
Agent may, in his sole discretion, determine to be necessary, desirable or
appropriate, in such forms and containing such provisions as the Agent may, in
his sole discretion, determine to be appropriate (including the Selling
Shareholders' Closing Certificate and any amendment to or waiver of rights
under any of the Transactional Agreements). Nothwithstanding anything to the
contrary contained in the Transactional Agreements:
36.
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(i) the Purchaser shall be entitled to deal
exclusively with the Agent, acting on behalf of the Individual Selling
Shareholders, on all matters relating to the Transactional Agreements and the
respective Transactions (including all matters relating to any notice to, or
any Consent to be given or action to be taken by, any Individual Selling
Shareholder, including any matters set forth in Section 10); and
(ii) each Purchaser Indemnitee shall be entitled
to rely conclusively (without further evidence of any kind whatsoever) on any
document executed or purported to be executed on behalf of any Individual
Selling Shareholder by the Agent, and on any other action taken or purported to
be taken on behalf of any Individual Selling Shareholder by the Agent, as fully
binding upon such Individual Selling Shareholder.
(c) The Individual Selling Shareholders recognize and
intend that the power of attorney granted herein (i) is coupled with an
interest and is irrevocable, (ii) may be delegated by the Agent and (iii) shall
survive the death or incapacity of each of the Individual Selling Shareholders.
(d) The Agent shall be entitled to treat as genuine, and
as the document it purports to be, any letter, facsimile, telex or other
document that is believed by him to be genuine and to have been telexed,
telegraphed, faxed or cabled by an Individual Selling Shareholder or to have
been signed and presented by an Individual Selling Shareholder.
(e) If the Agent shall die, become disabled or otherwise
be unable to fulfill his responsibilities hereunder, then the Individual
Selling Shareholders shall, within ten (10) days after such death or
disability, appoint a successor agent and, immediately thereafter, shall notify
the Purchaser of the identity of such successor. Any such successor shall
succeed the Agent as Agent hereunder. If for any reason there is no Agent at
any time, all references herein to the Agent shall be deemed to refer to the
Individual Selling Shareholders.
(f) All expenses incurred by the Agent in connection with
the performance of his duties as Agent shall be borne and paid by the
Individual Selling Shareholders.
12.2 PROSTEP'S AGENT FOR COMMUNICATIONS. The Purchaser shall be entitled to
deal with Xxxxx & XxXxxxxx, San Francisco, acting on behalf of ProSTEP, on all
matters relating to the Transactional Agreements and the respective Transactions
(including all matters relating to any notice to, or any Consent to be given or
action to be taken by, ProSTEP, including any matters set forth in Section 10).
12.3 FURTHER ASSURANCES. Each party hereto shall execute and 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.
12.4 FEES AND EXPENSES. Subject to Section 10, each party to this Agreement
shall bear and pay all fees, costs and expenses (including legal fees and
accounting fees) that have been incurred or that are incurred in the future by
such party in connection with the Transactions, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by the Purchaser and its Representatives with
respect
37.
44
to the Company's business (and the furnishing of information to the Purchaser
and its Representatives in connection with such investigation and review), (b)
the negotiation, preparation and review of this Agreement (including the
Disclosure Schedule) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions, (c) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions and the
obtaining of any Consent required to be obtained in connection with any of such
Transactions and (d) the consummation of the Acquisition. In no event shall
fees and expenses incurred on behalf of the Company exceed $50,000.00 in the
aggregate.
12.5 ATTORNEYS' FEES. If any action or Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement 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).
12.6 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 by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to the Purchaser:
Spatial Technology Inc.
0000-0xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: R. Xxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company:
InterData Access, Inc.
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
38.
45
if to the Agent:
Xxxxxxx Xxxxxxxx
c/o Spatial Technology Inc.
0000-0xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
if to any of the Individual Selling Shareholders:
to the appropriate address set forth on Exhibit B
with a copy to:
Lison & Xxxxxxx, P.C.
