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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
Between:
REQUISITE TECHNOLOGY, INC.
XXXXX XXXXX
XXXXX XXXXX XXXXX
XXXX XXXXXXXXXXXX
RAMACHANDRAN FAMILY TRUST
LATA XXX XXXXXXXXXXXX
and
FAIRWIN SUPPLIES LIMITED
DATED: APRIL 1, 1998
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of April
1, 1998, by and among REQUISITE TECHNOLOGY, INC., a Delaware corporation (the
"Purchaser"), and the following parties (the "Selling Stockholders"): Xxxxx
Xxxxx, Xxxxx Xxxxx Xxxxx, Xxxx Xxxxxxxxxxxx, Ramachandran Family Trust, Lata Xxx
Xxxxxxxxxxxx and Fairwin Supplies Limited, a corporation incorporated under the
laws of the Republic of Ireland. Xxxxx Xxxxx and Xxxx Xxxxxxxxxxxx are
hereinafter referred to as the "Founders."
RECITALS
WHEREAS, the Selling Stockholders own all of the outstanding capital stock
of Antaeus Systems, Inc., a company organized under the Ontario Business
Corporations Act (the "Company"), consisting of 1,000 shares of Class A Stock,
1,000 shares of Class B Stock and 1,000 shares of Class C Stock (the "Shares");
WHEREAS, the Selling Stockholders desire to sell, and the Purchaser desires
to purchase, the Shares on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. SALE AND PURCHASE OF SHARES; RELATED TRANSACTIONS.
1.1 SALE AND PURCHASE OF SHARES. At the Closing (as defined below), the
Selling Stockholders shall sell, assign, transfer and deliver the Shares to the
Purchaser, and the Purchaser shall purchase the Shares from the Selling
Stockholders, on the terms of and subject to the conditions set forth in this
Agreement.
1.2 PURCHASE PRICE. As consideration for the sale of the Shares to
Purchaser, at the Closing, Purchaser shall issue to the Selling Stockholders (i)
an aggregate of 430,002 shares of Common Stock of Purchaser (the "Common
Shares"), having a value of US$0.30 per share, (ii) an aggregate of 120,000
shares of Series C Preferred Stock of Purchaser (the "Preferred Shares"), having
a value of US$2.30 per share, in the respective amounts set forth opposite each
such Selling Stockholder's name on Schedule 1.2 under the headings "Common
Shares" and "Preferred Shares" (collectively, the Common Shares and the
Preferred Shares shall be referred to hereinafter as the "Purchaser Shares") and
(iii) Purchaser shall issue to the Selling Stockholders promissory notes
substantially in the form of Exhibit H in the principal amounts set forth on
Schedule 1.2 (the "Notes"). The rights, preferences and privileges of the
Purchaser Shares are set forth in the Purchaser's Restated Certificate of
Incorporation and Bylaws, copies of which have been delivered to the Selling
Stockholders or their legal counsel. Certain of the Purchaser Shares shall be
subject to the escrow provisions described in Section 1.3 below.
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1.3 ESCROW SHARES. At the Closing, Purchaser shall place in escrow an
aggregate of 70,002 of the Common Shares issued to the Selling Stockholders (the
"Escrow Shares") in the respective amounts set forth opposite each such Selling
Stockholder's name on Schedule 1.2 under the heading "Escrow Shares." Such
shares shall be held in escrow by Purchaser as collateral for the Founders' and
Selling Stockholders' indemnification obligations under Section 6 of this
Agreement. The terms and conditions of the escrow, and the release of the Escrow
Shares from the escrow, shall be set forth in the Escrow Agreement to be entered
into between the Purchaser and the Selling Stockholders, a copy of which is
attached hereto as Exhibit A.
1.4 EARN-OUT SHARES. In addition, the Selling Stockholders shall be
entitled to receive up to an aggregate of 271,998 additional shares of Common
Stock of Requisite (the "Earn-Out Shares") in the event that the criteria set
forth below are satisfied in accordance with this Section 1.4.
(a) FINANCIAL PERFORMANCE FROM JANUARY 1, 1998 UNTIL DECEMBER 31, 1998.
In the event that, for the fiscal year ended December 31, 1998 (the "First
Measurement Period"), Company Revenue (as defined below) falls within a
particular range set forth on Schedule 1.4(a) attached hereto, then subject to
the terms and conditions of this Section 1.4, Purchaser shall issue to the
Selling Stockholders the number of Earn-Out Shares set forth opposite such range
on Schedule 1.4(a), up to a maximum of 104,615 shares for the First Measurement
Period.
(b) FINANCIAL PERFORMANCE FROM JANUARY 1, 1999 UNTIL DECEMBER 31, 1999.
In the event that, for the fiscal year ended December 31, 1999 (the "Second
Measurement Period") (the "First Measurement Period and the Second Measurement
Period shall be referred to hereinafter as the "Measurement Periods"), Company
Revenue falls within a particular range set forth on Schedule 1.4(b) attached
hereto, then subject to the terms and conditions of this Section 1.4, Purchaser
shall issue to the Selling Stockholders the number of Earn-Out Shares set forth
opposite such range on Schedule 1.4(b), up to a maximum of 167,383 shares for
the Second Measurement Period.
(c) Notwithstanding anything herein to the contrary, in the event that
the Company is not operating on a cash-flow break-even basis at the end of
either Measurement Period, then the Selling Stockholders shall not be entitled
to receive and Purchaser shall not be obligated to issue any Earn-Out Shares for
such Measurement Period. Further, in the event that a Founder is not an employee
of Purchaser or the Company as of the end of either Measurement Period because
such Founder voluntarily resigned or was terminated for Cause (as defined in the
Employment Agreement for such Founder), then such Founder and the Selling
Stockholders who are affiliated with such Founder shall not be entitled to
receive and Purchaser shall not be obligated to issue such persons any Earn-Out
Shares for such Measurement Period. For purposes of this Agreement, Xxxxx Xxxxx
Xxxxx (and any assignee of or successor to her Purchaser Shares) shall be deemed
an affiliate of Xxxxx Xxxxx, and Lata Xxx Xxxxxxxxxxxx and the Ramachandran
Family Trust (and the respective assignees of and successors to their respective
Purchaser Shares) shall be deemed affiliates of Xxxx Xxxxxxxxxxxx. In the event
that both Founders are not employees of Purchaser or the Company as of the end
of either Measurement Period because both of such Founders voluntarily resigned
or were terminated for Cause, then Fairwin Supplies Limited shall not be
entitled to receive and Purchaser shall not be obligated to issue to Fairwin
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Supplies Limited any Earn-Out Shares for such Measurement Period. In the event
that the Purchaser is not obligated to issue any Earn-Out Shares to a particular
Selling Stockholder pursuant to this Section 1.4(c), then such Earn-Out shares
shall be deemed forfeited by all Selling Stockholders and no Selling Stockholder
shall have any rights to the Earn-Out Shares so forfeited.
