EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
May 31, 2000
By and Between
XXXXXX'X RESTAURANT GROUP, INC.
(a Texas corporation)
and
DCI TELECOMMUNICATIONS, INC.
(a Colorado corporation)
regarding all of the shares of
XXXX.XXX, LIMITED
(a corporation organized under the laws of England and Wales)
TABLE OF CONTENTS
ARTICLE 1 THE PURCHASE..................................................... 1
Section 1.1 Purchase and Sale of Shares.................................1
Section 1.2 Time and Place of Closing...................................1
ARTICLE 2 OFFICERS AND DIRECTORS OF THE COMPANY.............................1
ARTICLE 3 PURCHASE PRICE AND PAYMENT OF PURCHASE PRICE......................2
Section 3.1 Purchase Price..............................................2
Section 3.2 Payment of Purchase Price...................................2
Section 3.3 Surrender and Exchange of Certificates......................2
Section 3.4 Legending of Securities.....................................2
Section 3.5 Transfer Taxes..............................................3
ARTICLE 4 RULES OF CONSTRUCTION.............................................3
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF DCI.............................5
Section 5.1 Organization................................................5
Section 5.2 Capitalization..............................................5
Section 5.3 Authority; No Violation.....................................6
Section 5.4 Financial Statements........................................6
Section 5.5 Broker's and Other Fees.....................................7
Section 5.6 Absence of Certain Changes or Events........................7
Section 5.7 Legal Proceedings...........................................7
Section 5.8 Taxes and Tax Returns.......................................8
Section 5.9 Employee Benefit Plans and Relations........................8
Section 5.10 Compliance with Applicable Laws............................10
Section 5.11 Certain Contracts..........................................10
Section 5.12 Properties and Insurance...................................11
Section 5.13 Environmental Matters......................................12
Section 5.14 Intellectual Property......................................12
Section 5.15 [Intentionally Omitted]....................................13
Section 5.16 Third-Party Interests or Marketing Rights in Software......13
Section 5.17 No Parachute Payments......................................13
Section 5.18 Absence of Certain Agreements and Practices................14
Section 5.19 Major Vendors and Customers................................14
Section 5.20 Accounts Receivable........................................14
Section 5.21 Bank Accounts..............................................15
Section 5.22 Corporate Records..........................................15
Section 5.23 Combinations Involving the Company.........................15
Section 5.24 Labor Relations............................................15
Section 5.25 Year 2000 Matters..........................................15
Section 5.26 Change in Control Provisions...............................15
Section 5.27 Disclosure.................................................16
Section 5.28 Securities Act Compliance..................................16
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Section 5.29 No Prior Convictions.......................................16
Section 5.30 Tax Advice.................................................16
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER......................16
Section 6.1 Corporate Organization.....................................16
Section 6.2 Capitalization.............................................17
Section 6.3 Authority; No Violation....................................17
Section 6.4 Financial Statements.......................................18
Section 6.5 Broker's and Other Fees....................................18
Section 6.6 Legal Proceedings..........................................18
Section 6.7 Taxes and Tax Returns......................................18
Section 6.8 Buyer Common Stock.........................................19
ARTICLE 7 COVENANTS AND AGREEMENTS OF THE PARTIES..........................19
Section 7.1 No Solicitation............................................19
Section 7.2 Current Information........................................20
Section 7.3 Access to Properties and Records; Confidentiality..........20
Section 7.4 Regulatory Matters; Consents; Cooperation, etc.............21
Section 7.5 Parties' Efforts; Further Assurances; Cooperation..........21
Section 7.6 Public Announcements.......................................22
Section 7.7 Failure to Fulfill Conditions..............................22
Section 7.8 Disclosure Supplements.....................................22
Section 7.9 Release; Covenant Not to Xxx...............................22
Section 7.10 Intentionally omitted......................................23
Section 7.11 No Transfers...............................................23
Section 7.12 Special Provisions with Respect to Seller..................23
Section 7.13 Cooperation and Exchange of Information....................23
Section 7.14 Customer Contacts..........................................23
Section 7.15 Registration...............................................23
Section 7.16 Non-Competition............................................23
ARTICLE 8 CLOSING CONDITIONS...............................................24
Section 8.1 Conditions of Each Party's Obligations Under this
Agreement..................................................24
Section 8.2 Approvals and Regulatory Filings...........................24
Section 8.3 Conditions to the Obligations of Purchaser under this
Agreement..................................................25
Section 8.4 Conditions to the Obligations of DCI under this Agreement..26
ARTICLE 9 TERMINATION, AMENDMENT AND WAIVER................................27
Section 9.1 Termination................................................27
Section 9.2 Effect of Termination......................................27
Section 9.3 Amendment..................................................27
Section 9.4 Extension; Waiver..........................................27
ARTICLE 10 INDEMNIFICATION..................................................28
Section 10.1 Indemnification by the DCI.................................28
Section 10.2 Indemnification by Buyer...................................28
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Section 10.3 Claims for Indemnification.................................28
Section 10.4 Defense of Claim by Third Parties..........................29
Section 10.5 Third Party Claim Assistance...............................29
Section 10.6 Settlement of Indemnification Claims.......................29
Section 10.7 [Intentionally Omitted]....................................29
Section 10.8 Certain Limitations........................................29
ARTICLE 11 MISCELLANEOUS....................................................30
Section 11.1 Expenses...................................................30
Section 11.2 Notices....................................................30
Section 11.3 Parties in Interest........................................31
Section 11.4 Entire Agreement...........................................31
Section 11.5 Counterparts; Facsimiles...................................31
Section 11.6 Governing Law..............................................31
Section 11.7 Arbitration................................................32
Section 11.8 Invalidity of any Part.....................................32
Section 11.9 Time of the Essence; Computation of Time...................32
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STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of May 31, 2000,
by and between XXXXXX'X RESTAURANT GROUP, INC., a Texas corporation
("Purchaser"), and DCI TELECOMMUNICATIONS, INC., a Colorado corporation ("DCI").
Purchaser and DCI are hereinafter collectively called the "Parties."
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, DCI owns two shares of the common stock of XXXX.XXX, LIMITED, a
corporation organized under the laws of England and Wales (the "Company"),
constituting one hundred percent (100%) of the issued and outstanding shares of
the Company's common stock (the "Company Common Stock");
WHEREAS, the Parties have agreed that it is in their best interests for
Purchaser to purchase and for DCI to sell all of the Company Common Stock; and
WHEREAS, the Board of Directors of Purchaser has approved the purchase of
the Company Common Stock and the Board of Directors of DCI has approved the sale
of the Company Common Stock upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
Parties agree as follows:
ARTICLE 1
THE PURCHASE
1.1 Purchase and Sale of Shares. Upon the terms and subject to the
conditions of this Agreement, DCI shall sell to Purchaser, and Purchaser shall
purchase from DCI, all of the Company Common Stock.
1.2 Time and Place of Closing. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P., 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000 at 10:00 a.m. on the first business day after all
conditions set forth in Article 8 (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing)
have been satisfied or waived in writing, or at such other place and time as
Purchaser and DCI may agree (the "Closing Date"). At the Closing, the parties
shall execute and deliver the certificates, opinions and other instruments and
documents referred to in Article 8.
ARTICLE 2
OFFICERS AND DIRECTORS
Effective as soon as possible following the Closing, upon receipt of the
approval of the shareholders of Purchaser in accordance with applicable federal
and state law, certain officers and directors of Purchaser shall resign as
directors and officers of Purchaser, and the following officers and directors of
the Company shall be appointed as officers and directors of Purchaser:
(a) Xxxxx Xxxxxxxx, President and Director; and
(b) Xxxxxxxx Xxxxxxxxx, Director.
The officers and directors of the Company shall remain the officers and
directors of the Company following the closing.
ARTICLE 3
PURCHASE PRICE AND PAYMENT OF PURCHASE PRICE
3.1 Purchase Price. Subject to the terms of this Agreement and the related
agreements and documents, the purchase price ("Purchase Price") for all of the
Company Common Stock shall be 40,000,000 shares of common stock, par value $.01
per share, of Purchaser ("Purchaser Common Stock") and the assumption by
Purchaser of those liabilities of DCI set forth on Exhibit 3.1 hereto.
3.2 Payment of Purchase Price. At the Closing, Purchaser shall deliver (or
cause to be delivered) the Purchase Price as follows:
(a) to DCI, certificates representing 40,000,000 shares of Purchaser
Common Stock issued in the name of DCI.
(b) Purchaser and DCI shall execute and deliver those certain
Assumption Agreements of which copies are attached hereto as Exhibits 3.2(c)(i),
3.2(c)(ii) and 3.2(c)(iii).
3.3 Surrender and Exchange of Certificates
(a) Surrender of Certificates. At the Closing, Purchaser shall deliver
certificates for the number of shares of Purchaser Common Stock provided for in
for in Section 3.1 in a manner as provided in Section 3.2 and DCI shall deliver
certificates representing one hundred percent (100%) of the issued and
outstanding shares of the Company Common Stock (properly issued, executed and
countersigned, as appropriate) (the "Certificates"). All payments in respect of
Company Common Stock that are made in accordance with the terms hereof shall be
deemed to have been made in full satisfaction of all rights pertaining to such
securities.
(b) [Intentionally Omitted]
(c) Dividends on Purchaser Common Stock. No holder of a Certificate
shall be entitled to delivery of any dividend or other distribution from
Purchaser having a record date after the Closing Date until surrender of such
holder's Certificate pursuant to this Section 3.4. Upon such surrender, there
shall be paid to the holder the amount of any dividends or other distributions
(without interest) that theretofore became payable by Purchaser, but were not
paid by reason of the foregoing with respect to the number of whole shares of
Purchaser Common Stock represented by the Certificate(s) issued upon such
surrender. From and after the Closing Date, Purchaser shall, however, be
entitled to treat any such Certificate that has not yet been surrendered
pursuant to Section 3.4(a) as evidencing the ownership of the aggregate Purchase
Price represented by such Certificate, notwithstanding any failure to surrender
such Certificate.
3.4 Legending of Securities.
(a) The shares of Purchaser Common Stock to be delivered in connection
with this Agreement will be issued in a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act") by reason of
Section 4(2) thereof or Regulation D promulgated thereunder, and Purchaser is
relying on the representations of DCI with respect to such exemption. DCI
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understands and agrees that stop transfer instructions with respect to the
shares of Purchaser Common Stock issued pursuant to this Agreement will be given
to Purchaser's transfer agent and that there will be placed on the certificates
for such shares a legend stating in substance as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION UNLESS IN THE OPINION OF
COUNSEL REASONABLY SATISFACTORY TO PURCHASER, THE TRANSFER
OF SUCH SECURITIES ARE NOT REQUIRED TO BE REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES
LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE
PROVISIONS OF A STOCK PURCHASE AGREEMENT DATED MAY 31, 2000,
AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, EXCEPT IN
ACCORDANCE THEREWITH. COPIES OF SUCH AGREEMENTS MAY BE
OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
(b) The foregoing legends will also be placed on any certificate
representing securities issued subsequent to the original issuance of the
Purchaser Common Stock pursuant to this Agreement as a result of any transfer of
such shares or any stock dividend, stock split or other recapitalization as long
as the Purchaser Common Stock issued pursuant to this Agreement has not been
transferred in such a manner as to justify the removal of the legend therefrom.
3.5 Transfer Taxes. DCI shall pay all taxes and fees incurred by DCI, the
Company, and Purchaser as a result of the transfer of the Company Common Stock
from DCI to Purchaser.
