EXHIBIT 10-1
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of July 11, 1999, between DIGITAL
RIVER, INC., a Delaware corporation (the "Buyer"), and TECH SQUARED INC., a
Minnesota corporation (the "Seller").
The Seller currently holds (through its subsidiary MacUSA, Inc.),
among other assets, an option (the "OPTION") to acquire from Xxxx X. Xxxxxxx
("JAR") an aggregate of 3,000,000 shares (the "OPTION SHARES") of voting
Common Stock, par value $.01 per share, of the Buyer of the same class of
common stock of the Buyer as is registered under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") ("BUYER COMMON STOCK"). The Seller
has decided to terminate all of its operating businesses, specifically
including its Net Direct Operating, DTP Catalog Operations and Distribution
Sales. In anticipation of the disposition of such operating businesses, the
Seller has been considering various alternatives and has concluded that if it
continues as a company registered under the Exchange Act and possibly becomes
subject to the Investment Company Act of 1940, as amended, the Seller would
likely incur significant costs and be subject to significant risks. The
Seller has determined that the sale of the Seller's assets to the Buyer is
the most economic alternative for the Seller. In advance of the Acquisition
(as defined below), the Seller intends to engage in the sale or other
disposition (the "DISPOSITION"), through one or more asset or stock sale
transactions, of all of the assets of the Seller and its Subsidiaries, other
than the Option Shares and not less than $1,200,000 of cash or cash
equivalents of the Seller, to certain Persons (each, a "TECH SQUARED BUSINESS
ACQUIROR"). The Disposition shall include the transfer to the Tech Squared
Business Acquirors of the Liabilities of the Seller and its Subsidiaries,
other than those Liabilities expressly retained by the Seller and its
Subsidiaries.
Thereafter, pursuant to this Agreement, the Buyer and the Seller
propose to effect a tax-free reorganization under Section 368(a)(1)(C) of the
Code whereby the Seller will transfer to the Buyer, free and clear of all of
the Liabilities of the Seller and its Subsidiaries (the "ACQUISITION"), the
following (the "PURCHASED ASSETS"): (i) 3,000,000 shares of Buyer Common
Stock, which shall consist of the Option Shares and an additional number of
shares of Buyer Common Stock purchased by the Seller on the Nasdaq National
Market in the event the Option is exercised in a cashless transaction
resulting in the transfer to the holder of the Option of less than 3,000,000
shares of Seller Common Stock upon exercise of the Option and (ii) $1,200,000
(the "PURCHASED CASH AMOUNT"). The Purchased Assets will constitute
substantially all of the assets of the Seller as of the Closing. In
consideration therefor, the Buyer will issue to the Seller 2,650,000 shares
of Buyer Common Stock. The Seller will then dissolve (the "DISSOLUTION")
and, pursuant to the Dissolution, will distribute such shares of Buyer Common
Stock to the holders of Common Stock, no par value, of the Seller ("SELLER
COMMON STOCK"), subject to a liquidating trust and other arrangements that
adequately provide for the payment of all Liabilities of the Seller and its
Subsidiaries, as provided in Section 8.2 below.
For federal income tax purposes, the Acquisition is intended to
constitute a "reorganization" within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"). The parties to this Agreement
hereby adopt this Agreement as a "plan of
1.
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
Concurrently with the execution and delivery of this Agreement, each
of JAR, who owns beneficially 6,574,022 shares of Seller Common Stock,
representing approximately 44% of the outstanding Seller Common Stock
(calculated in accordance with Section 13 of the Exchange Act), and Xxxxxxx
Xxxxx, who owns beneficially 838,000 shares of the outstanding Seller Common
Stock, representing approximately 6% of the outstanding Seller Common Stock
(calculated in accordance with Section 13 of the Exchange Act), has delivered
to the Buyer a voting agreement and proxy (the "VOTING AGREEMENT AND PROXY")
pursuant to which, among other things, he has agreed to vote such shares in
favor of this Agreement and the transactions contemplated hereby.
Accordingly, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound hereby, the Buyer and the
Seller hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings indicated below:
"ACTION" means any action, suit, claim or legal, administrative or
arbitral proceeding or investigation by or before any Governmental Body.
"AFFILIATE" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"COMMISSION" means the Securities and Exchange Commission or any
successor agency.
"CONDITION OF THE SELLER" means the business, assets, properties,
results of operations or financial condition of the Seller and its
Subsidiaries, taken as a whole.
"CONTRACT" means any written, oral, implied or other agreement,
contract, understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy, benefit plan, commitment,
covenant, assurance or undertaking of any nature.
"CONVERTIBLE PREFERRED STOCK" means the Seller's Preferred Stock, par
value $1.00 per share, convertible at any time prior to maturity or
effectiveness of redemption into shares of Seller Common Stock at a
conversion price of $1.25 and which has been the subject of a notice of
redemption by the Seller, subject to conversion prior to August 30, 1999, at
scheduled redemption prices.
"DAMAGES" includes any loss, damage, injury, decline in value, lost
opportunity, Liability, claim, demand, settlement, judgment, award, fine,
penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense
of any nature.
"DISCLOSURE STATEMENT" means the disclosure statement setting forth
certain information concerning the Seller delivered by the Seller to the
Buyer on the date hereof.
2.
"GAAP" means generally accepted accounting principles.
"GOVERNMENTAL BODY" means any government or political subdivision
thereof, whether federal, state or local, domestic or foreign, or any agency
or instrumentality of any such government or political subdivision, or any
court, tribunal or arbitrator.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INDEMNITEES" means the following Persons: (a) the Buyer; (b) the
Buyer's current and future affiliates; and (c) the respective successors and
assigns of the Persons referred to in clauses "(a)" and "(b)" above.
"IRS" means the Internal Revenue Service or any successor agency.
"LIABILITY" means any debt, obligation, duty or liability of any
nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability), regardless of whether such debt, obligation,
duty or liability would be required to be disclosed on a balance sheet
prepared in accordance with generally accepted accounting principles and
regardless of whether such debt, obligation, duty or liability is immediately
due and payable.
"LIEN" means any lien, pledge, mortgage, security interest, claim,
lease, charge, option, right of first refusal, easement, servitude,
encumbrance or other restriction or limitation.
"MCL" means the General Corporation Law of the State of Minnesota, as
amended.
"PERSON" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.
"PROCEEDING" means any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding and any informal proceeding), prosecution, contest,
hearing, inquiry, inquest, audit, examination or investigation commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or any arbitrator or arbitration panel.
"REGISTRATION STATEMENT" means the registration statement of the Buyer
on Form S-4 and the prospectus included therein for the registration under
the Securities Act of shares of Buyer Common Stock constituting the Purchase
Consideration.
"RELATED PARTY" each of the following shall be deemed to be a "Related
Party": (a) each individual who is, or who has at any time been, an officer
of the Seller; (b) each member of the family of each of the individuals
referred to in clause "(a)" above; and (c) any entity (other than the Seller)
in which any one of the individuals referred to in clauses "(a)" and "(b)"
above holds or held (or in which more than one of such individuals
collectively hold or held), beneficially or otherwise, a controlling interest
or a material voting, proprietary or equity interest.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
3.
"SUBSIDIARY" means, with respect to any Person, any corporation at
least a majority of whose outstanding voting securities, or any other Person
at least a majority of whose total equity interest, is owned by such Person.
"TAX" or "TAXES" means, with respect to any Person, a net income,
gross income, gross receipts, sales, use, ad valorem, value added, franchise,
profits, license, withholding, payroll, employment, environmental, excise,
severance, stamp, transfer, occupation, premium, property or windfall profit
tax, custom duty or other tax, governmental fee or other similar assessment
or charge, together with any interest and any penalty, addition to tax or
additional amount imposed by any jurisdiction or taxing authority (domestic
or foreign) on such Person.
"TERMINATION DATE" means April 15, 2000.
The following terms are defined in the corresponding Sections listed
below:
TERM SECTION
Balance Sheet ......................... 6.5
Balance Sheet Date .................... 6.5
Buyer ................................. Recitals
Buyer Common Stock .................... Recitals
CERCLA ................................ 6.8.4
CERCLIS ............................... 6.8.4
Closing ............................... 2
Closing Date .......................... 5
Code .................................. Recitals
Disposition ........................... Recitals
Dissolution ........................... Recitals
Exchange Act .......................... Recitals
Form 10-Q ............................. 6.5
Hazardous Substance ................... 6.8.2
NPL ................................... 6.8.4
Option Shares ......................... Recitals
Option Stock Transfer ................. 8.2.1
Other Buyer Filings ................... 8.9
Other Seller Filings .................. 8.7
Proxy Statement ....................... 8.7
Purchase Consideration ................ 3.1.1
4.