(d) Purchaser shall promptly deliver to the Selling Stockholders the
audited consolidated financial statements for the Measurement Periods set forth
above and, in the event that the Selling Stockholders are entitled to receive
any Earn-Out Shares for such periods, Purchaser shall promptly issue to the
Selling Stockholders certificates representing the number of Earn-Out Shares to
which they are entitled.
(e) An acquiror of all or substantially all of the stock or assets of
Purchaser or of the Company shall assume the obligations of Purchaser under this
Section 1.4.
(f) For purposes of this Section 1.4 (including Schedules 1.4(a) and
1.4(b)), "Company Revenue" shall, for each Measurement Period, be equal to the
total revenue recognized by the Company in U.S. Dollars during such Measurement
Period as set forth on the audited consolidated financial statements of
Purchaser; such amounts to be computed in accordance with generally accepted
accounting principles applied on a basis consistent with the basis on which the
financial statements were prepared. For purposes of this Agreement, the parties
agree that the exchange rate between U.S. Dollars and Canadian Dollars shall be
US$1.00 equal to Cdn$1.40.
1.5 CLOSING DATE. The closing of the transactions contemplated hereunder
(the "Closing") shall take place on the date hereof, at the offices of Xxxxxx
Godward LLP, 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 or at
such other time or place as the Selling Stockholders and Purchaser may mutually
agree (such date is hereinafter referred to as the "Closing Date").
1.6 CLOSING. At the Closing:
(a) the Purchaser and the Selling Stockholders shall enter into the
Escrow Agreement attached hereto as Exhibit A;
(b) Purchaser and Xxxxx Xxxxx shall enter into an Employment Agreement
substantially in the form of Exhibit B-1.
(c) Purchaser and Xxxx Xxxxxxxxxxxx shall enter into an Employment
Agreement substantially in the form of Exhibit B-2.
(d) the Selling Stockholders shall execute and deliver a General
Release substantially in the form of Exhibit C.
(e) the Company and the Selling Stockholders shall deliver to Purchaser
a legal opinion from O'Xxxxxx Xxxxxxx, substantially in the form of Exhibit D.
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(f) the Founders and the Selling Stockholders shall deliver to
Purchaser a certificate to the effect that, except as otherwise stated in such
certificate, each of the Selling Stockholders and the Founders' representations
and warranties in this Agreement is accurate in all respects as of the date of
this Agreement and that each of the covenants and obligations that the Founders
and the Selling Stockholders are required to have complied with or performed
pursuant to this Agreement at or prior to the Closing has been duly complied
with and performed in all respects.
(g) Xxxxx Xxxxx and Xxxxxx XxXxxxxxx shall have resigned as directors
of the Company and Xxx XxXxxxxxx shall have resigned from all positions he may
hold with the Company, effective as of the Closing Date.
(h) Xxxxx Xxxxx and Xxxx Xxxxxxxxxxxx shall have executed and delivered
to Purchaser an Assignment and Agreement Concerning Non-Disclosure of
Proprietary Information & Non-Competition in the form of Exhibit E.
(i) Purchaser shall have delivered to the Selling Stockholders a legal
opinion substantially in the form of Exhibit F.
(j) Selling Stockholders shall deliver to Purchaser stock certificates
representing the Shares, duly endorsed for transfer.
(k) Purchaser shall have received certified resolutions of the Board of
Directors of the Company authorizing the continuation of the Company as a New
Brunswick corporation.
(l) Purchaser shall issue to the Selling Stockholders the Purchaser
Shares in the respective amounts set forth on Schedule 1.2, subject to holdback
of the Escrow Shares.
(m) The Company shall execute and deliver to Fairwin Supplies Limited a
promissory note substantially in the form of Exhibit G.
(n) Purchaser shall execute and deliver promissory notes substantially
in the form of Exhibit H.
(o) Purchaser shall deliver checks to the Lenders under the Notes
representing the first payment due under the Notes.
(p) Purchaser shall enter into Pledge Agreement with the Selling
Stockholders substantially in the form of Exhibit K.
(q) Concurrently with the Closing, Purchaser shall cause to be paid all
amounts owing under the Company's credit facility with the Bank of Montreal.
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2. REPRESENTATIONS AND WARRANTIES OF THE FOUNDERS, AND THE SELLING
STOCKHOLDERS.
Except as specifically set forth on the Company Disclosure Schedule
delivered to Purchaser, the Founders and each Selling Stockholder jointly and
severally hereby represent and warrant to Purchaser as follows:
2.1 DUE ORGANIZATION; RECORDS. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the Province of Ontario.
The Company has all requisite power and authority to own and operate its
respective properties and assets and is not required to be qualified,
authorized, registered or licensed to do business as a foreign entity in any
jurisdiction. The Company has no subsidiaries. The Company has delivered to
Purchaser accurate and complete copies of the Company's Articles of
Incorporation, Bylaws and Board of Director's and shareholder's minutes and
actions. There has been no violation of the Company's Articles, Bylaws or Board
or shareholder actions.
2.2 CAPITALIZATION. The Selling Stockholders are, and as of the Closing
Date, will be the only shareholders of the Company. The Selling Stockholders
have, and the Purchaser will acquire at the Closing, good and valid title to the
Shares free and clear of any liens and encumbrances. Of the Shares: (i) Fairwin
Supplies Limited owns, beneficially and of record, 1,000 Class A Shares, (ii)
Xxxxx Xxxxx owns, beneficially and of record, 501 Class B Shares, (iii) Xxxxx
Xxxxx Xxxxx owns, beneficially and of record, 499 Class B Shares, (iv) Xxxx
Xxxxxxxxxxxx owns, beneficially and of record, 501 Class C Shares, (v) Lata Xxx
Xxxxxxxxxxxx owns, beneficially and of record, 250 Class C Shares and (vi)
Ramachandran Family Trust owns, beneficially and of record, 249 Class C Shares.
There is (x) no outstanding option, warrant or other right to acquire any shares
of the capital stock or other securities of the Company; (y) no outstanding
security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of the capital stock or other securities of Company;
and (z) no contract or other right under which the Company is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities.