ARTICLE 4
RULES OF CONSTRUCTION
In the interpretation of this Agreement, unless otherwise provided or
the context otherwise requires:
(a) The singular includes the plural and vice versa and, in particular
(but without limiting the generality of the foregoing), any word or expression
defined in the singular has the corresponding meaning used in the plural and
vice versa;
(b) Any reference to any gender includes the other gender;
(c) Any reference to an Article, Section, Exhibit, clause, subclause,
paragraph, subparagraph, Schedule or recital is a reference to an Article,
Section, Exhibit, clause, subclause, paragraph, subparagraph, Schedule or
recital of this Agreement;
(d) Any reference to any agreement, instrument or other document (i)
shall include all appendices, exhibits and schedules thereto and all agreements,
documents or other writings incorporated by reference therein, and (ii) shall be
a reference to such agreement, instrument or other document as amended,
supplemented, modified, suspended, restated or novated from time to time;
3
(e) Any reference to any statute shall be construed as including all
statutory provisions consolidating, amending or replacing such statute and all
governmental regulations and rules promulgated thereunder;
(f) Any reference to "writing" includes printing, typing, lithography
and other means of reproducing words in a visible form;
(g) Any reference to a time or date or to a local time or date is a
reference to the time and date in Stratford, Connecticut;
(h) The headings and Article, Section and paragraph numbering contained
in this Agreement are used solely for convenience and do not constitute a part
of this Agreement, nor shall such headings and numbering be used in any manner
to aid in the construction of this Agreement;
(i) References herein to the "Company Disclosure Schedules" mean the
disclosure schedules, dated as of the date hereof, which have been delivered by
the Company and/or DCI to Purchaser and all other documents, agreements, and
other items disclosed by the Company and/or DCI in writing to the Purchaser and
attached to such schedules in connection with this Agreement, and references to
a numbered Company Disclosure Schedule shall mean that portion of the Company
Disclosure Schedules that refers to the specific section or subsection of
Article 5 of this Agreement;
(j) The term "including" means "including, without limitation";
(k) The term "Governmental Authority" means any United States federal,
state or local, or any foreign, governmental, regulatory or administrative
authority, agency, department, board, investigative body or commission or any
court, tribunal, or judicial or arbitral body;
(l) The term "Knowledge" as used with respect to DCI and/or the Company
(including any references to DCI and/or the Company being aware of a particular
matter) means the actual knowledge of DCI and/or the Company, their officers,
directors or employees, and information which DCI and/or the Company, their
officers, directors or employees reasonably should have known, given the nature
of the disclosure;
(m) The term "Material Adverse Effect" with respect to a person or
entity means any circumstance, change in, or effect on the business and affairs
of such person or entity or any Subsidiary thereof that, individually or in the
aggregate with any other circumstances, changes in, or effects on, the business
and affairs of such person or entity and its Subsidiaries: (i) is, or would
reasonably be expected to be, materially adverse to the business, operations,
assets or liabilities, prospects, results of operations or financial condition
of such person or entity and its Subsidiaries, taken as a whole, or (ii) would
reasonably be expected to materially adversely affect the ability of such person
or entity and its Subsidiaries to operate or conduct its or their business and
affairs in the manner in which it is currently operated or conducted or
contemplated by such person or entity to be operated or conducted;
(n) The term "person" means any individual, partnership, limited
liability company, firm, corporation, association, trust, joint venture,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Exchange Act
(as defined herein);
(o) The term "Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which a specified person or entity, directly or
indirectly, owns or controls the voting of at least a 50% share or other equity
4
interest or for which such person or entity, directly or indirectly, acts as a
general partner or managing member;
(p) Each of the Parties acknowledges that it has had the opportunity to
negotiate the terms and provisions of this Agreement, with the assistance and
review of its counsel. This Agreement, therefore, shall be construed without
regard to any presumption or other rule requiring construction against the party
causing the Agreement to be drafted.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF DCI
To induce Purchaser to enter into this Agreement and the other Purchase
Agreements, DCI hereby represents and warrants to Purchaser as follows:
5.1 Organization.
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of England and Wales. The Company has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and, except as
disclosed on Company Disclosure Schedule 5.1(a), is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary. The failure of the Company to be licensed, qualified or in good
standing in the jurisdictions listed on Company Disclosure 5.1(a) does not have
and is not reasonably likely to have a Material Adverse Effect on the Company.
The Company has no subsidiaries.
(b) Company Disclosure Schedule 5.1(b) sets forth true and correct
copies of the Articles of Incorporation and Bylaws and amendments thereto of the
Company.
(c) Except as disclosed on Company Disclosure Schedule 5.1(c), the
Company does not own or control, directly or indirectly, any equity interest in
any corporation, company, association, partnership, joint venture or other
entity.
5.2 Capitalization. DCI owns, of record and beneficially, good and valid
title to the Company Common Stock, and the Company Common Stock is validly
issued and are free and clear of any mortgage, charge (whether fixed or
floating), security interest, claim, right of first refusal, or any other lien,
encumbrance or restriction as to transfer, use or possession, with no defects of
title whatsoever, and DCI has full and exclusive power, right and authority to
vote the Company Common Stock. Upon consummation of the Closing, Purchaser shall
obtain good and valid title to the Company Common Stock, free and clear of all
any mortgages, charges (whether fixed or floating), security interests, claims,
rights of first refusal, and any other liens, encumbrances and restrictions as
to transfer, use or possession, with no defects of title whatsoever, and shall
have full and exclusive power, right and authority to vote the Company Common
Stock. The authorized capital stock of the Company consists of one hundred (100)
shares of Company Common Stock and no (0) shares of preferred stock. As of the
date hereof, there are two (2) shares of Company Common Stock issued and
outstanding, owned by DCI. There are no options, warrants, or other rights to
acquire Company Common Stock or any other equity securities of the Company
(collectively, "Company Stock"). Neither the Company nor DCI has granted or is
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the transfer, purchase, subscription or
issuance of any shares of capital stock of the Company or any securities
representing the right to purchase, subscribe or otherwise receive any shares of
5
such capital stock or any securities convertible into any such shares, and there
are no agreements or understandings with respect to voting any such shares.
5.3 Authority; No Violation.
(a) Except as disclosed on Company Disclosure Schedule 5.3(a)
(collectively, the "Company Approvals"), no consents, approvals, authorizations,
clearances or orders of, filings or registrations with or notices to
(collectively "Authorizations") any third party or any Governmental Authority
are necessary on behalf of the Company or DCI in connection with (i) the
execution and delivery by the Company and DCI of this Agreement and (ii) the
consummation by the Company and DCI of the transactions contemplated hereby.
Xxxxxxxx Xxxxxxxxx is the sole director of the Company and he has taken fully
approved the transfer of the Company Common Stock to Purchaser. The Company and
DCI have the full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby in accordance
with the terms hereof. The execution and delivery of this Agreement and the
other Purchase Agreements (as defined herein) and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of DCI in accordance with the Articles of
Incorporation and Bylaws of DCI and with applicable Laws (as defined below).
Except for the Company Approvals, no other corporate proceedings on the part of
the Company are necessary for the Company and DCI to execute and deliver this
Agreement and the other Purchase Agreements to which they are a party and for
the Company and DCI to be bound by the terms hereof and thereof. This Agreement
and the other Purchase Agreements to which they are a party have been duly and
validly executed and delivered by the Company and DCI and constitute the valid
and binding obligation of the Company and DCI enforceable against the Company
and DCI in accordance with its and their terms.
(b) Neither the execution and delivery by the Company and DCI of this
Agreement and the other Purchase Agreements to which they are a party, nor the
consummation by the Company and DCI of the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof, nor compliance by the
Company and DCI with any of the terms or provisions hereof, will: (i) violate
any provision of the Company's Articles of Incorporation or Bylaws; (ii)
assuming that the Company Approvals are duly obtained, violate any federal,
state or local or foreign statute, code, ordinance, rule, regulation, judgment,
order, writ, ruling, decree or injunction of any Governmental Authority
(collectively, "Laws") applicable to the Company, DCI or any of its or their
respective properties or assets; or (iii) assuming that the Company Approvals
are duly obtained, violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
mortgage, security interest, pledge, charge, other right of third parties or
other encumbrance (collectively, "Liens") upon any of the respective properties
or assets of the Company or DCI under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other instrument or obligation to which the Company or DCI is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except, with respect to (ii) and (iii) above, such as individually or
in the aggregate will not have a Material Adverse Effect on the Company, and
which will not prevent or delay the consummation of the transactions
contemplated hereby.
5.4 Financial Statements.
(a) Company Disclosure Schedule 5.4(a) sets forth copies of: (i) the
balance sheet of the Company as of December 31, 1999, and (ii) the statement of
income for the period ended December 31, 1999 (together with the related notes,
collectively, the "Company Financial Statements"). The Company and DCI represent
and warrant that the business of the Company commenced in June 1999 and that
6
there is no predecessor entity of the Company for which financial statements are
required under the accounting and securities laws, rules and regulations of the
United States or England and Wales.
(b) The Company Financial Statements present fairly, in all material
respects, the financial position of the Company as of the respective dates set
forth therein, and the results of the Company's operations and its cash flows
for the respective periods set forth therein.
(c) The books and records of the Company have been maintained in
material compliance with applicable legal and accounting requirements.
(d) Except as and to the extent reflected, disclosed or reserved
against in the Company Financial Statements, or as disclosed in Company
Disclosure Schedule 5.4(d), since December 31, 1999, the Company has not
incurred any liabilities or obligations of any kind, whether absolute, accrued,
contingent or otherwise ("Liabilities"), except in the ordinary course of
business and consistent with past practice (which, in the aggregate, are not
material).
(e) Since December 31, 1999 there has not been any change, occurrence
or circumstance affecting the business, results of operations or financial
condition of the Company that has had, individually or in the aggregate, a
Material Adverse Effect, other than changes, occurrences and circumstances
disclosed by the Company on the Company Disclosure Schedules.
(f) At the Closing, the Company shall not be indebted to DCI.
5.5 Broker's and Other Fees.Except as disclosed in Company Disclosure
Schedule 5.5, neither the Company nor DCI has employed any broker or finder or
incurred any liability for any broker's or finder's fees or commissions in
connection with any of the transactions contemplated by this Agreement and the
other Purchase Agreements.
5.6 Absence of Certain Changes or Events.
(a) Except as disclosed in Company Disclosure Schedule 5.6(a), to the
Knowledge of DCI or the Company, no facts or conditions exist which will cause a
Material Adverse Effect on the Company in the future.
(b) Except for execution of this Agreement and the other Purchase
Agreements, the Company has conducted its business only in the ordinary course,
consistent with past practice since December 31, 1999.
5.7 Legal Proceedings. Except as disclosed in Company Disclosure Schedule
5.7, neither the Company nor DCI is a party to any, and there are no pending or,
to the Knowledge of DCI or the Company, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental investigations of
any nature against the Company or DCI that involve the Company. Except as
disclosed in Company Disclosure Schedule 5.7, the Company is not a party to any
order, judgment or decree entered in any lawsuit or proceeding and DCI is not a
party to any order, judgment or decree entered in any lawsuit or proceeding that
involves the Company. Without limiting the foregoing, except as disclosed in
Company Disclosure Schedule 5.7, no actions, suits, demands, notices, claims,
investigations or proceedings are pending or, to the Knowledge of DCI or the
Company, threatened against or otherwise involving, directly or indirectly, any
officer, director, employee or agent of the Company (in connection with such
officer's, director's, employee's or agent's activities on behalf of the Company
or that otherwise relate, directly or indirectly to the Company or its
properties or securities) including without limitation any notices, demand
letters or requests from any Governmental Authority relating to such potential
7
Liabilities, nor, to the Knowledge of DCI or the Company, are there any
circumstances which could lead to such actions, suits, demands, notices, claims,
investigations or proceedings. The matters referenced on Company Disclosure
Schedule 5.7, if resolved against the Company or DCI, would not have a Material
Adverse Effect on the Company. DCI agrees to cooperate fully with the Company
and Purchaser in the defense of any claim or action referenced on Company
Disclosure Schedule 5.7 or otherwise brought against the Company after the date
of Closing.
