STOCK PURCHASE AGREEMENT
Exhibit
10.5
This Stock Purchase Agreement
(this “Agreement”) is
entered into as of the 2nd day
of November 2009 (the “Execution Date”) by and among
(A) XXXXX XXXX & CO.
INC., a New York corporation (the “Principal Stockholder”) and
the other Person or Persons who have executed this Agreement on the signature
page hereof under the designation “XXXXX LYON STOCKHOLDERS”
and/or their assignees (collectively, with the Principal Stockholder, the “Stockholders”); (B) XXXXX XXXX SOCRATIC, INC., a
Delaware corporation (“Xxxxx
Lyon”) with offices located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
XX 00000; and (C) XXXX.XXX INC., a Delaware
corporation (“FNDM”),
with offices located at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The
Stockholders, Xxxxx Xxxx and FNDM are hereinafter sometimes referred to
individually as a “Party” and collectively as
“Parties”.
RECITALS
A. On
the Closing Date, the Stockholders shall sell and FNDM shall purchase 100% of
the shares of the capital stock of Xxxxx Lyon.
B. On
the Closing Date, FNDM and Xxxxx Xxxx will enter into the Content License
Agreement with Vensure Employer
Services Inc., an Arizona corporation (“Vensure”) and Vensure Retirement Administration,
Inc., a Delaware corporation (“VRA” and with Vensure, the
“Vensure
Group”).
NOW, THEREFORE, in
consideration of the foregoing recitals, the following mutual and respective
covenants and agreements of the Parties, intending to be legally bound, the
Parties agree as follows:
1.
Definitions.
Certain capitalized terms used in this Agreement shall have the same
meaning as is defined in the Prior Agreement. Except as otherwise
specifically indicated, the following terms shall have the following meanings in
this Agreement (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
“Affiliate” means, with respect
to any particular Person means any other Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by or under
common control with such Person. For purposes of this definition, “control” (including
the terms “ controlling,” “ controlled by ” and “
under common control
with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
“Business Day” means a day,
other than a Saturday, Sunday or holiday, on which banks in New York City are
open for the general transaction of business.
“Closing Date” means a date,
which shall be as of September 29, 2009 (unless such date shall be extended by
mutual agreement of IPG and Xxxxx Lyon), when and all Transaction Documents
shall be executed and delivered and not less than fifty percent (50%) of the
proceeds of the $1,500,000 Long Term Loan shall be funded.
“Content License Agreement”
shall mean a seven year educational content license agreement among FNDM, Xxxxx
Xxxx and the Vensure Group, which shall be in the form of Exhibit
A annexed hereto and made a part hereof.
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“FNDM Class A Common Stock”
shall mean the 300,000,000 shares of the Class A Common Stock, $0.001 par value
per share, of FNDM that are authorized for issuance pursuant to the certificate
of incorporation of FNDM.
“FNDM Purchase Agreement” shall
mean that securities purchase agreement, dated as of September 24, 2009, among
FNDM, Vensure and the stockholders of Vensure, pursuant to which, inter alia,
FNDM shall have purchased 218,833.33 shares of the Series A participating
preferred stock of Vensure (the “Series A Preferred
Stock”).
“Governmental Authority” shall
mean any federal, state, municipal, national, local or other governmental
department, court, commission, board, bureau, agency or instrumentality or
political subdivision thereof, or any entity or officer exercising executive,
legislative or judicial, regulatory or administrative functions of or pertaining
to any government or any court, in each case, whether of the United States or a
state, territory or possession thereof, a foreign sovereign entity or country or
jurisdiction or the District of Columbia.
“Intellectual Property” shall
mean all present and future: trade secrets, know-how and other
proprietary information; Trademarks, internet domain names (including, without
limitation, the domain name “xxx.xxxx.xxx”), service marks, trade dress, trade
names, business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and other
source and/or business identifiers, and the goodwill of the business relating
thereto and all registrations or applications for registrations which have
heretofore been or may hereafter be issued thereon throughout the world;
Copyrights (including Copyrights for computer programs) and all tangible and
intangible property embodying the Copyrights, unpatented inventions (whether or
not patentable); Patents; industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, computer software, source codes, object codes,
executable code, data, databases and other physical manifestations, embodiments
or incorporations of any of the foregoing; the right to xxx for all past,
present and future infringements of any of the foregoing; all other intellectual
property; and all common law and other rights throughout the world in and to all
of the foregoing.
“Material Adverse Effect” means
a material adverse effect on (a) the assets, liabilities, results of operations,
condition (financial or otherwise), business or prospects of Xxxxx Xxxx, or FNDM
and its consolidated Subsidiaries, as applicable, and (b) the ability of Xxxxx
Lyon or FNDM and its consolidated Subsidiaries, as applicable, to perform its
obligations under the Transaction Documents.
“Person” means an individual,
corporation, partnership, limited liability company, trust, business trust,
association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.