2.3 AUTHORIZATION; BINDING OBLIGATIONS. The Company, Founders and each
Selling Stockholder have the absolute and unrestricted right, power and
authority to execute and deliver this Agreement and to carry out the provisions
of this Agreement and the transactions contemplated hereby. The execution,
delivery and performance by the Founders and the Selling Stockholders of this
Agreement and the agreements and transactions contemplated hereby have been duly
authorized by all necessary action on the part of Company, its shareholders,
board of directors and officers, the Selling Stockholders and the Founders. This
Agreement and the agreements contemplated hereby constitute the legal, valid and
binding obligations of the Founders and the Selling Stockholders, enforceable
against the Founders and the Selling Stockholders in accordance with their
terms.
2.4 FINANCIAL STATEMENTS. The Company has delivered to Purchaser the
following financial statements and notes (collectively the "FINANCIAL
STATEMENTS"); (i) the unaudited balance sheet of the Company as at December 31,
1997 and the statements of income for the twelve months ending December 31, 1997
and (ii) the unaudited balance sheet of the Company as at February 28, 1998 (the
"STATEMENT DATE") and statements of income for the two month
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period ending on the Statement Date, copies of which are attached hereto as
Exhibit I. The Financial Statements, together with the notes thereto, are
complete and correct in all material respects, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except as disclosed therein, and present
fairly the financial condition and position of the Company for the periods
covered thereby.
2.5 ABSENCE OF CHANGES. Except as set forth in Section 2.5 of the Company
Disclosure Schedule, since the Statement Date: (a) there has not been any
material adverse change in the Company's condition, assets, liabilities,
operations, financial performance, net income or prospects (or in any aspect or
portion thereof), and no event has occurred that might have a material adverse
effect on the Company's business, condition, assets, liabilities, operations,
financial performance, net income or prospects (or on any aspect or portion
thereof); (b) there has not been any loss, damage or destruction to, or any
interruption in the use of, any of the Company's assets (whether or not covered
by insurance); (c) the Company has not made any capital expenditure in excess of
US$2,500, purchased or otherwise acquired, sold or otherwise transferred, or
leased or licensed, any asset from or to any other person or entity; (d) the
Company has not entered into any transaction or taken any other action outside
the ordinary course of business; and (e) the Company has not agreed, committed
or offered (in writing or otherwise), or has not attempted, to take any of the
actions referred to in clauses (c) and (d) above.
2.6 TITLE TO ASSETS. All of the assets owned or purported to be owned by
the Company are set forth on the Financial Statements or listed on Section 2.6
of the Company Disclosure Schedule. Except as disclosed on the Company
Disclosure Schedule and except for the security interest registered in favour of
the Bank of Montreal, the Company has good, valid and marketable title to all of
said assets and all of said assets are owned by the Company free and clear of
any encumbrances.
2.7 REAL PROPERTY. The Company does not own any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Section 2.7 of the Company Disclosure Schedule.
2.8 PROPRIETARY ASSETS. Section 2.8 of the Company Disclosure Schedule
lists all patents, patent applications, trademarks, trademark applications,
trade names, service marks, trade secrets or other intellectual property rights
or intangible assets (a "Proprietary Asset") owned by or licensed to the Company
or that is otherwise used or useful in connection with the Company's business.
The Company is not infringing, and has not at any time infringed or received any
notice or other communication (in writing or otherwise) of any actual, alleged,
possible or potential infringement of, any Proprietary Asset owned or used by
any other person or entity. To the knowledge of the Founders and each of the
Selling Stockholders, no other person or entity is infringing, and no
Proprietary Asset owned or used by any other person or entity infringes or
conflicts with, any Proprietary Asset owned or used by the Company.
2.9 CONTRACTS. Section 2.9 of the Company Disclosure Schedule identifies
each contract, whether written or oral, of the Company other than contracts that
do not contemplate or involve the payment of cash or other consideration in an
amount or having a value in excess of
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US$5,000. To the knowledge of the Founders and each of the Selling Stockholders,
no person or entity has violated or breached, or declared or committed any
default under, any of said contracts and no event has occurred, and no
circumstance or condition exists, that might (with or without notice or lapse of
time) (i) result in a violation or breach of any of the provisions of any such
contract, (ii) give any person or entity the right to declare a default or
exercise any remedy under any such contract, (iii) give any person or entity the
right to accelerate the maturity or performance of any such contract, or (iv)
give any person or entity the right to cancel, terminate or modify any such
contract.
2.10 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in Section
2.10 of the Company Disclosure Schedule, the Company is in full compliance with
all applicable laws that are applicable to it or to the conduct of its business
or the ownership or use of any of its assets and no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) constitute or result directly or indirectly in a violation by the Company
of, or a failure on the part of the Company to comply with, applicable law. The
Company has not received, at any time, any notice or other communication (in
writing or otherwise) from any governmental body or any other person or entity
regarding (a) any actual, alleged, possible or potential violation of, or
failure to comply with, any applicable law or (b) any actual, alleged, possible
or potential obligation on the part of the Company to undertake, or to bear all
or any portion of the cost of, any cleanup or any remedial, corrective or
response action of any nature.
2.11 GOVERNMENTAL AUTHORIZATIONS. Section 2.11 of the Company Disclosure
Schedule identifies each permit, license, approval, consent, qualification or
authorization that is held by the Company. To the knowledge of the Founders and
each of the Selling Stockholders, the Company is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the consummation of the
transactions hereunder, except such as has been duly and validly obtained as
filed. The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business.
2.12 INSURANCE. Section 2.12 of the Company Disclosure Schedule sets forth
all insurance policies maintained by or at the expense of, or for the direct or
indirect benefit of, (including all renewals thereof and endorsements thereto)
of the Company. The Company has delivered to Purchaser accurate and complete
copies of such policies and each of such policies is valid, enforceable and in
full force and effect.
2.13 BENEFIT PLANS. Section 2.13 of the Company Disclosure Schedule
identifies and provides an accurate and complete description of each employee
benefit plan established, adopted or maintained by the Company or in which the
Company participates or has participated. The Company has delivered to Purchaser
accurate and complete copies of all documents relating to each such plan and
each such plan is being and has at all times been operated and administered
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in full compliance with the provisions thereof and any applicable legal or
governmental requirements.
2.14 NON CONTRAVENTION; CONSENTS. Except as set forth in Section 2.14 of
the Company Disclosure Schedule, the execution and delivery of the Agreement and
the agreements contemplated hereby will not directly or indirectly (with or
without notice or lapse of time): (a) contravene, conflict with or result in a
violation of any of the provisions of the Company's Articles of Organization or
Bylaws; (b) contravene, conflict with or result in a violation of, or give any
governmental body or other person or entity the right to challenge any of the
transactions contemplated by the Agreement or to exercise any remedy or obtain
any relief under, any applicable law or other legal requirement to which the
Company, or any Selling Stockholder, or any of the assets owned or used by the
Company is subject; (c) cause the Company, the Purchaser or any affiliate of the
Purchaser to become subject to, or to become liable for the payment of, any tax;
(d) contravene, conflict with or result in a violation or breach of, or result
in a default under, any provision of any of the contracts required to be
identified on Section 2.9 of the Company Disclosure Schedule; or (e) result in
the imposition or creation of any encumbrance upon or with respect to any asset
owned or used by the Company.