5.8 Taxes and Tax Returns. Except as disclosed in Company Disclosure
Schedule 5.8:
(a) The Company has duly filed (and until the Closing Date will so
file) all returns, declarations, reports, information returns and statements
("Returns") required to be filed by it in respect of any United States federal,
state or local, or any foreign, Taxes and has duly paid (and until the Closing
Date will so pay) all such Taxes due and payable. As used herein, "Tax" or
"Taxes" means and includes any and all taxes, fees, levies, assessments, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority, including, without
limitation: foreign, domestic, central, local, state or other jurisdictional
taxes or other charges on or with respect to income, estimated income,
franchises, business, occupation, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and customs
duties, tariffs, and similar charges. The Company has established (and until the
Closing Date will establish) on its books and records reserves that are adequate
for the payment of all Taxes not yet due and payable, but are incurred in
respect of the Company through such date.
(b) None of the Returns of the Company have been examined by the
Internal Revenue Service (the "IRS"), or any other federal, state or local or
any foreign Governmental Authority within the past six years. To the Knowledge
of DCI and the Company, there are no audits or other Governmental Authority
proceedings presently pending nor any other disputes pending with respect to, or
claims asserted for, Taxes upon the Company, nor has the Company given any
currently outstanding waivers or comparable consents regarding the application
of any statute of limitations with respect to any Taxes or Returns. There are no
Liens for Taxes upon the assets of the Company, except Liens for Taxes not yet
due. The Company and DCI have complied (and until the Closing Date will comply)
in all respects with all applicable Laws relating to the payment and withholding
of Taxes.
(c) The Company (i) has not requested any extension of time within
which to file any Return which Return has not since been filed; (ii) is not a
party to any agreement providing for the indemnification, allocation or sharing
of Taxes; (iii) is not required to include in income any adjustment by reason of
a voluntary change in accounting method initiated by the Company (nor to the
Knowledge of DCI and the Company has any Governmental Authority proposed any
such adjustment or change of accounting method); (iv) has not filed a consent
with any Governmental Authority pursuant to which the Company has agreed to
recognize gain (in any manner) relating to or as a result of this Agreement or
the transactions contemplated hereby; or (v) has not been a member of an
affiliated group other than one of which the Company was the common Purchaser.
5.9 Employee Benefit Plans and Relations. Except as disclosed in Company
Disclosure Schedule 5.9:
(a) The Company does not maintain or contribute to any "employee
pension benefit plan" (the "Company Pension Plans"), as such term is defined in
Section 3 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including any pension, profit-sharing, retirement, thrift or stock
8
bonus plan, "employee welfare benefit plan" (the "Company Welfare Plans"), as
such term is defined in Section 3 of ERISA, or any other stock option plan,
stock purchase plan, restricted stock plan, deferred compensation plan,
severance plan, phantom stock plan, bonus plan or other similar plan, program or
arrangement (collectively the "Employee Plans"). The Company has not contributed
to, or been required to contribute to, any "Multiemployer Plan," as such term is
defined in Section 3(37) of ERISA.
(b) Each of the Company Pension Plans is intended to be a qualified
plan within the meaning of Section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and DCI and the Company are not aware of any fact or
circumstance that would adversely affect the qualified status of any such plan.
(c) Each of the Company Pension Plans, Company Welfare Plans and other
Employee Plans has been operated in compliance in all material respects with the
provisions of ERISA, the Code, and all other applicable Laws.
(d) Neither the Company nor, to the Knowledge of DCI or the Company,
any trustee, fiduciary or administrator of any Company Pension Plan or Company
Welfare Plan or any trust created thereunder, has engaged in a "prohibited
transaction" as such term is defined in Section 4975 of the Code, which could
subject the Company or any such trustee, fiduciary or administrator thereof, to
the tax or penalty on prohibited transactions imposed by said Section 4975.
(e) No Company Pension Plan or any trust created thereunder has been
terminated, nor have there been any "reportable events" for which the 30 day
notice has not been waived with respect to any Company Pension Plan, as that
term is defined in Section 4043(b) of ERISA.
(f) There are no pending or, to the Knowledge of DCI or the Company,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Company Pension Plans or the Company Welfare
Plans or any trusts related thereto.
(g) Accruals; Funding.
(i) Pension Plans. None of the Employee Plans is a Pension Plan
subject to ERISA Title IV (including those for retired, terminated or other
former employees and agents).
(ii) Other Plans. Company Disclosure Schedule 5.9(g) fully and
accurately sets forth any funding liability under each Employee Plan not subject
to ERISA Title IV, whether insured or otherwise, specifically setting forth any
liabilities under any retiree medical arrangement and specifically designating
any insured plan which provides for retroactive premium or other adjustments. To
the Knowledge of DCI or the Company, the levels of insurance reserves and
accrued liabilities with regard to each such Employee Plan are reasonable and
are sufficient to provide for all incurred but unreported claims and any
retroactive premium adjustments.
(iii) Contributions. Except as set forth on Company Disclosure
Schedule 5.9(g): (A) the Company and each trade or business (whether or not
incorporated), which together with the Company is treated as a single employer
pursuant to Code Section 414(b),(c),(m) or (o) (an "ERISA Affiliate"), has made
full and timely payment of all amounts required to be contributed under the
terms of each Employee Plan and applicable Law, or required to be paid as
expense under such Employee Plan, including the Pension Benefit Guaranty
Corporation ("PBGC") premiums and amounts required to be contributed under Code
Section 412; (B) where applicable, all contributions have been made in
9
accordance with the actuarial recommendations; and (C) no excise taxes are
assessable as a result of any nondeductible or other contributions made or not
made to an Employee Plan.
(h) To the Knowledge of DCI and the Company, summary plan descriptions
and all other returns, reports, registration statements, prospectuses,
documents, statements and communications required to have been filed, published
or disseminated under ERISA or other Laws and the rules and regulations
promulgated by the Department of Labor under ERISA and the Treasury Department
or by the Securities and Exchange Commission ("SEC") with respect to the
Employee Plans have been so filed, published or disseminated.
5.10 Compliance with Applicable Laws. Except as set forth in Company
Disclosure Schedule 5.10, the Company holds all licenses, franchises, permits,
consents and authorizations ("Licenses") necessary for the lawful conduct of its
business, except to the extent a failure to hold such Licenses would not have a
Material Adverse Effect. No proceeding is pending or threatened seeking the
revocation or suspension of any License. Except as set forth on Company
Disclosure Schedule 5.10, the Company is and has been in compliance in all
material respects with all applicable Laws, and neither the Company nor any
Shareholder has received any notices of any allegation of any violation by the
Company of any Laws or Licenses.
5.11 Certain Contracts.
(a) Company Disclosure Schedule 5.11(a) lists the following agreements
(collectively, the "Material Contracts"), including, without limitation, leases,
purchase contracts and commitments, to which the Company is a party or by which
the Company or any of its properties or assets is bound:
(i) all agreements involving an annual commitment or payment by
any party thereto of more than $5,000 individually or which have a fixed term
extending more than 12 months from the date hereof;
(ii) all joint venture, sales agency, sales representative or
distributorship, broker, franchise, license or similar agreements;
(iii) all leases of real property and all leases of personal
property that is material to the Company's business;
(iv) all notes, bonds, mortgages, security agreements, guarantees
and other agreements and instruments for or relating to any lending or borrowing
by the Company in any amount (exclusive of advances to employees for expenses in
the ordinary course of business);
(v) all powers of attorney, guarantees, suretyships or similar
agreements; and
(vi) all other written agreements the breach of or default under
which could have a Material Adverse Effect on the Company.
(b) Except as set forth on Company Disclosure Schedule 5.11(b), each
of the Material Contracts is in full force and effect, has not been modified,
rescinded, cancelled, or amended and is valid, binding and enforceable on the
parties thereto in accordance with its terms. The Company has provided a copy of
each Material Contract to Purchaser.
10
(c) Except as disclosed in Company Disclosure Schedule 5.11(c), (i)
the Company is not a party to or bound by any agreement or understanding
(whether written or oral) with respect to the employment of any officers,
employees, directors or consultants, and (ii) the consummation of the
transactions contemplated by this Agreement and the other Purchase Agreements
will not (either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) becoming due from
the Company to any officer, employee, director, shareholder or consultant
thereof. Company Disclosure Schedule 5.11(c) sets forth true and correct copies
of all severance or employment agreements with officers, directors, employees,
agents or consultants to which the Company is a party.
(d) Except as disclosed in Company Disclosure Schedule 5.11(d), no
agreement or understanding to which the Company or DCI is a party or by which
any of them is bound limits the freedom of the Company to compete in any line of
business or with any person.
(e) Except as disclosed in Company Disclosure Schedule 5.11(e),
neither the Company nor, to the Knowledge of DCI or the Company, any other party
thereto, is in default under any of the Material Contracts or any other
agreement to which the Company or DCI is a party or to which its or their
properties is bound; to the Knowledge of DCI or the Company, no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default thereunder
entitling any party to terminate a Material Contract or other such agreement;
and the continuation, validity and effectiveness of all such Material Contracts
and agreements under the current terms thereof and the current rights and
obligations of the Company and DCI thereunder will in no way be affected,
altered or impaired by the consummation of the transactions contemplated hereby.
Except as disclosed in Company Disclosure Schedule 5.11(e), upon consummation of
the transactions contemplated by this Agreement and the other Purchase
Agreements, the Company will be entitled to continue to enjoy the advantages and
benefits of the business arrangements, agreements, opportunities and
relationships of the Company as it enjoyed on the Closing Date without
interference or interruption.
5.12 Properties and Insurance.
(a) Except as disclosed in Company Disclosure Schedule 5.12(a), the
Company has good and marketable title to all assets and properties, whether real
or personal, tangible or intangible, reflected in the Company Financial
Statements or owned or acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of for fair value in the ordinary
course of business since such date), subject to no Liens except (i) statutory
liens for amounts not yet delinquent or which are being contested in good faith
(and for which adequate reserves have been made) and (ii) such Liens and title
imperfections that do not in the aggregate have a Material Adverse Effect on the
Company. The Company as lessee has the right under valid and subsisting leases
to occupy, use, possess and control all real property leased by the Company as
presently occupied, used, possessed and controlled by the Company or necessary
in the operation of its businesses as currently conducted.
(b) The business operations and all insurable properties and assets of
the Company are insured for their benefit against all risks which, in the
reasonable judgment of DCI, should be insured against, in each case under
policies or bonds issued by insurers of recognized responsibility, in such
amounts with such deductibles and against such risks and losses as are in the
opinion of DCI adequate for the business engaged in by the Company. Copies of
all such policies as in effect on the date hereof are attached hereto as Company
Disclosure Schedule 5.12(b). Neither the Company nor any of DCI has received any
notice of cancellation or notice of a material amendment of any such insurance
policy or bond and the Company is not in default under any such policy or bond,
no coverage thereunder is being disputed and all material claims thereunder have
been filed in a timely fashion.
11
(c) No person other than the Company is currently entitled to
possession of any of the properties of the Company, whether owned or leased by
the Company. To the Knowledge of DCI and the Company, the real property,
buildings, structures and improvements owned or leased by the Company conform to
all applicable Laws, including zoning regulations, none of which would upon
consummation of the transactions contemplated hereby adversely interfere with
the use of such properties, buildings, structures or improvements for the
purposes for which they are now utilized. The Company has not received notice
of, and to the Knowledge of DCI and the Company, there does not exist (i) any
pending or contemplated condemnation or eminent domain proceeding affecting the
properties owned or leased by the Company, (ii) any proposal for increasing the
assessed value of any such properties for state, county, local or other ad
valorem Taxes or (iii) any pending or contemplated proceedings or public
improvements that would result in the levy of any special Tax or assessment
against any such properties; and there are no outstanding requirements or
recommendations by the Company's insurance providers requiring or recommending
any repairs or work to be done with reference to any such properties or any
basis for such. The properties and assets owned or leased by the Company
constitute all of the property and assets that the Company uses or may
reasonably need in connection with the operation of its business as conducted on
the Closing Date, and all such property and assets are in good repair and
operating condition, normal wear and tear excepted. The consummation of the
transactions contemplated by this Agreement and the other Purchase Agreements
will not impair the ability of the Company to continue to use such properties
and assets.