TERM SECTION
Purchased Assets ...................... Recitals
Purchased Cash Amount ................. Recitals
Release ............................... 6.8.2
Requirements of Law ................... 6.8.1
Seller ................................ Recitals
Seller Common Stock ................... Recitals
Seller Financial Statements ........... 6.5
Shareholders Meeting .................. 8.8
Tech Squared Business Acquiror ........ Recitals
Transactions .......................... 6.2.1
Trust Amount .......................... 8.2.2
Unaudited 1999 Financial Statements ... 6.5
Voting Agreement and Proxy ............ Recitals
2. SALE OF ASSETS.
At the closing provided for in Section 5 below (the "Closing"), the
Seller shall sell, assign, transfer and deliver to the Buyer the Purchased
Assets, which shall constitute all or substantially all of the assets of the
Seller on the Closing Date, by delivery of stock certificates representing
3,000,000 shares of Buyer Common Stock, duly endorsed in blank or accompanied
by stock powers duly executed in blank, in proper form for transfer, and
$1,200,000 of cash by wire transfer of immediately available funds to an
account designated by the Buyer not less than one business day prior to the
Closing Date.
3. PURCHASE CONSIDERATION.
3.1.1 The aggregate consideration for the Purchased Assets
shall be an aggregate of 2,650,000 shares of Buyer Common Stock (the
"Purchase Consideration"); PROVIDED, HOWEVER, that the Purchase Consideration
shall be adjusted appropriately if prior to the Closing Date there is a
change in the number of shares of Buyer Common Stock held by the Seller or a
change in the class of shares of Buyer Common Stock held by the Seller, in
each case, to the extent attributable to the declaration of any stock
dividend, stock split, recapitalization, reclassification, combination or
similar event.
3.1.2 At the Closing, the Buyer shall deliver to the Seller
stock certificates representing the Purchase Consideration, duly registered
in the name of the Seller. All shares of Buyer Common Stock delivered as
Purchase Consideration shall be duly authorized, fully paid and
non-assessable and free of preemptive rights and registered under the
Securities Act.
5.
4. NO ASSUMPTION OF LIABILITIES.
Anything in this Agreement to the contrary notwithstanding, the Buyer
shall not assume, or in any way be liable or responsible for, any Liabilities
of the Seller whatsoever. Without limiting the generality of the foregoing,
the Buyer shall not assume (i) any Liability of the Seller arising out of or
in connection with the negotiation and preparation of this Agreement or the
consummation and performance of the transactions contemplated hereby,
including, without limitation, any Liability relating to Taxes so arising;
(ii) any Liability under Contracts to which the Seller is a party or by or to
which it or its assets, properties or rights are bound or subject, including
without limitation environmental Liabilities, wrongful termination
Liabilities; (iii) any Liability to trade or other creditors or customers of
the Seller; (iv) any Liability of the Seller or any shareholder of the Seller
for any Taxes; or (v) any Liability of the Seller with respect to any
violation by the Seller or any of its Subsidiaries of any Requirements of Law.
5. CLOSING.
The Closing of the Acquisition shall take place at the offices of
Xxxxxx Godward LLP, Xxx Xxxxxxxx Xxxxx, Xxx Xxxxxxxxx, XX 00000 and Larkin,
Hoffman, Xxxx & Xxxxxxxx, Ltd., 1500 Norwest Financial Center, 0000 Xxxxxx
Xxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000, at 10:00 A.M., Pacific time, on a
business day within 10 business days after satisfaction or waiver of each of
the conditions set forth in Section 9 below, such business day to be mutually
agreed by the Buyer and the Seller (subject to reasonable delay of the
closing date by either party not to exceed 10 additional business days), or
at such other place, at such other time or on such other date as the Buyer
and the Seller mutually agree in writing. The date upon which the Closing
occurs is herein called the "Closing Date."
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller represents and warrants to the Buyer as follows:
6.1 ORGANIZATION. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Minnesota and has the requisite corporate power to own its properties and
carry on its business as now conducted.
6.2 AUTHORITY RELATIVE TO THE AGREEMENTS.
6.2.1 The Seller has the requisite corporate power and
authority to enter into this Agreement and to engage in the Acquisition, the
Disposition and the Dissolution (collectively, the "TRANSACTIONS") and
otherwise perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement by the Seller and the consummation by the
Seller of the transactions contemplated hereby have been duly authorized by
the Board of Directors of the Seller and, except for the approval of its
shareholders as set forth in Section 8.8 below, no other corporate
proceedings on the part of the Seller are necessary to authorize this
Agreement, the Transactions or the other transactions contemplated hereby or
thereby; provided that (i) the Seller has not yet entered into definitive
agreements with respect to the Disposition and (ii) the Seller's Board of
Directors has not approved any particular form or terms of the Dissolution.
This Agreement has been duly executed and delivered by the Seller. This
Agreement constitutes a valid and binding obligation of the Seller
enforceable against it in accordance with its terms.
6.
6.2.2 Except as set forth in the Disclosure Statement, neither
the execution and delivery of this Agreement by the Seller, nor the
consummation of the transactions contemplated hereby nor compliance by the
Seller with any of the provisions hereof or thereof will: (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Seller or any of its Subsidiaries under, any of
the terms, conditions or provisions of (x) its charter or by-laws or (y) any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other Contract to which it is a party or to which it or any of its properties
or assets may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in Section 6.2.3 below, violate any judgment, ruling,
order, writ, injunction or decree known to the Seller or any Subsidiary or
any statute, rule or regulation applicable to the Seller or its Subsidiaries
or any of their respective properties or assets, except in the case of
clauses (i)(y) and (ii) above for violations, breaches and defaults which
would not, adversely effect (A) the ability of the Seller to consummate the
Transactions or the other transactions contemplated hereby or (B) the Buyer.
6.2.3 Except as set forth in the Disclosure Statement, other
than compliance with (i) the Exchange Act, (ii) the Securities Act, (iii)
applicable bulk transfer laws, (iv) the HSR Act and (v) applicable provisions
of the MCL, no notice to, filing with, or authorization, consent or approval
of, any Governmental Body is necessary for the consummation by the Seller of
the Transactions or the other transactions contemplated by this Agreement.
6.3 BOARD RECOMMENDATION. The Board of Directors of the Seller
has, by resolutions duly adopted by a vote at a meeting of such Board duly
held on July 11, 1999, approved and adopted this Agreement, the Transactions
and the other transactions contemplated herein and therein on the terms and
conditions set forth herein, and has recommended that holders of shares of
Seller Common Stock approve this Agreement, the Transactions and the other
transactions contemplated hereby and thereby; provided, that the Seller's
Board of Directors has not approved any particular form or terms of the
Disposition or the Dissolution.
6.4 TITLE TO OPTION SHARES. Following the exercise of the JAR
Option in accordance with its terms, the Seller and its Subsidiaries will own
in the aggregate beneficially and of record, and will have the power and
authority to convey, free and clear of any Lien, the Option Shares, and, upon
delivery of and payment on the Closing Date for the Option Shares as herein
provided, the Seller will convey to the Buyer good and valid title to such
Option Shares, free and clear of any Lien.
6.5 COMMISSION FILINGS; FINANCIAL STATEMENTS. The Seller has
heretofore delivered to the Buyer its (i) Annual Report on Form 10-K for the
fiscal years ended December 31, 1996, 1997 and 1998, as filed with the
Commission, (ii) Quarterly Report on Form 10-Q for the quarter ended March
31, 1999 (the "FORM 10-Q"), and (iii) proxy statements relating to all
meetings of the Seller's shareholders (whether annual or special) since
January 1, 1996, (iv) all other reports (including any Form 8-Ks) or
registration statements filed by the Seller with the Commission since January
1, 1996, and (v) the unaudited consolidated balance sheet and related
unaudited consolidated statements of income and cash flows of the Seller and
its Subsidiaries at June 30, 1999 and for the six months then ended (the
"UNAUDITED 1999 FINANCIAL STATEMENTS"). As of
7.
their respective dates, such reports and registration statements (including
all exhibits and schedules thereto and documents incorporated by reference
therein) complied in all material respects with all applicable requirements
of the Exchange Act or the Securities Act, as applicable, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Seller and its Subsidiaries included or
incorporated by reference in the Form 10-Q, such other reports and the
Unaudited 1999 Financial Statements (collectively, the "SELLER FINANCIAL
STATEMENTS") have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto); and except that the Unaudited 1999 Financial Statements
do not include footnote disclosures otherwise required by GAAP, and fairly
present the consolidated financial position of the Seller and its
Subsidiaries as of the dates thereof and the results of their operations and
changes in their financial position for the periods then ended, except as
otherwise noted therein and subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments and any other
adjustments described therein. The consolidated balance sheet of the Seller
and its Subsidiaries as at June 30, 1999 is referred to as the "BALANCE
SHEET," and June 30, 1999, is referred to as the "BALANCE SHEET DATE."