Except as set forth in Section 2.14 of the Company Disclosure Schedule,
neither the Company, nor any Founder or Selling Stockholder was, is or will be
required to make any filing with or give any notice to, or to obtain any consent
from, any person or entity in connection with the execution and delivery of the
Agreement or the consummation of the transactions contemplated by the Agreement.
2.15 BROKERS. None of the Company, the Founders and any Selling Stockholder
has agreed or become obligated to pay, or has taken any action that might result
in any person or entity claiming to be entitled to receive, any brokerage
commission, finder's fee or similar commission or fee in connection with any of
the transactions contemplated by this Agreement.
2.16 FULL DISCLOSURE. The Agreement, the Exhibits and Schedules hereto, and
all other documents delivered to the Purchaser or their representatives pursuant
hereto, do not contain and will not contain any untrue statement of fact and, to
the knowledge of the Founders and each of the Selling Stockholders, none of such
documents omit, or will omit, to state any fact necessary to make any of the
representations, warranties or other statements or information contained therein
not misleading. Except as set forth in Section 2.16 of the Company Disclosure
Schedule, there is no fact within the knowledge of the Founders or any Selling
Stockholder (other than publicly known facts relating exclusively to political
or economic matters of general applicability that will adversely affect all
entities comparable to those of the Company) that may have a material adverse
effect on the Company or may have the effect of preventing, delaying, making
illegal or otherwise interfering with any of the transactions contemplated by
the Agreement. All of the information and material regarding the Company and its
business, condition, assets, liabilities, operations, financial performance, net
income and prospects that has been furnished to the Purchaser or any of its
representatives by or on behalf of the Company in connection with the execution,
delivery and/or performance of this Agreement, is accurate and complete in all
material respects.
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2.17 LIABILITIES. Section 2.17 of the Company Disclosure Schedule sets
forth all liabilities or obligations of any nature (whether unknown,
undisclosed, unmatured, unaccrued, unasserted, contingent or otherwise) of the
Company, except for liabilities or obligations reflected or reserved against in
the Financial Statements or described in the notes thereto, or liabilities under
the contracts required to be disclosed under Section 2.9 of the Company
Disclosure Schedule.
2.18 LITIGATION. There is no action, suit, proceeding or investigation
pending or to any Founder's or any Selling Stockholder's knowledge currently
threatened against the Company that questions the validity of this Agreement,
the transactions contemplated hereby, or the right of the Company, the Founders
or the Selling Stockholders to enter into this Agreement or to consummate the
transactions contemplated hereby, or which might result, either individually or
in the aggregate, in any material adverse change in the assets, condition,
affairs or prospects of the Company, financially or otherwise, or any change in
the current ownership of the Company. Neither the Founders nor any Selling
Stockholder is aware of any basis for the foregoing. Neither the Founders nor
any Selling Stockholder is a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
2.19 EMPLOYEE MATTERS. Section 2.19 of the Company Disclosure Schedule
lists the name, title and annual compensation of each current employee of the
Company and accurately identifies each former employee of the Company receiving
or scheduled to receive (or whose dependent is receiving or is scheduled to
receive) any benefits from the Company (and accurately describes such benefits).
The Company is not a party to or bound by any employment agreement, union
contract, collective bargaining agreement or similar contract, and the
employment of each employee of the Company is terminable by the Company at will,
subject to compliance with applicable statutory or common law requirements.
2.20 TAX RETURNS AND PAYMENTS. The Company has timely filed all tax returns
(federal, state, provincial, and local) required to be filed by it. All taxes
shown to be due and payable on such returns, any assessments imposed, and to the
knowledge of the Company, the Founders and the Selling Stockholders, all other
taxes due and payable by the Company on or before the Closing have been paid or
will be paid prior to the time they become delinquent. The Company has not been
advised (i) that any of its returns, federal, state, provincial or other, have
been or are being audited as of the date hereof, or (ii) of any deficiency in
assessment or proposed judgment to its federal, state, province or other taxes.
The Company has no knowledge of any liability of any tax to be imposed upon
their respective properties or assets as of the date of this Agreement that is
not adequately provided for.
2.21 ENVIRONMENTAL AND SAFETY LAWS. To the knowledge of the Founders and
the Selling Stockholders, the Company is not in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, and to the knowledge of the Founders and the Selling Stockholders,
no material expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
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2.22 INVESTMENT REPRESENTATIONS. The Selling Stockholders understand that
the Purchaser Shares, and if issued the Earn-Out Shares, have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
The Selling Stockholders also understand that the Purchaser Shares and, if
issued, the Earn-Out Shares, are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon the Selling
Stockholders' representations contained in the Agreement. Each Selling
Stockholder hereby represents and warrants as follows:
(a) The Selling Stockholder has sufficient knowledge and experience in
business and financial matters so that it is capable of evaluating the merits
and risks of its investment in the Purchaser and has the capacity to protect its
own interests. The Selling Stockholder must bear the economic risk of this
investment indefinitely unless the Purchaser Shares and, if issued, the Earn-Out
Shares, are registered pursuant to the Securities Act or an exemption from
registration is available. The Selling Stockholder understands that the
Purchaser has no present intention of registering the Purchaser Shares or any
shares of its capital stock. The Selling Stockholder also understands that there
is no assurance that any exemption from registration under the Securities Act
will be available and that even if available such exemption may not allow the
Selling Stockholder to transfer all or any portion of the Purchaser Shares and,
if issued, the Earn-Out Shares, under the circumstances in the amounts or at the
times the Selling Stockholder might propose.
(b) The Selling Stockholder is acquiring the Purchaser Shares and, if
issued, the Earn-Out Shares, for the Selling Stockholder's own account for
investment only and not with a view towards their distribution.
(c) The Selling Stockholder represents that by reason of its, or of its
management's, business or financial experience, the Selling Stockholder has the
capacity to protect its own interests in connection with the transactions
contemplated in this Agreement.
(d) The Selling Stockholder has had an opportunity to discuss the
Purchaser's business, management and financial affairs with directors, officers
and management of the Purchaser and has had the opportunity to review the
Purchaser's operations and facilities. The Selling Stockholder has also had the
opportunity to ask questions of and receive answers from, the Purchaser and its
management regarding the terms and conditions of this investment.