5.13 Environmental Matters.
(a) The operations of the Company comply, and have complied, in all
material respects with all applicable Laws relating to pollution or protection
of the environment ("Environmental Laws").
(b) The Company has obtained all environmental, health and safety
Licenses and other authorizations necessary for the operation of the Company's
business, all of which are valid and in good standing and are not subject to any
modification or revocation proceeding, and the Company is in compliance in all
material respects with all terms and conditions thereof.
(c) Neither the Company nor DCI has received any notice of any pending
or threatened investigation, proceeding or claim to the effect that the Company
is or may be liable to any person or entity, or responsible or potentially
responsible for the costs of any remedial or removal action or other cleanup
costs, as a result of noncompliance with any Environmental Laws or arising out
of the presence, generation, storage or disposal of hazardous waste, including
liability under the United States Comprehensive Environmental Response,
Compensation and Liability Act, as amended, any state superfund law or any
Environmental Law, and there is no past or present action, or to the Knowledge
of DCI and the Company, activity, condition or circumstance that could be
expected to give rise to any such liability on the part of the Company to any
person or entity or for any such cleanup costs.
5.14 Intellectual Property.
(a) Ownership. Except as set forth in Company Disclosure Schedule
5.14(a), the Company owns all patents, trademarks, service marks, trade names
and copyrights (including registrations, licenses and applications pertaining
thereto) and all other proprietary information used by the Company in the
conduct of its business. Company Disclosure Schedule 5.14(a) sets forth all
domestic and foreign patents, trademarks, service marks, trade names and
copyrights owned or used by the Company and all applications therefor and
registrations thereof.
12
(b) Procedures for Copyright Protection. Company Disclosure Schedule
5.14(b) sets forth the form and placement of the proprietary legends and
copyright notices displayed in or on the Company's and in or on documents
related to the Company's products or services. To the Knowledge of DCI and the
Company, the eligibility of the Company's products, services, documentation and
other assets for protection under copyright law has not been forfeited to the
public domain.
(c) Procedures for Trade Secret Protection. Neither the Company nor
DCI has ever disclosed proprietary information to a third party other than the
persons identified in Company Disclosure Schedule 5.14(c). The Company discloses
its proprietary information to employees only on a need-to-know basis in
connection with the performance of their duties to the Company. The Company has
at all times maintained its proprietary information in confidence and the
Company has not taken (nor has it failed to take) any action which would result
in such proprietary information not being protectable as a trade secret under
applicable Laws.
(d) Ownership of Proprietary Information. Except as disclosed on
Company Disclosure Schedule 5.14(d), all persons who have contributed to or
participated in the conception and development of the Company's proprietary
information on behalf of the Company have been full-time employees of the
Company hired to prepare such works within the scope of employment. As a
consequence, the Company has all ownership interests in its proprietary
information.
(e) Absence of Claims. Except as set forth in Company Disclosure
Schedule 5.14(e), no claims have been asserted by any person to rights in the
Company's proprietary information, and no valid basis for any such claim exists.
To the Knowledge of DCI and the Company, the use of the proprietary information
by the Company and its licensees does not infringe on the rights of any person
(whether arising under copyright, trade secret, patent, unfair competition or
other Laws which protect intellectual property rights). To the Knowledge of DCI
and the Company, the use by the Company of the patents, trademarks, service
marks, trade names and copyrights identified in Company Disclosure Schedule
5.14(a) does not infringe the rights of any person, and no claim has been
asserted that the use by the Company of any of the foregoing infringes the
rights of any person. No claim has been asserted by any person to the effect
that any current or former employee of the Company has violated the provisions
of any noncompete or nondisclosure agreement with such person, or has disclosed
any proprietary information of such person to the Company or any third party.
5.15 [Intentionally omitted.]
5.16 Third-Party Components. The Company has validly obtained the right and
license to use, copy, modify and distribute any third-party products, services
and materials used in the conduct of its business pursuant to the contracts
identified in Company Disclosure Schedule 5.16, subject to no further license
fee, royalty or other payment obligations not identified in Company Disclosure
Schedule 5.16.
5.17 Third-Party Interests or Marketing Rights in Software. The Company has
not granted, transferred or assigned any right or interest in its proprietary
information to any person except pursuant to the contracts identified on Company
Disclosure Schedule 5.17(i). There are no contracts, agreements, licenses,
commitments or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the proprietary information by any
independent salesperson, distributor, sublicensor or other remarketer or sales
organization except as set forth on Company Disclosure Schedule 5.17(ii).
5.18 No Parachute Payments. Except as disclosed on Company Disclosure
Schedule 5.18, no officer, director, employee, shareholder or agent (or former
officer, director, employee, shareholder or agent) of the Company is entitled
now, or will or may be entitled to as a consequence of this Agreement and the
13
other Purchase Agreements, to any payment or benefit from the Company or
Purchaser which if paid or provided would constitute an "excess parachute
payment," as defined in Section 280G of the Code.
5.19 Absence of Certain Agreements and Practices.
(a) Except as set forth in Company Disclosure Schedule 5.19(a) or in
connection with customary transactions in the ordinary course of business, no
present or former officer, director or shareholder of the Company:
(i) owes money to the Company;
(ii) has any claim (as defined in Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Bankruptcy Code) against the Company;
(iii) has any interest in any property or assets used by the
Company in its business;
(iv) has any benefits that are contingent on the transactions
contemplated by this Agreement, other than as stated herein;
(v) has any agreement with the Company that is not terminable by
the Company without penalty or notice;
(vi) has any agreement providing severance benefits or other
benefits after the termination of employment of such employee (before or after a
change in control) regardless of the reason for such termination of employment;
or
(vii) has any agreement or plan, any of the benefits of which will
be increased, vested or accelerated by the occurrence of any of the transactions
contemplated by this Agreement.
(b) Neither the Company nor any of its directors, officers, agents,
affiliates or employees, nor any other person acting on behalf of the Company or
DCI has (i) given or agreed to give any gift or similar benefit having a value
of $1,000 or more to any customer, supplier or governmental employee or official
or any other person, for the purpose of directly or indirectly furthering the
business of the Company, (ii) used any corporate funds for contributions,
payments, gifts or entertainment, or made any expenditures relating to political
activities to government officials or others in violation of any applicable Laws
or (iii) received any unlawful contributions, payments, gifts or expenditures in
connection with the business of the Company.
5.20 Major Vendors and Customers. Company Disclosure Schedule 5.20 sets
forth a list of each licensor, developer, remarketer, distributor and supplier
of property or services to, and each licensee, end-user or customer of, the
Company, to whom the Company paid or billed in the aggregate in excess of $5,000
during calendar year 1999 and through April 30, 2000.
5.21 Accounts Receivable. Company Disclosure Schedule 5.21 sets forth the
accounts receivable of the Company as of April 30, 2000, together with an aging
of these accounts. These accounts receivable, and all accounts receivable of the
Company created after April 30, 2000, arose from valid transactions in the
ordinary course of business and will be good and collectible at the recorded
amounts thereof, except to the extent adequate reserves therefor have been made
on the Company Financial Statements. No portion of the accounts receivable is
subject to counterclaim or setoff.
14
5.22 Bank Accounts. Company Disclosure Schedule 5.22 lists all bank, money
market, savings and similar accounts and safe deposit boxes of the Company,
specifying the account numbers and the authorized signatories or persons having
access to them.
5.23 Corporate Records. The corporate record books (including the share
records) of the Company are complete, accurate and up to date with all necessary
signatures and set forth all meetings and actions taken by the shareholders and
directors of the Company and all transactions involving the shares of the
Company (and contain all canceled share certificates).
5.24 Combinations Involving the Company. All mergers, consolidations or
other business combinations involving the Company and all liquidations,
purchases or other transactions by which the Company or any of its Subsidiaries
acquired or disposed of any of their business and property were conducted in
accordance with applicable certificates of incorporation, bylaws, any other
applicable agreements, instruments and documents and applicable Laws.
5.25 Labor Relations. Except as disclosed on Company Disclosure Schedule
5.25, the Company is in compliance with all federal, state and foreign Laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and is not engaged in any unfair labor or unlawful
employment practice except where a failure to so comply would not have a
Material Adverse Effect on the Company. There is no unlawful employment practice
or discrimination charge pending before the United States Equal Employment
Opportunity Commission ("EEOC"), any EEOC recognized state "referral agency" or
any foreign governing body. There is no unfair labor practice charge or
complaint against the Company pending before the National Labor Relations Board
("NLRB") or any similar foreign governing body. There is no labor strike,
dispute, slowdown or stoppage actually pending or, to the Knowledge of DCI and
the Company, threatened against or involving or affecting the Company and no
NLRB representation question exists respecting any of its employees. No
grievance or arbitration proceeding is pending and no written claim therefor
exists. There is no collective bargaining agreement that is binding on the
Company. Except for any Material Contract disclosed pursuant to Section 5.11,
the Company is not a party to or bound by any agreement, arrangement or
understanding with any employee or consultant that cannot be terminated on
notice of ninety (90) or fewer days without liability to the Company or that
entitles the employee or consultant to receive any salary continuation or
severance payment or retain any specified position with the Company.
5.26 Year 2000 Matters. Except as provided on Company Disclosure Schedule
5.26, the Company's products and services are designed to be used after January
1, 2000 and will operate during each such time period without error relating to
date data, specifically including any error relating to, or the product of, date
data which represents or references different centuries or more than one century
or any leap year. The Company's internal systems and software and the network
connections it maintains are adequately programmed to address the Year 2000
issue.
5.27 Change in Control Provisions. Company Disclosure Schedule 5.27
contains a true and complete copy of all agreements in effect to which the
Company is a party and which contain any provisions which become effective upon
a change in control, merger, consolidation, sale of assets or other business
combination involving the Company or otherwise require any payment or
performance by the Company or any officer, director or shareholder thereof, now
or in the future, in connection with or as a result of any of the transactions
contemplated by this Agreement.
15
5.28 Disclosure. No representation, warranty or statement made by the
Company and/or DCI in this Agreement, the other Purchase Agreements or in any
document or certificate furnished or to be furnished to Purchaser pursuant to
this Agreement or the other Purchase Agreements contains or will contain any
untrue or incomplete statement or omits or will omit to state any fact necessary
to make the statements contained herein or therein not misleading in any
material respect. The Company and DCI have completely and accurately responded
to all diligence inquiries made by Purchaser or its officers, directors,
attorneys, accountants and other representatives in connection with this
Agreement and the other Purchase Agreements. All facts known or reasonably
available to the Company or DCI that are material to the financial condition,
operation, or prospects of the business and assets of the Company have been
disclosed by the Company and DCI to Purchaser.
5.29 Securities Act Compliance. DCI acknowledges that the issuance of the
shares of the Purchaser Common Stock pursuant to this Agreement will not be
registered under the securities laws of any state or federal authority (the
"Securities Laws"). DCI represents and warrants that it is acquiring the
Purchaser Common Stock for its own account for investment purposes and not with
a view toward, or for resale in connection with, a distribution or public
offering of the Purchaser Common Stock. DCI acknowledges that at reasonable
times prior to DCI's execution of this Agreement it has had the opportunity to
ask questions and receive answers concerning the terms and conditions of this
Agreement, the financial condition of Purchaser, and the Purchaser Common Stock
and to obtain any additional information that is necessary to verify the
accuracy of the information furnished to DCI. DCI understands and agrees that
DCI may not sell or otherwise transfer any of the Purchaser Common Stock except
pursuant to a registered offering or in one or more private transactions which,
in the opinion of counsel reasonably satisfactory to Purchaser, are not required
to be registered under the Securities Act of 1933 and applicable state
securities laws.