6.6 NO UNDISCLOSED LIABILITIES. At the Balance Sheet Date, the
Seller and its Subsidiaries taken as a whole did not have any direct or
indirect Liabilities, secured or unsecured, known or unknown, fixed or
unfixed, xxxxxx or inchoate, liquidated or unliquidated, accrued, absolute,
contingent or otherwise, not reflected, reserved against or disclosed in the
Balance Sheet or in the footnotes thereto which were required to be
reflected, reserved against or disclosed therein in accordance with generally
accepted accounting principles. Since the Balance Sheet Date, except as
disclosed in the Unaudited 1999 Financial Statements or the Disclosure
Statement, neither the Seller nor any of its Subsidiaries has incurred any
Liabilities other than (i) in the ordinary course of business, (ii) those
contained in the agreements entered into or to be entered into in connection
with the Transactions or incurred in connection with consummating the
Transactions or (iii) in amounts that, individually or in the aggregate, are
not material to the Condition of the Seller or its ability to consummate the
Transactions or the other transactions contemplated hereby or to the Buyer.
6.7 LITIGATION. Except as set forth in the Disclosure Statement,
there is no Action pending or, to the Seller's knowledge, threatened against
or involving the Seller or any of its Subsidiaries, or any of its properties
or rights, and neither the Seller nor any of its Subsidiaries is subject to
any order, writ, injunction or decree, which, in each case, is reasonably
likely (i) to have a material adverse effect on the Condition of the Seller
or its ability to consummate the Transactions or the other transactions
contemplated hereby or (ii) to be material to the Buyer.
6.8 REGULATORY AND ENVIRONMENTAL COMPLIANCE.
6.8.1 The Seller and each of its Subsidiaries have conducted
their respective businesses so as to comply with all applicable Requirements
of Law relating to the operations, conduct or ownership of the property or
business of the Seller or any Subsidiary, the failure to comply with which
would, individually or in the aggregate, have a material adverse effect on the
8.
Condition of the Seller. "REQUIREMENTS OF LAW" means (i) the charter or
by-laws or other organizational or governing documents of the Seller, or (ii)
any statute, law (including common law), treaty, rule, regulation or
ordinance (including, without limitation, environmental, pollution control,
occupational health and safety and food and drug regulations) or permit or
any judgment, decree, injunction, order or legally binding determination of
any Governmental Body applicable to the Seller or any of its Subsidiaries
existing as of the date hereof.
6.8.2 No notice, written notification (and, to the Seller's
knowledge, no oral notification or notice), demand, request for information,
citation, summons or order has been received, no complaint has been filed, no
penalty has been assessed which has not been paid, and no written notice
(and, to the Seller's knowledge, no oral notification or notice) has been
received by the Seller or any of its Subsidiaries that any investigation or
review is pending or threatened by any Governmental Body or other Person,
with respect to any alleged violation by the Seller or any of its
Subsidiaries of any Requirements of Law, with respect to any generation,
treatment, storage, recycling, transportation or disposal or release, as
defined in 42 U.S.C. Section 9601(22), including into an indoor environment
("RELEASE"), of any toxic, caustic or otherwise hazardous substance including
asbestos, petroleum, its derivatives, by-products and other hydrocarbons,
regulated under federal, state or local environmental statutes, ordinances,
rules, regulations or orders ("HAZARDOUS SUBSTANCE").
6.8.3 No Hazardous Substance is present in violation of any
Requirements of Law at any property now owned or leased by the Seller or any
of its Subsidiaries, and no Hazardous Substance resulting from the Seller's
or any of its Subsidiaries' operations is present in violation of any
Requirements of Law at any property formerly owned or leased by the Seller or
any of its Subsidiaries. There are no underground storage tanks for
Hazardous Substances present in violation of any Requirements of Law at any
property now owned or leased by the Seller or any of its Subsidiaries or, on
any property previously owned or leased by the Seller or any of its
Subsidiaries, with respect to which the Seller or any such Subsidiary may
have liability. Except as set forth in the Disclosure Statement, there has
been no Release of any Hazardous Substance, and no Hazardous Substance is
present, in a reportable or threshold quantity, where such a quantity has
been established by statute, ordinance, rule, regulation or order, at, on or
under any property now or previously owned by the Seller or any of its
Subsidiaries, except for Releases in such quantities that have been reported
and for which all Requirements of Law have been satisfied.
6.8.4 To the Seller's knowledge, neither the Seller nor any of
its Subsidiaries has transported or arranged for the transportation, directly
or indirectly, of any hazardous waste (as defined under applicable Federal or
state law) to any location which is listed or proposed for listing on the
National Priorities List ("NPL") under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), or
on the Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS"), or on any similar state list, which is the
subject of federal, state or local enforcement actions or other
investigations which may reasonably be expected to lead to claims against the
Seller or any of its Subsidiaries for cleanup costs, remedial work, damages
to natural resources or for personal injury claims, including, but not
limited to, claims under CERCLA.
9.
6.8.5 Except as set forth in the Disclosure Statement, no oral
or written notification of a Release of a Hazardous Substance has been filed
by or on behalf of the Seller or any of its Subsidiaries and no property now
or, to the Seller's knowledge, previously owned or leased by the Seller or
any of its Subsidiaries is listed or, to the Seller's knowledge, proposed for
listing, on the NPL, on CERCLIS or any similar state list of sites requiring
investigation or clean-up.
6.8.6 There are no environmental Liens on any of the real
property or other properties owned or leased by the Seller or any of its
Subsidiaries, and neither the Seller nor any of its Subsidiaries has been
notified of any governmental actions that have been taken or are in process
which could subject any of such properties to such Liens and neither the
Seller nor any of its Subsidiaries are required to place any notice or
restriction relating to the presence of Hazardous Substances at any property
owned by any of them in any deed to such property.
6.8.7 To the Seller's knowledge, except as set forth in the
Disclosure Statement, there is no fact, circumstance or condition of or
concerning any property now or previously owned or leased by the Seller or
any of its Subsidiaries that is reasonably likely to result in any material
Liability to the Seller, any of its Subsidiaries or the Buyer under or based
on any Requirements of Law.
6.9 BROKERS. Other than as previously disclosed to the Buyer in
writing, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Acquisition or the
Transactions contemplated hereby based upon arrangements made by or on behalf
of the Seller.
6.10 TAX RETURNS AND AUDITS. Except as set forth in the Disclosure
Statement:
6.10.1 The Seller and its Subsidiaries as of the Closing Date
(A) will have prepared and filed all required federal, state, local and
foreign returns, estimates, information statements and reports ("RETURNS")
relating to any and all Taxes concerning or attributable to the Seller and
its Subsidiaries or their operations and such Returns are true and correct
and have been completed in accordance with applicable law; (B) will have paid
or accrued all Taxes they are required to pay or accrue; and (C) will have
withheld with respect to their employees all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld.
6.10.2 There are no other Taxes that would be due if asserted
by a taxing authority, except with respect to which the Seller is maintaining
reserves to the extent currently required by GAAP, and as of the Closing
Date, there will not be any Contract, including but not limited to the
provisions of this Agreement, covering any employee or former employee of the
Seller or its Subsidiaries that, individually or collectively, could give
rise to the payment of any amount that would not be deductible pursuant to
Sections 280G or 162 of the Code. Neither the Seller or its subsidiaries has
executed any waiver of any statute of limitations on or extending the period
for the assessment or collection of any Tax.
6.10.3 Neither the Seller nor its Subsidiaries (A) has filed
any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by the
10.
Seller or its Subsidiaries; (B) is a party to a tax sharing, tax indemnity or
tax allocation agreement nor does the Seller or its Subsidiaries owe any
amount under any such agreement; (C) has been a member of an affiliated group
of corporations, within the meaning of Section 1504 of the Code, other than
the affiliated group of which the Seller is the common parent corporation;
(D) owns material assets that directly or indirectly secure debt the interest
on which is tax-exempt under Section 103(a) of the Code; or (E) is, or has
been at any time, a "United States real property holding corporation" within
the meaning of Section 897(c)(2) of the Code.