“SEC Filings” means all
reports, schedules, forms, statements and other documents the Corporations are
required to file with the Securities and Exchange Commission pursuant to the
reporting requirements of the Exchange Act, including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act.
“Subject Shares” shall mean
100% of the shares of Xxxxx Xxxx Common Stock that are issued and outstanding as
at the date of this Agreement.
“Subsidiary” means any
corporation or other entity of which at least a majority of the securities or
other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by Xxxxx Lyon and/or any
of its other subsidiaries.
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“Trademarks” shall mean, with
respect to any Person, all of such Person’s now existing or hereafter acquired
right, title, and interest in and to: (i) trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos, other business identifiers, prints and labels on which any
of the foregoing have appeared or appear, all applications, registrations and
recordings relating to the foregoing as may at any time be filed in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof, any political subdivision thereof or in any
other country, and all research and development relating to the foregoing; (ii)
all renewals thereof; and (iii) all designs and general intangibles of a like
nature.
“Transaction Documents” means
the collective reference to this Agreement and the Content License
Agreement.
“Xxxxx Xxxx Common Stock”
means, at any point in time, the one hundred (100) shares of the common stock of
Xxxxx Lyon, without par value per share, authorized for issuance pursuant to the
certificate of incorporation of Xxxxx Xxxx.
2. Sale and Purchase of the Subject
Shares
2.1 Sale of the Subject
Shares.
(a) On
the Closing Date, the Stockholders shall sell, transfer and assign to FNDM one
hundred (100) shares of Xxxxx Lyon Common Stock, constituting all, and not less
than all of the Subject Shares. Such Subject Shares shall represent
100% of the issued and outstanding shares of the capital stock of Xxxxx Xxxx as
at the Closing Date.
(b) On
the Closing Date, against payment and delivery of the FNDM Purchase Shares
contemplated by Section 2.2 below, the Stockholders shall deliver to FNDM stock
certificate(s) evidencing all, and not less than all, of the Subject Shares,
duly endorsed for transfer or accompanied by separate stock powers, duly
executed in a manner reasonably acceptable to FNDM.
2.2 Consideration for the
Subject Shares. On the Closing Date, and in full
consideration for the Subject Shares, FNDM shall:
(a)
deliver to the Stockholders an aggregate of five hundred thousand (500,000)
shares of FNDM Class A Common Stock (the “FNDM Purchase Shares”); which
FNDM Purchase Shares shall be issued to the Stockholders, in pro rata amounts
based upon the percentage by which the number of Subject Shares owned of record
by each Stockholder bears to 100% of the Subject Shares;
(b) pay
to Xxxxx Xxxx the sum of Two Hundred and Fifty Thousand ($250,000) Dollars, by
wire transfer of immediately available funds to a bank account designated by
Xxxxx Lyon.
2.3 Consummation of Certain
Transaction. The parties hereto covenant and agree that
on or before the Closing Date under this Agreement, all of the transactions with
the Vensure Group contemplated by the FNDM Purchase Agreement shall have been
consummated.
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3. Lock
up Agreement
By their execution of this Agreement,
the Principal Stockholder does hereby covenant and agree that, without the prior
written consent of FNDM, neither it nor its Affiliates shall not publicly sell
or transfer any of the FNDM Purchase Shares issued to them for a period of
eighteen (18) months following the Closing Date.
4. Representations
and Warranties of Xxxxx Xxxx and the Principal Stockholder
Each of
Xxxxx Lyon and the Xxxxx Xxxx Principal Stockholder jointly and severally
represents and warrants to FNDM as of the date hereof, the Closing Date, as
follows:
4.1 Organization
and Authority
Xxxxx
Lyon is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. Xxxxx Xxxx (i) has all requisite
corporate or entity power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in the
Transaction Documents, (ii) is duly qualified to do business in every
jurisdiction in which failure so to qualify would reasonably be likely to have a
Material Adverse Effect, and (iii) has all requisite power and authority to
execute, deliver and perform the Transaction Documents to which it is a party,
and to consummate all the transactions contemplated under the Transaction
Documents. Xxxxx Lyon is not an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended,
or is controlled by such an “investment company.”
4.2 Transaction
Documents
The execution, delivery and performance
by Xxxxx Xxxx of the Transaction Documents to which it is a party, and the
consummation of the transactions contemplated thereby:
(a) have
been duly authorized by all requisite action of each such Person and have been
duly executed and delivered by or on behalf of each such Person;
(b) do
not violate any provisions of (i) applicable law, statute, rule,
regulation, ordinance or tariff, (ii) any order of any Governmental
Authority binding on any such Person or any of their respective properties, or
(iii) the certificate of incorporation or bylaws (or any other equivalent
governing agreement or document) of Xxxxx Lyon, or any agreement between Xxxxx
Xxxx and its Stockholders, officers or directors or among any such Stockholders,
officers or directors;
(c) are
not in conflict with, and do not result in a breach or default of or constitute
an event of default, or an event, fact, condition or circumstance which, with
notice or passage of time, or both, would constitute or result in a conflict,
breach, default or event of default under, any indenture, agreement or other
instrument to which any such Person is a party, or by which the properties or
assets of such Person are bound;
(d) except
as set forth therein, will not result in the creation or imposition of any Lien
of any nature upon any of the properties or assets of any such Person,
and
(e) do
not require the consent, approval or authorization of, or filing, registration
or qualification with, any Governmental Authority or any other
Person.
