Exhibit 1
STOCK PURCHASE AGREEMENT
by and among
CALLISTO PHARMACEUTICALS, INC.,
WEBTRONICS, INC.
and
MR. XXXXX XXXXXXX.
Dated as of March 15, 2002
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March 15,
2002 by and among Callisto Pharmaceuticals, Inc., a Delaware corporation
("CALLISTO"), Webtronics, Inc., a Florida corporation (the "Company"), and Mr.
Xxxxx Xxxxxxx of 0000 Xxxxx Xxxx Xxxxxx #000, Xxxxxxx Xxxxx, Xxxxxxx 00000 (the
"Seller").
RECITALS
WHEREAS, Seller owns substantially all of the issued and
outstanding equity of the Company;
WHEREAS, CALLISTO desires to buy from Seller and Seller desires to
sell to CALLISTO 94.5% of the fully diluted equity interests in the Company for
a purchase price of $373,813.50; and
WHEREAS, pursuant to certain other agreements (the "Separate
Agreements") by and between CALLISTO and certain other sellers listed hereto on
Schedule A (the "Other Sellers"), dated the date hereof, CALLISTO is purchasing
an additional 5.2% of the fully diluted equity interests of the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
Certain Definitions
"Affiliated Person(s)" has the meaning set forth in Section 4.17.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Balance Sheet" means the balance sheet of the Company on a
consolidated basis as of December 31, 2001.
"Business Day" means any day that is not a Saturday or Sunday or a
legal holiday on which banks are authorized or required by law to be closed in
New York, New York.
"Closing" has the meaning set forth in Article III.
"Closing Date" has the meaning set forth in Article III.
"COBRA" has the meaning set forth in Section 4.13.
"Code" has the meaning set forth in Section 4.6(c)(viii).
"Common Stock" has the meaning set forth in Section 4.2(a).
"Company" has the meaning set forth in the recitals.
"Company IP Rights" has the meaning set forth in Section 4.8(a)(xv).
"Company Shares" has the meaning set forth in Section 4.2(a).
"Company Subsidiary" means any corporation, joint venture, limited
liability company, partnership, association or other business entity of which
more than 50% of the total voting power of stock or other equity entitled to
vote in the election of directors or managers thereof is owned or controlled,
directly or indirectly, by the Company.
"Contracts" has the meaning set forth in Section 4.8(b).
"Debt" means the total amount of principal and accrued but unpaid
interest and all other obligations of the Company for borrowed money excluding
any and all capital lease obligations.
"Disclosure Schedule" means the disclosure schedule accompanying
this Agreement.
"Employee Benefit Plan(s)" has the meaning set forth in Section
4.13.
"Encumbrance" means any lien, pledge, mortgage, security interest,
charge, restriction, adverse claim or other encumbrance of any kind or nature
whatsoever.
"Environmental Law" has the meaning set forth in Section 4.14.
"Environmental Costs or Liabilities" has the meaning set forth in
Section 4.14(b).
"ERISA" has the meaning set forth in Section 4.13(a).
"ERISA Affiliate(s)" has the meaning set forth in Section 4.13(a).
"Financial Statements" means the balance sheet and statements of
earnings, shareholders' equity and cash flows of the Company, on a consolidated
basis, as of, and for the period ended, December 31, 2001.
"GAAP" means United States generally accepted accounting principles,
as in effect from time to time.
"Indemnification Obligations" means the indemnification obligations
of the Seller under Article VIII.
"Intellectual Property Rights" has the meaning set forth in Section
4.8(a)(xiv).
"IRS" means the U.S. Internal Revenue Service.
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"knowledge," with respect to a particular Person, means the actual
knowledge, after reasonable inquiry, of in the case of an individual, such
Person or, in the case of a corporation, the directors and officers of such
Person.
"Licenses" has the meaning set forth in Section 4.11(b).
"Loss(es)", in respect of any matter, means any loss, liability,
cost, expense, judgment, settlement or damage arising, directly or indirectly,
as a result of or in connection with such matter, including reasonable
attorneys', consultants' and other advisors' fees and expenses, reasonable costs
of investigating or defending any claim, action, suit or proceeding or the
imposition of any judgment or settlement and reasonable costs of enforcing any
Indemnification Obligations.
"Material Adverse Effect" means any material adverse effect on the
business, operations, assets, condition (financial or otherwise), liabilities or
results of operations or prospects of the Company.
"Options" means any option to purchase any capital stock of the
Company.
"Other Sellers" has the meaning set forth in the Recitals.
"Other Sellers' Agent" has the meaning set forth in Section 9.14.
"Permitted Encumbrances" has the meaning set forth in Section
4.7(c).
"Person" means an individual, partnership, venture, unincorporated
association, organization, syndicate, corporation, limited liability company, or
other entity, trust and trustee, executor, administrator or other legal or
personal representative or any government or any agency or political subdivision
thereof.
"Pre-Closing Period" means all taxable periods ending on or before
the Closing Date and the portion ending on or before the Closing Date of any
taxable period that includes (but does not end on) the Closing Date.
"Preferred Stock" shall have the meaning set forth in Section 4.2
"Previous Director" shall have the meaning set forth in Section 6.3.
"Purchase Price" has the meaning set forth in Section 2.1(b).
"Returns" shall mean returns, reports, and information statements
with respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including consolidated, combined and unitary tax
returns, including returns required in connection with any employee benefit
plan.
"Seller" has the meaning set forth in the first paragraph of this
Agreement and includes the Company Stockholders.
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"Separate Agreements" has the meaning set forth in the Recitals.
"Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs,
imposts and governmental impositions or charges of any kind in the nature of (or
similar to) taxes, payable to any federal, state, local or foreign taxing
authority, including (i) income, franchise, profits, gross receipts, ad valorem,
net worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto.
"United States" or "U.S." means the United States of America.
ARTICLE II
Purchase and Sale
2.1 Purchase and Sale of Company Shares.
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(a) Subject to and upon the terms and conditions hereinafter set
forth, at the Closing, and in reliance upon the representations and warranties
contained in this Agreement or made pursuant hereto, the Seller hereby agrees to
sell, assign, transfer and deliver to CALLISTO, and CALLISTO hereby agrees to
purchase from the Seller, 996,836 Company Shares owned by the Seller, free and
clear of all Encumbrances (other than restrictions on transfer imposed on
CALLISTO by applicable state and federal securities laws), against receipt of
payment therefor of three hundred seventy three thousand eight hundred thirteen
dollars and fifty cents ($373,813.50); provided, however, that in no event shall
payments by CALLISTO to the Seller and the Other Sellers exceed four hundred
thousand dollars ($400,000) in the aggregate, taking into account $40,000 which
has previously been put into escrow for release at the Closing.
(b) All amounts paid by CALLISTO pursuant to Section 2.1(a) shall
for the purposes of this Agreement constitute the "Purchase Price."
(c) All payments of cash pursuant to Section 2.1 shall be made in
immediately available funds by certified or official bank check or by wire
transfer to an account specified by Seller in accordance with Section 13.4 at
least two (2) Business Days prior to the date such payment is to be made.
ARTICLE III
Closing
3.1 Closing Date. The closing of the transactions contemplated
hereby (the "Closing") shall be held at 10:00 a.m., prevailing local time, on
the date hereof, at the offices of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, or at
such other time or other place as may be agreed to in writing by CALLISTO and
Seller. The date on which the Closing actually occurs is herein referred to as
the "Closing Date."
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3.2 Certain Actions at Closing.
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(a) At the Closing:
(i) Seller shall deliver or cause to be delivered to CALLISTO
stock certificates representing ninety-four and five tenths percent
(94.5%), on a fully diluted basis, of all the equity interests of the
Company, accompanied by stock powers duly endorsed in blank or accompanied
by duly executed instruments of transfer;
(ii) CALLISTO shall make the payments required by Section 2.1;
(iii) Seller shall execute and/or deliver to CALLISTO each
other document, certificate or other instrument required to be executed
and/or delivered by Seller under this Agreement at or prior to the
Closing;
(iv) CALLISTO shall execute and/or deliver to Seller each
other document, certificate or other instrument required to be executed
and/or delivered by CALLISTO under this Agreement at or prior to the
Closing;
(v) Seller shall be liable for and shall pay all Taxes,
direct or indirect, if any, attributable to the transfer of the Company
Shares and, in connection therewith, shall affix any necessary transfer
stamps to the stock certificates (or stock transfer powers) evidencing
such Company Shares.