6.11 DISCLOSURE. No written statement, certificate, schedule, list
or other written information furnished by or on behalf of the Seller to the
Buyer contemplated by this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading.
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer represents and warrants to the Seller as follows:
7.1 ORGANIZATION. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to carry on its business as now
conducted.
7.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
7.2.1 The Buyer has the requisite corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by the Buyer and the
consummation by the Buyer of the transactions contemplated hereby have been
duly authorized by the Board of Directors of the Buyer, and no other
corporate proceeding on the part of the Buyer is necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Buyer and constitutes a valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms.
7.2.2 Neither the execution and delivery of this Agreement by
the Buyer nor the consummation of the transactions contemplated hereby nor
compliance by the Buyer with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
properties or assets of the Buyer under, any of the terms, conditions or
provisions of (x) the Certificate of Incorporation or Bylaws of the Buyer or
(y) any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Buyer is a party, or
to which it, or any of its properties or assets, may be subject, or (ii)
subject to compliance with the statutes and regulations referred to in
Section 7.2.3 below, violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to the Buyer or any of its
properties or assets, or any shares of preferred stock of any class
outstanding of the Buyer except in the case of clauses (i)(y) and (ii) above
for violations, breaches and
11.
defaults which would not, individually or in the aggregate, adversely affect
the ability of the Buyer to consummate the Acquisition or the other
transactions contemplated hereby.
7.2.3 Other than compliance with the HSR Act and the
Securities Act, no notice to, filing with, or authorization, consent or
approval of, any Governmental Body is necessary for the consummation by the
Buyer of the transactions contemplated by this Agreement.
7.3 BUYER COMMON STOCK. The shares of Buyer Common Stock
constituting the Purchase Consideration, when issued and delivered as
consideration for the Purchased Assets pursuant to the terms hereof, will be
validly issued and outstanding, fully paid and nonassessable, and the
issuance of such shares is not and will not be subject to preemptive rights.
7.4 OPTION SHARES. The Option Shares are validly issued and
outstanding, fully paid and nonassessable.
7.5 BROKERS. Other than as previously disclosed to the Seller, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Acquisition or the
transactions contemplated hereby based upon arrangements made by or on behalf
of the Buyer.
7.6 DISCLOSURE. No written statement, certificate, schedule, list
or other written information furnished by the Buyer or on behalf of the Buyer
to the Seller contemplated by this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
8. COVENANTS AND AGREEMENTS.
The Buyer and the Seller covenant and agree as follows:
8.1 CONDUCT OF BUSINESS. From the date hereof through the Closing
Date, unless the Buyer shall otherwise agree in writing or as otherwise
expressly contemplated hereby (including, without limitation, the Disposition
and the Option Stock Transfer), neither the Seller nor any of its
Subsidiaries shall, directly or indirectly, take (or agree, in writing or
otherwise, to take) any action, including without limitation, any acquisition
(by merger, consolidation, or acquisition of stock or assets) of any other
Person, or any investment either by purchase of stock or securities,
contributions to capital (other than to wholly-owned Subsidiaries), property
transfer, or, except in the ordinary course, purchase of any property or
assets of any other Person, or the incurrence of any indebtedness for money
borrowed or the issuance of any debt securities or the assumption or
guarantee of any of the foregoing, except short-term indebtedness incurred in
the ordinary course of business and consistent with past practices, (i) which
would make any representation or warranty in Section 6 hereof untrue or
incorrect in any material respect, (ii) which impairs the Seller's ability to
satisfy any of the conditions set forth in Section 9.1 or 9.3 below or has
the effect of preventing or disabling the Seller from performing its
obligations under this Agreement, (iii) which diminishes the number of shares
of Buyer Common Stock held by the Seller or its Subsidiaries as of the date
hereof or (iv) which could reasonably result in preventing the consummation
of the Transactions or the other transactions contemplated hereby.
12.
8.2 THE OPTION STOCK TRANSFER; THE DISPOSITION; THE DISSOLUTION.
8.2.1 Promptly following the exercise of the JAR Option in
accordance with its terms (which exercise shall be effected at the time of
the signing of this Acquisition Agreement) and the disposition of the assets
of MacUSA, Inc., and in any event prior to the Closing, MacUSA, Inc. shall
distribute all of its property, including but not limited to all of the
Option Shares (the "Option Stock Transfer"), to the Seller in accordance with
a resolution adopted by Seller authorizing the distribution of all of the
assets of MacUSA, Inc. in complete cancellation or redemption of all of its
stock pursuant to Code Section 332.
8.2.2 Prior to the Closing Date, the Seller will use
commercially reasonable efforts to consummate the Option Stock Transfer in a
manner that will not give rise to the recognition of taxable income or gain
to the Seller or any of its Subsidiaries for Federal income tax purposes. In
addition, prior to the Closing Date, the Seller shall use all commercially
reasonable efforts to consummate the Disposition in a commercially reasonable
manner, except to the extent the Buyer concludes in good faith that the
manner selected by Seller may result in the Buyer incurring Liabilities. In
any case, the parties intend that the Disposition will not create, give rise
to or result in any Liability to the Buyer. In that regard, the Seller, on
or prior to the Closing Date, (i) will cause to be paid or satisfied any of
its or its Subsidiaries' liabilities that become due on or prior to the
Closing Date, and (ii) will establish a liquidating trust in accordance with
Internal Revenue Service ("IRS") Revenue Procedures 82-58 and 91-15 and the
MCL containing cash (or, to the extent the Seller's available cash shall be
insufficient, shares of Buyer Common Stock received as Purchase
Consideration, and, to the extent determined by the Seller, other assets in
an amount (the "TRUST AMOUNT") reasonably believed by the Board of Directors
of the Seller, and reasonably acceptable to the Buyer, to satisfy the
requirements of the MCL and be sufficient to pay or adequately provide for
any known, actual or contingent Liabilities of the Seller or its
Subsidiaries, or arising out of the Transactions that may be asserted against
the Seller, its Subsidiaries, such liquidating trust or the Buyer. Written
notice of a preliminary estimate of the Trust Amount made by the Seller in
good faith shall be delivered to the Buyer at least 45 days prior to the
Closing Date. Written notice of the determination of the Trust Amount by the
Seller's Board of Directors and the terms thereof, including copies of the
minutes of any meetings or any consents related thereto, shall be delivered
to the Buyer at least five business days prior to the Closing Date.
8.2.3 The foregoing liquidating trust shall be established
with a trustee selected by the stockholders of record or a court of competent
jurisdiction pursuant to a trust agreement, in form and substance reasonably
acceptable to the Buyer and drafted in accordance with IRS Revenue Procedures
82-58 and 91-15 and the MCL, which agreements shall include provisions
entitling the Buyer to receive payment thereunder if Liabilities of the
Seller are successfully asserted against the Buyer or if the Buyer becomes
subject to Liabilities as a result of the transactions contemplated by this
Agreement. The Liabilities to be provided for in the liquidating trust will
include, without limitation, Liabilities (if any) under Contracts, Liability
(if any) to trade and other creditors, Liability (if any) to dissenting
shareholders of the Seller, any Liability (including legal fees and
disbursements) related to any litigation against Seller (whether or not now
pending) and to any Actions arising from the transactions contemplated hereby
or relating to any assertion of Liability provided for in this Section 8.2,
environmental Liabilities (if any), indebtedness for money borrowed (if any)
and the fees and expenses of consummating the
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transactions contemplated hereby. Such trust agreement shall provide that
any tax imposed (other than upon the shareholders of Seller and their
successors) with respect to such trust arrangement or the earnings with
respect to amounts contained in such trust shall be paid with funds withdrawn
from such trust.
8.2.4 Within one year of the Closing Date, the Seller will
consummate the Dissolution, pursuant to which it will distribute the shares
of Buyer Common Stock received as Purchase Consideration (other than shares
subject to the liquidating trust as provided above) to the holders of Seller
Common Stock.
8.3 CALL OF CONVERTIBLE PREFERRED STOCK. Prior to the Closing
Date, the Seller will call for redemption all outstanding shares of
Convertible Preferred Stock and, on or prior to the Closing Date, cause all
such shares of Convertible Preferred Stock to be redeemed or converted into
Seller Common Stock pursuant to the terms thereof.