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
if to ProSTEP Produktdatentechnologie GmbH
ProSTEP Produktdatentechnologie GmbH
Xxxxxx-Xxxxxx-Xxxxxx 00
Xxxxxxxxx X-00000
Xxxxxxx
Attention: President
Facsimile:00-0000-000000
with a copy to
Xxxxx & XxXxxxxx
Two Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
12.7 CONFIDENTIALITY. Without limiting the generality of anything contained
in Sections 5.2 on and at all times after the Closing Date, each party shall
keep confidential, and shall not use or disclose to any other Person, any
non-public document or other non-public information in such party's possession
that relates to the business of the Selling Shareholders, the Company or the
Purchaser.
12.8 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
12.9 HEADINGS. The bold-faced section 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.
39.
46
12.10 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
12.11 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of Colorado
(without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating
to this Agreement or the enforcement of any provision of this Agreement may be
brought or otherwise commenced in any state or federal court located in the
State of Colorado. Each party to this Agreement:
(i) expressly and irrevocably consents and
submits to the jurisdiction of each state and federal court located in the
State of Colorado (and each appellate court located in the State of Georgia) in
connection with any such legal proceeding;
(ii) agrees that each state and federal court
located in the State of Colorado 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 Colorado, 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 the subject matter of this Agreement may not
be enforced in or by such court.
(c) Nothing contained in Section 12.10(b) shall be deemed
to limit or otherwise affect the right of any Purchaser Indemnitee to commence
any legal proceeding or otherwise proceed against the Company or any of the
Selling Shareholders in any other forum or jurisdiction.
(d) The Individual Selling Shareholders irrevocably
constitute and appoint the Agent as their agent to receive service of process
in connection with any legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement.
12.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Selling Shareholders and
their respective personal representatives, executors, administrators, estates,
heirs, successors and assigns (if any); and the Purchaser and its successors and
assigns (if any). This Agreement shall inure to the benefit of: the Company; the
Selling Shareholders; the Purchaser; the Purchaser Indemnitees and the XXX
Indemnitees (subject to Section 10.8); and the respective successors and assigns
(if any) of the foregoing. The Purchaser may freely assign any or all of its
rights under this Agreement (including its indemnification rights under Section
10), in whole or in part, to any other Person without obtaining the consent or
approval of any other party hereto or of any other Person.
40.
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12.13 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies of
the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
12.14 WAIVER.
(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 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 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.
12.15 AMENDMENTS. Subject to Section 11.6, this Agreement may not be
amended, modified, altered or supplemented other than by means of a written
instrument duly executed and delivered on behalf of all of the parties hereto.
12.16 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
12.17 PARTIES IN INTEREST. Except for the provisions of Section 10, none of
the provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the parties hereto and their respective successors and
assigns (if any).
12.18 ENTIRE AGREEMENT. This Agreement and the other agreements referred to
herein set forth the entire understanding of the parties hereto relating to the
subject matter 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.
12.19 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.
41.
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(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 indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of
this Agreement and Exhibits to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
42.
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The parties hereto have caused this Agreement to be executed and
delivered as of the date first set forth above.
PURCHASER: SPATIAL TECHNOLOGY INC.,
a Delaware corporation
By:/s/ R. Xxxxx Xxxxxx
----------------------------------------
R. Xxxxx Xxxxxx
President and Chief Executive Officer
COMPANY: INTERDATA ACCESS, INC.,
an Illinois corporation
By:/s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Xxxx Xxxxxxxx
President
SELLING SHAREHOLDERS: /s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxxxxx Xxxx
-------------------------------------------
Xxxxxxxx Xxxx
PROSTEP PRODUKTDATENTECHNOLOGIE GMBH
By:/s/Xxxxx Xxxxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
By:/s/Xxxxxxxx Xxxx
-------------------------------------------
Name: Xxxxxxxx Xxxx
Title: Vice President/Chief Financial
Officer
/s/ Xxxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxxx Xxxxxxxx
43.