ARTICLE IV
Representations and Warranties of Seller
The Seller hereby represents and warrants to CALLISTO as follows:
4.1 Organization and Good Standing. The Company is a corporation
duly organized and validly existing under the laws of its jurisdiction of
incorporation. The Company is in good standing under the laws of its
jurisdiction of incorporation. The Company has full corporate power and
authority to own its properties and to carry on its business as it is now being
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction wherein the nature of the business done or the
property owned, leased or operated by it requires such qualification. Copies of
the charter documents and by-laws of the Company and all amendments thereto have
been delivered to CALLISTO and are true, complete and accurate in all respects.
The corporate minutes, corporate records and stock register and transfer records
of the Company have been made available to CALLISTO and are true, complete and
accurate in all material respects. The Company has no Company Subsidiaries.
4.2 Capitalization.
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(a) The Company's authorized capital stock consists solely of the
following: 50,000,000 shares of common stock, $.0001 par value ("Common Stock")
and 20,000,000 shares of preferred stock, $.0001 par value ("Preferred Stock")
of which 1,054,500 shares of Common
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Stock (the "Company Shares") have been duly authorized and outstanding and are
validly issued, fully paid and non-assessable. No shares of Preferred Stock are
outstanding. The Seller owns, beneficially and of record, and has good and valid
title to and the right to transfer to CALLISTO, 996,836 Company Shares, free and
clear of any and all Encumbrances. Immediately after the Closing of this
Agreement and the Separate Agreements, CALLISTO will own ninety-nine and seven
tenths percent (99.7%), of the equity interests of the Company then outstanding.
At the Closing of this Agreement and the Separate Agreements, CALLISTO will own,
and have good and valid title to, ninety-nine and seven tenths percent (99.7%),
on a fully diluted basis, of all equity interests of the Company, in each and
every case free and clear of any and all Encumbrances. No Person other than
CALLISTO has any written or oral agreement, arrangement or understanding or
option to or any right or privilege (whether by law, preemption or contract)
that is or is capable of becoming an agreement, arrangement or understanding or
option for the purchase or acquisition from the Company or any Person of any
shares of capital stock of the Company.
(b) There are no outstanding or authorized options (vested or
unvested), warrants, purchase agreements, subscription rights, conversion
rights, exchange rights or other securities, contracts, arrangements,
understanding or commitments that could require the Company to issue, sell or
otherwise cause to become outstanding any of their authorized but unissued
shares of capital stock or any securities convertible into, exchangeable for or
carrying a right or option to purchase shares of capital stock or to create,
authorize, issue, sell or otherwise cause to become outstanding any new class of
capital stock. None of the issued and outstanding shares of capital stock of the
Company has been issued in violation of any rights of any Person or in violation
of the registration requirements of any state or federal securities law.
4.3 Authorization.
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(a) Each Other Seller and Seller has full legal capacity to enter
into and carry out his or her obligations under this Agreement and is not under
any prohibition or restriction, contractual, statutory or otherwise, against
doing so. For each Other Seller which is not an individual, such Other Seller
has all requisite power and authority to execute, deliver and perform its
obligations under this Agreement. This Agreement and the Separate Agreements
have been duly executed and delivered by the parties thereto (other than
CALLISTO) and constitutes a legal, valid and binding obligation of each seller,
enforceable against him, her or it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other laws affecting the rights of creditors generally and by general
principles of equity regardless of whether enforcement is sought in proceedings
in equity or at law.
4.4 No Conflicts. Neither the execution and delivery of this
Agreement by the Seller nor the Separate Agreements by the Other Sellers,
regardless of whether enforcement is sought in a proceeding in equity or at law
nor the consummation of the transactions contemplated hereby, will (i) conflict
with or violate the constituting documents or by-laws or resolutions of the
directors or stockholders of the Company or (ii) conflict with, violate, result
in the breach of any term of, result in the acceleration of performance of any
obligation under, constitute a default under, require the consent or approval of
or any notice to or filing with any
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third party or governmental authority, or create an Encumbrance (other than a
Permitted Encumbrance) on any of the assets of the Company under, (x) any note,
mortgage, deed of trust or other agreement or instrument to which the Seller,
the Other Sellers or the Company is a party or by which the Seller, the Other
Sellers or the Company or any of their respective assets is bound, or (y) any
law, order, rule, regulation, decree, writ, injunction, License of any
governmental body having jurisdiction over the Seller, the Other Sellers or the
Company or their respective properties; or (iii) create an Encumbrance on any of
the shares of capital stock of the Company except for restrictions on transfers
of securities under applicable state or federal security laws.
4.5 Financial Statements; Undisclosed Liabilities.
---------------------------------------------
(a) The Financial Statements, true, complete and accurate copies of
which have been previously delivered to CALLISTO, have been prepared from the
books and records of the Company in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and fairly present in all material
respects the consolidated financial condition of the Company as at their
respective dates and the consolidated results of operations of the Company for
the periods covered thereby. The statements of operations included in the
Financial Statements do not include any item of special or non-recurring income,
except as specifically identified therein.
(b) As of the date of the Balance Sheet, the Company had no material
liabilities, debts or obligations (whether absolute, accrued, contingent or
otherwise), except for liabilities, debts or obligations reflected or reserved
against in the Balance Sheet. Since the date of the Balance Sheet, the Company
has conducted its business in the ordinary course consistent with past practice
and it has not incurred any liabilities, debts or obligations (whether absolute,
accrued, contingent or otherwise), except for liabilities incurred in the
ordinary course of business, and none of such liabilities would be reasonably
likely to have a Material Adverse Effect. Since the date of the Balance Sheet,
there has been no material adverse change in the business, operations, assets,
condition (financial or otherwise), liabilities or results of operations of the
Company (other than general economic or industry conditions), and no event has
occurred or facts or circumstances exist from the date hereof through and
including the Closing Date which would be reasonably likely to result in a
Material Adverse Effect.
4.6 Taxes.
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(a) The Company has timely filed with the appropriate taxing
authorities all Returns required to be filed by it (taking into account any
extension of time to file). The information on such Returns is complete and
accurate in all material respects. The Company has paid on a timely basis all
Taxes (whether or not shown on any Return) due and payable, except for Taxes
which the Company believes, as the case may be, in good faith, are not due and
payable because they are being diligently contested by appropriate proceedings
and for which the Company has set aside on its books reserves to the extent
required by GAAP. There are no liens for Taxes (other than for current Taxes not
yet due and payable) upon the assets of the Company.
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(b) The Company has not received any notice from any taxing or other
governmental authority claiming, proposing or assessing deficiencies for Taxes
with respect to the Company for any Pre-Closing Period and the Seller has no
knowledge that there exists any unpaid (or unreserved in accordance with GAAP)
deficiencies for Taxes with respect to the Company for any Pre-Closing Period.
There are no pending or, to the knowledge of the Seller or the Company,
threatened audits, investigations or claims or issued and outstanding
assessments for or relating to any liability in respect of Taxes of the Company.
The Company has not requested any extension of time within which to file any
currently unfiled returns in respect of any Taxes and no extension of a statute
of limitations relating to any Taxes is in effect with respect to the Company.