(e) The Selling Stockholder acknowledges and agrees that the Purchaser
Shares and, if issued, the Earn-Out Shares, must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. The Selling Stockholder has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act, which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Purchaser, the
resale occurring not less than two years after a party has purchased and paid
for the security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
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(f) If the Selling Stockholder is an individual, then the Selling
Stockholder resides in the state or province identified in the address of the
Selling Stockholder set forth on the signature page hereto; if the Selling
Stockholder is a partnership, corporation, limited liability company or other
entity, then the office or offices of the Selling Stockholder in which its
investment decision was made is located at the address or addresses of the
Selling Stockholder set forth on the signature page hereto.
(g) The Selling Stockholders acknowledge and agree that any shares of
Common Stock of Purchaser held by them shall be subject to the right of first
refusal set forth in Purchaser's Bylaws.
(h) The Selling Stockholder acknowledges and agrees that all
certificates representing any of the Purchaser Shares and, if issued, the
Earn-Out Shares, shall have endorsed thereon appropriate legends reflecting the
foregoing limitations and transfer restrictions.
(i) The Selling Stockholder agrees that, if requested by Purchaser or
the representative of the underwriters of common stock (or other securities) of
Purchaser, the Selling Stockholder shall not sell or otherwise transfer or
dispose of any common stock (or other securities) of Purchaser held by the
Selling Stockholder (other than those included in the registration) for a period
specified by the representative of the underwriters not to exceed one hundred
eighty (180) days following the effective date of a registration statement of
Purchaser filed under the Securities Act. The obligations described in this
subsection (i) shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms that may be promulgated in the future.
Purchaser may impose stop-transfer instructions with respect to the shares of
common stock (or other securities) subject to the foregoing restriction until
the end of said one hundred eighty (180) day period.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
Except as specifically set forth on the Purchaser Disclosure Schedule
delivered to the Selling Stockholders, Purchaser hereby represents and warrants
to the Company and each of the Selling Stockholders as follows:
3.1 DUE ORGANIZATION; RECORDS. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite power and authority to own and operate its
respective properties and assets and is duly qualified to do business as a
foreign corporation in Colorado and all other jurisdictions in which the nature
of its activities and of its properties makes such qualification necessary,
except for those jurisdictions in which the failure to do so would not have a
material adverse effect on the Company or its business. The Company has no
subsidiaries.
3.2 AUTHORIZATION; BINDING OBLIGATIONS. The Purchaser has the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
and to carry out the provisions of this Agreement and the transactions
contemplated hereby. The execution, delivery and performance by the Purchaser of
this Agreement and the agreements and transactions contemplated hereby have been
duly authorized by all necessary action on the part of the
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Purchaser, its stockholders and its board of directors. This Agreement and the
agreements contemplated hereby constitute the legal, valid and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance
with their terms except as limited by applicable bankruptcy, insolvency or other
laws of general enforcement affecting creditor's rights, general principles of
equity that restrict the availability of equitable remedies and to the extent
that enforceability of the indemnification provisions may be limited by
applicable laws.
3.3 FINANCIAL STATEMENTS. The Purchaser has delivered to the Company the
following financial statements and notes (collectively the "PURCHASER FINANCIAL
STATEMENTS"); (i) the balance sheet of the Purchaser as at December 31, 1997 and
the statements of income and cash flows for the twelve months ending December
31, 1997 and (ii) the unaudited balance sheets of the Purchaser as at February
28, 1998 (the "STATEMENT DATE") and statements of income and cash flows for the
two month period ending on the Statement Date, copies of which are attached
hereto as Exhibit J. The Purchaser Financial Statements, together with the notes
thereto, are complete and correct in all material respects, have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, except as disclosed therein,
and present fairly the financial condition and position of the Purchaser for the
periods covered thereby.
3.4 GOVERNMENTAL AUTHORIZATIONS. To the knowledge of the Purchaser, the
Purchaser is not in violation of any applicable statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which would materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Purchaser. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement and the
consummation of the transactions hereunder, except such as has been duly and
validly obtained as filed.
3.5 NON CONTRAVENTION; CONSENTS. The execution and delivery of the
Agreement and the agreements contemplated hereby will not directly or indirectly
(with or without notice or lapse of time): (a) contravene, conflict with or
result in a violation of any of the provisions of the Company's Certificate of
Incorporation or Bylaws; or (b) contravene, conflict with or result in a
violation of, or give any governmental body or other person or entity the right
to challenge any of the transactions contemplated by the Agreement or to
exercise any remedy or obtain any relief under, any applicable law or other
legal requirement to which the Purchaser or any of the assets owned or used by
the Purchaser is subject. Purchaser was not, is not or will not be required to
make any filing with or give any notice to, or to obtain any consent from, any
person or entity in connection with the execution and delivery of the Agreement
or the consummation of the transactions contemplated by the Agreement, except as
have been or will be duly obtained on or prior to the Closing.
3.6 LITIGATION. There is no action, suit, proceeding or investigation
pending or to the Purchaser's knowledge currently threatened against the
Purchaser that questions the validity of this Agreement, the transactions
contemplated hereby, or the right of the Purchaser to enter into this Agreement
or to consummate the transactions contemplated hereby, or which might result,
either individually or in the aggregate, in any material adverse change in the
assets, condition,
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affairs or prospects of the Purchaser, financially or otherwise. The Purchaser
is not aware of any basis for the foregoing.
3.7 CAPITALIZATION. The issuance of the Common Shares, the Preferred
Shares, the shares of Common Stock issuable upon conversion of the Preferred
Shares and the Earn-Out Shares has been duly and validly authorized by all
action on the part of Purchaser, and when issued in compliance with the
provisions of this Agreement and the Restated Certificate of Incorporation of
the Purchaser, will be validly issued, fully paid and non-assessable. The
authorized capital stock of Purchaser immediately prior to the Closing consists
of (i) 15,000,000 shares of Common Stock, 1,555,252 of which are issued and
outstanding, and (ii) 6,519,955 shares of Preferred Stock, 337,420 of which are
designated Series A Preferred Stock, 189,630 shares of which are issued and
outstanding, 3,132,535 of which are designated Series B Preferred Stock,
3,118,785 shares of which are issued and outstanding and 3,050,000 of which are
designated Series C Preferred Stock, 2,826,088 shares of which are issued and
outstanding.
3.8 ABSENCE OF CHANGES. Since February 28, 1998, (a) there has not been any
material adverse change in the Purchaser's condition, assets, liabilities,
operations, financial performance, net income or prospects (or in any aspect or
portion thereof), and no event has occurred that might have a material adverse
effect on the Purchaser's business, condition, assets, liabilities, operations,
financial performance, net income or prospects (or on any aspect or portion
thereof); and (b) there has not been any loss, damage or destruction to, or any
interruption in the use of, any of the Purchaser's assets (whether or not
covered by insurance).