5.30 No Prior Convictions. No officer or director of DCI or the Company has
been convicted of, arrested for, or has any action pending for, a crime
involving fraud, embezzlement or theft or any similar crime.
5.31 Tax Advice. DCI is responsible for the federal, state, local and
foreign tax consequences (to DCI) of an investment in the Purchaser Common Stock
and the transactions contemplated by this Agreement and the other Purchase
Agreements. DCI is not relying on any statements or representations of Purchaser
or any of their agents, and DCI (and not Purchaser or any other person or
entity) shall be responsible for its own tax liability that may arise as a
result of this investment or the transactions contemplated by this Agreement and
the other Purchase Agreements.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
To induce DCI to enter into this Agreement and the other Purchase
Agreements, Purchaser hereby represents and warrants to DCI as follows:
6.1 Corporate Organization.
(a) Purchaser is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Texas. Purchaser has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
16
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a Material Adverse Effect on Purchaser.
6.2 Capitalization.
(a) The authorized capital stock of Purchaser consists of 200,000,000
shares of Purchaser Common Stock and 5,000,000 shares of preferred stock, par
value $1.00 per share ("Purchaser Preferred Stock"). As of May 24, 2000, there
were 23,823,328 shares of Purchaser Common Stock issued and outstanding, and
1,212,295.5 shares of Purchaser Preferred Stock issued and outstanding. Exhibit
6.2(a) sets forth the number of shares of common stock issuable pursuant to
outstanding stock options and warrants and the number of shares of common stock
issuable upon conversion of outstanding convertible securities ("Stock
Options"). All issued and outstanding shares of Purchaser Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable.
(b) Exhibit 6.2(b) sets forth true and correct copies of the Articles
of Incorporation and Bylaws and amendments thereto of Purchaser.
(c) Except as disclosed on Exhibit 6.2(c), Purchaser does not own or
control, directly or indirectly, any equity interest in any corporation,
company, association, partnership, joint venture or other entity.
6.3 Authority.
(a) Except as disclosed on Exhibit 6.3(a) (collectively, the "Purchaser
Approvals"), no consents, approvals, authorizations, clearances or orders of,
filings or registrations with or notices to (collectively "Purchaser
Authorizations") any third party or any Governmental Authority are necessary on
behalf of Purchaser in connection with (i) the execution and delivery by
Purchaser of this Agreement and (ii) the consummation by Purchaser of the
transactions contemplated hereby. Assuming that the Purchaser Approvals are duly
obtained, Purchaser has the full corporate power and authority to execute and
deliver this Agreement and the other Purchase Agreements to which it is a Party
and to consummate the transactions contemplated hereby in accordance with the
terms hereof and thereof; the execution and delivery of this Agreement and the
other Purchase Agreements to which it is a Party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of Purchaser in accordance with the Articles of
Incorporation and Bylaws of Purchaser and with applicable Laws; no other
corporate proceedings on the part of Purchaser are necessary for Purchaser to
execute and deliver this Agreement and for Purchaser to be bound by the terms
hereof; and to the knowledge of Purchaser, this Agreement and the other Purchase
Agreements to which it is a Party have been duly and validly executed and
delivered by Purchaser and constitute the valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its and their terms.
(b) Assuming that the Purchaser Approvals are duly obtained, to the
best of the knowledge of Purchaser, neither the execution and delivery by
Purchaser this Agreement and the other Purchase Agreements to which they are a
party, nor the consummation by Purchaser of the transactions contemplated hereby
and thereby in accordance with the terms hereof and thereof, nor compliance by
Purchaser with any of the terms or provisions hereof, will: (i) violate any
provision of Purchaser's Articles of Incorporation or Bylaws; (ii) violate any
Laws applicable to Purchaser or any of its respective properties or assets; or
(iii) violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any Liens upon any of the
respective properties or assets of Purchaser under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Purchaser is a
17
party, or by which they or any of their respective properties or assets may be
bound or affected, except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a Material Adverse Effect on
Purchaser, and which will not prevent or delay the consummation of the
transactions contemplated hereby.
6.4 Financial Statements.
(a) Exhibit 6.4(a) sets forth copies of: (i) the balance sheet of
Purchaser as of December 31, 1999, and (ii) the statement of income of Purchaser
for the period ended December 31, 1999 (together with the related notes,
collectively, the "Purchaser Financial Statements").
(b) The Purchaser Financial Statements present fairly, in all material
respects, the financial position of Purchaser as of the respective dates set
forth therein, and the results of Purchaser's operations and its cash flows for
the respective periods set forth therein.
(c) The books and records of Purchaser have been maintained in material
compliance with applicable legal and accounting requirements.
6.5 Broker's and Other Fees. Except as disclosed in Exhibit 6.5, Purchaser
has not employed any broker or finder or incurred any liability for any broker's
or finder's fees or commissions in connection with any of the transactions
contemplated by this Agreement and the other Purchase Agreements.
6.6 Legal Proceedings. To the knowledge of Purchaser, and except as
disclosed in Exhibit 6.6, Purchaser is not a party to any, and there are no
pending or threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against Purchaser.
Except as disclosed in Exhibit 6.6, to the knowledge of Purchaser, Purchaser is
not a party to any order, judgment or decree entered in any lawsuit or
proceeding. Without limiting the foregoing, except as disclosed in Exhibit 6.6,
to the knowledge of Purchaser no actions, suits, demands, notices, claims,
investigations or proceedings are pending or threatened against or otherwise
involving, directly or indirectly, any officer, director, employee or agent of
the Company (in connection with such officer's, director's, employee's or
agent's activities on behalf of Purchaser or that otherwise relate, directly or
indirectly to Purchaser or its properties or securities) including without
limitation any notices, demand letters or requests from any Governmental
Authority relating to such potential Liabilities, nor, to the knowledge of
Purchaser, are there any circumstances which could lead to such actions, suits,
demands, notices, claims, investigations or proceedings.
6.7 Taxes and Tax Returns. Except as disclosed in Exhibit 6.7:
(a) The Purchaser has duly filed (and until the Closing Date will so
file) all returns, declarations, reports, information returns and statements
("Returns") required to be filed by it in respect of any United States federal,
state or local, or any foreign, Taxes and has duly paid (and until the Closing
Date will so pay) all such Taxes due and payable. As used herein, "Tax" or
"Taxes" means and includes any and all taxes, fees, levies, assessments, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority, including, without
limitation: foreign, domestic, central, local, state or other jurisdictional
taxes or other charges on or with respect to income, estimated income,
franchises, business, occupation, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and customs
duties, tariffs, and similar charges. Purchaser has not established on its books
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and records reserves that are adequate for the payment of all Taxes not yet due
and payable, but are incurred in respect of Purchaser through such date.
(b) To the knowledge of Purchaser, there are no audits or other
Governmental Authority proceedings presently pending nor any other disputes
pending with respect to, or claims asserted for, Taxes upon Purchaser, nor has
Purchaser given any currently outstanding waivers or comparable consents
regarding the application of any statute of limitations with respect to any
Taxes or Returns. To the knowledge of Purchaser, there are no Liens for Taxes
upon the assets of Purchaser, except Liens for Taxes not yet due.
6.8 Purchaser Common Stock. Assuming the Purchaser Approvals are duly
obtained, at the Closing Date, the Purchaser Common Stock to be delivered to DCI
will be duly authorized and validly issued, fully paid and nonassessable, free
of preemptive rights and free and clear of all Liens created by or through
Purchaser (except as set forth in this Agreement and the documents and
agreements executed in connection herewith).
ARTICLE 7
COVENANTS AND AGREEMENTS OF THE PARTIES
7.1 No Solicitation. Except as indicated on Company Disclosure Schedule
7.3, from the date hereof to the Closing Date or the earlier termination of this
Agreement in accordance with its terms, DCI:
(a) agrees that neither the Company nor any of its present or future
subsidiaries or other affiliates, nor any of its or their directors, officers,
shareholders, employees, representatives or other agents (collectively, the
"Company Affiliates") shall, directly or indirectly, (i) enter into any
agreement (or agree to do so), or solicit, initiate or knowingly encourage the
invitation of inquiries or proposals or offers from any person or entity (other
than Purchaser or its directors, officers, employees, representatives and
agents) concerning: (A) any sale of assets or transfer or liabilities of the
Company or any of its present or future subsidiaries, divisions or other
affiliates (other than any such sale or transfer in the ordinary course of
business); (B) any issuance, purchase or sale of capital stock or debt or other
securities of the Company or any of its present or future subsidiaries,
divisions or other affiliates (other than the incurrence of liabilities in the
ordinary course of its business); or (C) any merger, consolidation,
restructuring, recapitalization or other significant transaction involving the
Company or any of its present or future subsidiaries, divisions or other
affiliates; or (ii) provide any confidential information to, participate in
discussions or negotiations relating to any such transaction with, or otherwise
cooperate with or assist or participate in any effort to take such action by any
person or entity (other than Purchaser or its directors, officers, shareholders,
employees, representatives and agents). The Company shall immediately advise
Purchaser if any such inquiry, offer or proposal is made or received by the
Company or any of the Company Affiliates;
(b) will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and the Company and DCI will take the
necessary steps to inform the individuals or entities referred to above of the
obligations undertaken in this Section 7.1; and
(c) will notify Purchaser immediately of the identity of any potential
acquiror and the terms of any proposal or offer (including, without limitation,
any proposal or offer to any of DCI) with respect to a proposed or potential
merger, acquisition, consolidation, business combination, transfer or similar
transaction involving, or any purchase of all or any significant portion of the
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assets, equity securities of or rights with respect to any assets or securities
of, the Company whether or not permitted by this Section 7.1.
7.2 Current Information.
(a) During the period from the date of this Agreement to the Closing
Date or the earlier termination of this Agreement in accordance with its terms,
on a frequent basis:
(b) DCI will cause one or more of the Company's representatives to
confer with representatives of Purchaser regarding its business, operations,
properties, assets and financial condition; each of the Parties will cause one
or more of its representatives to confer with representatives of the other
Parties regarding matters relating to the completion of the transactions
contemplated herein; and
(c) Each of the Parties will notify the other Parties as soon as
practicable after any determination or discovery by it of any fact or
circumstance relating to any Party which it has discovered through the course of
investigation and which represents, or is reasonably likely to represent, a
material breach of any representation, warranty, covenant or agreement of any
Party or which has or is reasonably likely to have a Material Adverse Effect on
any Party.
7.3 Access to Properties and Records; Confidentiality.
(a) DCI shall permit, and shall cause the Company to permit, Purchaser
and its representatives reasonable access to its properties and shall disclose
and make available to Purchaser and its representatives all books, papers and
records and information relating to it, its assets, stock ownership, properties,
operations, obligations and liabilities, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' and shareholders' meetings, organizational documents, agreements,
filings with any Governmental Authority, accountants' work papers, litigation
files, plans affecting employees, and any other records and information in which
Purchaser and its representatives may have a reasonable interest; provided that
such investigation shall be reasonably related to the transactions contemplated
by this Agreement and shall not interfere unnecessarily with the normal business
operations of the Company.
(b) DCI shall hold in trust and confidence all Confidential Information
(as defined below) and shall not make any copies of, distribute, or use any
Confidential Information except as necessary to prepare for the completion of
the transactions contemplated under this Agreement. DCI shall not make any
unauthorized disclosure of Confidential Information. Upon the first request in
writing from Purchaser, DCI shall return to Purchaser all Confidential
Information in its possession, without retaining any copies thereof; provided,
however, that DCI may retain Confidential Information (but not use or disclose
such Confidential Information except to enforce its rights under this Agreement,
and any such Confidential Information so retained shall remain subject to the
restrictions contained in this Agreement) which is necessary to enforce its
rights under this Agreement.