(c) (i) The Company has made or will make provision in accordance
with GAAP for all Taxes payable by it with respect to any Pre-Closing Period
which have not been paid prior to the Closing Date except to the extent no
Material Adverse Effect is likely to result; (ii) the provisions for Taxes with
respect to the Company for the Pre-Closing Period (excluding any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) are adequate to cover all Taxes with respect to such period except to
the extent no Material Adverse Effect is likely to result; (iii) the Company has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, shareholder or other third party except to the extent no Material
Adverse Effect is likely to result; (iv) except as set forth in Section
4.6(c)(iv) of the Disclosure Schedule, the Company does not have any net capital
losses, non-capital losses or other loss carryovers or tax credits and except as
set forth on such Schedule, no losses are subject to limitation under Code
sections 382, 383, or 384 or the federal consolidated return regulation; (v)
there are no advance tax rulings in respect of any Tax pending between the
Company and any taxing authority; (vi) except as set forth in Section 4.6(c)(vi)
of the Disclosure Schedule, the Company is not liable for Taxes of any other
Person, and is neither currently under any contractual obligation to or a party
to any tax sharing agreement or any other agreement providing for payments by
the Company with respect to Taxes; (vii) the Company is not a party to any joint
venture, partnership or other arrangement or contract which is properly treated
or would be properly classified as a partnership for federal income tax
purposes; (viii) the Company, as of the Closing Date, has not agreed or will be
required, as a result of a change in method of accounting or otherwise, to
include any adjustment under Section 481 of the Internal Revenue Code of 1986,
as amended (the "Code") (or any corresponding provision of state, local or
foreign law) in taxable income for any period after the Closing Date; (ix) the
Company is not a party to any agreement, contract, arrangement or plan that
could result after the Closing (taking into account the transactions
contemplated by this Agreement), separately or in the aggregate, in the payment
of any "excess parachute payments" within the meaning of Section 280G of the
Code or would give rise to an excise tax under Section 4999 of the Code (or any
corresponding provision of state, local or foreign tax law); No written claim
has ever been made by a taxing authority in a jurisdiction where the Company
does not currently file Returns that the Company is or may be subject to
taxation by that jurisdiction; and (x) the Company has not filed or been
included in a combined, consolidated or unitary return (or substantial
equivalent thereof) of any Person other than the Company; (xi) the Company is
not a "consenting corporation" under section 341(f) of the Code or any
corresponding provision of state, local or foreign law; and (xii) the Company
has not made an election or is required to treat any of its assets as owned by
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another Person for federal income tax purposes or as tax-exempt bond financed
property or tax-exempt use property within the meaning of section 168 of the
Code (or any corresponding provision of state, local or foreign law).
4.7 Title to Properties; Absence of Encumbrances.
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(a) Section 4.7(a) of the Disclosure Schedule contains a complete
list by address of all real property owned, leased or used by the Company
indicating the nature of the Company's interest therein. No condemnation,
expropriation, eminent domain or similar proceeding affecting all or any
material portion of any such real property is pending or, to the knowledge of
Seller, threatened, which if determined adversely to the Company would be
reasonably likely to have a Material Adverse Effect.
(b) Except as set forth in Section 4.7(b) of the Disclosure
Schedule, the Company has good title to all of the material properties and
assets, real and personal, tangible and intangible, it owns, including those
reflected on its books and records and on the Balance Sheet (except as sold or
disposed of subsequent to the date thereof in the ordinary course of business
consistent with past practice), free and clear of all Encumbrances, except for
Permitted Encumbrances. Except as set forth in Section 4.7(b) of the Disclosure
Schedule, the Company has a valid leasehold, license or other interest in all of
the other assets, real or personal, tangible or intangible, which are used in
the operation of its business, free and clear of all Encumbrances, except for
Permitted Encumbrances and except where the invalidity would not be reasonably
likely to have Material Adverse Effect. Except as set forth in Section 4.7(b) of
the Disclosure Schedule, none of such property leased by the Company is subject
to any sublease, sublicense or other agreement granting to any other Person any
right to the use, occupancy or enjoyment of such property or any portion
thereof.
(c) "Permitted Encumbrances" means: (i) liens for Taxes not yet due
and payable or which are being diligently contested in good faith by appropriate
proceedings and as to which appropriate reserves (to the extent required by
GAAP) have been established in the books and records of the Company; (ii)
mechanics', materialmen's, carriers', warehousemen's, landlord's and similar
liens securing obligations not yet delinquent or which are being diligently
contested in good faith by appropriate proceedings and as to which appropriate
reserves (to the extent required by GAAP) have been established in the books and
records of the Company; (iii) such imperfections of title, easements,
encroachments and Encumbrances as do not materially detract from the value or
interfere with the present use of the properties or assets subject thereto or
affected thereby; (iv) Encumbrances on personal property taken by or granted to
a Person who, by making advances or incurring an obligation gives value to
enable the Company to acquire rights in or the use of such property, provided
that the Encumbrance does not extend to or cover any other property and the
total cost to the Company that would be required to discharge such Encumbrance
in full does not exceed the value so given by such Person to the Company; and
(v) Encumbrances, if any, noted in the Financial Statements.
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4.8 Contracts and Agreements.
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(a) Set forth in Section 4.8(a) of the Disclosure Schedule is a
true, complete and accurate list of each of the following contracts, agreements,
arrangements or understandings, whether oral or written, to which the Company is
a party or by which the Company or its assets or properties is bound:
(i) each employment or other similar agreement providing for
compensation, severance or a fixed term of employment in respect of
services performed by any employee of the Company;
(ii) (a) each management, consulting, retainer or other
similar type of agreement under which services are provided by any Person
to the Company or any of the Company Subsidiaries in excess of $10,000 per
annum and (b) each agreement or commitment for services and supplies
provided by any other Person to the Company (other than those that are
terminable upon not more than thirty (30) days' notice to the Company
without penalty);
(iii) each agreement that restricts the operation of the
business of the Company as presently conducted and each agreement that
restricts the ability of the Company to solicit customers, employees or
other service providers;
(iv) each agreement with an Affiliated Person;
(v) each lease (as lessor, lessee, sublessor or sublessee) of
any real property;
(vi) each lease (as lessor, lessee, sublessor or sublessee) of
any tangible personal property;
(vii) each license (as licensor, licensee, sublicensor or
sublicensee) of any Intellectual Property Rights (other than customary,
non-negotiated licenses of commercially available, "packaged, off the
shelf" computer software);
(viii) each agreement under which any money is being or may be
borrowed or loaned or any note, bond, factoring agreement, indenture or
other evidence of indebtedness has been issued or assumed (other than
those under which there remain no ongoing obligations of the Company), and
each guaranty (including "take-or-pay" and "keepwell" agreements) of any
evidence of indebtedness or other obligation, or of the net worth, of any
Person;
(ix) each mortgage agreement, deed of trust, security
agreement, purchase money agreement, conditional sales contract or capital
lease;
(x) each partnership, joint venture or similar agreement;
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(xi) each agreement containing restrictions with respect to
the payment of dividends or other distributions in respect of the
Company's capital stock;
(xii) each agreement or commitment to make unpaid capital
expenditures in excess of $10,000;
(xiii) each agreement containing a change of control provision;
(xiv) each agreement or other arrangement providing for the
development of software for, or license of software or Intellectual
Property Rights to, the Company, which software or Intellectual Property
Rights is used or incorporated in any of the Company's products, or other
Intellectual Property Rights, including, rights of publicity, used or
incorporated in any of Company's products. For the purposes of this
Agreement, "Intellectual Property Rights" means all worldwide intellectual
property rights, including, patents, patent applications, patent rights,
trademarks, trademark applications, trade names, service marks, service
xxxx applications, copyright, copyright applications, franchises,
licenses, inventories, know-how, trade secrets, customer lists,
proprietary processes and formulae, all source and object code, algorithm,
architecture, structure, display screens, layouts, inventions, development
tools and all documentation and media constituting, describing or relating
to the above, including, manuals, memoranda and records;
(xv) each agreement or other arrangement with respect to any
Company IP Rights. The Company owns, is licensed or has the right to use,
sell or license all Intellectual Property Rights used to conduct the
business of the Company as presently conducted; provided that no
representation is made with respect to commercial, off-the shelf software
used or licensed by the Company in the ordinary course of its business
(such Intellectual Property Rights being hereinafter collectively referred
to as the "Company IP Rights");
(xvi) each agreement or arrangement with respect to
advertising; and
(xvii) each other agreement having an indefinite term or a fixed
term of more than six (6) months (other than those that are terminable at
will or upon not more than thirty (30) days' notice by the Company without
penalty).