8.4 LIQUIDATING DISTRIBUTIONS. In pursuance of the Plan of
Reorganization, and no later than one (1) year from the Closing Date, the
Seller shall distribute the stock, securities and other properties it
receives in the Acquisition, as well as its other properties, first to its
creditors, to the extent necessary to pay all of the Seller's debts and
liabilities, then to the liquidating trust, and then to its stockholders, in
complete liquidation of Seller.
8.5 TAX REPRESENTATION LETTERS. At or prior to the filing of the
Registration Statement, the Seller and the Buyer shall deliver to Xxxxxx
Xxxxxxxx LLP and Cooley Godward LLP tax representation letters in forms
reasonably satisfactory to Xxxxxx Xxxxxxxx LLP and Xxxxxx Godward LLP. The
Seller and the Buyer shall each confirm to Xxxxxx Xxxxxxxx LLP and Xxxxxx
Godward LLP the accuracy and completeness as of the date of effectiveness of
the Registration Statement (with respect to Xxxxxx Xxxxxxxx LLP only) and the
Closing Date (with respect to Xxxxxx Xxxxxxxx LLP and Xxxxxx Godward LLP) of
the tax representation letters delivered pursuant to the prior sentence. The
Seller and the Buyer shall use all reasonable efforts prior to the Closing
Date to cause the Acquisition to qualify as a tax-free reorganization under
Section 368(a) of the Code. Following delivery of the tax representations
letters pursuant to the first sentence of this Section 8.5, each of the
Seller and the Buyer shall use its reasonable efforts to cause Xxxxxx
Xxxxxxxx LLP to deliver to it a tax opinion satisfying the requirements of
Item 601 of Regulation S-K promulgated under the Securities Act. In
rendering such opinions and the opinions referred to in Sections 9.2.3, 9.3.3
and 9.3.4, Xxxxxx Xxxxxxxx LLP and Xxxxxx Godward LLP shall be entitled to
rely on the tax representation letters described in this Section 8.5.
8.6 AGREEMENT NOT TO SELL OPTION SHARES. The Seller hereby
covenants and agrees that the Seller will not, between the date hereof and
the Closing Date: (i) directly or indirectly, sell, transfer, assign, pledge,
hypothecate or otherwise dispose of or encumber the Option Shares, or enter
into any Contract with respect to the foregoing; (ii) directly or indirectly,
solicit, encourage, participate in or initiate discussions or negotiations
with, or provide information to, any Person other than the Buyer or any
Affiliate or representative of the Buyer, concerning any direct or indirect
sale or other disposition of the Option Shares, except as permitted above; or
(iii) purchase any additional shares of Buyer Common Stock.
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8.7 PROXY STATEMENT; OTHER SELLER FILINGS. As promptly as
practicable after the date hereof, the Seller shall prepare and file with the
Commission under the Exchange Act, and shall use all reasonable efforts to
have cleared by the Commission, and promptly thereafter shall mail to its
shareholders, a proxy statement and form of proxy with respect to the
Shareholders Meeting. "PROXY STATEMENT" means such proxy statement and form
of proxy at the time it is initially mailed to the Seller's shareholders and
all amendments or supplements thereto, if any, similarly filed and mailed.
As soon as practicable after the date of this Agreement, the Seller shall
promptly prepare and file any other filings required to be filed by the
Seller under the Exchange Act, Securities Act or any other federal or state
securities laws relating to the Acquisition and the transactions contemplated
herein ("OTHER SELLER FILINGS"). The Seller shall notify the Buyer promptly
of the receipt of any comments of the Commission and of any request by the
Commission for amendments or supplements to the Proxy Statement or by any
other governmental official with respect to any Other Seller Filing or for
additional information and will supply the Buyer with copies of all
correspondence with respect to the Proxy Statement and any Other Seller
Filings. Each of the Seller and the Buyer shall use its best efforts to
obtain and furnish the information required to be included in the Proxy
Statement and any Other Seller Filing. The Seller, after consultation with
the Buyer, shall use its best efforts to respond promptly to any comments
made by the Commission with respect to the Proxy Statement and any Other
Seller Filing and any preliminary version thereof and cause the Proxy
Statement and related form of proxy to be mailed to the shareholders of the
Seller at the earliest practicable time. The Seller shall bear the costs and
expenses of printing and distributing the Proxy Statement and related form of
proxy (which will include the prospectus included in the Registration
Statement and the related Registration Statement) to the Seller's
shareholders; provided that the Buyer shall be responsible for any Commission
or state blue sky filing or similar fees relating to the Registration
Statement, subject to Section 8.10 below. The Seller shall notify the Buyer
of its intention to mail the Proxy Statement to the shareholders of the
Seller at least 48 hours prior to the intended time of such mailing. The
information provided and to be provided by the Seller and the Buyer,
respectively, for use in the Proxy Statement and any Other Seller Filings
shall, on the date the Proxy Statement is first mailed to the Seller's
shareholders or any Other Seller Filing is filed with the appropriate
Governmental Body and in each case on the date of the Shareholders Meeting,
be true and correct in all material respects and shall not omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, and each of the
Seller and the Buyer agree to correct any such information provided by it for
use in the Proxy Statement or any Other Seller Filing which shall have become
false or misleading. The Proxy Statement and any Other Seller Filing, when
filed with the appropriate Governmental Body, shall comply as to form in all
material respects with all applicable requirements of law.
8.8 MEETING OF SHAREHOLDERS. The Seller shall take all action
necessary, in accordance with the MCL and its Certificate of Incorporation and
Bylaws, to duly call, give notice of, convene and hold a meeting of its
shareholders as promptly as practicable to consider and vote upon the approval
of the Acquisition and the transactions contemplated hereby (such meeting and
any adjournment or postponement thereof is referred to as the "SHAREHOLDERS
MEETING"). The Proxy Statement shall contain the determinations and
recommendations of the Board of Directors of the Seller as to the Acquisition
and the transactions contemplated hereby, provided, that the Seller's Board of
Directors need not approve or recommend any particular form or terms of the
Disposition. The Seller shall use its best efforts to solicit from holders of
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shares of Seller Common Stock proxies in favor of approval of the Acquisition
and the transactions contemplated hereby and to take all other action
necessary or, in the reasonable judgment of the Buyer, helpful to secure the
vote of holders of shares of Seller Common Stock required by law to effect
the Acquisition and the transactions contemplated hereby.
8.9 REGISTRATION STATEMENT; OTHER BUYER FILINGS. As promptly as
practicable after the date hereof, the Buyer shall prepare and file the
Registration Statement with the Commission under the Securities Act and shall
use all reasonable efforts to cause the Registration Statement to be declared
effective by the Commission. As soon as practicable after the date of this
Agreement, the Buyer shall promptly prepare and file any other filings
required to be filed by the Buyer under the Securities Act or any other
federal or state securities laws relating to the Acquisition and the
transactions contemplated herein ("OTHER BUYER FILINGS"). The Buyer shall
notify the Seller promptly of the receipt of any comments of the Commission
and of any request by the Commission for amendments or supplements to the
Registration Statement or by any other governmental official with respect to
any Other Buyer Filing or for additional information and will supply the
Seller with copies of all correspondence with respect to the Registration
Statement and any Other Buyer Filings. Each of the Seller and the Buyer
shall use its best efforts to obtain and furnish the information required to
be included in the Registration Statement and any Other Buyer Filing. The
Buyer, after consultation with the Seller, shall use its best efforts to
respond promptly to any comments made by the Commission with respect to the
Registration Statement and any Other Buyer Filing and any preliminary version
thereof. The information provided and to be provided by the Seller and the
Buyer, respectively, for use in the Registration Statement and any Other
Buyer Filings shall, on the date the prospectus included in the Registration
Statement is first mailed to shareholders by the Seller as part of the Proxy
Statement or any Other Buyer Filing is filed with the appropriate
Governmental Body and, in each case, on the date of the Shareholders Meeting,
be true and correct in all material respects and shall not omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, and each of the
Buyer and the Seller agree to correct any such information provided by it for
use in the Registration Statement or any Other Buyer Filing which shall have
become false or misleading. The Registration Statement and any Other Buyer
Filing, when filed with the appropriate Governmental Body, shall comply as to
form in all material respects with all applicable requirements of law.