3.9 BROKERS. The Purchaser has not agreed or become obligated to pay, nor
has it taken any action that might result in any person or entity claiming to be
entitled to receive, any brokerage commission, finder's fee or similar
commission or fee in connection with any of the transactions contemplated by
this Agreement.
3.10 FULL DISCLOSURE. The Agreement, the Exhibits and Schedules hereto, and
all other documents delivered to the Selling Stockholders or their
representatives pursuant hereto, do not contain and will not contain any untrue
statement of fact and, to the knowledge of the Purchaser, none of such documents
omit, or will omit, to state any fact necessary to make any of the
representations, warranties or other statements or information contained therein
not misleading. There is no fact within the knowledge of the Purchaser (other
than publicly known facts relating exclusively to political or economic matters
of general applicability that will adversely effect all entities comparable to
those of the Purchaser) that may have a material adverse effect on the Purchaser
or may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the transactions contemplated by the Agreement. All of
the information and material regarding the Purchaser and its business,
condition, assets, liabilities, operations, financial performance, net income or
prospects that has been furnished to the Selling Stockholders or any of their
representatives by or on behalf of the Purchaser in connection with the
execution, delivery and/or performance of this Agreement, is accurate and
complete in all material respects.
4. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE.
The Purchaser's obligation to purchase the Shares and to take the other
actions required to be taken by Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of
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each of the following conditions (any of which may be waived by the Purchaser,
in whole or in part, in accordance with Section 8.6):
4.1 SATISFACTORY COMPLETION OF PRE-ACQUISITION REVIEW. The Purchaser shall
have satisfactorily completed its pre-acquisition investigation and review of
the Company's business, condition, assets, liabilities, operations, financial
performance, net income and prospects and shall be satisfied with the results of
that investigation and review.
4.2 ACCURACY OF REPRESENTATIONS. All of the representations and warranties
made by the Founders and each of the Selling Stockholders in this Agreement
(considered collectively), and each of said representations and warranties
(considered individually), shall have been accurate in all material respects as
of the date of this Agreement, and shall be accurate in all material respects as
of the Closing as if made on the Closing Date, without giving effect to any
update to the Company Disclosure Schedule.
4.3 PERFORMANCE OF OBLIGATIONS. All covenants and obligations that the
Company, the Founders and the Selling Stockholders are required to comply with
or to perform at or prior to the Closing (considered collectively), and each of
said covenants and obligations (considered individually), shall have been duly
complied with and performed in all material respects.
4.4 APPROVALS; CONSENTS.
(a) The Purchaser's board of directors and, if necessary, its
stockholders, shall have ratified the execution of this Agreement by the
Purchaser and shall have approved the consummation of the transactions.
(b) Each of the consents required to be obtained hereunder shall have
been obtained and shall be in full force and effect.
4.5 BOARD OF DIRECTORS. The authorized size of the Board of Directors of
the Company shall be two (2), and effective as of the Closing, the Board of
Directors shall consist of the Chief Executive Officer of Purchaser (initially
Xxxxxxx Xxxxx) and the President of the Company (initially Xxxx Xxxxxxxxxxxx).
4.6 ADDITIONAL DOCUMENTS. Purchaser shall have received the following
documents:
(a) an opinion letter from O'Xxxxxx Xxxxxxx dated the date of Closing,
in the form of Exhibit D;
(b) such other documents as Purchaser may request in good faith for the
purpose of (i) evidencing the accuracy of any representation or warranty made
hereunder, (ii) evidencing the compliance by the Company, the Founders or any of
the Selling Stockholders with, or the performance by the Company, the Founders
or any of the Selling Stockholders of, any covenant or obligation set forth in
this Agreement, (iii) evidencing the satisfaction of any condition set forth in
this Section 4 or (iv) otherwise facilitating the consummation or performance of
any of the transactions contemplated by this Agreement.
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(c) Such other documents required to be delivered to Purchaser pursuant
to Section 1.6.
4.7 NO PROCEEDINGS. There shall not have been commenced or threatened
against the Purchaser, or against any person or entity affiliated with the
Purchaser, any proceeding (i) involving any challenge to, or seeking damages or
other relief in connection with, any of the transactions contemplated by this
Agreement, or (ii) that may have the effect of preventing, delaying, making
illegal or otherwise interfering with any of the transactions contemplated by
this Agreement.
4.8 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. No person or
entity shall have made or threatened any claim asserting that such person or
entity (i) may be the holder or the beneficial owner of, or may have the right
to acquire or to obtain beneficial ownership of, any shares of capital stock of
the Company, or (ii) may be entitled to any portion of the consideration to be
received by the Selling Stockholders in connection with this Agreement.
5. CONDITIONS PRECEDENT TO THE FOUNDERS' AND THE SELLING STOCKHOLDERS'
OBLIGATION TO CLOSE.
The Selling Stockholders' obligation to sell their Shares and the Founders'
and the Selling Stockholders' obligation to take the other actions required to
be taken at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by the
Founders and the Selling Stockholders, in whole or in part, in accordance with
Section 8.6):
5.1 ACCURACY OF REPRESENTATIONS. All of the representations and warranties
made by Purchaser in this Agreement (considered collectively), and each of said
representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement and shall be
accurate in all material respects as of the Closing as if made on the Closing
Date.
5.2 PURCHASER'S PERFORMANCE. All of the other covenants and obligations
that Purchaser is required to comply with or to perform pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of said
covenants and obligations (considered individually), shall have been complied
with and performed in all material respects.
5.3 NO INJUNCTION. There shall not be in effect any injunction that shall
have been entered by a court of competent jurisdiction since the date of this
Agreement and that prohibits the sale of the Shares by the Selling Stockholders
to the Purchaser.
5.4 ADDITIONAL DOCUMENTS. The Selling Stockholders shall have received the
following documents:
(a) an opinion letter from Xxxxxx Godward LLP dated the date of
Closing, in the form of Exhibit F;
(b) such other documents as the Selling Stockholders may request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made
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hereunder, (ii) evidencing the compliance by the Purchaser with, or the
performance by the Purchaser of, any covenant or obligation set forth in this
Agreement, (iii) evidencing the satisfaction of any condition set forth in this
Section 5 or (iv) otherwise facilitating the consummation or performance of any
of the transactions contemplated by this Agreement.
(c) Such other documents required to be delivered by Purchaser pursuant
to Section 1.6.