A complete copy of each written (or a summary of each oral) agreement,
arrangement, lease, license, mortgage, deed of trust, instrument, contract or
other type of document, arrangement or understanding required to be disclosed
pursuant to this Section 4.8(a) has been previously delivered to CALLISTO or its
representatives.
(b) To the knowledge of the Seller, all of the agreements,
arrangements, leases, licenses, mortgages, deeds of trust, instruments,
contracts or other types of documents required to be listed in Section 4.8(a) of
the Disclosure Schedule (collectively, the "Contracts") are legal, valid,
binding and in full force and effect and are enforceable by the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and by
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general principles of equity. Except as set forth in Section 4.8(b) of the
Disclosure Schedule, the Company is not (with or without the lapse of time or
the giving of notice, or both) in breach of or in default under any of the
Contracts, and, to the knowledge of the Seller, no other party to any of the
Contracts is (with or without the lapse of time or the giving of notice, or
both) in breach of or in default under any of the Contracts other than defaults,
breaches or violations as would not reasonably be expected to have a Material
Adverse Effect.
4.9 Insurance. All insurance policies currently maintained by the
Company are accurately listed and described in Section 4.9 of the Disclosure
Schedule. Each such insurance policy is in full force and effect and all
premiums due and payable in respect thereof have been paid. The Company has not
received notice of cancellation or non-renewal of any such policy. The
transactions contemplated by this Agreement will not give rise to a right of
termination of any such policy by the insurance company issuing the same prior
to the expiration of the term of such policy.
4.10 Litigation. There is no lawsuit, governmental investigation or
legal, administrative or arbitration action or proceeding pending or, to the
knowledge of the Seller, threatened against the Seller, the Other Sellers, the
Company or any of their respective properties, or any director, officer or
employee of the Company, in his or her capacity as such. The Company is not
specifically identified as a party subject to any restrictions or limitations
under any judgment, order or decree of any court, administrative agency or other
governmental authority.
4.11 Compliance with Law.
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(a) The Company is and has been in compliance in all respects with
all applicable laws, statutes, rules, ordinances, regulations, orders and
decrees governing the conduct or operation of its business, and all of its
governmental licenses, approvals, authorizations, franchises and permits. The
Company has not received any written notice of any violation of any such law,
statute, rule, ordinance, regulation, order, decree, license, approval,
authorization, franchise or permit material to the Company.
(b) The Company has all governmental licenses, approvals,
authorizations, franchises and permits (collectively, the "Licenses") necessary
to conduct its business as currently conducted and such Licenses are in full
force and effect. No proceeding is pending or, to the knowledge of the Seller,
threatened seeking the revocation or limitation of any such License material to
the Company. All material Licenses necessary for the ownership or operation of
its properties or assets, the manufacturing, marketing, sale and distribution of
its products or the conduct or operation of its business by the Company is
listed in Section 4.11(b) of the Disclosure Schedule. To the knowledge of the
Seller, there exists no state of facts which could cause any agency, commission,
board or governmental body or authority to limit, revoke or fail to renew any
License related to or in connection with any business currently conducted or
operated by the Company.
12
4.12 Employees.
---------
(a) The Company has, as of the date hereof, a total of one (1)
employee and, to the knowledge of the Seller, the Company has good relationships
with its employee.
(b) The Company is in all respects in compliance with all applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours.
(c) No collective bargaining agreement with respect to the business
of the Company is currently in effect or being negotiated. The Company has no
obligation to negotiate any such collective bargaining agreement, and no
employee of the Company has indicated to the Company that he or she desires to
be covered by a collective bargaining agreement.
(d) All material levies, assessments and penalties made against the
Company pursuant to all applicable workers compensation legislation as of the
date of the Balance Sheet have been paid or have been reserved for or accrued on
the Balance Sheet by the Company and the Company has not as of, at the Closing
Date, been reassessed under any such legislation. There have been no material
levies, assessments or penalties against the Company since the date of the
Balance Sheet.
(e) Section 4.12(e) of the Disclosure Schedule accurately sets forth
all unpaid severance which, as of the date of this Agreement, is due or claimed
to be due from the Company to any Person whose employment with the Company was
terminated.
(f) Section 4.12(f) of the Disclosure Schedule accurately sets forth
all accrued, but unused, vacation as of the date hereof of all employees of the
Company and the Company's policy with respect thereto.
(g) Except as specifically set forth in Section 4.12(g) of the
Company Disclosure Schedule, neither the Seller nor the Company distributed any
written material to any of its employees regarding continued employment of the
Company's employees subsequent to the date hereof or the Closing Date.
4.13 Employee Benefit Plans.
----------------------
(a) Section 4.13(a) of the Disclosure Schedule lists all (i) pension
benefit plans (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), (ii) employee welfare benefit plans
(as defined in Section 3(1) of ERISA), (iii) other material retirement, pension,
bonus, stock purchase, profit sharing, stock option, deferred compensation,
severance or termination pay, life insurance, medical, hospital, dental, vision
care, disability, group legal benefit, incentive or other compensation, fringe
or employee benefit plans, programs or arrangements, and (iv) employment,
executive compensation or severance agreements, in each case (whether referred
to in Section 4.13(a)(i), (ii), (iii) or (iv)) whether written or otherwise, for
the benefit of, or relating to, any former or current employee, officer,
director or consultant (or any of their beneficiaries) of the Company or any
other entity which is a member of a controlled group or an affiliated service
group, or which is under
13
common control, with the Company within the meaning of Sections 414(b), (c), (m)
or (o) of the Code or Section 4001(a)(14) or (b) of ERISA (an "ERISA
Affiliate"), which is maintained, contributed to, or with respect to which there
is an obligation to contribute, by the Company or an ERISA Affiliate, or to
which the Company or an ERISA Affiliate is a named party, and any other similar
plan, program, arrangement or agreement, whether or not the Company or an ERISA
Affiliate currently maintains or contributes to it, with respect to which the
Company or an ERISA Affiliate would be reasonably be expected to incur a
material liability (each an "Employee Benefit Plan").
(b) the Seller has delivered or made available to CALLISTO, with
respect to each Employee Benefit Plan, true and complete copies of (i) the plan
instruments and all amendments thereto for each written plan (and a written
description of any Employee Benefit Plan which is not written), and where
applicable related trust agreements, insurance and other contracts (including
policies), summary plan descriptions, summaries of material modifications and
any other material written communications distributed to employees (excluding
communications in the ordinary course of plan administration), (ii) to the
extent annual reports on Form 5500 are required with respect to any Employee
Benefit Plan, the three most recent annual reports with accompanying schedules
and attachments, (iii) where applicable, the most recent opinion, notification,
or determination letter and application therefor (including all materials
furnished to the IRS in support of such application and all related material
correspondence to or from the IRS), (iv) where applicable, the most recent
audited financial statements, (v) the most recent actuarial valuation for each
Employee Benefit Plan subject to Title IV of ERISA (excluding multiemployer
plans within the meaning of Section 3(37) of ERISA) and (vi) representative
forms of communication used in (A) making distributions under any plan intended
to be qualified under Section 401(a) of the Code, (B) explaining benefit rights
on termination of employment (including rights to elect health care continuation
coverage under Part 6 of Subtitle B of Title I ERISA and Section 4980B of the
Code ("COBRA"), and (C) certifying group health insurance coverage pursuant to
Part 7 of Subtitle B of Title I of ERISA and Sections 9801-9805 of the Code.
(c) Each Employee Benefit Plan has been established and maintained
in all material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations that are
applicable to such Employee Benefit Plan. As of and including the date of the
Closing, the Company shall have made all contributions required to be made by it
up to and including the date of the Closing with respect to each Employee
Benefit Plan, or adequate accruals therefor will have been provided for and will
be reflected on the audited Balance Sheet of the Company.