8.10 FEES AND EXPENSES. If this Agreement or the transactions
contemplated hereby are abandoned or terminated pursuant to Sections 11.1.5,
11.1.6, 11.1.8 or 11.1.10 the Seller shall promptly (and in any event within
two business days after written request by the Buyer) reimburse the Buyer and
its Affiliates for all reasonable out-of-pocket expenses (including all fees
and expenses of counsel, outside accountants, investment banking firms,
experts and consultants to the Buyer and its Affiliates) incurred by them or
on their behalf, commencing in May 1999, in connection with the transactions
contemplated hereby, including without limitation, all costs and expenses of
or relating to (i) the preparation and negotiation of this Agreement and the
Voting Agreement and Proxy, (ii) the printing and filing of the Registration
Statement and exhibits thereto, each prospectus included therein and any
amendment or supplement to the Registration Statement or any such prospectus,
including, without limitation, any filing fees payable to the Commission or
any applicable blue sky authorities, (iii) the preparation and delivery of
stock certificates representing the Purchase Consideration, (iv) the
distribution, shipping and mailing to the Seller's shareholders of any
prospectus, including any
16.
supplement thereto, included in the Registration Statement, (v) the listing
of the shares representing the Purchase Consideration on the Nasdaq Stock
Market, (vi) any registration or qualification of the shares representing the
Purchase Consideration with applicable blue sky authorities, including the
fees and disbursements of blue sky counsel in connection therewith and the
preparation and printing of any blue sky memoranda and (vii) compliance with
the HSR Act, including the payment of any filing fees. Except as provided in
the preceding sentence, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses. If this Agreement or the transactions
contemplated hereby are abandoned or terminated pursuant to Section 11.1.7 or
11.1.9, the Buyer shall promptly (and in any event within two business days
after written request by the Seller) reimburse the Seller and its Affiliates
for all reasonable out-of-pocket expenses (including all fees and expenses of
counsel, outside accountants, investment banking firms, experts and
consultants to the Seller and its Affiliates) incurred by them or on their
behalf, commencing in May 1999, in connection with the transactions
contemplated hereby, including without limitation, all costs and expenses of
or relating to (i) the preparation and negotiation of this Agreement and the
Voting Agreement and Proxy, (ii) the printing and filing of the Registration
Statement and exhibits thereto, each prospectus included therein and any
amendment or supplement to the Registration Statement or any such prospectus,
including, without limitation, any filing fees payable to the Commission or
any applicable blue sky authorities, (iii) the distribution, shipping and
mailing to the Seller's shareholders of any prospectus, including any
supplement thereto, included in the Registration Statement, (iv) compliance
with the HSR Act, including the payment of any filing fees and (v) the
preparation of the liquidating trust.
8.11 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and to cooperate with each other in connection with the foregoing,
including (i) using reasonable best efforts to obtain all necessary waivers,
consents and approvals from other parties to loan Contracts; (ii) using
reasonable best efforts to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal, state or
foreign law or regulations, to defend all Proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby, to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby; and (iii) effecting all necessary registrations and
filings, including, but not limited to, filings under the HSR Act and
submissions of information requested by governmental authorities.
8.12 ACCESS TO INFORMATION; CONFIDENTIALITY.
8.12.1 Prior to the Closing Date, the Buyer shall be entitled,
through its officers, employees and agents, reasonable access at all
reasonable times to the offices and facilities of the Seller and its
Subsidiaries and to their officers, employees, agents, properties, books,
records and Contracts, and the Seller shall furnish the Buyer and its
representatives all financial, operating and other data and information as
the Buyer, through its representatives, may reasonably request. In addition,
the Seller shall deliver to the Buyer a copy of any report, opinion,
recommendation, assessment, summary, compilation or other document relating
to the Liabilities of the Seller and
17.
its Subsidiaries and prepared for or on behalf of or addressed to the Seller,
the Seller's Board of Directors or any committee thereof (other than any
analysis completed by the Seller's financial advisor related to the
Transactions). At the Buyer's request, the Seller shall cause the party
preparing any such document to provide a letter permitting the Buyer to rely
thereon as though it were addressed to the Buyer. Subject to the
requirements of law or judicial process, the Buyer shall hold in confidence,
and shall use its best efforts to cause its representatives to hold in
confidence, all nonpublic information concerning the Seller until such time
as such information is otherwise publicly available, and, if this Agreement
is terminated, the Buyer will, and will use its best efforts to cause its
representatives to, deliver to the Seller, within 2 business days of the date
of termination, all documents, work papers and other material (including
copies) obtained by the Buyer, or on its behalf, from the Seller as a result
of this Agreement or in connection herewith, whether so obtained before or
after the execution hereof.
8.12.2 Prior to the Closing Date, the Seller shall be entitled
to participate in a due diligence meeting with one or more members of the
senior management of the Buyer, such member or members to be reasonably
designated by the Buyer, to the extent that such meeting shall be reasonably
necessary to fulfill the due diligence obligations of the Seller under the
federal securities laws in connection with the Proxy Statement. Subject to
the requirements of law or judicial process, the Seller shall hold in
confidence all nonpublic information concerning the Buyer until such time as
such information is otherwise publicly available.
8.12.3 No investigation pursuant to this Section 8.12 shall
affect any representations, warranties, covenants or agreements of the Seller
or the Buyer under this Agreement.
8.13 PUBLIC ANNOUNCEMENTS. The Seller and the Buyer will consult
with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated hereby (other
than the Disposition) and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required
by law. Each of the Seller and the Buyer shall expeditiously review any such
press release or other document in connection with any such consultation.
8.14 NOTIFICATION OF CERTAIN MATTERS. The Seller shall give prompt
notice to the Buyer, and the Buyer shall give prompt notice to the Seller, of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any of the representations or warranties of
the Seller or the Buyer, as the case may be, contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date
hereof to the Closing Date, and (ii) any material failure of the Seller or
the Buyer, as the case may be, or of any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that no such
notifications shall affect the representations or warranties of the parties
or the conditions to the obligations of the parties hereunder unless waived
by the other party hereto.
8.15 BROKERS. Any broker, finder or other fee or commission in
connection with the Transactions or the other transactions contemplated
hereby based upon arrangements made by or on behalf of either of the parties
hereto will be paid, except as set forth in Section 8.10 above, by the party
making such arrangements or on whose behalf such arrangements were made.
Each
18.
party hereto will indemnify and hold the other party harmless from any
claims, Liabilities incurred by such other party as a result of broker,
finder or other fees or commissions which were incurred by, or as result of
any action or involvement of, the indemnifying party in connection with the
Transactions or the other transactions contemplated hereby.
8.16 RESERVED.
8.17 PERMITTED DISCLOSURES. Notwithstanding anything to the
contrary herein, neither the Seller nor the Buyer (or their respective boards
of directors) shall be prohibited from making any disclosure to its own
shareholders that, in the judgment of the disclosing party's board of
directors, in accordance with the advice of counsel, is required under
applicable law; provided that, prior to making any such disclosure, the party
making such disclosure shall notify the other party in writing and afford the
other party a reasonable opportunity for consultation as to such proposed
disclosure.
9. CONDITIONS.
9.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE
ACQUISITION. The respective obligations of each party to effect the
Acquisition shall be subject to the fulfillment at or prior to the Closing
Date of each of the following conditions, unless waived by both the Buyer and
the Seller:
9.1.1 The Transactions and the other transactions contemplated
hereby shall have been approved by the shareholders of the Seller by the vote
(if any) required by the MCL. Holders of no more than 4.0% of the shares of
Seller Common Stock outstanding on the record date of the Shareholders
Meeting shall have perfected dissenter's rights with respect to any of the
Transactions.
9.1.2 Any waiting period (and any extension thereof)
applicable to the consummation of the Acquisition under the HSR Act shall
have expired or been terminated.
9.1.3 No preliminary or permanent injunction or other order,
decree or ruling issued by a Governmental Body nor any statute, rule,
regulation or executive order promulgated or enacted by a Governmental Body
shall be in effect which would (i) make the acquisition by the Buyer of the
Option Shares illegal or (ii) otherwise prevent the consummation of the
Acquisition and the transactions contemplated hereby.
9.1.4 The Registration Statement shall be effective under the
Securities Act and no "STOP ORDER" shall have been issued with respect to the
Registration Statement and no Proceeding for such purpose shall have been
commenced. The staff of the Commission shall have indicated that they have
no further comments regarding the Proxy Statement.
9.1.5 The Buyer Common Stock constituting the Purchase
Consideration shall have been approved for listing by the Nasdaq Stock
Market, subject to official notice of issuance.
9.1.6 Any licenses, permits, consents, approvals, waivers,
authorizations, qualifications and orders of domestic governmental
authorities and parties to Contracts with the
19.