6. INDEMNIFICATION, ETC.
6.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations, warranties, covenants and obligations of each
party shall survive (without limitation): (i) the execution and delivery of this
Agreement and the sale of the Shares to Purchaser; (ii) any subsequent sale or
other disposition of any or all of the Shares by Purchaser; (iii) the
liquidation, dissolution or winding up of any Selling Stockholder and (iv) the
death of any Founder. All of said representations, warranties, covenants and
obligations shall remain in full force and effect and shall survive until the
date eighteen (18) months from the Closing Date; provided, however, that if a
Claim Notice relating to any representation or warranty is given to the
indemnifying party on or prior to the date eighteen (18) months from the Closing
Date, then, notwithstanding anything to the contrary contained in this Section
6.1(a), such representation or warranty shall not so expire, but rather shall
remain in full force and effect until the later of (i) the date eighteen (18)
months from the Closing Date, or (ii) such time as each and every claim
(including any indemnification claim asserted by any Indemnitee under Section
6.2) that is based directly or indirectly upon, or that relates directly or
indirectly to, any breach or alleged breach of such representation or warranty
has been fully and finally resolved, either by means of a written settlement
agreement executed on behalf of the Selling Stockholders, the Founders and
Purchaser or by means of a final, non-appealable judgment issued by a court of
competent jurisdiction.
(b) The representations, warranties, covenants and obligations of the
Founders, the Selling Stockholders and the Purchaser and the rights and remedies
that may be exercised by the Purchaser Indemnitees or the Seller Indemnitees, as
applicable, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, any of
the Purchaser Indemnitees or the Seller Indemnitees, as applicable, or any of
their representatives.
(c) For purposes of this Agreement, a "Claim Notice" relating to a
particular representation or warranty shall be deemed to have been given if any
Purchaser Indemnitee or the Seller Indemnitee, as applicable, acting in good
faith, delivers to the indemnifying party a written notice stating that such
Indemnitee believes that there is or has been a possible breach of such
representation or warranty and containing (i) a brief description of the
circumstances supporting such Indemnitee's belief that there is or has been such
a possible breach, and (ii) a non-binding, preliminary estimate of the aggregate
dollar amount of the actual and potential damages that have arisen and may arise
as a direct or indirect result of such possible breach.
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(d) For purposes of this Agreement, each statement or other item of
information set forth in the Company Disclosure Schedule or Purchaser Disclosure
Schedule, as applicable, or in any update to the Company Disclosure Schedule or
Purchaser Disclosure Schedule, as applicable, shall be deemed to be a
representation and warranty made by each Founder, each of the Selling
Stockholders and the Purchaser, as applicable, in this Agreement.
6.2 INDEMNIFICATION BY THE FOUNDERS AND SELLING STOCKHOLDERS.
(a) Each of the Founders jointly and severally, and the other Selling
Stockholders, severally, shall hold harmless and indemnify each of (i)
Purchaser, (ii) Purchaser's current and future affiliates, (iii) the
representatives of the persons identified in (i) and (ii), and (iv) the
respective successors and assigns of the persons referred to in (i) and (ii)
(collectively, the "Purchaser Indemnitees") for any damages which are directly
or indirectly suffered or incurred by any of the Purchaser Indemnitees or to
which Purchaser may otherwise become subject at any time (regardless of whether
or not such damages relate to any third party claim) and which arise directly or
indirectly from or as a direct or indirect result of, or are directly or
indirectly connected with:
(i) Any breach of any of the representations or warranties made by
any Founder or any of the Selling Stockholders in this agreement or any other
agreement contemplated hereby;
(ii) any breach of any representation, warranty, statement,
information or provision contained in the Company Disclosure Schedule or in any
other document delivered or otherwise made available to Purchaser or any of its
representatives in connection with this Agreement by or on behalf of the
Founders, the Selling Stockholders, the Company or any of the Company's
representatives;
(iii) any breach of any covenant or obligation of the Company, any
of the Founders or any of the Selling Stockholders contained in this agreement
or the other agreement contemplated hereby;
(iv) any liability to which Purchaser or any of the other
Indemnities may become subject and that arises directly or indirectly from as
relates directly or indirectly to any services performed by or on behalf of the
Company, or the operation by the Company of its business on or at any time prior
to the Closing Date;
(v) any matter identified or referred to in Sections [__] of the
Company Disclosure Schedule; or
(vi) any proceeding relating directly or indirectly to any breach,
alleged breach, liability or matter of the type referred to in clauses (i) - (v)
above (including any proceeding commenced by any Indemnitee for the purpose of
enforcing any of its rights under this Section 6).
(b) The Selling Stockholders and the Founders acknowledge and agree
that, if there is any breach of any representation, warranty or other provision
relating to the Company, or its business, condition, assets, liabilities,
operations, financial performance, net income or
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prospects (or any aspect or portion thereof), then Purchaser itself shall be
deemed, by virtue of its being the sole shareholder of the Company, to have
incurred damages as a result of such breach or liability. Nothing contained in
this Section 6.2(b) shall have the effect of (i) limiting the circumstances
under which Purchaser may otherwise be deemed to have incurred damages for
purposes of this Agreement, (ii) limiting the other types of damages that
Purchaser may be deemed to have incurred (whether in connection with any such
breach or liability or otherwise) or (iii) limiting the rights of the Company or
any of the other Indemnitees under this Section 6.2.
(c) Purchaser shall have the ability to offset any indemnifiable
damages under this Section 6 against any payments due under the Notes.
Additionally, the Escrow Shares shall be held in escrow by Purchaser as
collateral for the Selling Stockholders' and Founders' indemnification
obligations hereunder.
(d) The liability of the Founders and the Selling Stockholders (in the
aggregate) under this Section 6.2 shall in no event exceed the aggregate
purchase price paid by Purchaser pursuant to Section 1.2, and the individual
liability of the Selling Stockholders (other than the Founders) shall in no
event exceed that portion of the aggregate purchase price received by it
pursuant to Section 1.2; provided that nothing in this Section 6.2(c) shall
limit the Purchaser's remedies in the event of willful misconduct, intentional
misrepresentation or fraud. Purchaser agrees that it shall seek to recover any
indemnification obligation owed to it hereunder first out of the Escrow Shares,
then by offsetting the amounts due under the Notes and then out of the Purchaser
Shares prior to seeking indemnification from other assets or property of the
Founders and the Selling Stockholders.
6.3 INDEMNIFICATION BY PURCHASER. The Purchaser shall hold harmless and
indemnify each of (i) the Founders, (ii) the Selling Stockholders, and (iii) the
respective successors and assigns of the persons referred to in (i) and (ii)
(collectively, the "Seller Indemnitees") for any damages which are directly or
indirectly suffered or incurred by any of the Seller Indemnitees or to which
such persons may otherwise become subject at any time (regardless of whether or
not such damages relate to any third party claim) and which arise directly or
indirectly from or as a direct or indirect result of, or are directly or
indirectly connected with any breach of any of the representations or warranties
made by the Purchaser in this Agreement or any other agreement contemplated
hereby. The liability of the Purchaser under this Section 6.3 shall in no event
exceed the aggregate purchase price paid by Purchaser pursuant to Section 1.2;
provided that nothing in the foregoing clause shall limit the Purchaser's
remedies in the event of willful misconduct, intentional misrepresentation or
fraud.