(d) Each Employee Benefit Plan may, by its terms, be amended or
terminated at any time (subject to applicable notice requirements) and
applicable law.
(e) No Employee Benefit Plan (i) is subject to Title IV of ERISA or
Section 412 of the Code; (ii) is a "multiemployer plan" as such term is defined
in Sections 3(37) or 4001(a)(3) of ERISA; (iii) is a "multiple employer plan" as
described in Section 3(40) of ERISA or Section 413(c) of the Code; (iv) provides
for medical or health benefits (through insurance or otherwise) or provided for
the continuation of such benefits or coverage for any participant or
14
any dependent or beneficiary of any participant after such participant's
retirement or other termination of employment except as may be required by
COBRA; (v) other than a "pension plan" within the meaning of Section 3(2) of
ERISA, is funded through a trust intended to be exempt from tax pursuant to
Section 501 of the Code.
(f) None among the Company or any ERISA Affiliate has incurred or
could reasonably be expected to incur any material liability under Title IV of
ERISA.
(g) With respect to each Employee Benefit Plan, (i) there has been
no prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) that could reasonably be expected to subject CALLISTO, or
the Company, directly or indirectly, to a material tax, penalty or other
liability; and (ii) no fiduciary (as defined in Section 3(21) of ERISA) who is
an employee, officer or director of, or who is otherwise under the direction and
control of, the Company (including the Company and any committee comprised of
one or more such persons) and, to the knowledge of the Company and the Seller,
no other fiduciary, has breached any of the responsibilities or obligations
imposed upon the fiduciary under Title I of ERISA, which would reasonably be
expected to result in material liability.
(h) Except as already disclosed pursuant to this Section 4.13 except
as required by law, none among the Company, any ERISA Affiliate or the Seller
has proposed (to the extent such proposal has been publicized, whether in
writing or otherwise, to individuals who could benefit thereunder) or has agreed
to any changes that would cause an increase in the number or value of benefits
offered, or the class of individuals eligible, under any Employee Benefit Plan
(or that would create new benefits or plans) or which could otherwise cause, in
the aggregate, a material increase in the expense of maintaining the Employee
Benefit Plans.
(i) Except as set forth in Section 4.13(i) of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not result in (i) any payment (including, severance, unemployment
compensation, golden parachute or bonus payments or otherwise) becoming due to
any director, officer, employee or consultant of the Company, (ii) any increase
in the amount of compensation or benefits payable in respect of any director,
officer, employee or consultant of the Company, or (iii) accelerate the vesting
or timing of payment of any benefits or compensation payable in respect of any
director, officer, employee or consultant of the Company. Except as set forth in
Section 4.13(i) of the Disclosure Schedule, no Employee Benefit Plan provides
benefits or payments contingent upon, triggered by or increased as a result of,
a change (or pending change) in the ownership or effective control of the
Company.
(j) There are no pending or, to the knowledge of the Seller,
threatened investigations by any governmental or regulatory agency or authority
involving or relating to any Employee Benefit Plan or pending claims (except for
claims for benefits payable in the normal operation of the Employee Benefit
Plans), suits or proceedings against any Employee Benefit Plan, the Company
(relating to an Employee Benefit Plan), or any fiduciary or trustee of an
Employee Benefit Plan who is an employee, officer or director of, or who is
otherwise under the direction and control of, the Company (including the Company
and any committee comprised of one or more such persons) or, to the knowledge of
the Company and the Seller, any other
15
fiduciary or trustee of any Employee Benefit Plan, nor are there any facts that
would reasonably be expected to give rise to any material liability in the event
of such investigation, claim, suit or proceeding.
4.14 Environmental Matters.
---------------------
(a) The operations of the business by the Company is in compliance
with all applicable federal, state or local statutes, codes, rules or
regulations relating to the environment, natural resources and public or
employee health and safety ("Environmental Laws");
(b) There are no facts, circumstances or conditions relating to,
arising from, associated with or attributable to the operations of the business
by the Company or, to the knowledge of the Seller, adjacent properties, that are
reasonably likely to give rise to an environmental claim or result in
Environmental Costs and Liabilities. "Environmental Costs and Liabilities" means
any losses, liabilities, obligations, damages, fines, penalties, judgments,
actions, claims, costs and expenses (including, without limitation, fees,
disbursements and expenses of legal counsel, experts, engineers and consultants
and the costs of investigation and feasibility studies, remedial or removal
actions and cleanup activities) arising from or under any Environmental Law or
order or contract with any federal, state or local governmental authority or
other person.
4.15 Absence of Certain Changes. Since December 31, 2001 and except
as set forth in Section 4.15 of the Disclosure Schedule, the Company has
operated its businesses in the ordinary course consistent with past practice.
Without limiting the generality of the immediately preceding sentence and except
as set forth in Section 4.15 of the Disclosure Schedule, since that date, the
Company has not:
(i) amended or otherwise modified its constituting documents
or by-laws (or similar organizational documents);
(ii) issued or sold or authorized for issuance or sale, or
granted any options or made other agreements, arrangements or
understandings of the type referred to in Section 4.2(b) with respect to,
any shares of its capital stock or any other of its securities, or altered
any term of any of its outstanding securities or made any change in its
outstanding shares of capital stock or other ownership interests or its
capitalization, whether by reason of a reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares, stock
dividend or otherwise;
(iii) mortgaged, pledged or granted any security interest in
any of its assets, except security interests solely in tangible personal
property granted pursuant to any purchase money agreement, conditional
sales contract or capital lease under which, solely with respect to
conditional sales contracts and capital leases, there exists an aggregate
future liability not in excess of $10,000 per agreement, contract or lease
(which amount was not more than the purchase price for such personal
property and which security interest does not extend to any other item or
items of personal property);
16
(iv) declared, set aside, made or paid any dividend or other
distribution to any shareholder with respect to its capital stock;
(v) redeemed, purchased or otherwise acquired, directly or
indirectly, any capital stock;
(vi) increased the compensation of any employee of the Company
or increased the compensation of the Seller;
(vii) adopted or (except as otherwise required by law) amended
any Employee Benefit Plan;
(viii) terminated or modified any Contract, or received any
written notice of termination of any Contract, except for terminations of
Contracts upon their expiration during such period in accordance with
their terms and terminations or modifications that have not had since
December 31, 2001 and would not reasonably be likely to have a Material
Adverse Effect;
(ix) incurred or assumed any indebtedness for borrowed money
or guaranteed any obligation or the net worth of any Person;
(x) discharged or satisfied any Encumbrance (other than
Permitted Encumbrances) other than those then required to be discharged or
satisfied in accordance with their original terms;
(xi) cancelled or compromised any material debt or claim;
(xii) made any loan or advance to any Person other than travel
and other similar routine advances in the ordinary course of business
consistent with past practice, or acquired any capital stock or other
securities of any other corporation or any ownership interest in any other
business enterprise;
(xiii) changed its method of accounting or its accounting
principles or practices utilized in the preparation of the Financial
Statements, other than as required by GAAP;
(xiv) instituted or settled any material litigation or any
material legal, administrative or arbitration action or proceeding before
any court or governmental body relating to it or its property; or
(xv) entered into any commitment to do any of the foregoing.
4.16 Books and Records. All accounts, books, ledgers and official
and other records prepared and kept by the Company have been truthfully kept and
completed in accordance with GAAP, as applicable, and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein.
17
4.17 Transactions with Related Parties. Except for any employment
relationships between the Company on the one hand, and any employee of the
Company on the other hand, and except as set forth in Section 4.17 of the
Disclosure Schedule, (i) the Company did not or has not within the past two
years, directly or indirectly, purchased, leased or otherwise acquired any
property or obtained any services from, or sold, leased or otherwise disposed of
any property or furnished any services to (except in each case with respect to
remuneration for services rendered as a director, officer or employee of
Company), in the ordinary course of business or otherwise, the Seller, any Other
Seller, any member of the immediate family of the Seller or any Other Seller or
any other Person (other than the Company) that, directly or indirectly, alone or
together with others, controls, is controlled by or is under common control with
the Company or the Seller or any Other Seller or any member of the immediate
family of the Seller or any Other Seller (the Persons listed in this clause (i)
being referred to herein collectively as "Affiliated Persons" and individually
as an "Affiliated Person"); (ii) the Company does not owe any amount to any
Affiliated Person; and (iii) no Affiliated Person owes any amount to the Company
and no part of the property or assets of any Affiliated Person is used by the
Company in the conduct or operation of its businesses.