(c) DCI shall hold in trust and confidence all Trade Secrets (as
defined below) and shall not make any copies of, distribute, or use any Trade
Secrets except as necessary to prepare for the completion of the transactions
contemplated under this Agreement. DCI shall not make any unauthorized
disclosure of any Trade Secrets. Upon the first request in writing from
Purchaser, DCI shall return to Purchaser all manifestations of any Trade Secrets
in their possession, without retaining any copies thereof; provided, however,
that the DCI may retain Trade Secrets (but not use or disclose such Trade
Secrets except to enforce its rights under this Agreement, and any Trade Secrets
so retained shall remain subject to the restrictions contained in this
Agreement) which is necessary to enforce their rights under this Agreement.
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(d) As used in this Section 7.3(b):
(i) "Confidential Information" means all information relating to
the Company's business (current or future), or any person or entity with which
the foregoing deals, and whether such information is oral, written, recorded or
stored by electronic, magnetic, electromagnetic or other form or process or
otherwise in a machine readable form, translated from the original form,
recompiled, made into a compilation, wholly or partially copied, modified,
updated or otherwise altered, or originated or obtained by, or coming into the
possession, custody, control or knowledge of the Company either alone or
jointly; provided, that Confidential Information expressly excludes Trade
Secrets and information in the public domain on the date hereof or that enters
the public domain after the date hereof through no fault of any DCI.
(ii) By way of example and not in limitation of the foregoing,
"Confidential Information" includes the terms of this Agreement and the
transactions contemplated hereunder, all Inventions; technical data; research
and development information; business records, information and notes; products;
"know-how"; engineering or other data; designs, specifications, processes and
formulae; manufacturing or planning procedures, techniques or information;
marketing plans, strategies and forecasts; business and product development
plans, strategies and forecasts; financial statements, budgets, prices, costs
and financial projections; accounting procedures or financial information; names
and details of consumers, customers, suppliers and agents; employee details; and
secret information.
(iii) "Invention" means any invention, drawing, design, model,
contrivance, structure, specification, improvement, discovery, creation, idea,
concept, formula, process and other work or contribution however developed,
created, made discovered or conceived, and whether or not patented or patentable
(whether by renewal or otherwise), protected by copyright, or otherwise
protected or capable of protection by law anywhere.
(iv) "Trade Secrets" means any information of the (including but
not limited to technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, or a list of actual or potential
customers or suppliers) which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or
use, and (ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
7.4 Regulatory Matters; Consents; Cooperation, etc.
(a) Each of the Parties will promptly furnish each other with copies of
written communications received by them or any of their respective Subsidiaries
from, or delivered by any of the foregoing to, any Governmental Authorities in
respect of the transactions contemplated hereby.
(b) As soon as practicable following the date hereof, each of the
Parties will use its commercially reasonable efforts to obtain all material
consents, waivers and other Approvals under any of its or its Subsidiaries'
agreements, contracts, licenses or leases required to be obtained by such Party
in connection with the consummation of the transactions contemplated hereby.
7.5 Parties' Efforts; Further Assurances; Cooperation. Subject to the other
provisions in this Agreement, the Parties shall in good faith perform their
obligations under this Agreement before, at and after the Closing Date, and
shall each use all commercially reasonable efforts to do, or cause to be done,
all things necessary, proper or advisable under applicable Laws to obtain all
Authorizations and satisfy all conditions to the obligations of the Parties
under this Agreement and to cause the transactions contemplated by this
21
Agreement to be carried out promptly in accordance with the terms hereof and
shall cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as part of their respective obligations under
this Agreement. Upon the execution of this Agreement and thereafter, each party
shall take such actions and execute and deliver such documents as may be
reasonably requested by the other Parties in order to consummate the
transactions contemplated by this Agreement.
7.6 Public Announcements. Prior to the Closing Date or the earlier
termination of this Agreement in accordance with its terms, the Parties shall
consult and cooperate with each other as to the timing, content and form of any
press release or other public disclosure related to this Agreement or the
transactions contemplated herein, and will not issue a press release or make any
such public disclosure without the prior consent of the other party, which shall
not be unreasonably withheld, conditioned or delayed. After the Closing Date,
DCI shall not make any public announcement regarding any aspect of this
Agreement without Purchaser's prior written consent. Nothing in this Section 7.6
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary in order to satisfy such Party's disclosure obligations
imposed by Law or Governmental Authority.
7.7 Failure to Fulfill Conditions. In the event that any Party determines
that a material condition to its or the other's obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to June 15,
2000 (the "Deadline Date"), it will promptly notify the other Party. Each Party
will promptly inform the other Parties of any facts applicable to it that would
be likely to prevent or materially delay consummation of the transactions
contemplated by this Agreement.
7.8 Disclosure Supplements. From time to time prior to the Closing Date,
each Party hereto will promptly notify the other Party of any inaccuracy in its
respective Disclosure Schedules delivered pursuant hereto including, without
limitation, any matter which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in such
Schedule or which is necessary to correct any information in such Schedule that
has been rendered inaccurate. Notwithstanding the foregoing, for the purpose of
determining satisfaction of the conditions set forth in Article 8, no such
notification shall be deemed to amend such Disclosure Schedules or shall be
deemed to be part hereof unless agreed to by the other Parties.
7.9 Release; Covenant Not to Xxx.
(a) If the Closing occurs, then DCI hereby releases Purchaser and the
Company, and their agents, representatives, successors and assigns
(collectively, the "Released Parties") from any and all Claims (as defined
herein) that any of DCI may have or may have had against any or all of the
Released Parties arising out of or in connection with any transactions between
DCI and any or all of the Released Parties prior to, or arising from or with
respect to any fact, circumstance, act or omissions occurring prior to or on the
Closing Date.
(b) If the Closing occurs, DCI covenants not to xxx or otherwise
institute, cause to be instituted or in any way participate in, any legal or
administrative proceeding against any of the Released Parties with respect to
any claims (as defined by Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, as
amended), debts, demands, actions, causes of action, suits, accounts, damages
and liabilities of every name and nature, both at law and in equity, whether
known or unknown (collectively, the "Claims"), that DCI or the Company now has,
ever had or may, at any time, claim to have had against any of the Released
Parties. This covenant shall not apply to Claims based upon acts or omissions by
a Released Party first occurring after the Closing Date. DCI represents and
warrants that it has not voluntarily or involuntarily assigned or suffered any
transfer of any of the Claims to any other person or entity, and DCI agrees to
indemnify and hold harmless the Released Parties from and against any loss,
damage, liability, cost and expense (including, but not limited to, attorneys'
22
fees incurred in connection therewith or in connection with enforcing this
indemnity) asserted against, imposed on or incurred by any Released Parties by
reason of any such Claims which were effectively or purportedly assigned or
transferred by the Company or DCI.
7.10 [Intentionally omitted.]
7.11 No Transfers. Except pursuant to this Agreement or with the prior
written consent of Purchaser, DCI shall not transfer, assign, convey or
otherwise dispose of any of the Company Common Stock or any rights with respect
to such Company Common Stock (including voting and conversion or option rights)
after the date of this Agreement.
7.12 Special Provisions with Respect to the Company. If the Closing occurs
as provided herein, then at that time all representations, warranties, covenants
and agreements to the extent made or adopted by the Company (and only to such
extent) shall expire and be of no further force and effect, and the Company's
having made representations, warranties, covenants and agreements shall in no
way limit the liability of DCI for those representations, warranties, covenants
and agreements pursuant to this Agreement.
7.13 Cooperation and Exchange of Information. The Parties agree to furnish,
or to cause to be furnished in good faith to each other, such cooperation and
assistance as is reasonably necessary to file any future returns, to respond to
audits, to negotiate settlements with Tax authorities and to prosecute and
defend against Tax claims.
7.14 Customer Contacts. The Company shall permit Purchaser to conduct a
survey or otherwise inquire of certain or all of the Company's key customers, as
selected by Purchaser, regarding the relationship between such customer and the
Company and the impact of a change in control on such relationship. The Company
shall assist Purchaser in making such survey or inquiries and shall have the
right to have a representative of its choice participate therein.
7.15 Registration. Parent hereby agrees to use its best efforts to file a
registration statement with the Securities and Exchange Commission for the
purpose of registering the resale of the 40,000,000 shares of Parent Common
Stock to be issued to DCI pursuant to the terms of this Agreement. Parent shall
us its best efforts to file such registration statement by the later to occur
of:
(i) the 60th day after the Closing Date; or
(ii) the 45th day after DCI delivers to Parent audited financial
statements for the Company that satisfy the requirements of U.S. Generally
Accepted Accounting Principles and the United States Securities laws and
regulations applicable to financial statements to be included in the
registration statement.
7.16 Non-Competition. DCI shall not at any time after the date of this
Agreement and for five (5) years after the Closing: (i) engage directly or
indirectly in any Competitive Business anywhere in the Restricted Territory,
whether such engagement be as an employer, officer, director, owner, investor,
employee, partner, consultant or other participant in any Competitive Business;
(ii) solicit or accept business, for a business which is wholly or partly
similar to the Company's Business from anyone who is an active or prospective
customer of Purchaser, the Company, or any of their Affiliates; or (iii) attempt
to do any of the things (or directly or indirectly assist anyone else in doing
or attempting to do any of the things) specified in this paragraph. For the
purposes of this section, "Competitive Business" means any business, individual,
corporation or other entity which is primarily engaged wholly or partly in any
23
business similar to the Company's Business; the "Company's Business" means the
business of the Company and "Restricted Territory" means Europe, Asia, Africa
and South America.
7.17 English Company Legal Matters. DCI shall cooperate with Purchaser
after the Closing to effect all actions necessary or desirable to vest Purchaser
with ownership and enjoyment of the Company Common Stock, including but not
limited to the following actions: (i) a meeting of the directors of the Company
shall be held and the transfer of the Company Common Stock to Purchaser shall be
passed for registration and registered, and persons nominated by the Purchaser
shall be appointed to be directors or secretaries of the Company; (ii) at the
request of Purchaser, DCI shall procure and deliver the written resignations of
all of the directors and secretaries of the Company upon terms acceptable to
Purchaser; (iii) at the request of Purchaser, DCI shall procure and deliver the
written resignations of the auditors of the Company containing the statements
referred to in section 394(1), CA 85 that they consider there are no such
circumstances as are mentioned in that section and confirming that they have
deposited or shall deposit that statement in accordance with section 394(2), CA
85 at the respective registered offices of the Company; (iv) DCI shall revoke
all existing instructions and authorities to bankers shall replaced the same
with alternative instructions, mandates and authorities in such form as the
Purchaser may require; (v) DCI shall change the registered office of the Company
to such address as the Purchaser shall direct; (vi) DCI shall cause the Company
to change the accounting reference date to such date as the Purchaser shall
direct; and (vii) DCI shall cause the Company to hold an Extraordinary General
Meeting of the Company to transact such other business as the Purchaser may
require.
ARTICLE 8
CLOSING CONDITIONS
8.1 Conditions of Each Party's Obligations Under this Agreement. The
respective obligations of each party under this Agreement shall be subject to
the satisfaction, or, where permissible under applicable Law, waiver at or prior
to the Closing Date of the following conditions:
(a) Approvals and Regulatory Filings. All necessary Authorizations of
Governmental Authorities required to consummate the transactions contemplated
hereby shall have been obtained without any term or condition which would
materially impair the value of the Company or Purchaser. All conditions required
to be satisfied prior to the Closing Date by the terms of such approvals and
consents shall have been satisfied; and all statutory waiting periods in respect
thereof shall have expired.
(b) Suits and Proceedings. The consummation of the transactions
contemplated hereby will not violate the provisions of any injunction, order,
judgment, decree or Law applicable or effective with respect to Purchaser or the
Company or their officers and directors. No suit or proceeding shall have been
instituted by any person, or, to the knowledge of Purchaser or DCI, shall have
been threatened by any Governmental Authority, and not subsequently withdrawn,
dismissed or otherwise eliminated, which seeks (i) to prohibit, restrict or
delay consummation of the transactions contemplated hereby or to limit in any
material respect the right of Purchaser to control any material aspect of the
business of Purchaser or the Company after the Closing Date, or (ii) to subject
Purchaser or the Company or their respective directors or officers to material
liability on the ground that it or they have breached any Law or otherwise acted
improperly in relation to the transactions contemplated by this Agreement.