Seller and its Subsidiaries as are necessary in connection with the
consummation of the transactions contemplated hereby shall have been obtained.
9.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE SELLER. The
obligation of the Seller to effect the Acquisition is also subject to each of
the following conditions, unless waived by the Seller:
9.2.1 The Buyer shall in all material respects have performed
each obligation to be performed by it hereunder on or prior to the Closing
Date.
9.2.2 The representations and warranties of the Buyer set
forth in this Agreement shall be true and correct in all material respects at
and as of the Closing Date as if made at and as of such time, except to the
extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct as of such date.
9.2.3 The Seller shall have received a written opinion from
Xxxxxx Xxxxxxxx LLP in form and substance reasonably satisfactory to it, to
the effect that the Acquisition should constitute a reorganization within the
meaning of Section 368 of the Code and such opinion shall not have been
withdrawn. In rendering such tax opinion, Xxxxxx Xxxxxxxx LLP shall be
entitled to rely on the tax representation letters referred to in Section 8.5.
9.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The
obligation of the Buyer to effect the Acquisition is also subject to each of
the following conditions, unless waived by the Buyer:
9.3.1 The Seller shall in all material respects have performed
each obligation to be performed by it hereunder on or prior to the Closing
Date.
9.3.2 The representations and warranties of the Seller set
forth in this Agreement shall be true and correct in all material respects at
and as of the Closing Date as if made at and as of such time, except to the
extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct as of such date.
9.3.3 The Buyer shall have received a written opinion from
Xxxxxx Xxxxxxxx LLP in form and substance reasonably satisfactory to it, to
the effect that the Acquisition should constitute a reorganization within the
meaning of Section 368 of the Code and such opinion shall not have been
withdrawn. In rendering such tax opinion, Xxxxxx Xxxxxxxx LLP shall be
entitled to rely on the tax representation letters referred to in Section 8.5.
9.3.4 The Buyer shall have received a written opinion from
Xxxxxx Godward LLP in form and substance reasonably satisfactory to it, to
the effect that the Acquisition should constitute a reorganization within the
meaning of Section 368 of the Code and such opinion shall not have been
withdrawn. In rendering such tax opinion, counsel shall be entitled to rely
on the tax representation letters referred to in Section 8.5.
20.
9.3.5 Prior to the Closing Date, the Seller shall have taken
all steps necessary to consummate the Dissolution other than the filing of
the Certificate of Dissolution of the Seller with the Secretary of State of
the State of Minnesota, in a form and by a method acceptable to the Buyer.
9.3.6 Prior to the Closing Date, the Seller shall have paid or
satisfied all of its Liabilities or the Seller's Board of Directors shall
have made adequate provision therefor in the liquidating trust required by
Section 8.2 above in an amount, and with terms and conditions, reasonably
satisfactory to the Buyer.
9.3.7 The Buyer shall not have reasonably determined, after
taking into account any applicable terms and provisions of the liquidating
trust required by Section 8.2 above, that the consummation of the
Transactions and the other transactions contemplated hereby (i) is likely to
result in Liability to the Buyer or (ii) is likely to result in the Buyer
receiving less than 3,000,000 shares of Buyer Common Stock, as set forth in
this Agreement.
9.3.8 No Action shall have been commenced and be pending by
any Person against the Seller or the Buyer (but, as to the Buyer, only if
such Action is related to the transactions contemplated hereby or based upon
claims that are reasonably likely to result in Liability of the Buyer for
Liabilities of the Seller) or any of their Affiliates, associates, officers
or directors, which is reasonably likely to be material to the Buyer;
provided, however, that the Buyer shall not be entitled to terminate the
Acquisition based upon an Action described in the Disclosure Statement which
the Seller considered in determining the amount of funds deposited in the
Liquidating Trust unless a development in connection with such Action has
occurred after the date of this Agreement that materially increases the
likelihood of the Buyer incurring Liabilities in connection with such Action.
10. INDEMNIFICATION, ETC.
10.1 INDEMNIFICATION BY THE SELLER. The Seller shall hold harmless
and indemnify each of the Indemnitees from and against, and shall compensate
and reimburse each of the Indemnitees for, any Damages that are directly or
indirectly suffered or incurred by any of the Indemnitees or to which any of
the Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any third-party claim) and that arise
directly or indirectly from or as a direct or indirect result of, or are
directly or indirectly connected with (a) any breach of any covenant or
obligation of the Seller contained in any of the agreements with respect to
the Transactions; (b) any Liability of the Seller or of any Related Party;
(c) any Liability to which the Buyer or any of the other Indemnitees may
become subject and that arises directly or indirectly from or relates
directly or indirectly to (i) any product produced or sold or any services
performed by or on behalf of the Seller, (ii) the presence of any Hazardous
Substance at any site owned, leased, occupied or controlled by the Seller or
any Subsidiary on or at any time prior to the Closing Date, (iii) the
generation, manufacture, production, transportation, importation, use,
treatment, refinement, processing, handling, storage, discharge, release or
disposal of any Hazardous Substance (whether lawfully or unlawfully) by or on
behalf of the Seller, (iv) the operation by the Seller of its business, or
(v) any failure to comply with any bulk transfer law or similar Legal
Requirement in connection with any of the Transactions, including the
Disposition; and (d) any Proceeding relating directly or indirectly to
21.
any breach, alleged breach, Liability or matter of the type referred to in
clause "(a)," "(b)" or "(c)" above (including any Proceeding commenced by
any Indemnitee for the purpose of enforcing any of its rights under this
Section 10).
10.2 SETOFF. In addition to any rights of setoff or other rights
that the Buyer or any of the other Indemnitees may have at common law or
otherwise, the Buyer shall have the right to withhold and deduct any sum that
may be owed to any Indemnitee under this Section 10 from any amount otherwise
payable by any Indemnitee to the Seller. The withholding and deduction of
any such sum shall operate for all purposes as a complete discharge (to the
extent of such sum) of the obligation to pay the amount from which such sum
was withheld and deducted.
10.3 NONEXCLUSIVITY OF INDEMNIFICATION REMEDIES. The
indemnification remedies and other remedies provided in this Section 10 shall
not be deemed to be exclusive. Accordingly, the exercise by any Person of
any of its rights under this Section 10 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 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).
10.4 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion
or commencement by any Person of any claim or Proceeding (whether against the
Buyer, against any other Indemnitee or against any other Person) with respect
to which the Seller may become obligated to indemnify, hold harmless,
compensate or reimburse any Indemnitee pursuant to this Section 10, the Buyer
shall have the right, at its election, to designate the Seller to assume the
defense of such claim or Proceeding at the sole expense of the Seller. If
the Buyer so elects to designate the Seller to assume the defense of any such
claim or Proceeding (1) the Seller shall proceed to defend such claim or
Proceeding in a reasonable and diligent manner with counsel reasonably
satisfactory to the Buyer; (2) the Buyer shall make available to the Seller
any non-privileged documents and materials in the possession of the Buyer
that may be necessary to the defense of such claim or Proceeding; (3) the
Seller shall keep the Buyer informed of all material developments and events
relating to such claim or Proceeding; (4) the Buyer shall have the right to
participate in the defense of such claim or Proceeding at its own expense;
(5) the Seller shall not settle, adjust or compromise such claim or
Proceeding without the prior written consent of the Buyer, which consent
shall not be unreasonably withheld; and (6) the Buyer may at any time
(notwithstanding the prior designation of the Seller to assume the defense of
such claim or Proceeding) assume the defense of such claim or Proceeding. If
the Buyer does not elect to designate the Seller to assume the defense of any
such claim or Proceeding (or if, after initially designating the Seller to
assume such defense, the Buyer elects to assume such defense), the Buyer may
proceed with the defense of such claim or Proceeding on its own. If the
Buyer so proceeds with the defense of any such claim or Proceeding on its
own: (a) the Buyer shall proceed to defend such claim or Proceeding in a
reasonable and diligent manner with counsel reasonably satisfactory to the
Seller; (b) all reasonable expenses relating to the defense of such claim or
Proceeding (whether or not incurred by the Buyer) shall be borne and paid
exclusively by the Seller; (c) the Seller shall make available to the Buyer
any non-privileged documents and materials in the possession or control of
the Seller that may be necessary to the defense of such claim or Proceeding;
(d) the Buyer shall keep the Seller informed of all material developments and
events relating to such claim or Proceeding; and (e) the Buyer shall have the
right to settle,
22.
adjust or compromise such claim or Proceeding with the consent of the Seller;
PROVIDED, HOWEVER, that the Seller shall not unreasonably withhold such
consent.