4.18 Absence of Certain Business Practices. None of the Company or
any of its respective directors, officers, agents or employees, or to the
knowledge of the Seller, any other Person associated with or acting for or on
behalf of any of them, has directly or indirectly (a) made any contribution or
gift which contribution or gift is not in violation of any applicable law and is
consistent with past practice, or any bribe, rebate, payoff, influence payment,
kickback or other payment to any Person, private or public, regardless of form,
whether in money, property or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of the Company or any affiliate of the Company, or (iv) in
violation of any legal requirement, or (b) established or maintained any fund or
asset that has not been recorded in the books and records of the Company.
4.19 No Broker or Finder. Except as set forth in Section 4.19 of the
Disclosure Schedule, no broker or finder has been engaged by the Seller, any
Other Seller or the Company in connection with the transactions contemplated by
this Agreement.
4.20 Restrictions on Business Activities. Except as set forth on
Section 4.20 of the Disclosure Schedule, there is no judgment, injunction, order
or decree binding upon the Company or the Seller or, to the knowledge of the
Seller, threatened that has or could reasonably be expected to have the effect
of prohibiting or impairing any business practice of the Company, any
acquisition of property by the Company, any sale of any product or providing of
any service by the Company or the hiring of employees or the conduct of business
by the Company as currently conducted, except for such prohibitions or
impairments which would not reasonably be likely to have a Material Adverse
Effect.
4.21 Disclosure. No representation or warranty by the Seller in this
Agreement, nor any certificate, schedule, exhibit, or annex delivered or to be
delivered pursuant to this Agreement: (a) contains or will contain any untrue
statement of material fact or (b) omits or will omit to state a material fact
necessary to make the statements contained herein or therein
18
not misleading. There is no information concerning the Company or its respective
operations which has not heretofore been disclosed to CALLISTO, which
information would reasonably be likely to have a Material Adverse Effect.
ARTICLE V
Representations and Warranties of CALLISTO
CALLISTO represents and warrants to the Seller as follows:
5.1 Organization and Good Standing. CALLISTO is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to enter into and carry out
its obligations under this Agreement.
5.2 Authorization. The execution and delivery of this Agreement by
CALLISTO has been duly authorized by all necessary corporate action required on
the part of CALLISTO. This Agreement has been duly executed and delivered by
CALLISTO and constitutes a legal, valid and binding obligation of CALLISTO,
enforceable against CALLISTO in accordance with their respective terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other laws affecting the rights of creditors generally and by
general principles of equity.
ARTICLE VI
Covenants of the Seller
The Seller hereby covenants and agrees as follows:
6.1 Certain Filings. The Seller agrees to make or cause to be made
all filings with regulatory authorities that are required to be made by the
Seller or by the Company to carry out the transactions contemplated by this
Agreement. The Seller agrees to assist and to cause each of the Company to
assist CALLISTO in making all such filings, applications and notices as may be
necessary or desirable in order to obtain the authorization, approval or consent
of any governmental entity which may be reasonably required or which CALLISTO
may reasonably request in connection with the consummation of the transactions
contemplated hereby.
6.2 Consents and Approvals. The Seller agrees to use his or her best
efforts to obtain as promptly as practicable all consents, authorizations,
approvals and waivers required in connection with the consummation of the
transactions contemplated by this Agreement.
6.3 Resignation of Directors. The Seller shall (a) cause the
director of the Company (the "Previous Director") to deliver a written
resignation effective as soon as permissible pursuant to Rule 14F-1 of the
Securities Exchange Act of 1934, as amended, and (b) cause to be duly elected as
director of the Company the individual listed in Exhibit 1 attached hereto with
such individual's term as director commencing upon the resignation of the
Previous Director.
19
6.4 Outstanding Debt. At the Closing, the Company, on a consolidated
basis, shall have no outstanding Debt.
6.5 Secretary's Certificate. At Closing, the Seller shall cause the
Company to deliver a duly executed Secretary's Certificate attaching and
acknowledging as true, accurate and complete each of, the articles of
incorporation and the by-laws of the Company, as well all resolutions of the
Company with respect to the transaction contemplated herein and all filings of
the Company made pursuant to the federal securities laws.
6.6 Board of Approval of Company Share Acquisition. Prior to the
date hereof, the Board of Directors of the Company has approved the acquisition
of Company Shares contemplated by this Agreement, pursuant to Sections
607.0902(d)(7.) of the Florida Business Corporation Act.
6.7 Further Assurances. The Seller agrees to execute and deliver,
and to cause the Company to execute and deliver, such additional documents and
instruments, and to perform such additional acts, as CALLISTO may reasonably
request to effectuate or carry out and perform all the terms, provisions and
conditions of this Agreement and the transactions contemplated hereby and to
effectuate the intent and purposes hereof.
ARTICLE VII
Covenants of CALLISTO
CALLISTO hereby covenants and agrees as follows:
7.1 Certain Filings. CALLISTO agrees to make or cause to be made all
filings with regulatory authorities that are required to be made by CALLISTO or
its respective affiliates to carry out the transactions contemplated by this
Agreement. CALLISTO agrees to assist the Seller in making all such filings,
applications and notices as may be necessary or desirable in order to obtain the
authorization, approval or consent of any governmental entity which may be
reasonably required or which the Seller may reasonably request in connection
with the consummation of the transactions contemplated hereby.
7.2 Further Assurances. CALLISTO agrees to execute and deliver such
additional documents and instruments, and to perform such additional acts, as
the Seller may reasonably request, to effectuate or carry out and perform all
the terms, provisions and conditions of this Agreement and the transactions
contemplated hereby and to effectuate the intent and purposes hereof.
ARTICLE VIII
Indemnification
8.1 Survival of Representations, Warranties and Covenants. The
parties to this Agreement hereby agree that the exclusive remedy for any breach
of a representation or warranty, covenant or agreement shall be the
indemnification provisions set out in this Article
20
VIII. The representations, warranties, covenants and agreements of the parties
contained in this Agreement, any Schedule or any certificate delivered pursuant
hereto shall survive the Closing and continue in full force and effect (a) in
the case of the representations and warranties of the Seller contained in
Sections 4.6, 4.11(a), 4.13, 4.14 and 4.18 until the expiration of the
applicable statute of limitations with respect to the matter to which the claim
relates, as such limitation period may be extended from time to time, (b) in the
case of the representations and warranties of the Seller contained in Sections
4.1, 4.2, 4.3, 4.7 and 4.17 forever hereafter, and (c) in the case of all other
representations and warranties of the parties contained in this Agreement, any
Schedule or any certificate delivered pursuant hereto until the two (2) year
anniversary of the Closing Date. Each party hereto shall be entitled to rely on
any such representation or warranty regardless of any inquiry or investigation
made by on behalf of such party.
8.2 Indemnification by the Seller.
-----------------------------
(a) The Seller shall indemnify and hold harmless CALLISTO, the
Company and their respective directors, officers and employees (the "Indemnified
Parties") from and against any Loss incurred or suffered by such Person as a
result of, arising from or in connection with:
(i) a breach by the Seller of any representation or warranty
made by the Seller in this Agreement or in any Schedule or certificate
delivered pursuant hereto or thereto;
(ii) a failure by the Seller to perform or comply with any
covenant or agreement on the part of the Seller contained herein or in any
other Transaction Document; and
(iii) any act or omission made by or caused by the Other
Sellers based on the Seller's obligations pursuant to Section 9.14.