24
8.2 Conditions to the Obligations of Purchaser under this Agreement. The
obligations of Purchaser under this Agreement shall be further subject to the
satisfaction or waiver, at or prior to the Closing Date (and continued until the
Closing Date), of the following conditions:
(a) Representations and Warranties; Covenants and Agreements; Consents.
The representations and warranties of DCI contained in this Agreement shall be
true and correct in all material respects as of the date hereof and shall also
be true and correct in all material respects on the Closing Date as though made
on and as of the Closing Date, except that those representations and warranties
which are confined to a particular date shall speak only as of such date, and
the Company and DCI shall have performed in all material respects the
agreements, covenants and obligations to be performed by it or them at or prior
to the Closing Date. All Authorizations of or with any Governmental Authority or
other third party that are required for or in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby by the Company and DCI shall have been obtained or made.
(b) Opinion of Counsel. Purchaser shall have received an opinion of
counsel to the Company and DCI, dated the Closing Date, in form and substance
reasonably satisfactory to Purchaser, covering the matters set forth on Exhibit
8.2(b).
(c) Certificates. DCI shall have furnished Purchaser with such
certificates of the Company and its authorized officers, DCI or others and such
other documents to evidence fulfillment of the conditions set forth in this
Article 8 and otherwise to consummate the transactions contemplated pursuant to
this Agreement as Purchaser may reasonably request, including certificates in
the form attached hereto as Exhibit 8.2(c).
(d) Transfer Tax. DCI shall have paid to Purchaser the amount of the
stock transfer stamp duty required to lawfully transfer the Company Common
Stock, as estimated by Purchaser, such amount not to exceed U.S. $30,000.
(e) Xxxx.xxx, Limited. DCI shall have delivered the following documents
regarding the Company to Purchaser: (i) resolutions of the sole director of the
Company authorizing the transfer of the Company Stock to Purchaser; (ii)
original stock transfer forms endorsed by Xxxxxxxx Xxxxxxxxx surrendering any
and all interest of the same to DCI; (ii) original stock transfer forms endorsed
by at least two members of the board of directors of DCI effecting the transfer
of the Company Stock from DCI to Purchaser; and (iv) original stock certificates
in the name of DCI evidencing all of the Company Stock.
(f) Completion of Due Diligence on the Company. Purchaser shall have
completed its review of the Company, the results of which shall be acceptable to
Purchaser in its absolute discretion.
(g) No Material Adverse Effect on the Company. No event shall have
occurred and no fact or circumstance shall have arisen which, in the judgment of
Purchaser, is reasonably likely to have a Material Adverse Effect on the Company
or materially and adversely affect the value of this transaction to Purchaser,
since the date of the most recent Company Financial Statements except (i) the
announcement of this Agreement or (ii) conditions effecting global economy or
regional economy in which Purchaser operates any part of its or their business.
25
(h) Customer Inquiries. Purchaser shall be reasonably satisfied with
the results of their inquiries of the Company's customers with respect to the
impact of a change in control on their relationship with the Company.
(i) No Interest in Proprietary Information. Except as set forth in
Company Disclosures Schedule 8.2(i), the Company shall have eliminated or
provided for the elimination of any and all claims to ownership, access, copies,
source code and license and royalty interests in all products, services,
software, systems and proprietary information associated with the Company.
(j) Spinoff. The Company and DCI shall have executed and delivered
agreements, the terms of which are acceptable to Purchaser, with respect to
which DCI and the Company shall have transferred, assigned, sold or otherwise
conveyed all of the Company's assets and all of its liabilities, including
accounts receivable, customer agreements, intellectual property rights,
software, and any other support systems necessary to ensure continuity in the
business and operations to be transferred to Purchaser pursuant to this
Agreement.
(k) Release of Obligations. All obligations of the Company pursuant to
any loan, lease, guaranty, commitment or other undertaking of the Company, DCI
or any of its or their Subsidiaries and other Affiliates, whether as maker,
guarantor or otherwise, including those obligations listed on Schedule 8.2(k),
shall have been fully and permanently released or satisfied, or payoff letters
shall have been executed and delivered, pursuant to documents and agreements
satisfactory in all respects to Purchaser.
8.3 Conditions to the Obligations of the Company and DCI under this
Agreement. The obligations of the Company and DCI under this Agreement shall be
further subject to the satisfaction or waiver, at or prior to the Closing Date,
of the following conditions:
(a) Representations and Warranties; Covenants and Agreements; Consents.
The representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all material respects as of the date hereof and
shall also be true and correct in all material respects on the Closing Date as
though made on and as of the Closing Date, and Purchaser shall have performed in
all material respects the agreements, covenants and obligations to be performed
by it and them at or prior to the Closing Date. All Authorizations of or with
any Governmental Authority or other third party that are required for or in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby by Purchaser shall have been obtained or
made, except where the failure to obtain any such Authorizations would not have
a Material Adverse Effect on Purchaser.
(b) Certificates. Purchaser shall have furnished the Company with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Article 8 and otherwise to
consummate the transactions contemplated pursuant to this Agreement as the
Company may reasonably request.
(c) No Material Adverse Effect on Purchaser. No Material Adverse Effect
with respect to Purchaser shall have occurred since the date of this Agreement
except (i) the announcement of this Agreement, and (ii) conditions effecting
global economy or regional economy in which Purchaser operates any part of its
business.
26
(d) Approvals. This Agreement and the transactions contemplated hereby
shall have received all Required Government Consents and other consents or
approvals from third parties (including lenders, licensees and lessors) required
to consummate the transactions contemplated hereby which, either individually or
in the aggregate, if not obtained would have a Material Adverse Effect.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated prior to the Closing
Date, whether before or after approval of this Agreement by DCI or Purchaser:
(a) by mutual written consent of Purchaser and DCI;
(b) by Purchaser or DCI if the Closing Date shall not have occurred on
or prior to the Deadline Date; provided, however, that the right to terminate
this Agreement under this Section 9.1(b) shall not be available to any Party
whose action or failure to act has been a principal cause of or resulted in the
failure of the transaction contemplated by this Agreement to occur on or before
such date and such action or failure to act constitutes a willful and material
breach of this Agreement;
(c) by Purchaser, if there has been a material breach of any
representation, warranty, covenant, agreement or obligation of the Company or
DCI hereunder in each case which either is not capable of being remedied, or, if
capable of being remedied, shall not have been remedied within 10 days after
receipt by the Company or DCI, as appropriate, of notice in writing from
Purchaser specifying the nature of such breach and requesting that it be
remedied;
(d) by DCI, if there has been a material breach in any representation,
warranty, covenant, agreement or obligation of Purchaser hereunder in each case
which either is not capable of being remedied, or, if capable of being remedied,
shall not have been remedied within 10 days after receipt by Purchaser of notice
in writing from DCI specifying the nature of such breach and requesting that it
be remedied;
(e) by Purchaser if any of the conditions set forth in Section 8.1 or
8.2 is not satisfied and is no longer capable of being satisfied by the Closing
Date; or
(f) by DCI if any of the conditions set forth in Section 8.1 or 8.3 is
not satisfied and is no longer capable of being satisfied by the Closing Date;
9.2 Effect of Termination. If either Purchaser or DCI terminates and
abandons this Agreement pursuant to Section 9.1, this Agreement, other than
Section 7.5(b), this Section 9.2, Section 9.3, Article 10 and Section 11.1 (each
of which shall survive termination), shall forthwith become void and have no
effect, without any liability on the part of any Party or its officers,
directors or shareholders; provided, however, that nothing contained in this
Section 9.2, shall relieve any Party from any liability for any material breach
of this Agreement.
9.3 Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the Parties hereto.
9.4 Extension; Waiver. The Parties may, at any time prior to the Closing
Date, (a) extend the time for the performance of any of the obligations or other
acts of the other Parties; (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant thereto; or
27
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of any Party to any extension or waiver shall be valid
only if it is set forth in an instrument in writing signed on behalf of the
Party against which the waiver is sought to be enforced and shall apply only to
the specific condition, representation or warranty identified by the writing as
being waived, extended or modified.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification by DCI. Subject to the terms of this Article 10, DCI
shall indemnify, defend, save and hold harmless Purchaser, its subsidiaries and
their respective predecessors, successors, directors, officers, employees,
agents, representatives and assigns (collectively, the "Purchaser Indemnified
Parties"), from and against any demands, claims (as defined in Section 101 of
the U.S. Bankruptcy Code), actions, losses, damages, deficiencies, liabilities,
costs and expenses (including, without limitation, reasonable attorneys' and
accountants' fees and expenses), together with interest and penalties, if any,
awarded by court order or otherwise agreed to (collectively, "Indemnifiable
Damages"), suffered by Purchaser Indemnified Parties that arise out of or result
from any of the following (whether or not a third party initiates the proceeding
or claim giving rise to such Indemnifiable Damages):
(a) any breach of any of the representations, warranties, covenants or
agreements made by the Company or DCI in this Agreement and the other Purchase
Agreements; or
(b) any breach of any representation, warranty, covenant or agreement
in a document, certificate or affidavit delivered by the Company or DCI at the
Closing.
10.2 Indemnification by Purchaser. Subject to the terms of this Article 10,
Purchaser shall indemnify, defend, save and hold harmless the Company and DCI
(but after consummation of the transactions contemplated by this Agreement,
solely DCI, and not the Company) and its predecessors, successors, directors,
officers, employees, agents, representatives and assigns (collectively, the
"Company Indemnified Parties"), from and against any Indemnifiable Damages
suffered by the Company Indemnified Parties that arise out of or result from any
of the following (whether or not a third party initiates the proceeding or claim
giving rise to such Indemnifiable Damages):
(a) any breach of any of the representations, warranties, covenants
and agreements made by Purchaser in this Agreement and the other Purchase
Agreements; or
(b) any breach of any representation, warranty, covenant or agreement
in a document, certificate or affidavit delivered by Purchaser at the Closing.
10.3 Claims for Indemnification. The representations, warranties, covenants
and agreements in this Agreement shall survive the Closing for a period of two
years and shall not be affected by any investigation made by the parties hereto
prior to the date hereof or the Closing Date. The Party seeking indemnification
(the "Indemnified Party") shall give the Party from whom indemnification is
sought (the "Indemnifying Party") a written notice ("Notice of Claim") within
sixty (60) days of the discovery of any loss, liability, claim or expense in
respect of which the right to indemnification contained in this Article 10 may
be claimed; provided, however, that the failure to give such notice within such
sixty (60) day period shall not result in the waiver or loss of any right to
bring such claim hereunder after such period unless, and only to the extent
that, the other Party is actually prejudiced by such failure. In the event a
claim is pending or threatened or the Indemnified Party has a reasonable
28
belief as to the validity of the basis for such claim, the Indemnified Party may
give written notice (a "Notice of Possible Claim") of such claim to the
Indemnifying Party, regardless of whether a loss has arisen from such claim. A
Party shall have no liability under this Article 10 for breach of a
representation or warranty, unless a Notice of Claim or Notice of Possible Claim
therefor is delivered by the Indemnified Party; provided, however, that the
limitations set forth in this Section 10.3 shall not apply to liability under
this Article 10 for any intentional breach of a representation or warranty in
this Agreement. Any Notice of Claim or Notice of Possible Claim shall set forth
the representations, warranties, covenants and agreements with respect to which
the claim is made, the specific facts giving rise to an alleged basis for the
claim and the amount of liability asserted or anticipated to be asserted by
reason of the claim.