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all
or a material portion of the Company's business or assets;
(b) the issuance, disposition or acquisition of (i) any
capital stock or other equity security of the Company, (ii) any option, call,
warrant or right (whether or not immediately exercisable) to acquire, or
otherwise relating to, any capital stock or other equity security of the
Company, or (iii) any security, instrument or obligation that is or may become
convertible into or exchangeable for any capital stock or other equity security
of the Company; or
(c) any merger, consolidation, business combination,
share exchange, reorganization or similar transaction involving the Company.
AGENT. "Agent" shall have the meaning set forth in Section 11.1(a) of this
Agreement.
AGREEMENT. "Agreement" shall mean the Stock Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may be
amended from time to time.
BEST KNOWLEDGE. With respect to the Company or the Selling Shareholders,
the term "Best Knowledge" shall mean the actual knowledge which any of the
Selling Shareholders or any officer, director or affiliate of XXX has, and the
knowledge that the management of XXX should have had through the conduct and
exercise of reasonable due diligence, with respect to the subject matter of the
representation.
BREACH. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been any
inaccuracy in or breach of, or any failure to comply with or perform, such
representation, warranty, covenant, obligation or other provision; and the term
"Breach" shall be deemed to refer to any such inaccuracy, breach or failure.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to which
the Company is a party; (b) by which the Company or any of its assets is or may
become bound or under which the Company has, or may become subject to, any
obligation; or (c) under which the Company has or may acquire any right or
interest.
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COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, warranty, deed, assignment, power of attorney,
certificate, purchase order, work order, insurance policy, benefit plan,
commitment or covenant.
CURRENT BENEFIT PLAN. "Current Benefit Plan" shall mean any Employee
Benefit Plan that is currently in effect and:
(a) that was established or adopted by the Company or is
maintained or sponsored by the Company;
(b) in which the Company participates;
(c) with respect to which the Company is required to make
any contribution; or
(d) with respect to which the Company is subject to any
Liability.
DAMAGES. "Damages" shall include any loss, damage, injury, reduced value,
Liability, claim, demand, settlement, judgment, award, fine, penalty, Tax, fee
(including any legal fee, expert fee, accounting fee or advisory fee), charge,
cost (including any cost of investigation or enforcement costs) or expense of
any nature, net of insurance recoveries.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to the Purchaser on behalf of the
Company and the Selling Shareholders, a copy of which is attached to this
Agreement.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
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ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
EXCLUDED CONTRACT. "Excluded Contract" shall mean any Company Contract
that:
(a) the Company has entered into in the Ordinary Course
of Business;
(b) does not contemplate or involve the payment of cash
or other consideration in an amount or having a value in excess of $10,000; or
(c) is terminable by the Company at any time without
penalty to the Company.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
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, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
HAZARDOUS MATERIAL. "Hazardous Material" shall include:
(a) any petroleum, waste oil, crude oil, asbestos, urea
formaldehyde or polychlorinated biphenyl;
(b) any waste, gas or other substance or material that is
explosive or radioactive and is defined in or regulated under any Environmental
Law;
(c) any "hazardous substance," "pollutant,"
"contaminant," "hazardous waste," "regulated substance," "hazardous chemical"
or "toxic chemical" as designated, listed or defined (whether expressly or by
reference) in any statute, regulation or other Legal Requirement (including
CERCLA, any other so-called "superfund" or "superlien" law, the Resource
Conservation Recovery Act, the Federal Water Pollution Control Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know Act
and the respective regulations promulgated thereunder);
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00
(x) any other substance or material (regardless of
physical form) or form of energy that is subject to any Legal Requirement which
regulates or establishes standards of conduct in connection with, or which
otherwise relates to, the protection of human health, plant life, animal life,
natural resources, property or the enjoyment of life or property from the
presence in the environment of any solid, liquid, gas, odor, noise or form of
energy; and
(e) any compound, mixture, solution, product or other
substance or material that contains any substance or material referred to in
clause "(a)", "(b)", "(c)" or "(d)" above.