The amount paid pursuant to the preceding sentence shall be paid to CALLISTO or,
at CALLISTO's election, to the Company and shall be the amount required to put
CALLISTO or the Company, as the case may be, in the position it would have been
in had such representation, warranty, covenant or agreement not been breached.
(b) Notwithstanding anything to the contrary in this Agreement, the
Seller shall indemnify and hold harmless the Indemnified Parties from and
against any Loss incurred or suffered by such Person after the Closing Date as a
result of, arising from or in connection with any fraudulent acts or intentional
misconduct, which occurred prior to the Closing Date, by the Seller, the Company
or any of their respective employees against a third party.
(c) To the maximum extent permitted by law, the Seller hereby
releases from any and all manner of claims, demands, causes of action,
obligations, damages or liabilities whatsoever of every kind and nature, at law
or in equity, known or unknown, and whether or not discoverable, which the
Seller has or may have against the Company for any period prior to the Closing.
21
8.3 Indemnification by CALLISTO. CALLISTO shall indemnify and hold
harmless the Seller from and against any Loss incurred or suffered by the Seller
as a result of, arising from or in connection with:
(i) a breach by CALLISTO of any representation or warranty
made by CALLISTO in this Agreement or in any Schedule or certificate
delivered pursuant hereto or thereto; and
(ii) a failure by CALLISTO to perform or comply with any
covenant or agreement on the part of CALLISTO contained herein.
8.4 Assumption of Defense. An indemnified party shall promptly give
notice to each indemnifying party after obtaining knowledge of any matter as to
which recovery may be sought against such indemnifying party because of the
indemnity set forth above, and, if such indemnity shall arise from the claim of
a third party, shall permit such indemnifying party to assume the defense of any
such claim or any litigation resulting from such claim; provided, however, that
failure promptly to give any such notice shall not affect the indemnification
provided under this Article VIII, except to the extent such indemnifying party
shall have been actually and materially prejudiced as a result of such failure.
Notwithstanding the foregoing, an indemnifying party may not assume the defense
of any such third-party claim if it does not demonstrate to the reasonable
satisfaction of the indemnified party that it has adequate financial resources
to defend such claim and pay any and all Losses that may result therefrom, or if
the claim (i) is reasonably likely to result in imprisonment of the indemnified
party, (ii) is reasonably likely to result in a criminal penalty or fine against
the indemnified party the consequences of which would be reasonably likely to
have a Material Adverse Effect on the indemnified party unrelated to the size of
such penalty or fine, or (iii) is reasonably likely to result in an equitable
remedy which would materially impair the indemnified party's ability to exercise
its rights under this Agreement, or impair CALLISTO's right or ability to
operate the Company. If an indemnifying party assumes the defense of such third
party claim, such indemnifying party shall conduct such defense diligently,
shall have full and complete control over the conduct of such proceeding on
behalf of the indemnified party and shall, in his or her or its sole discretion,
have the right to decide all matters of procedure, strategy, substance and
settlement relating to such proceeding; provided, however, that any counsel
chosen by such indemnifying party to conduct such defense shall be reasonably
satisfactory to the indemnified party. The indemnified party may participate in
such proceeding and retain separate co-counsel at its sole cost and expense
(except that the indemnifying party shall be responsible for the fees and
expenses of one separate co-counsel for the indemnified party to the extent the
indemnified party is advised by its counsel that either (x) the counsel the
indemnifying party has selected has a conflict of interest or (y) there are
legal defenses available to the indemnified party that are different from or
additional to those available to the indemnifying party), and the indemnifying
party will not without the written consent of the indemnified party consent to
the entry of any judgment or enter into any settlement with respect to the
matter which does not include a provision whereby the plaintiff or the claimant
in the matter releases the indemnified party from all liability with respect
thereto. Failure by an indemnifying party to notify the indemnified party of its
election to defend any such claim or action by a third party within thirty (30)
days after notice thereof shall have been
22
given to such indemnifying party by the indemnified party shall be deemed a
waiver by such indemnifying party of its right to defend such claim or action.
8.5 Non-Assumption of Defense. If no indemnifying party is permitted
or elects to assume the defense of any such claim by a third party or litigation
resulting therefrom, the indemnified party shall diligently defend against such
claim or litigation in such manner as it may deem appropriate and, in such
event, the indemnifying party or parties shall promptly reimburse the
indemnified party for all reasonable out-of-pocket costs and expenses, legal or
otherwise, incurred by the indemnified party and its affiliates in connection
with the defense against such claim or litigation, as such costs and expenses
are incurred. Any counsel chosen by such indemnified party to conduct such
defense must be reasonably satisfactory to the indemnifying party or parties,
and only one counsel shall be retained to represent all indemnified parties in
an action (except that if litigation is pending in more than one jurisdiction
with respect to an action, one such counsel may be retained in each jurisdiction
in which such litigation is pending).
8.6 Indemnified Party's Cooperation as to Proceedings. The
indemnified party will cooperate in all reasonable respects with any
indemnifying party in the conduct of any proceeding as to which such
indemnifying party assumes the defense. For the cooperation of the indemnified
party pursuant to this Section 8.6, the indemnifying party or parties shall
promptly reimburse the indemnified party for all reasonable out-of-pocket costs
and expenses, legal or otherwise, incurred by the indemnified party or its
affiliates in connection therewith, as such costs and expenses are incurred.
8.7 Limitation on Losses. The amount of any Loss incurred or
suffered by any Indemnified Party shall be increased by any Tax incurred or
reasonably expected to be incurred as a result of or related to any such Loss,
including any Tax related to the inclusion in gross income of insurance proceeds
or a payment, and by the amount of any increase in insurance premiums suffered
by any Person as a result of any claim for any breach, failure or other event
which gives rise to any Loss. Such Person shall use reasonable efforts to
collect any insurance proceeds available with respect to such Loss.
8.8 Tax Matters. Notwithstanding anything to the contrary in
Sections 8.1 - 8.7, this Section 8.8 shall govern indemnification as to the
subject matter discussed in this Section 8.8.
(a) (i) The Seller shall be jointly and severally liable for and
indemnify CALLISTO and the Company for Taxes of the Company for any
taxable year or period that ends on or before the Closing Date and, with
respect to any taxable year or period beginning, before and ending after
the Closing Date, the portion of such taxable year ending on and including
the Closing Date.
(ii) CALLISTO and the Company shall be liable for and
indemnify the Seller for the Taxes of the Company for any taxable year or
period that begins after the Closing Date and, with respect to any taxable
year or period beginning before and
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ending after the Closing Date, the portion of the taxable year beginning
on the day after the Closing Date.
(iii) For purposes of paragraphs (a)(i) and (a)(ii), whenever
it is necessary to determine the liability for Taxes of the Company for a
portion of a taxable year or period that begins before and ends after the
Closing Date, the determination of such Taxes for the portion of the year
or period ending on, and the portion of the year or period beginning
after, the Closing Date shall be determined by assuming that the Company
had a taxable year or period which ended at the close of the Closing Date,
except that exemptions, allowances or deductions that are calculated on an
annual basis, such as the deductions for depreciation, shall be
apportioned based on the number of days in the year elapsed to and
including the Closing Date.
(iv) Any payment by the Seller or CALLISTO under this Section
8.8 will be treated for tax purposes as an adjustment to the Purchase
Price.
(b) The Seller shall cause the Company to file when due all Returns
that are required to be filed by the Company for taxable years or periods ending
on or before the Closing Date, and CALLISTO shall file or cause to be filed when
due all other Returns that are required to be filed by or with respect to the
Company.
(c) After the Closing Date, the Seller and CALLISTO shall:
(i) assist in all reasonable respects (and cause their
respective Affiliated Persons to assist) the other party in preparing any
Returns or reports which such other party is responsible for preparing and
filing in accordance with this Section 8.8.
(ii) cooperate in all reasonable respects in preparing for any
audits of, or disputes with taxing authorities regarding any Returns of
the Company;
(iii) make available to the other and to any taxing authority
as reasonably requested all information, records, and documents relating
to Taxes of the Company;
(iv) provide timely notice to the other in writing of any
pending or threatened Tax audits or assessments of the Company for taxable
periods for which the other may have a liability under this Section 8.8;
and
(v) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax audit or
information requests with respect to any such taxable period.