10.4 Defense of Claim by Third Parties. If any claim is made by a third
party against a Party to this Agreement that, if sustained, would give rise to a
liability of another Party under this Agreement, the Party against whom the
claim is made shall promptly cause notice of the claim to be delivered to the
other Party and shall afford the other Party and its counsel, at the other
Party's sole expense, the opportunity to join in the defense and settlement of
the claim. The failure to provide such notice will not relieve the Indemnifying
Party of liability under this Agreement unless, and only to the extent that, the
Indemnifying Party is actually prejudiced by such failure.
10.5 Third Party Claim Assistance. From time to time after the Closing,
Purchaser, the Company and DCI shall provide or cause their appropriate
employees or representatives to provide the other Parties with information or
data in connection with the handling and defense of any third party claim or
litigation (including counterclaims filed by the parties) in respect to which a
Party may be required to indemnify another Party under this Agreement. The Party
receiving such information or data shall reimburse the other Parties for all of
their reasonable costs and expenses in providing these services, including,
without limitation, (i) all out of pocket, travel and similar expenses incurred
by their personnel in rendering these services; and (ii) all fees and expenses
for services performed by third parties engaged by or at the request of such
other Parties.
10.6 Settlement of Indemnification Claims. If a recipient of a Notice of
Claim desires to dispute such claim, it shall, within thirty (30) days after
receipt of the Notice of Claim, give counternotice, setting forth the basis for
disputing such claim, to Purchaser or DCI, as the case may be. If no such
counternotice is given within such thirty (30) day period, or if Purchaser or
DCI, as the case may be, acknowledges liability for indemnification, then the
amount claimed shall be promptly satisfied. If, within thirty (30) days after
the receipt of counternotice by Purchaser or DCI, as the case may be, DCI and
Purchaser shall not have reached agreement as to the claim in question, then the
Party disputing the claim shall satisfy any undisputed amount and the disputed
amount of the claim of indemnification shall be submitted to and settled by
arbitration in accordance with the then prevailing commercial arbitration rules
of the American Arbitration Association. Such arbitration shall be held in the
Stratford, Connecticut area before a panel of three (3) arbitrators, one
selected by each of the Parties and the third selected by mutual agreement of
the first two, and all of whom shall be independent and impartial under the
rules of the American Arbitration Association. The decision of the arbitrators
shall be final and binding as to any matter submitted under this Agreement. To
the extent the decision of the arbitrators is that a Party shall be indemnified
hereunder, the amount shall be satisfied. Judgment upon any award rendered by
the arbitrators may be entered in any court of competent jurisdiction.
10.7 [intentionallyomitted].
10.8 Certain Limitations. The foregoing indemnification obligations are
subject to the limitation that no Indemnifying Party shall have any liability
for indemnification for breaches of representations and warranties pursuant to
this Article 10 unless the total Indemnifiable Damages for which the
Indemnifying Party would be liable exceed $50,000 in the aggregate; provided,
29
however, that the foregoing limitation shall not apply to any Indemnifiable
Damages with respect to, as a result of or involving any intentional breach of a
representation or warranty in this Agreement. In no event shall the liability of
DCI and Purchaser under this Article 10 exceed the total Purchase Price paid by
Purchaser for the Company Common Stock.
ARTICLE 11
MISCELLANEOUS
11.1 Expenses.
(a) Except as otherwise expressly stated herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including legal and accounting fees and expenses) shall be
borne by the Party incurring such costs and expenses and shall be paid by such
Party prior to or on the Closing Date.
(b) Notwithstanding any provision in this Agreement to the contrary,
if any of the Parties shall willfully default in its obligations hereunder, the
non-defaulting Party may pursue any remedy available at law or in equity to
enforce its rights and shall be paid by the willfully defaulting Party for all
damages, costs and expenses, including without limitation reasonable legal and
accounting expenses incurred or suffered by the non-defaulting Party in
connection herewith or in the enforcement of its rights hereunder.
11.2 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or by reputable overnight or express courier, sent by registered or certified
mail, postage prepaid, or by telefax (with subsequent delivery via one of the
two previous methods) as follows:
If to Purchaser, to:
Xxxxxx'x Restaurant Group, Inc.
c/o X.X. Xxxxx Securities, Inc.
Atlanta Financial Center, East Tower
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxxx
Telefax: (000) 000-0000
Copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Telefax: (000) 000-0000
If to the Company (prior to Closing) or DCI, to:
Xxxx.xxx, Limited
c/o DCI Telecommunications, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telefax: (000) 000-0000
Attn: Xxxx Xxxxx
30
Copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxx, P.A.
000 Xxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telefax: (000) 000-0000
If to DCI, to:
DCI Telecommunications, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telefax: (000) 000-0000
Attn: Xxxx Xxxxx
or such other addresses and telefax numbers as shall be furnished in writing
by any Party, and any such notice or communications shall be deemed to have been
given as of three business days after the date actually sent via overnite or
express courier, eight days after mailed and upon telefax confirmation of
receipt to addressee by the sender.
11.3 Parties in Interest. This Agreement shall be binding on and shall
inure to the benefit of the Parties hereto and their respective successors,
representatives and assigns. This Agreement (and the rights and interests
herein) may not be assigned by any Party without the written consent of the
other Parties; provided, however, Purchaser may assign its interests herein to
(a) an entity controlling, controlled by or under common control with Purchaser
or (b) a purchaser or transferee of all or substantially all of the business or
assets of Purchaser, whether by sale of stock or assets, merger or otherwise.
Any attempted assignment in contravention of the foregoing shall be null and
void. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person or entity any rights or remedies under or by
reason of this Agreement.
11.4 Entire Agreement. This Agreement, which includes the Disclosure
Schedules, Exhibits and the other documents, agreements, certificates and
instruments executed and delivered pursuant to or in connection with this
Agreement (collectively, the "Purchase Agreements"), sets forth the agreement
among the Parties with respect to the purchase and sale of the Company Common
Stock.
11.5 Counterparts; Facsimiles. This Agreement may be executed in two or
more counterparts, each of which shall be an original, and each of which shall
constitute one and the same agreement. Any Party may deliver an executed copy of
this Agreement and any documents contemplated hereby by facsimile transmission
to another Party, and such delivery shall have the same force and effect as any
other delivery of a manually signed copy of this Agreement or of such other
documents.
11.6 Governing Law.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE UNITED STATES OF AMERICA AND THE STATE OF CONNECTICUT,
EXCLUDING CHOICE OF LAW PRINCIPLES.
(b) Purchaser, the Company and DCI consent to the exclusive
jurisdiction and venue of the courts of any county in the State of Connecticut
and the United States Federal District Courts of Connecticut, in any judicial
proceeding brought to enforce this Agreement. The Parties agree that any forum
31
other than the State of Connecticut is an inconvenient forum and that a lawsuit
(or non-compulsory counterclaim) brought by one Party against another Party, in
a court of any jurisdiction other than the State of Connecticut should be
forthwith dismissed or transferred to a court located in the State of
Connecticut.
11.7 Arbitration.
(a) Any dispute, controversy or claim arising out of or relating to
this Agreement or any other related documents, agreements, certificates or other
writing, or the breach, termination, construction, validity or enforceability
hereof or thereof, shall be settled by binding arbitration in accordance with
the rules of the American Arbitration Association (except as otherwise provided
in this Section 11.7).
(b) Termination or limitation of Purchaser's rights in any of its
software, products, or any associated intellectual property rights or documents
may not be awarded under any circumstances. The right to demand arbitration and
to receive damages and obtain other available remedies as provided hereunder
shall be the exclusive remedy in the event an arbitration demand is made, except
that Purchaser shall be entitled to obtain equitable relief, such as injunctive
relief, from any court of competent jurisdiction to protect its rights in any of
its software products or any associated intellectual property rights or
documents while such proceeding is pending or in support of any award made
pursuant to such arbitration.
11.8 Invalidity of any Part. If any provision or part of this Agreement
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement and shall be construed as if such invalid, illegal
or unenforceable provision or part thereof had never been contained herein, but
only to the extent of its invalidity, illegality, or unenforceability. Upon any
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties hereto will negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible.
11.9 Time of the Essence; Computation of Time. Time is of the essence of
each and every provision of this Agreement. Whenever the last day for the
exercise of any right or the discharge of any duty under this Agreement shall
fall upon Saturday, Sunday or a federal, public or legal holiday, the Party
having such right or duty shall have until 5:00 p.m., Eastern Standard Time on
the next succeeding regular business day to exercise such right or to discharge
such duty.
[Signatures begin on following page]
32
IN WITNESS WHEREOF, Purchaser and DCI have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
PURCHASER:
Xxxxxx'x Restaurant Group, Inc.
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------
Title: Chief Executive Officer
------------------------------
DCI:
DCI Telecommunications, Inc.
By: /s/ Xxxx X. Xxxxx
------------------------------
Name: Xxxx X. Xxxxx
------------------------------
Title: President
------------------------------
33
SCHEDULES
---------
Schedule 5.1(a) - Governmental Authority
Schedule 5.1(b) - Articles of Incorporation and Bylaws of Company
Schedule 5.1(c) - Equity Interests
Schedule 5.2 - Shareholders and other Holders of Company Stock
Schedule 5.3(a) - Company Approvals
Schedule 5.4(a) - Company Financial Statements
Schedule 5.4(d) - Certain Company Liabilities and Obligations
Schedule 5.5 - Brokers, Finders, Etc.
Schedule 5.6(a) - Facts or Conditions
Schedule 5.7 - Litigation of Company
Schedule 5.8 - Taxes and Tax Returns
Schedule 5.9 - Employee Benefit Plans
Schedule 5.9(g) - Accruals; Funding - Employee Benefit Plans
Schedule 5.10 - Compliance with Applicable Laws
Schedule 5.11(a) - Material Contracts
Schedule 5.11(b) - Amendments to Material Contracts
Schedule 5.11(c) - Employment/Severance Agreements
Schedule 5.11(d) - Limits on Competition
Schedule 5.11(e) - Defaults on Material Contract
Schedule 5.12(a) - Ownership of Company Assets and Properties
Schedule 5.12(b) - Insurance
Schedule 5.14 - Intellectual Property not owned by the Company
Schedule 5.14(a) - Ownership of Patents, Trademarks, Service Marks, Trade Names
and Copyrights
Schedule 5.14(b) - Proprietary Legends and Copyright Notices
Schedule 5.14(c) - Trade Secret Protection
Schedule 5.14(d) - Ownership of Software
Schedule 5.14(e) - Absence of Claims
Schedule 5.16 - Third Party Components
Schedule 5.17 - Third Party Interests
Schedule 5.18 - Parachute Payments
Schedule 5.19(a) - Absence of Certain Agreements
Schedule 5.20 - Major Vendors and Customers
Schedule 5.21 - Accounts Receivable
Schedule 5.22 - Bank Accounts
Schedule 5.25 - Labor and Employment Matters
Schedule 5.26 - Year 2000 Matters
Schedule 5.27 - Change in Control Provisions
Schedule 7.3 - No Solicitation
Schedule 8.2(i) - No Interest in Proprietary Information
Schedule 8.2(k) - Release of Obligations
34
EXHIBITS
--------
Exhibit 3.1 - Liabilities of DCI to be Assumed by Purchaser
Exhibit 3.2(c)(i) - Form of Assumption Agreement
Exhibit 3.2(c)(ii) - Form of Assumption Agreement
Exhibit 3.2(c)(iii) - Form of Assumption Agreement
Exhibit 6.2(a) - Outstanding Securities of Purchaser
Exhibit 6.2(b) - Articles of Incorporation and Bylaws of Purchaser
Exhibit 6.2(c) - Subsidiaries
Exhibit 6.3(a) - Purchaser Approvals
Exhibit 6.4(a) - Financial Statements
Exhibit 6.5 - Broker's and Other Fees
Exhibit 6.6 - Legal Proceedings
Exhibit 6.7 - Taxes and Tax Returns
Exhibit 8.2(b) - Form of Opinion of Counsel to the Company and DCI
Exhibit 8.2(c) - Form of Certificate of the Company
35