XXX INDEMNITEES. "XXX Indemnitees" shall mean the Selling Shareholders and
IDA's current affiliates.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
LIABILITY. "Liability" shall mean any debt, obligation, duty or liability
of any nature (including any unknown, undisclosed, unmatured, unaccrued,
unasserted, contingent, indirect, conditional, implied, vicarious, derivative,
joint, several or secondary liability), regardless of whether such debt,
obligation, duty or liability would be required to be disclosed on a balance
sheet prepared in accordance with GAAP and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to have
a "Material Adverse Effect" on the Company if such violation or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement but for the
presence of "Material Adverse Effect" or other materiality qualifications, or
any similar qualifications, in such representations and warranties) would have a
material adverse effect on the Company's business, condition, assets,
liabilities, operations or financial performance, taken as a whole.
ORDER. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, verdict, sentence, 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.
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of an Entity
shall not be deemed to have been taken in the "Ordinary Course of Business"
unless:
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(x) such action is consistent with an Entity's past
practices and is taken in the ordinary course of such Entity's normal
day-to-day operations;
(e) such action is taken in accordance with reasonable
business practices; and
(f) such action is not required to be authorized by an
Entity's shareholders, board of directors or similar body, or committee of such
Entity's board of directors or similar body and does not require any other
separate or special authorization of any nature.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall mean the period commencing
as of the date of this Agreement through the Closing Date.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Body or any arbitrator or arbitration
panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), 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, customer list, franchise, system, computer
software, source code, computer program, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset; or (b) right to use or exploit
any of the foregoing.
PURCHASER INDEMNITEES. "Purchaser Indemnitees" shall mean the following
Persons: (a) the Purchaser; (b) the Purchaser's current and future affiliates
(including the Company but excluding the Selling Shareholders); (c) the
respective Representatives of the Persons referred to in clauses "(a)" and "(b)"
above; and (d) the respective successors and assigns of the Persons referred to
in clauses "(a)", "(b)" and "(c)" above.
RELATED PARTY. Each of the following shall be deemed to be a "Related
Party":
(a) each individual who is, or who has at any time been,
an officer or director of the Company;
(b) each member of the family of each of the individuals
referred to in clauses "(a)" and "(b)" above; and
(c) any Entity (other than the Company) in which any one
of the individuals referred to in clauses "(a)", "(b)" and "(c)" above holds
(or in which more than one of such individuals collectively hold), beneficially
or otherwise, a material voting, proprietary or equity interest.
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REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
amended.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains 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, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
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 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.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean the
Agreement and all other documents or agreements contemplated by Sections 6 and
7.
TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery of
the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements, including:
(i) the Acquisition; and
(ii) the performance by the Purchaser, the Company
and the Selling Shareholders of their respective obligations under the
Transactional Agreements and the exercise by each such party of their
respective rights under the Transactional Agreements.
A-6
56
EXHIBIT B
ALLOCATION OF PURCHASE PRICE
Aggregate Shares Shares of Purchaser
Name of Selling of Purchaser Common Stock, Escrow
Shareholder Common Stock except Escrow Shares Shares
--------------- ---------------- -------------------- -------
Xxxxxx Xxxxxxxx 35,000 31,500 3,500
c/o Spatial Technology Inc.
0000-00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Xxxxxxxx Xxxx 35,000 31,500 3,500
c/o Spatial Technology Inc.
0000-00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
ProSTEP Produktdatentechnologie
GmbH 665,000 598,500 66,500
Xxxxxx-Xxxxxx-Xxxxxx 00
Xxxxxxxxx X-00000
Xxxxxxx
Attention: President
Facsimile:00-0000-000000
Xxxxxxx Xxxxxxxx 665,000 598,500 66,500
c/o Spatial Technology Inc.
0000-00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
G-1