(d) CALLISTO shall notify the Seller in writing upon receipt by
CALLISTO or the Company of notice of any pending or threatened federal, state,
local or foreign Tax audits or assessments which may materially affect the Tax
liabilities of the Company for which the Seller would be required to indemnify
CALLISTO and the Company, provided that failure to
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comply with this provision shall not affect CALLISTO's right to indemnification
hereunder except to the extent such failure materially impairs Seller's ability
to contest any such Tax liabilities.
ARTICLE IX
Miscellaneous
9.1 Expenses. Whether or not the transactions contemplated hereby
are consummated, each party hereto shall pay all costs and expenses incurred by
such party in respect of the transactions contemplated hereby. All expenses,
including the fees and expenses of any broker or investment banker, incurred by
the Company for the benefit of the Seller prior to the Closing shall be paid by
the Seller.
9.2 Entirety of Agreement. This Agreement (including the Disclosure
Schedule and all other Schedules, annexes and exhibits hereto), together with
any other certificates delivered hereunder, state the entire agreement of the
parties, merge all prior negotiations, agreements and understandings, if any,
and state in full all representations, warranties, covenants and agreements
which have induced this Agreement. Each party agrees that in dealing with third
parties no contrary representations will be made.
9.3 Notices. All notices and demands of any kind which any party
hereto may be required or desire to serve upon another party under the terms of
this Agreement shall be in writing and shall be given by: (a) personal service
upon such other party; or (b) mailing a copy thereof by certified or registered
mail, postage prepaid, with return receipt requested; (c) sending a copy thereof
by Federal Express or equivalent courier service; or (d) sending a copy thereof
by facsimile, to the parties at their respective addresses and facsimile numbers
set forth on the signature pages of this Agreement.
In case of service by Federal Express or equivalent courier service
or by facsimile or by personal service, such service shall be deemed complete
upon delivery or transmission, as applicable. In the case of service by mail,
such service shall be deemed complete on the fifth Business Day after mailing.
The addresses and facsimile numbers to which, and persons to whose attention,
notices and demands shall be delivered or sent may be changed from time to time
by notice served, as hereinabove provided, by any party upon the other party.
9.4 Amendment. This Agreement may be modified or amended only by an
instrument in writing, duly executed by all of the parties hereto.
9.5 Waiver. No waiver by any party of any term, provision,
condition, covenant, agreement, representation or warranty contained in this
Agreement (or any breach thereof) shall be effective unless it is in writing
executed by the party against which such waiver is to be enforced; no waiver
shall be deemed or construed as a further or continuing waiver of any such term,
provision, condition, covenant, agreement, representation or warranty (or
breach) on any other occasion or as a waiver of any other term, provision,
condition, covenant, agreement, representation or warranty (or of the breach of
any other term, provision, condition,
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covenant, agreement, representation or warranty) contained in this Agreement on
the same or any other occasion.
9.6 Counterparts. For the convenience of the parties, any number of
counterparts hereof may be executed (by original or facsimile signatures), each
such executed counterpart shall be deemed an original and all such counterparts
together shall constitute one and the same instrument.
9.7 Assignment; Binding Nature; No Beneficiaries. This Agreement may
not be assigned by any party hereto without the written consent of CALLISTO and
Seller; provided, however, that CALLISTO may assign its rights hereunder to any
direct or indirect wholly-owned subsidiary of CALLISTO which assumes the
obligations of CALLISTO, hereunder, but no such assignment shall relieve
CALLISTO of any such obligations. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective heirs, personal representatives,
legatees, successors and permitted assigns. Except as otherwise expressly
provided in Article VIII, this Agreement shall not confer any rights or remedies
upon any Person other than the parties hereto and their respective heirs,
personal representatives, legatees, successors and permitted assigns.
9.8 Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
9.9 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
applicable to contracts made and to be entirely performed therein. In the event
of any controversy or claim arising out of or relating to this Agreement or the
breach or alleged breach hereof, each of the parties hereto irrevocably (i)
submits to the non-exclusive jurisdiction of the courts of the State of New
York, located in New York City or the United States District Court for the
Southern District of New York, (ii) waives any objection which it may have at
any time to the laying of venue of any action or proceeding brought in any such
court, (iii) waives any claim that such action or proceeding has been brought in
an inconvenient forum, and (iv) agrees that service of process or of any other
papers upon such party by registered mail at the address to which notices are
required to be sent to such party under Section 9.3 shall be deemed good, proper
and effective service upon such party.
9.10 Construction. In this Agreement (i) words denoting the singular
include the plural and vice versa, (ii) "it" or "its" or words denoting any
gender include all genders, (iii) the word "including" shall mean "including
without limitation," whether or not expressed, (iv) any reference to a statute
shall mean the statute and any regulations thereunder in force as of the date of
this Agreement or the Closing Date, as applicable, unless otherwise expressly
provided, (v) any reference herein to a Section, Article, Schedule or Exhibit
refers to a Section or Article of or a Schedule or Exhibit to this Agreement,
unless otherwise stated, and (vi) when calculating the period of time within or
following which any act is to be done or steps taken, the date which is the
reference day in calculating such period shall be excluded and if the last day
of such period is not a Business Day, then the period shall end on the next day
which is a Business Day.
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9.11 Negotiated Agreement. CALLISTO and the Seller acknowledges that
he, she or it has been advised and represented by counsel in the negotiation,
execution and delivery of this Agreement and accordingly agrees that if an
ambiguity exists with respect to any provision of this Agreement, such provision
shall not be construed against any party because such party or its
representatives drafted such provision.
9.12 Public Announcements. Each of the parties agrees that neither
CALLISTO nor the Seller shall make any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without the
prior written approval of CALLISTO, in the case of an announcement by the
Seller, or the Seller, in the case of an announcement by CALLISTO; provided,
however, that CALLISTO or the Company may describe this Agreement and the
transactions contemplated hereby in any press release it is required to make
under applicable laws, rules or regulations.
9.13 Remedies Cumulative. The remedies provided for or permitted by
this Agreement shall be cumulative and the exercise by any party of any remedy
provided for herein shall not preclude the assertion or exercise by such party
of any other right or remedy provided for herein.
9.14 Concerning Other Sellers' Agent. Seller hereby agrees to serve
as agent to the Other Sellers ("Other Sellers' Agent") for the purposes of this
Section 9.14. As Other Sellers' Agent, Seller shall be solely responsible for
(a) allocating the funds due and received from CALLISTO pursuant to this
Agreement and the Separate Agreements at the closing among the Seller and the
Other Sellers and (b) delivery at the closing of the stock certificates of the
Other Sellers to CALLISTO with appropriate stock powers attached, free and clear
of all Encumbrances (other than restrictions imposed on CALLISTO by applicable
state and federal securities laws). Seller represents and warrants that he has
been granted the authority from the Other Sellers to perform the actions set
forth in the previous sentence.
9.15 WAIVER OF JURY TRIAL. CALLISTO, THE COMPANY AND THE SELLER
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE), ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
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The parties hereto have duly executed and delivered this Agreement
as of the day and year first above written.
Address: CALLISTO PHARMACEUTICALS, INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 By: ___________________________________
Attention: Xxxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000 Title: Authorized Person
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
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The parties hereto have duly executed and delivered this Agreement
as of the day and year first above written.
Address: WEBTRONICS, INC.
0000 Xxxxx Xxxx Xxxxxx #000
Xxxxxxx Xxxxx, Xxxxxxx 00000 By: _____________________________________
Attention: Mr. Xxxxx Xxxxxxx Name: Xxxxx Xxxxxxx
Title: President and Director
Facsimile No.: (000) 000-0000
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The parties hereto have duly executed and delivered this Agreement
as of the day and year first above written.
Address:
0000 Xxxxx Xxxx Xxxxxx #000
Xxxxxxx Xxxxx, Xxxxxxx 00000 _____________________________________
Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
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