10.5 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN BUYER. No
Indemnitee (other than the Buyer or any successor thereto or assign thereof)
shall be permitted to assert any indemnification claim or exercise any other
remedy under this Agreement unless the Buyer (or any successor thereto or
assign thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.
11. TERMINATION, AMENDMENT AND WAIVER.
11.1 TERMINATION. This Agreement may be terminated and the
Acquisition and the transactions contemplated hereby may be abandoned, by
written notice promptly given to the other party hereto, at any time prior to
the Closing Date, whether prior to or after approval by the shareholders of
the Seller:
11.1.1 By mutual written consent of the Seller and the Buyer;
11.1.2 By either the Seller or the Buyer, if a Governmental
Body shall have issued an order, decree or ruling or promulgated or enacted
any statute, rule, regulation or executive order, in each case, permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that any such order, decree or ruling
shall have become final and nonappealable;
11.1.3 By either the Seller or the Buyer, if the Closing shall
not have occurred on or before the Termination Date, unless the absence of
such occurrence shall be due to the failure of the party seeking to terminate
this Agreement to perform in all material respects each of its obligations
under this Agreement required to be performed by it prior to the Closing Date;
11.1.4 By either the Seller or the Buyer, if at the
Shareholders Meeting the Transactions and any other transactions contemplated
hereby that are required to be approved by the shareholders of the Seller
shall fail to be approved by such shareholders by the vote required by the
MCL or holders of more than four percent of the shares of Seller Common Stock
outstanding have perfected their dissenter's rights;
11.1.5 By the Buyer, if the Buyer shall have reasonably
determined, after taking into account any applicable terms and provisions of
the liquidating trust required by Section 8.2 above, that consummation of the
Transactions and the other transactions contemplated hereby could result in
Liability to the Buyer; provided, however, that the Buyer shall have ten days
from the date it receives notice of such determination to cure any
circumstance giving rise to such determination; and provided, further, that
if cash or other assets having a value of at least $7,200,000 are deposited
in the liquidating trust, the Buyer shall only make such determination based
upon claims or potential Liabilities not described in the Disclosure
Statement or material adverse developments relating to Liabilities described
in the Disclosure Statement;
11.1.6 By the Buyer, if the Seller shall have (i) withdrawn,
modified or amended in any respect its approval or recommendation of the
Acquisition or the transactions contemplated hereby (other than any
particular form of Disposition), (ii) failed to include in the
23.
Proxy Statement such recommendation (including the recommendation that the
shareholders of the Seller vote in favor of the Acquisition and the
transactions contemplated hereby (other than any particular form of
Disposition), (iii) taken any public position inconsistent with such
recommendation or (iv) if the Board of Directors of the Seller shall have
resolved to do any of the foregoing;
11.1.7 By the Seller, if the Buyer fails to perform in all
material respects its obligations under this Agreement; PROVIDED, HOWEVER,
that the Buyer shall have ten days from the date it receives notice of such
failure to cure any failure to perform any such obligations;
11.1.8 By the Buyer, if the Seller fails to perform in all
material respects its obligations under this Agreement; PROVIDED, HOWEVER,
that the Seller shall have ten days from the date it receives notice of such
failure to cure any failure to perform any such obligations;
11.1.9 By the Buyer, if the board of directors of the Buyer
determines in good faith that termination of this Agreement would be in the
best interests of the Buyer and its stockholders, provided that the Buyer
shall not exercise any rights under this section unless the Buyer shall
determine in good faith to enter into a transaction that its board of
directors determines in good faith to be in the best interests of the Buyer
and its stockholders; or
11.1.10 By the Seller, if the board of directors of Seller
determines in good faith on the basis of advice of counsel that termination
of this Agreement is necessary in order for such board of directors to comply
with its fiduciary obligations under applicable law; provided that the Seller
shall not exercise any rights under this section unless the Seller shall
determine in good faith to enter into a transaction that its board of
directors determines, based upon advice of counsel, the Seller is required to
enter into in accordance with the board's fiduciary obligations.
In the event this Agreement is terminated pursuant to Section 11.1.9 in
connection with a transaction proposed to be entered into by the Buyer that
is intended to be accounted for as a pooling of interests in connection with
which affiliates of the Buyer are required to enter into agreements related
to their equity interests in the Buyer, the Seller agrees to execute such
agreements as are executed by other affiliates of the Buyer; provided,
however, that the Seller shall not be required to enter into such agreements
if the board of directors of the Seller determines in good faith on the basis
of advice of counsel that execution of such agreements would violate the
fiduciary obligations of such board of directors under applicable law.
11.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement and abandonment of the Acquisition as provided in Section 11.1
above, this Agreement shall forthwith become void and there shall be no
Liability on the part of the Seller or the Buyer, except as set forth in this
Section, Section 8.10 above, the last sentences of Sections 8.12.1 and 8.12.2
above, Section 8.12.3 above, 8.13 above, 8.17 above and the last sentence of
Section 11.1 above, and except to the extent that such termination results
from the willful breach of a party hereto of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
11.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
24.
11.4 WAIVER. At any time prior to the Closing Date, whether before
or after the Shareholders Meeting, any party hereto, by action taken by its
Board of Directors, may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto or (ii) waive compliance
with any of the agreements of any other party or with any conditions to its
own obligations. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party by a duly authorized officer.
12. GENERAL PROVISIONS.
12.1 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally or sent by cable, telegram, telecopier or telex to the parties at
the following addresses or at such other addresses as shall be specified by
the parties by like notice:
(a) if to the Seller:
Tech Squared Inc.
0000 Xxxx 00xx Xx., Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
Facsimile: (000) 000-0000
with a copy to:
Larkin, Hoffman, Xxxx & Xxxxxxxx, Ltd.
1500 Norwest Financial Center
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(b) if to the Buyer:
Digital River, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
25.
12.2 REPRESENTATIONS AND WARRANTIES; ETC. The respective
representations and warranties of the Seller and the Buyer contained herein
shall expire with, and be terminated and extinguished upon, consummation of
the Acquisition and the transactions contemplated hereby, and thereafter
neither the Seller nor the Buyer nor any officer, director or principal
thereof shall be under any Liability whatsoever with respect to any such
representation or warranty. This Section 12.2 shall have no effect upon any
other obligation of the parties hereto, whether to be performed before or
after the consummation of the Acquisition and the transactions contemplated
hereby.
12.3 VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provisions of this Agreement, which shall remain in full force and
effect.
12.4 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
12.5 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
12.6 MISCELLANEOUS. This Agreement and the Voting Agreement and
Proxy (i) constitute the entire agreement and supersede all other prior
agreements and undertakings, both written and oral, between or among the
parties thereto with respect to the subject matter hereof or thereof; (ii)
may not be assigned by either the Seller or the Buyer without the consent of
the other party; and (iii) shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of Delaware
applicable to agreements made and to be performed entirely within such State.
Any legal action or other legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement may be brought or otherwise
commenced, and shall be venued, in any state or federal court located in
Hennepin County in the State of Minnesota. This Agreement may be executed in
one or more counterparts which together shall constitute a single agreement.
26.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be executed as of the date first above written by their
respective officers thereunto duly authorized.
DIGITAL RIVER, INC. TECH SQUARED INC.
By: /s/ XX Xxxxxxx By: /s/ Xxxxxxx Xxxxx
----------------------- -----------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxx, Xx.
Title: President Title: President, CEO
27.
The undersigned, Xxxx X. Xxxxxxx, although not otherwise a party to this
Agreement, hereby confirms that, prior to exercise of the JAR Option in
accordance with its terms, the undersigned owns, in the aggregate,
beneficially and of record, and has the power and authority to convey, free
and clear of any Lien, the Option Shares, and, upon delivery of and payment
of the exercise price under the JAR Option, the undersigned will convey to
the Seller good and valid title to such Option Shares, free and clear of any
Lien and, following the exercise of the JAR Option in accordance with its
terms, the Seller and its Subsidiaries will own, in the aggregate,
beneficially and of record, and will have the power and authority to convey
free and clear of any Lien, the Option Shares, and upon delivery of and
payment of the Closing Price for the Option Shares as herein provided, the
Seller will convey to the Buyer good and valid title to such Option Shares,
free and clear of any Lien.
/s/ Xxxx Xxxxxxx
----------------
Xxxx X. Xxxxxxx
28.