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When
executed and delivered, each of the Transaction Documents to which Xxxxx Lyon is
a party will constitute the legal, valid and binding obligation of Xxxxx Xxxx
and each of the Stockholders, enforceable against such Persons in accordance
with its terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of
creditors’ rights generally and to the effect of general principles of equity
which may limit the availability of equitable remedies (whether in a proceeding
at law or in equity).
4.3 Capitalization;
Ownership and Employees
(a) The
number of issued and outstanding shares of Xxxxx Lyon Common Stock, the names of
each of the Stockholders, and the ownership of the Subject Shares by each of the
Stockholders are set forth on the signature page to this Agreement.
(b) The
Subject Shares represent 100% of the issued and outstanding shares of the Xxxxx
Xxxx Common Stock. Except for this Agreement and the Subject Shares,
there are no shares of Xxxxx Lyon capital stock or other Xxxxx Xxxx securities
issued and outstanding, and there are no options, warrants, agreements or other
commitments binding upon Xxxxx Lyon or any of the Stockholders to issue any
additional securities of Xxxxx Xxxx.
(c) The
Subject Shares have been duly authorized and validly issued and are fully paid
and non-assessable, and each of the Stockholders owns beneficially and of record
all the Subject Shares free and clear of any Liens other than Liens created by
the Transaction Documents.
(d) The
Principal Stockholder is the record and beneficial owner of fifty one (51) of
the Subject Shares, representing 51% of the issued and outstanding shares of
capital stock of Xxxxx Lyon.
4.4 Agreements
Xxxxx Xxxx is not
(a) a
party to any judgment, order or decree or any agreement, document or instrument,
or subject to any restriction, which would affect its ability to execute and
deliver, or perform under, any Transaction Document,
(b) in
default in the performance, observance or fulfillment of any obligation,
covenant or condition contained in any agreement, document or instrument to
which it is a party or to which any of its properties or assets are subject,
which default, if not remedied within any applicable grace or cure period would
reasonably be likely to have a Material Adverse Effect, nor is there any event,
fact, condition or circumstance which, with notice or passage of time or both,
would constitute or result in a conflict, breach, default or event of default
under, any of the foregoing which, if not remedied within any applicable grace
or cure period would reasonably be likely to have a Material Adverse Effect;
or
(c) a
party or subject to any agreement, document or instrument with respect to, or
obligation to pay any, management or service fee with respect to, the ownership,
operation, leasing or performance of its business.
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4.5 Litigation
There is
no action, suit, proceeding or investigation pending or, to the Stockholders’
knowledge, threatened against Xxxxx Xxxx that (a) questions or could prevent the
validity of any of the Transaction Documents or the right of such Person to
enter into any Transaction Document or to consummate the transactions
contemplated thereby, (b) would reasonably be likely to be or have, either
individually or in the aggregate, any Material Adverse Effect, or (c) would
reasonably be likely to result in any change of control or other change in the
current ownership, control or management of Xxxxx Lyon. Neither Xxxxx
Xxxx nor any of the Stockholders is aware that there is any basis for the
foregoing. Xxxxx Lyon is not a party or subject to any order, writ,
injunction, judgment or decree of any Governmental Authority. There
is no action, suit, proceeding or investigation initiated by Xxxxx Xxxx
currently pending. Xxxxx Lyon does not have any existing accrued
and/or unpaid indebtedness or other payment obligations to any Governmental
Authority.
4.6 Compliance
with Law
(a) Xxxxx
Xxxx (i) is in compliance with all laws, statutes, rules, regulations,
ordinances and tariffs of any Governmental Authority applicable to such Person
and/or such Person’s business, assets or operations, including, without
limitation, ERISA, and (ii) is not in violation of any order of any Governmental
Authority or other board or tribunal, except where noncompliance or violation
could not reasonably be expected to have a Material Adverse
Effect. There is no event, fact, condition or circumstance which,
with notice or passage of time, or both, would constitute or result in any
noncompliance with, or any violation of, any of the foregoing, in each case
except where noncompliance or violation could not reasonably be expected to have
a Material Adverse Effect.
(b) Xxxxx
Lyon has not received any notice that it is not in compliance in any respect
with any of the requirements of any of the foregoing. Xxxxx Xxxx has
not (i) engaged in any Prohibited Transactions as defined in Section 405 of
ERISA and Section 4965 of the Internal Revenue Code of 1985, as amended,
and the rules and regulations promulgated thereunder, (ii) failed to meet any
applicable minimum funding requirements under Section 302 of ERISA in
respect of its plans and no funding requirements have been postponed or delayed,
(iii) any knowledge of any amounts due but unpaid to the Pension Benefit
Guaranty Corporation, or of any event or occurrence which would cause the
Pension Benefit Guaranty Corporation to institute proceedings under Title IV of
ERISA to terminate any of the employee benefit plans, (iv) any fiduciary
responsibility under ERISA for investments with respect to any plan existing for
the benefit of Persons other than its employees or former employees, or (v)
withdrawn, completely or partially, from any multi-employer pension plans so as
to incur liability under the MultiEmployer Pension Plan Amendments of
1980.
4.7 Intellectual
Property
(a) Xxxxx
Lyon owns, licenses or utilizes, and is a party to, all patents, patent
applications, trademarks, trademark applications, service marks, registered
copyrights, copyright applications, copyrights, trade names, trade secrets,
software, licenses and other Intellectual Property, necessary to operate the
business of Xxxxx Xxxx and the Xxxxx Lyon Subsidiaries.
(b) Xxxxx
Xxxx owns all rights to the trademarks or trade names “The Institute of
Modern Economy” and “IOME.”
(c) Xxxxx
Lyon will own, or will license or have the exclusive right to utilize, as the
case may be, all educational content contemplated to be produced under the
Content License Agreement
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4.8 Licenses
and Permits; Labor
Xxxxx Xxxx is in compliance with and
has all permits and Intellectual Property necessary or required by applicable
law or Governmental Authority for the operation of Xxxxx Lyon’s
business. All of the foregoing are in full force and effect and not
in known conflict with the rights of others. Xxxxx Xxxx is not (i) in
breach of or default under the provisions of any of the foregoing, nor is there
any event, fact, condition or circumstance which, with notice or passage of time
or both, would constitute or result in a conflict, breach, default or event of
default under, any of the foregoing which, if not remedied within any applicable
grace or cure period would reasonably be likely to have a Material Adverse
Effect, (ii) a party to or subject to any agreement, instrument or restriction
that is so unusual or burdensome that it might have a Material Adverse Effect,
and/or (iii) and has not been, involved in any labor dispute, strike, walkout or
union organization which would reasonably be likely to have a Material Adverse
Effect.
4.9 Disclosure
No Transaction Document nor any other
agreement, document, certificate, or statement furnished to FNDM by or on behalf
of Xxxxx Xxxx in connection with the transactions contemplated by the
Transaction Documents, nor any representation or warranty made by Xxxxx Lyon in
any Transaction Document, contains any untrue statement of material fact or
omits to state any fact necessary to make the statements therein not materially
misleading. There is no fact known to Xxxxx Xxxx or the Stockholders
which has not been disclosed to FNDM in writing which would reasonably be likely
to have a Material Adverse Effect.
4.10 Intentionally
Omitted
4.11 Names;
Location of Offices and Records
Xxxxx
Lyon has not conducted business under or used any name (whether corporate,
partnership or assumed) other than as shown on Schedule
4.11. Each trade name of Xxxxx Xxxx represents a division or
trading style of Xxxxx Lyon..
4.12 Survival
Xxxxx Xxxx and the Stockholders makes
the representations and warranties contained herein with the knowledge and
intention that FNDM is relying and will rely thereon. All such
representations and warranties will survive the execution and delivery of this
Agreement.
5. Representations
and Warranties of FNDM
FNDM does
hereby represent and warrant on behalf of itself and each of its consolidated
Subsidiaries (collectively with FNDM, the “FNDM Corporations”) to each of
Xxxxx Lyon and the Xxxxx Xxxx Stockholders as of the date hereof, the Closing
Date, as follows:
5.1 Organization
and Authority
FNDM is a
corporation or
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. FNDM and each of the FNDM
Corporations:
(a) has
all requisite corporate or entity power and authority to own its properties and
assets and to carry on its business as now being conducted and as contemplated
in the Transaction Documents,
(b) is
duly qualified to do business in every jurisdiction in which failure so to
qualify would reasonably be likely to have a Material Adverse Effect, and (iii)
has all requisite power and authority to execute, deliver and perform the
Transaction Documents to which it is a party, and to consummate all the
transactions contemplated under the Transaction Documents.
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(c) None
of the FNDM Corporations is an “investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, or is
controlled by such an “investment company.”
5.2 Transaction
Documents
The execution, delivery and performance
by FNDM of the Transaction Documents to which it is a party, and the
consummation of the transactions contemplated thereby:
(a) have
been duly authorized by all requisite action of each such Person and have been
duly executed and delivered by or on behalf of each such Person;
(b) do
not violate any provisions of (i) applicable law, statute, rule,
regulation, ordinance or tariff, (ii) any order of any Governmental
Authority binding on any such Person or any of their respective properties, or
(iii) the certificate of incorporation or bylaws (or any other equivalent
governing agreement or document) of FNDM, or any agreement between FNDM and its
Stockholders, officers or directors or among any such Stockholders, officers or
directors;
(c) are
not in conflict with, and do not result in a breach or default of or constitute
an event of default, or an event, fact, condition or circumstance which, with
notice or passage of time, or both, would constitute or result in a conflict,
breach, default or event of default under, any indenture, agreement or other
instrument to which any such Person is a party, or by which the properties or
assets of such Person are bound;
(d) except
as set forth therein, will not result in the creation or imposition of any Lien
of any nature upon any of the properties or assets of any such Person,
and
(e) do
not require the consent, approval or authorization of, or filing, registration
or qualification with, any Governmental Authority or any other
Person.
When
executed and delivered, each of the Transaction Documents to which FNDM is a
party will constitute the legal, valid and binding obligation of FNDM,
enforceable against it in accordance with its terms, subject to the effect of
any applicable bankruptcy, moratorium, insolvency, reorganization or other
similar law affecting the enforceability of creditors’ rights generally and to
the effect of general principles of equity which may limit the availability of
equitable remedies (whether in a proceeding at law or in equity).
5.3 FNDM
Public Filings; Financial Statements; Assets and Liabilities.
(a) FNDM
has timely filed (subject to 12b-25 extensions) all Form 10-KSB, Form 8-K, Form
10-Q and other forms and periodic reports (collectively, SEC Reports”) required to be
filed under the United States Securities and Exchange Act of 1934, as amended
(the “1934 Act”), and is
a voluntary filer of reports under Section 13 or 15(d) of the 34
Act..
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(b) The
Form 10-KSB/A Annual Report of of FNDM for its 2008 fiscal year, includes the
audited consolidated balance sheet, statement of operations and statement of
cash flows of the FNDM Corporations as at December 31, 2008 and for the fiscal
year then ended (the “FNDM 2008
Audited Financial Statements”), and the FNDM Form 10-Q for the quarterly
period ended June 30, 2009, contains the consolidated unaudited balance sheet,
statement of operations and statement of cash flows of the FNDM Corporations as
at June 30, 2009 and for the six months then ended (the “FNDM Unaudited Financial
Statements”). Except as set forth on the FNDM Balance Sheet as
at June 30, 2009 or otherwise disclosed on Schedule 4(d), as at
June 30, 2009 and for all periods subsequent thereto up to the date of this
Agreement, the FNDM Corporations have no other assets and have incurred no other
liabilities, debts or obligations, whether fixed, contingent or otherwise
required to be set forth on a balance sheet prepared in accordance with
GAAP. The books of account and other financial records of the FNDM
Corporations are in all respects complete and correct in all material respects
and are maintained in accordance with good business and accounting
practices.
(c) Except
as set forth on its SEC Reports, the FNDM Corporations has no other material
operating assets or liabilities and conducts no other trade or
business.
(d) No Material Adverse
Changes. Since June 30, 2009, (i) there has not been any
material adverse changes in the financial position of the FNDM Corporations
except changes arising in the ordinary course of business or liabilities not
required to be reflected in the FNDM financial statements pursuant to GAAP or
required to be disclosed in filings made with the SEC, which changes will in no
event materially and adversely affect the consolidated financial position of
FNDM, and will be consistent with the representations made by FNDM
hereunder.
5.4 Agreements
Except as disclosed in the SEC Reports,
none of the FNDM Corporations is:
(a) a
party to any judgment, order or decree or any agreement, document or instrument,
or subject to any restriction, which would affect its ability to execute and
deliver, or perform under, any Transaction Document,
(b) in
default in the performance, observance or fulfillment of any obligation,
covenant or condition contained in any agreement, document or instrument to
which it is a party or to which any of its properties or assets are subject,
which default, if not remedied within any applicable grace or cure period would
reasonably be likely to have a Material Adverse Effect, nor is there any event,
fact, condition or circumstance which, with notice or passage of time or both,
would constitute or result in a conflict, breach, default or event of default
under, any of the foregoing which, if not remedied within any applicable grace
or cure period would reasonably be likely to have a Material Adverse Effect;
or
(c) a
party or subject to any agreement, document or instrument with respect to, or
obligation to pay any, management or service fee with respect to, the ownership,
operation, leasing or performance of its business.
5.5 Litigation
Except as
disclosed in the SEC Reports, there is no action, suit, proceeding or
investigation pending or, to FNDM’s knowledge, threatened against any of the
FNDM Corporations that (a) questions or could prevent the validity of any of the
Transaction Documents or the right of such Person to enter into any Transaction
Document or to consummate the transactions contemplated thereby, (b) would
reasonably be likely to be or have, either individually or in the aggregate, any
Material Adverse Effect, or (c) would reasonably be likely to result in any
change of control or other change in the current ownership, control or
management of FNDM. FNDM is not aware that there is any basis for the
foregoing. None of the FNDM Corporations is a party or subject to any
order, writ, injunction, judgment or decree of any Governmental Authority that
could reasonably be expected to have a Material Adverse Effect. There
is no action, suit, proceeding or investigation initiated by the FNDM
Corporations currently pending. None of the FNDM Corporations has any
existing accrued and/or unpaid indebtedness or other payment obligations to any
Governmental Authority.
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5.6 Compliance
with Law
(a) Except
as disclosed in the SEC Reports, each of the FNDM Corporations (i) is in
compliance with all laws, statutes, rules, regulations, ordinances and tariffs
of any Governmental Authority applicable to such Person and/or such Person’s
business, assets or operations, including, without limitation, ERISA, and (ii)
is not in violation of any order of any Governmental Authority or other board or
tribunal, except where noncompliance or violation could not reasonably be
expected to have a Material Adverse Effect. There is no event, fact,
condition or circumstance which, with notice or passage of time, or both, would
constitute or result in any noncompliance with, or any violation of, any of the
foregoing, in each case except where noncompliance or violation could not
reasonably be expected to have a Material Adverse Effect.
(b) None
of the FNDM Corporations has received any notice that it is not in compliance in
any respect with any of the requirements of any of the
foregoing. Xxxxx Xxxx has not (i) engaged in any Prohibited
Transactions as defined in Section 405 of ERISA and Section 4965 of
the Internal Revenue Code of 1985, as amended, and the rules and regulations
promulgated thereunder, (ii) failed to meet any applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans and no
funding requirements have been postponed or delayed, (iii) any knowledge of any
amounts due but unpaid to the Pension Benefit Guaranty Corporation, or of any
event or occurrence which would cause the Pension Benefit Guaranty Corporation
to institute proceedings under Title IV of ERISA to terminate any of the
employee benefit plans, (iv) any fiduciary responsibility under ERISA for
investments with respect to any plan existing for the benefit of Persons other
than its employees or former employees, or (v) withdrawn, completely or
partially, from any multi-employer pension plans so as to incur liability under
the MultiEmployer Pension Plan Amendments of 1980.
5.7 Intellectual
Property
Each of
the FNDM Corporations owns, licenses or utilizes, and is a party to, all
patents, patent applications, trademarks, trademark applications, service marks,
registered copyrights, copyright applications, copyrights, trade names, trade
secrets, software, licenses and other Intellectual Property, necessary to
operate the business of the FNDM Corporations.
5.8 Licenses
and Permits; Labor
Except as disclosed in the SEC Reports,
the FNDM Corporations are in compliance with and has all permits and
Intellectual Property necessary or required by applicable law or Governmental
Authority for the operation of their businesses. All of the foregoing
are in full force and effect and not in known conflict with the rights of
others. None of the FNDM Corporations is (i) in breach of or default
under the provisions of any of the foregoing, nor is there any event, fact,
condition or circumstance which, with notice or passage of time or both, would
constitute or result in a conflict, breach, default or event of default under,
any of the foregoing which, if not remedied within any applicable grace or cure
period would reasonably be likely to have a Material Adverse Effect, (ii) a
party to or subject to any agreement, instrument or restriction that is so
unusual or burdensome that it might have a Material Adverse Effect, and/or (iii)
and has not been, involved in any labor dispute, strike, walkout or union
organization which would reasonably be likely to have a Material Adverse
Effect.
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5.9 Disclosure
No Transaction Document nor any other
agreement, document, certificate, or statement furnished to Xxxxx Xxxx and the
Stockholders by or on behalf of the FNDM Corporations in connection with the
transactions contemplated by the Transaction Documents, nor any representation
or warranty made by FNDM Lyon in any Transaction Document, contains any untrue
statement of material fact or omits to state any fact necessary to make the
statements therein not materially misleading. There is no fact known
to FNDM which has not been disclosed to Xxxxx Xxxx and the Stockholders in
writing which would reasonably be likely to have a Material Adverse
Effect.
5.10 Insurance
The FNDM Corporations have in full
force and effect such insurance policies as are customary in its
industry.
5.11 Survival
FNDM makes the representations and
warranties contained herein with the knowledge and intention that Xxxxx Lyon and
the Stockholders are relying and will rely thereon. All such
representations and warranties will survive the execution and delivery of this
Agreement.
6. Closing
and Closing Deliveries.
6.1 The
closing in connection with this Agreement (the “Closing”) shall take place on
a date (the “Closing
Date”) which shall be one (1) Business Day following the date notice of
such Closing shall be given to Xxxxx Xxxx and the Stockholders by FNDM; provided
that such Closing and the Closing Date shall be not later than October
__, 2009, unless such date shall be extended by mutual agreement of the
Stockholders and Xxxxx Lyon.
6.2 Notwithstanding
anything to the contrary, express or implied contained in this Agreement or in
any other Transaction Document, in the event and to the extent that any
documents or other closing instruments otherwise required to be delivered by
September 29, 2009 under any of the Transaction Documents shall not have been so
delivered, and the Parties hereto and pursuant to any such Transaction Document
shall have agreed to waive delivery of any such document(s) or instrument(s) or
defer such delivery to a later date, all of the transactions contemplated by
this Agreement and all other Transaction Documents shall, for all purposes, be
deemed to have been consummated as at 5:00 p.m. on September 29,
2009.
6.3 The
Parties may, by mutual consent, forego a formal closing, and consummate the
transactions contemplated by this Agreement by email and pdf or facsimile
signatures on Transaction Documents and federal express deliveries of stock
certificates evidencing the Subject Shares and the FNDM Purchase
Shares.
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7. Termination
This
Agreement is subject to termination by the applicable Party set forth below,
after providing prior written notice to the other Parties upon the occurrence of
one or more of the following events:
7.1 Mutual
Agreement. Immediately following the written mutual
agreement among all of the Parties to terminate this Agreement; or
7.2 Breach or Failure to Perform
Conditions.
(a) By
the Stockholders, in the event that FNDM shall (i) breach in any material
respect any of their representations and warranties set forth in this Agreement
or (ii) fail or refuse to perform all conditions to Closing on its part to be
performed under this Agreement; or
(b) By
FNDM, in the event that Xxxxx Xxxx or the Stockholders shall fail or refuse to
perform all conditions to Closing on their part to be performed under this
Agreement.
7.3 Material Adverse
Effect. By the Stockholders, in the event of: (i) a Material
Adverse Effect upon FNDM or any of the FNDM Subsidiaries or a change in any
governmental requirements, laws or regulations, that, in the opinion of legal
counsel for the Stockholders, renders the continued performance of this
Agreement either illegal or commercially unreasonable; or (ii) FNDM or any of
the FNDM Subsidiaries has been directed by any regulatory authority to cease or
materially limit its performance of its obligations under this Agreement; and,
in each case, the Parties cannot find a legal and commercially reasonable
solution or alternative within a reasonable amount of time which shall not be
greater than one hundred twenty (120) days.
8. Miscellaneous
8.1 Waiver. The failure
of either Party to insist upon or enforce performance by the other Party of any
provision of this Agreement or to exercise any right under this Agreement will
not be construed as a waiver or relinquishment to any extent of such Party’s
right to assert or rely upon any such provision or right in that or any other
instance; rather the same will be and remain in full force and
effect.
8.2 Resolution of
Disputes. Any dispute involving the interpretation or
application of this Agreement which cannot be settled among the Parties shall be
resolved by final and binding arbitration before a panel of three arbitrators in
New York, New York pursuant to the then prevailing rules of the American
Arbitration Association (the “AAA”). The
Stockholders shall select one of the arbitrators, FNDM shall select the second
arbitrator and the two arbitrators so selected shall select the third
arbitrator; provided,
that if any one of the Parties fail or refuse to select their arbitrator within
20 days of a Party making a demand for arbitration, the AAA shall select such
arbitrator(s). The decision of the arbitrators shall be final and
binding upon all Parties and may be enforced in any court of competent
jurisdiction in New York or Delaware, as applicable.
8.3 Force Majeure. No
Party shall be liable for, or considered in breach of or default under this
Agreement on account of, any delay or failure to perform as required by the
Agreement (except with respect to payment obligations) as a result of any causes
or conditions which are beyond such Party’s reasonable control and which such
Party is unable to overcome by the exercise of reasonable
diligence. If any force majeure event occurs (which shall include,
without limitation, acts of God, telecommunications, Internet or network
failure, results of vandalism or computer hacking, fire, explosion, storm or
other natural occurrences, any conflicting order, direction, action or request
of the United States government (including, without limitation, state and local
governments) or of any regulatory department, agency, commission, court, bureau,
corporation or other instrumentality, or of any civil or military authority,
national emergencies, insurrections, riots, wars, strikes, lockouts, work
stoppages or other such labor difficulties), the affected Party will give prompt
written notice to the other Party and will use commercially reasonable efforts
to minimize the impact of such event. Notwithstanding the foregoing,
the Parties' obligations to one another shall be excused and/or postponed during
and only for the duration of the applicable force majeure event and shall resume
as soon as practicable after the force majeure event has ended.
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8.4 Relationship of the
Parties. The Parties to the Agreement are independent
contractors. No Party is an agent, representative, partner or
employee of the other Party. No Party will have any right, power, or
authority to enter into any agreement on behalf of, or incur any obligation or
liability of, or to otherwise bind the other Party. The Agreement
will not be interpreted or construed to create an association, agency, joint
venture, or partnership between the Parties or to impose any liability
attributable to such a relationship upon either Party.
8.5 Survival. In
addition to any provisions which specifically provide for survival or for
continued obligations following the termination of this Agreement, the following
shall survive the termination of this Agreement: all representations
and warranties; all provisions for payment of any amounts due hereunder,
including but not limited to, expenses or compensation; all provisions for
confidentiality; all provisions for indemnification, until the first anniversary
of the Maturity Date; all provisions for insurance coverage; and all provisions
for arbitration or the resolution of disputes.
8.6 Construction;
Severability. Each Party acknowledges that the
provisions of this Agreement were negotiated to reflect an informed, voluntary
allocation between them of all the risks (both known and unknown) associated
with the transactions contemplated hereunder. Further, all provisions
are inserted conditionally on their being valid in law. In the event
that any provision of the Agreement conflicts with the law under which the
Agreement is to be construed or if any such provision is held invalid or
unenforceable by a court with jurisdiction over the Parties to the
Agreement: (i) such provision will be restated to reflect as nearly
as possible the original intentions of the Parties in accordance with applicable
law; and (ii) the remaining terms, provisions, covenants, and restrictions of
the Agreement will remain in full force and effect.
8.7 Remedies. Except
as otherwise specified, the rights and remedies granted to a Party under the
Agreement are cumulative and in addition to, not in lieu of, any other rights
and remedies which the Party may possess at law or in equity.
8.8 Entire
Agreement. This Agreement and the other Transaction Documents
constitutes the entire and only agreements among the Parties and supersedes any
and all prior agreements, whether written, oral, express, or implied, of the
Parties with respect to the transactions set forth herein and
therein.
8.9 Amendment. No
change, amendment, or modification of any provision of the Agreement will be
valid unless set forth in a written instrument signed by all of the
Parties.
8.10 Assignment. Except
as provided herein, no Party to the Agreement shall sell, transfer, or assign
the Agreement, the other Transaction Documents or the rights or obligations
hereunder or thereunder without the prior written consent of the other Party or
Parties.
8.11 Headings. The
captions and headings used in the Agreement are inserted for convenience only
and will not affect the meaning or interpretation of the Agreement.
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8.12 Counterparts. The
Agreement may be executed in counterparts, each of which will be deemed an
original and all of which together will constitute one and the same
document.
8.13 Governing Law; Jurisdiction and
Venue. This Agreement will be interpreted, construed, and
enforced in all respects in accordance with the laws of the State of New York,
without respect to its conflict of laws principles.
8.14 Expenses. Each
of the Parties will bear their own costs and expenses in connection with the
drafting, negotiation and execution of this Agreement and the other Transaction
Documents.
8.15 Contract
Interpretation. For purposes of contract interpretation,
including resolution of any ambiguity, the Parties acknowledge that this
Agreement was prepared jointly by their respective attorneys and therefore the
terms of the Agreement should not be construed against either Party as the
drafting Party.
8.17 Legal
Representation. The Parties hereto acknowledge
that Xxxxxxx Xxxx LLP has drafted this Agreement as counsel to FNDM and the FNDM
Subsidiaries. Xxxxxxx Xxxx LLP does not and will not represent Xxxxx
Lyon or any other Party in connection with the drafting, negotiating and
delivery of this Agreement or the other Transaction Documents. Each
of the Parties hereto do further hereby acknowledge that Xxxxxxx Xxxx LLP also
has represented the Principal Stockholder and his Affiliates, and may further
represent the Principal Stockholder and/or his Affiliates, in each case, in
connection with legal matters unrelated to the transactions contemplated by this
Agreement or the other Transaction Documents. Each of the Parties do
hereby waive all actual or perceived conflicts of interest that may arise by
reason of such other representation.
8.18 Facsimile
Signature. This Agreement and any
Transaction Document may be executed by pdf or other facsimile transmission and
such signatures shall, for all purposes, hereunder and thereunder, be treated as
ribbon originals.
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[The
balance of this page intentionally left blank - signature page
follows]
IN WITNESS WHEREOF, the
Parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the Closing Date set forth above.
XXXX.XXX,
INC.
By: /s/
Xxxxxxx
Xxxxxxx
Xxxxxxx
Xxxxxxx, Chief Executive Officer
XXXXX
LYON SOCRATIC, INC.
By:/s/
Xxxxxx X.
Xxxxxx
Xxxxxx X.
Xxxxxx, President
STOCKHOLDERS:
No. of Subject Shares
Owned:
XXXXX XXXX CO., INC.
51
Subject Shares
By: /s/
Xxxxxx X.
Xxxxxx
Xxxxxx X.
Xxxxxx, CEO
__
Subject Shares
__________________________________
___________________
__
Subject Shares
__________________________________
_______________________
__
Subject Shares
__________________________________
_______________________
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