6.4 NONEXCLUSIVITY OF INDEMNIFICATION REMEDIES. The indemnification
remedies and other remedies provided in this Section 6 shall not be deemed to be
exclusive. Accordingly, the exercise by any person or entity of any of its
rights under this Section 6 shall not be deemed to be an election of remedies
and shall not be deemed to prejudice, or to constitute or operate as a waiver
of, any other right or remedy that such person or entity may be entitled to
exercise (whether under this Agreement, under any other contract, under any
statute, rule or other legal requirement, at common law, in equity or
otherwise).
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7. POST-CLOSING COVENANTS.
7.1 FURTHER ACTIONS. From and after the Closing Date, each party shall
cooperate with the other parties hereto and their respective affiliates and
representatives, and shall execute and deliver such documents and take such
other actions as such other party may reasonably request for the purpose of
evidencing the transactions contemplated hereby, making any filings or obtaining
any consents required by the transactions contemplated hereby and for the
purpose of continuing the Company as a New Brunswick corporation.
7.2 SALE OF PURCHASER SHARES. In connection with each Qualified Financing
occurring on or prior to the closing of a firm commitment underwritten public
offering of Purchaser's common stock pursuant to an affective registration
statement under the Securities Act, Purchaser will use its reasonable best
efforts to allow the Selling Stockholders to sell up to an aggregate of 120,000
of the Preferred Shares to some or all of the investors participating in such
Qualified Financing. A Qualified Financing shall mean the issuance and sale by
Purchaser of shares of its preferred stock to private investors, institutional
venture investors or corporate investors in one or a series of related
transactions.
7.3 COVENANTS RELATING TO EARN-OUT SHARES. Purchaser and the Founders agree
to mutually determine in good faith a methodology and the mechanics, by May 1,
1998, for calculating and measuring Company Revenue for purposes of Section 1.4
to accurately reflect revenue earned by the Company during the applicable
Measurement Periods. In the event that Purchasers and the Founders are unable to
so agree, then Purchasers and the Founders shall mutually select an independent
third party (such as a representative of a nationally recognized accounting
firm) to assist such parties in reaching such a determination.
7.4 COMPANY BOARD OF DIRECTORS. Purchaser hereby agrees that, for so long
as any Earn-Out Shares remain subject to issuance, Purchaser shall cause the
Board of Directors of the Company to include as one of its members the then
current President of the Company provided that the Board of Directors of the
Company shall not be more than two members until such time as the Company is
continued as a New Brunswick corporation.
7.5 ASSIGNMENT AND AGREEMENT CONCERNING NON-DISCLOSURE OF PROPRIETARY
INFORMATION AND NON-COMPETITION. Promptly following the Closing, the Founders
will use good faith efforts to have each employee of the Company execute and
deliver an Assignment and Agreement Concerning Non-Disclosure of Proprietary
Information and Non-Competition in the form of Exhibit E.
7.6 WORKING CAPITAL REQUIREMENTS. For fiscal year 1998, Purchaser agrees
that it shall transfer funds to the Company to fund the Company's working
capital requirements, at such time and in such amounts as may be mutually agreed
in good faith by Purchaser and the Company.
8. MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the State of Colorado as such laws are applied to agreements between
Colorado residents entered into and performed entirely in Colorado.
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8.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of the shares from time to time.
8.3 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
8.4 SEVERABILITY. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
8.5 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise
any right, power or remedy accruing to any party, upon any breach, default or
noncompliance by another party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of or in any similar
breach, default or noncompliance thereafter occurring. It is further agreed that
any waiver, permit, consent or approval of any kind or character on Purchaser's
part of any breach, default or noncompliance under this Agreement or any waiver
on such party's part of any provisions or conditions of this Agreement must be
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, under this Agreement, by law or otherwise afforded
to any party, shall be cumulative and not alternative.
8.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified only
upon the written consent of Purchaser and each of the Selling Stockholders and,
with respect to Section 6, with the written consent of the Founders.
8.7 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Selling Stockholders and Purchaser at the addresses as set forth on the
signature page hereof or at such other address as the Selling Stockholders or
Purchaser may designate by ten (10) days advance written notice to the other
parties hereto.
8.8 EXPENSES. All costs and expenses, including without limitation, fees
and disbursements of counsel, financial advisors and accountants incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, provided that if the
Closing occurs, Purchaser or the Company shall pay all such costs and expenses
incurred by the Selling Stockholders and the Founders.
20.
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8.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
8.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
8.11 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall constitute an original and all of which, when taken together, shall
constitute one agreement.
8.12 PRONOUNS. All pronouns contained herein, and any variations thereof,
shall be deemed to refer to the masculine, feminine or neutral, singular or
plural, as to the identity of the parties hereto may require.
21.
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IN WITNESS WHEREOF, the parties hereto have executed this STOCK PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
PURCHASER:
REQUISITE TECHNOLOGY INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------
Title: President
----------------------------
Address: 0000 Xxxxx Xxxx Xxxxxx
Xxxxx 000X
Xxxxxxx, XX 00000
SELLING STOCKHOLDERS:
/s/ Xxxxx Xxxxx
-----------------------------------
XXXXX XXXXX
Address:
--------------------------
--------------------------
--------------------------
/s/ Xxxxx Xxxxx
-----------------------------------
XXXXX XXXXX XXXXX
Address:
--------------------------
--------------------------
--------------------------
24
/s/ Xxxx Xxxxxxxxxxxx
-----------------------------------
XXXX XXXXXXXXXXXX
Address:
--------------------------
--------------------------
--------------------------
/s/ Xxxx Xxxxxxxxxxxx
-----------------------------------
LATA XXX XXXXXXXXXXXX
Address:
--------------------------
--------------------------
--------------------------
RAMACHANDRAN FAMILY TRUST
By: /s/ Xxxx Xxxxxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxxxxx
-----------------------------
Title: Trustee
----------------------------
Address:
--------------------------
--------------------------
--------------------------
FAIRWIN SUPPLIES LIMITED
By: /s/ Xxx XxXxxxxxx
-------------------------------
Name: Xxx XxXxxxxxx
-----------------------------
Title: Authorized Signing Officer
----------------------------
Address:
--------------------------
--------------------------
--------------------------
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FOUNDERS
/s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxxxxx
