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Exhibit 6.2
PLAN AND AGREEMENT OF REORGANIZATION
AMONG
SCOTTSDALE TECHNOLOGIES, INC.,
WO CONSULTING, INC.,
XXXX X. XXXXXXXXX
AND
C. XXXXXXX XXXXXXXX
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TABLE OF CONTENTS
Page
ARTICLE 1. SALE OF ASSETS..................................................... 3
Section 1.1 Description of Assets.......................................... 3
Section 1.2 Retained Items................................................. 4
ARTICLE 2. PURCHASE PRICE..................................................... 4
Section 2.1 Consideration.................................................. 4
ARTICLE 3. NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION..................... 5
Section 3.1 Non-Assumption of Liabilities.................................. 5
Section 3.2 Indemnification by Seller and Executive Officers............... 5
Section 3.3 Indemnification by Schedeler................................... 6
Section 3.4 Procedure for Indemnification.................................. 7
Section 3.5 Security....................................................... 7
Section 3.6 Satisfaction of Obligations.................................... 7
ARTICLE 4. CLOSING............................................................ 8
Section 4.1 Time and Place of Closing...................................... 8
Section 4.2 Deliveries by Seller........................................... 8
Section 4.3 Deliveries by Buyer............................................ 9
ARTICLE 5. CLOSING CONDITIONS................................................. 9
Section 5.1 Conditions of Seller and Executive Officers.................... 9
Section 5.2 Conditions of Buyer............................................ 9
ARTICLE 6. REPRESENTATIONS AND WARRANTIES..................................... 11
Section 6.1 Representations and Warranties of Seller and Executive Officers 11
(a) Authorization of Transaction................................... 11
(b) Capitalization of Seller....................................... 11
(c) Compliance with Law............................................ 11
(d) Title to the Assets............................................ 12
(e) Financial Statements........................................... 12
(f) Litigation..................................................... 12
(g) Employees; Employee Relations and Benefit Plans................ 13
(h) Intellectual Property.......................................... 13
(i) Taxes.......................................................... 16
(j) Government Notices............................................. 16
(k) Permits and Environmental Matters.............................. 16
(l) Applicable Laws Compliance..................................... 16
(m) Premises....................................................... 17
(n) Contracts...................................................... 18
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(o) Disclosure................................................... 18
Section 6.2 Representations and Warranties of Buyer...................... 18
Section 6.3 Survival..................................................... 19
ARTICLE 7. GENERAL.......................................................... 19
Section 7.1 Use of Names................................................. 19
Section 7.2 Notices...................................................... 19
Section 7.3 Entire Agreement............................................. 20
Section 7.4 Assignment................................................... 20
Section 7.5 Expenses of Transaction...................................... 20
Section 7.6 Modification................................................. 20
Section 7.7 Specific Performance......................................... 20
Section 7.8 Further Assurances........................................... 21
Section 7.9 Sales and Other Taxes........................................ 21
Section 7.10 Governing Law................................................ 21
SCHEDULE 2.1(D) TRADE PAYABLES....................ERROR! BOOKMARK NOT DEFINED.
SCHEDULE 6.1(a) CONTRACTS.........................ERROR! BOOKMARK NOT DEFINED.
EXHIBITS
Exhibit A Stock Pledge Agreement
Exhibit B Note and Warrant Purchase Agreement
SCHEDULES
Schedule 2.1(a) List of Stockholders
Schedule 2.1(d) List of Trade Payables
Schedule 5.2(d) List of Parties Required to Execute Intellectual Property
Assignment Agreements
Schedule 6.1(b) List of Equity Security Owners
Schedule 6.1(c) List of Alleged Violations
Schedule 6.1(f) List of Pending Litigation
Schedule 6.1(h)(i) List of Intellectual Property
Schedule 6.1(h)(iii) List of Patents or Registrations on Intellectual Property
Schedule 6.1(h)(iii)(D) List of Company's Indemnity Obligations
Schedule 6.1(h)(iv) List of Intellectual Property Owned by Third Party
Schedule 6.1(h)(v) List of Intellectual Property Right Filings
Schedule 6.1(i) Hazardous Materials
Schedule 6.1(k) Permits and Environmental Matters
Schedule 6.1(l) Applicable Laws Compliance
Schedule 6.1(n) Contracts
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PLAN AND AGREEMENT OF REORGANIZATION
THIS PLAN AND AGREEMENT OF REORGANIZATION (this "Agreement") is executed
on February 28, 1997 but intended by the parties hereto to be effective as of
January 1, 1997, between SCOTTSDALE TECHNOLOGIES, INC., a Delaware corporation
("Seller"), WO CONSULTING, INC., a Delaware corporation ("Buyer"), and XXXX X.
XXXXXXXXX ("Xxxxxxxxx") and C. XXXXXXX XxXXXXXX ("XxXxxxxx") (Xxxxxxxxx and
XxXxxxxx are collectively referred to herein as the "Executive Officers").
R E C I T A L:
WHEREAS, Seller wishes to sell, and Buyer wishes to purchase, the business
of Seller and substantially all of the assets used in connection therewith, in
exchange for securities of the Buyer in a transaction intended to qualify as a
tax free "reorganization" within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended; and
WHEREAS, pursuant to this Agreement, Seller wishes to sell substantially
all of its assets to Buyer in exchange for 1,461,585 shares of Buyer's common
stock ("Common Stock") and Buyer's agreement to pay certain royalties to an
escrow agent to facilitate the repayment of certain obligations of Seller in
accordance with that certain Escrow Agreement effective as of January 1, 1997
(the "Escrow Agreement") and those certain Restructuring Agreements between the
Company and certain of its creditors;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, received to the full
satisfaction of each of them, the parties hereby agree as follows:
A G R E E M E N T:
ARTICLE 1.
SALE OF ASSETS
SECTION 1.1 DESCRIPTION OF ASSETS. Subject to and in accordance with the
terms of this Agreement, Seller shall grant, convey, sell, transfer and assign
to Buyer at Closing (as defined below) the following assets, properties and
contractual rights of Seller, wherever located:
(a) all tangible personal property (including, without limitation,
machinery, equipment, computers, inventories, parts, components, goods,
furniture and vehicles) relating to the operation of Seller's business
located at 0000 X. Xxxx Xx., Xxxxx 000, Xxxxxxxxxx, Xxxxxxx, 00000 (the
"Premises") and all activities and operations incidental thereto
(collectively the "Business");
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(b) all Intellectual Property (as defined below), goodwill
associated therewith, licenses and sublicenses granted and obtained with
respect thereto, and rights thereunder, remedies against infringement
thereof, and rights to protection of interests therein under the laws of
all jurisdictions;
(c) all books, records, ledgers, files, documents, correspondence,
lists, plats, drawings, specifications, advertising and promotional
materials, studies, reports and other printed and written materials
relating to the Business;
(d) all permits, authorities, licenses, franchises, consents and
other approvals relating to the business of developing, constructing or
operating the Business;
(e) all contractual rights of Seller relating to the Business;
(f) all deposits, advances, prepaid amounts, refunds, causes of
action and rights of recovery, set-off or recoupment of Seller relating to
the Business;
(g) the name "Scottsdale Technologies" in all jurisdictions in which
the Seller has the right to use such names; and
(h) all of the goodwill of the Business.
All of the foregoing assets, properties and contractual rights are hereinafter
sometimes collectively called the "Assets".
All of such Assets shall be delivered free and clear of any liens, claims,
pledges, security interests, mortgages or encumbrances of any kind. The sale,
conveyance, assignment, transfer and delivery of the Assets shall be effected by
bills of sale, endorsements, assignments, or other instruments in such
reasonable or customary form as shall be requested by the Buyer and its counsel.
Seller shall at any time from and after the Closing Date, upon the reasonable
request of Buyer and at Seller's expense, execute, acknowledge and deliver such
additional conveyances, assignments, transfers or other instruments, as may be
reasonably required to assign, transfer or convey the Assets to Buyer, or vest
ownership of such Assets in Buyer, as contemplated by this Agreement.
SECTION 1.2 RETAINED ITEMS. Seller does not transfer to Buyer hereunder,
and Seller retains all rights and liabilities in respect of or in connection
with, all obligations of Seller not expressly transferred to and assumed by
Buyer hereunder (collectively the "Retained Items").
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ARTICLE 2.
PURCHASE PRICE
SECTION 2.1 CONSIDERATION. Subject to and in accordance with the terms of
this Agreement, as full consideration for the Assets, Buyer will deliver to
Seller the following:
(a) At Closing, Buyer will issue and deliver 1,461,585 shares of
Common Stock to the parties listed on Schedule 2.1(a) hereto ("Shares"),
and Buyer shall sell no less than 481,000 shares of Common Stock and no
more than 550,000 shares of Common Stock in the aggregate to the Executive
Officers and Xxxx Xxxxxx, as agreed upon among the Company, the Executive
Officers and Xx. Xxxxxx; provided, however, that the Executive Officers
shall deliver to Buyer the aggregate amount of 213,221 shares of Common
Stock (apportioned among such officers in the manner described in Section
3.4) to serve as collateral for the period set forth in Section 9 of the
Stock Pledge Agreement between Executive Officers and Buyer in the form
attached hereto as Exhibit A (the "Stock Pledge Agreement");
(b) At Closing, Buyer shall assume and undertake to discharge and
perform Seller's obligations under that certain Promissory Note issued by
Seller in favor of Software Funding Corp. (the "General Partner") as agent
for certain investors, which note has a principal balance of $400,000 (the
"Existing Note");
(c) At Closing, Buyer shall assume and undertake to discharge and
perform Seller's obligations pursuant to the express terms of those
specific written contracts set forth on Schedule 6.1(n) (the "Listed
Contracts"); and
(d) At Closing, Buyer shall assume and undertake to discharge and
perform Seller's obligations with respect to the trade payables listed on
Schedule 2.1(d) hereto (the "Trade Payables"). The obligations assumed by
Buyer with respect to the Existing Note, the Listed Contracts and the
Trade Payables are collectively referred to herein as the "Assumed
Liabilities".
ARTICLE 3.
NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION
SECTION 3.1 NON-ASSUMPTION OF LIABILITIES. Except for the Assumed
Liabilities, Buyer shall not, by the execution and performance of this Agreement
or otherwise, assume, become responsible for or incur any liability or
obligation of any nature of Seller, whether legal or equitable, matured or
contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary,
patent or latent, whether arising out of occurrences prior to, at or after the
date of this Agreement. Seller and each of the Executive Officers hereby jointly
and severally agrees to indemnify Buyer, its successors and assigns from and
against any and all of the foregoing liabilities and obligations (other than the
Assumed Liabilities) in accordance with this Article 3.
SECTION 3.2 INDEMNIFICATION BY SELLER AND EXECUTIVE OFFICERS. Subject to
the limitations set forth in Section 3.6, and notwithstanding any investigation
at any time made by or
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on behalf of Buyer, Seller and the Executive Officers each jointly and severally
agree to defend, indemnify and hold harmless Buyer, its officers, stockholders,
directors, affiliates, employees, agents, successors and assigns, and the
Assets, from and against all losses, claims, actions, causes of action, damages,
liabilities, expenses and other costs of any kind or amount whatsoever
(including, without limitation, reasonable attorneys' fees), whether equitable
or legal, matured or contingent, known or unknown, foreseen or unforeseen,
ordinary or extraordinary, patent or latent, which result, either before or
after the date of this Agreement, from or in connection with any:
(a) inaccuracy in or breach of any representation or warranty made
by Seller and Executive Officers in this Agreement;
(b) failure of Seller duly to perform and observe any term,
provision, covenant, agreement or condition under this Agreement; and
(c) liability of Seller of any kind whatsoever other than the
Assumed Liabilities, including, without limitation, any liability arising
out of or in connection with any claims or rights of Seller's creditors or
any other person or entity who may now or hereafter have a claim resulting
from or arising out of any actions or operations of Seller.
Buyer shall be deemed to have suffered such loss, claim, action, cause of
action, damage, liability, expense or other cost, or to have paid or to have
become obligated to pay any sum on account of, the matters referred to in
subparagraphs (a) - (c) of this Section 3.2 if the same shall be suffered, paid
or incurred by Buyer or any parent, subsidiary, affiliate, or successor of
Buyer. The amount of the loss, claim, action, cause of action, damage,
liability, expense or other cost deemed to be suffered paid or incurred by Buyer
shall be an amount equal to the loss, claim, action, cause of action, damage,
liability, expense or other cost suffered, paid or incurred by such parent,
subsidiary, affiliate, or successor.
SECTION 3.3 INDEMNIFICATION BY SCHEDELER. In addition to the requirements
of Section 3.2, and subject to the limitations set forth in Section 3.6, and
notwithstanding any investigation at any time made by or on behalf of Buyer,
Schedeler hereby agrees to defend, indemnify and hold harmless Buyer, its
officers, stockholders, directors, affiliates, employees, agents, successors and
assigns, and the Assets, from and against all losses, claims, actions, causes of
action, damages, liabilities, expenses and other costs of any kind or amount
whatsoever (including, without limitation, reasonable attorneys' fees), whether
equitable or legal, matured or contingent, known or unknown, foreseen or
unforeseen, ordinary or extraordinary, patent or latent, which result, either
before or after the date of this Agreement, from or in connection with any
liability of Xxxx Force Ltd., a Delaware corporation ("Force"), other than the
amount Buyer is obligated to pay with respect to such liability in accordance
with the Escrow Agreement and that certain Force Restructuring Agreement between
Force and Seller.
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Buyer shall be deemed to have suffered such loss, claim, action, cause of
action, damage, liability, expense or other cost, or to have paid or to have
become obligated to pay any sum on account of, the matters referred to in this
Section 3.3 if the same shall be suffered, paid or incurred by Buyer or any
parent, subsidiary, affiliate, or successor of Buyer. The amount of the loss,
claim, action, cause of action, damage, liability, expense or other cost deemed
to be suffered paid or incurred by Buyer shall be an amount equal to the loss,
claim, action, cause of action, damage, liability, expense or other cost
suffered, paid or incurred by such parent, subsidiary, affiliate, or successor.
SECTION 3.4 PROCEDURE FOR INDEMNIFICATION. Promptly after a party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person") or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being made
against any party obligated to provide indemnification pursuant to this
Agreement (hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or proceeding
(the "Notice"). The Notice shall state the nature and the basis of such claim
and a reasonable estimate of the amount thereof. The Indemnifying Party, after
receipt of the Notice, shall defend and settle, at its own expense and by its
own counsel, each such matter; provided, however, that the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the third party claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably); and provided further, that
the Indemnifying Party may consent to the entry of a judgment or enter into a
settlement with respect to a third party claim without the prior written consent
of the Indemnified Party if such judgment or settlement involves only the
payment by the Indemnifying Party of monetary damages (if any) and does not (a)
impose an injunction or other equitable relief upon (or constitute an admission
of guilt, liability, fault or responsibility by) the Indemnified Party, or (b)
result in any adverse consequences for the business and operations of the
Indemnified Party. Notwithstanding the foregoing, the Indemnified Party shall
have the right to participate in any matter through counsel of its own choosing.
Such separate representation shall be at the cost and expense of the Indemnified
Party as long as the Indemnifying Party is pursuing the defense of such matter
diligently, reasonably and in good faith. If the Indemnifying Party fails to
defend any such matter to which the Indemnified Party is entitled to
indemnification hereunder diligently, reasonably and in good faith, the
Indemnified Party may undertake such defense through counsel of its choice and
at the Indemnifying Party's expense.
SECTION 3.5 SECURITY. On the Closing Date, to secure performance of
Seller's and Executive Officers' indemnification obligations to Buyer hereunder,
the Executive Officers shall execute and deliver to Buyer the Stock Pledge
Agreement, certificates for 213,221 shares of Common Stock owned by the
Executive Officers (the "Pledged Shares") and irrevocable stock powers
corresponding to such shares. The Pledged Shares shall consist of 195,430 shares
of Common Stock pledged by Xxxx X. Xxxxxxxxx; and 17,791 shares of Common Stock
pledged by C. Xxxxxxx XxXxxxxx, all in accordance with the terms of the Stock
Pledge Agreement.
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SECTION 3.6 SATISFACTION OF OBLIGATIONS. Notwithstanding anything herein
to the contrary, Buyer's recovery for any obligations of Seller or the Executive
Officers under this Agreement shall be limited to recovery against the Pledged
Shares. Subject to the foregoing qualification, to the extent an Executive
Officer becomes liable to Buyer under Article 3 hereof, such Executive Officer
may satisfy any such liability by tendering (a) cash in the amount of such
liability, (b) shares of Buyer's Common Stock pledged by such officer in
accordance with the terms of the Stock Pledge Agreement or (c) any combination
of cash and such shares. Any such shares tendered by such Executive Officer
shall be valued at their fair market value. For purposes of this Agreement, the
term "fair market value" shall mean (i) if the shares of Common Stock of Buyer
are publicly traded on a national market, the price per share determined by
averaging the closing sales prices of shares of Common Stock as reported in the
Wall Street Journal for the five (5) trading days immediately preceding the date
such shares are tendered or (ii) if the shares of Common Stock are not publicly
traded or the closing sales price of such shares is not reported in the Wall
Street Journal on a daily basis, the price per share determined by written
agreement between such Executive Officer and Buyer, or, if no such agreement is
reached within ten (10) days after such Executive Officer notifies Buyer in
writing that he wishes to tender such shares, then the price per share shall be
determined by an independent appraiser selected by Buyer; provided, however,
that such appraiser shall have no past or present relationship with Buyer or
such Executive Officer. Such Executive Officer and Buyer shall share the
expenses of such appraiser equally. Notwithstanding anything herein to the
contrary, however, Buyer shall first seek to satisfy any claims it has against
any Executive Officer hereunder by enforcing its rights under the Stock Pledge
Agreement in accordance with the terms thereof before seeking to recover any
amount from the Executive Officer individually.
ARTICLE 4.
CLOSING
SECTION 4.1 TIME AND PLACE OF CLOSING. This transaction shall be closed
simultaneously with the execution and delivery of this Agreement and the other
documents and instruments referred to in this Article 4 (the "Closing"). The
Closing shall take place at the offices of Seller on February 28, 1997, or on
such other place and date as the parties may mutually agree (the "Closing
Date").
SECTION 4.2 DELIVERIES BY SELLER. At the Closing, Seller shall deliver to
Buyer, all duly executed:
(a) proper and adequate evidence that all permits, licenses,
registrations and governmental authorizations necessary or appropriate for
the operation of the Business have been obtained by the Seller and have
been issued in the name of the Seller or can properly be transferred to
the Buyer;
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(b) a general conveyance, assignment and xxxx of sale, in form and
substance satisfactory to Buyer, conveying, selling, transferring and
assigning to Buyer all of the Assets (the "Xxxx of Sale"); and
(c) such other additional instruments of sale, assignment or
transfer as may be reasonably required by Buyer.
SECTION 4.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver the
Shares to the parties listed on Schedule 2.1(a) and shall further execute and
deliver an assumption agreement regarding Buyer's assumption of the Assumed
Liabilities consistent with the terms hereof.
ARTICLE 5.
CLOSING CONDITIONS
SECTION 5.1 CONDITIONS OF SELLER AND EXECUTIVE OFFICERS. The obligation of
Seller and Executive Officers to consummate the transactions to be performed by
them pursuant to this Agreement is subject to satisfaction of the following
conditions:
(a) The representations and warranties of Buyer set forth in Section
6.2 shall be true and correct;
(b) Buyer shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing Date;
(c) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement; (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation; or
(iii) affect adversely the right of Buyer to acquire the assets and to
operate the Business (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect); and
(d) Buyer and Scottsdale Technologies-I, Ltd. (the "Partnership")
shall have executed the Note and Warrant Purchase Agreement attached
hereto as Exhibit B (the "Note and Warrant Purchase Agreement").
SECTION 5.2 CONDITIONS OF BUYER. The obligation of Buyer to consummate the
transactions to be performed by it pursuant to this Agreement is subject to
satisfaction of the following conditions:
(a) The representations and warranties of Seller and Executive
Officers set forth in Section 6.1 shall be true and correct;
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(b) Seller and Executive Officers shall have performed and complied
with all of their covenants hereunder in all material respects through the
Closing Date;
(c) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement; (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation; or
(iii) affect adversely the right of Buyer to acquire the assets and to
operate the Business (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(d) Each person or entity listed on Schedule 5.2(d) hereto
(collectively, the "Listed Persons") shall have executed and delivered an
agreement in form and substance satisfactory to Buyer and the Partnership
providing that (i) he or she assigns all right, title and interest that
he, she or it may have in and to any of the Intellectual Property that are
or have been owned, used, promoted or distributed by Seller or its
affiliates or predecessors and any such property or asset that is
equivalent thereto or is related thereto or is incorporated in any of the
products that have been or intended to be distributed by Seller
(collectively, the "Intellectual Property Assets"), (ii) that he, she or
it has no right, title or interest, after given effect to the assignment
described above, in and to any of the Intellectual Property Assets, (iii)
that he, she or it has no claim or right as against Buyer or Seller after
giving effect to the purchase of the Assets other than the right of the
Executive Officers and Xxxx Xxxxxx to purchase no less than 481,000 Shares
of Common Stock and no more than 550,000 shares of Common Stock in the
aggregate, as agreed upon among the Company, the Executive Officers and
Xx. Xxxxxx, and to receive Shares, if any, to be issued or distributed to
them as provided on Schedule 2.19(a), and (iv) he, she or it will not
compete with Buyer with respect to any business related to or competing
with the Assets or the Intellectual Property Assets or any improvement to
such products developed by Buyer or use or divulge confidential
information included within the Intellectual Property Assets or otherwise
relating to Buyer or Seller. In addition, in each such agreement executed
by a Listed Person, such Listed Person shall represent and warrant that he
or it has no interest in any of the Assets or any other property or
intellectual property that is used by or is material to the operations of
Seller (collectively, the "Covered Assets"), that he or it has no interest
in any business that is competitive with Seller in the Program Master
product line or technology related thereto (including, without limitation,
the light-link technology) and that he or it has no interest in any
Covered Asset or any enhancement or add-on to any Covered Asset for which
such Listed Person has been engaged by the Company to develop or provide
any assistance in the development of such enhancement or add-on; provided,
however, that nothing herein or in any such agreement shall limit the
right of Schedeler & Company, L.L.C. (in which Xxxx X. Xxxxxxxxx has no
interest) to directly or indirectly own any interest in any business that
produces or markets electronic programming guides; and provided further
that
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nothing herein or in any such agreement shall limit the right of any
Listed Person to collect payment for any services rendered by such Listed
Person to the Company.
(e) Buyer and Seller shall have entered into written restructuring
agreements with Transcap Manufacturing Services, Inc. ("Transcap") and
Network Gaming International Corp. (formerly known as AI Software, Inc.)
("NGIC"), pursuant to which Transcap and NGIC agree to accept the payment
of certain royalties in exchange for their claims against Seller;
(f) Seller shall have entered into agreements in form and substance
satisfactory to Seller and General Partner with both Chambord
Technologies, Inc. ("Chambord") and Mesa Research pursuant to which Seller
shall have acquired programs relating to a code library, light link
technology, operating systems and other technologies incorporated in or
used in connection with the development of any of Seller's products
(including, without limitation, the ETV Host Software and the Program
Master (collectively, the "System")), which agreement shall be assignable
to Buyer;
(g) Seller shall have entered into an agreement in form and
substance satisfactory to Seller and General Partner with Xxxx Force Ltd.,
a Delaware corporation, pursuant to which Seller shall have acquired all
right, title and interest in and to any and all Intellectual Property
owned by Xxxx Force Ltd., including, without limitation, any and all
trademarks relating to the Program Master owned by Xxxx Force Ltd.;
(h) Seller shall provide an opinion of counsel satisfactory in form
and substance to Buyer regarding the capital structure of Seller; and
(i) Buyer and the Partnership shall have executed the Note and
Warrant Purchase Agreement substantially in the form attached hereto as
Exhibit B.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 REPRESENTATIONS AND WARRANTIES OF SELLER AND EXECUTIVE
OFFICERS. Seller and Executive Officers each jointly and severally represent and
warrant to Buyer that each of the following shall be true and correct as of the
date hereof and as of the Closing Date:
(a) AUTHORIZATION OF TRANSACTION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Seller and Executive Officers have full power and
authority to execute and deliver this Agreement and to perform their
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Seller and Executive Officers, enforceable in
accordance with its terms and conditions. Seller is not required to give
any notice to, make any filing with, or obtain any authorization, consent,
or approval of, any government or
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governmental agency in order to consummate the transactions contemplated
by this Agreement.
(b) CAPITALIZATION OF SELLER. All of the equity securities of Seller
are owned by the persons and entities set forth in Schedule 6.1.(b)
hereto. Seller has provided copies of all agreements relating to the
acquisition of such equities from Seller and Seller's former parent.
(c) COMPLIANCE WITH LAW. Seller is in compliance with all applicable
federal, state or local laws, statutes, ordinances, permits, licenses,
orders, approvals, variances, rules or regulations or judicial or
administrative decisions, except for insignificant instances of
non-compliance that would not, individually or in the aggregate, have an
adverse effect upon the Assets or the Business. Seller has not received
any notice of an alleged violation of any of the foregoing matters other
than as set forth in Schedule 6.1(c). Seller has been granted all
licenses, permits, consents, authorizations and approvals from federal,
state and local government regulatory bodies necessary or desirable to
carry on the Business, all of which are currently in full force and
effect, and may be transferred to Buyer without the consent, action or
approval of any other party. Each of the Assets complies in all respects
with all federal, state and local laws, statutes, ordinances, permits,
licenses, approvals, rules and regulations applicable thereto.
(d) TITLE TO THE ASSETS. Seller has good and marketable title to the
Assets, free and clear of all liens, encumbrances, security interests,
equities or restrictions whatsoever. By virtue of the grant, conveyance,
sale, transfer, and assignment of the Assets hereunder, Buyer shall
receive good and marketable title to the Assets, free and clear of all
liens, encumbrances, security interests, equities or restrictions
whatsoever. The Assets include all of (i) the licenses necessary to use
the intellectual property of any third party used in connection with the
conduct of the Business as presently conducted, (ii) any third party
approvals required under any agreement to which Seller is a party, and
(iii) any governmental approvals or permits of which Seller is aware that
are necessary to conduct the Business as presently conducted. Seller has
independently developed all of its products, and no third party other than
a Listed Person or Chambord has participated in the development or
marketing of any product of Seller. In addition, Seller has not been
informed that any of its products violates any copyright or issued or
pending patent owned by another party.
(e) FINANCIAL STATEMENTS. The financial statements of Seller as of
and for the fiscal years ended December 31, 1995 and December 31, 1994
audited by Xxxxx, Xxxxxx & Company and the unaudited financial statements
of Seller as of and for the fiscal year ended December 31, 1996 have been
prepared in accordance with generally accepted accounting principles
consistently applied and present fairly the financial condition of Seller
as of such dates. Seller is not subject to any liability that is not
disclosed on such financial statements except for liabilities that (i)
have been incurred since December 31,
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1996 in the ordinary course of business as known to Buyer and (ii) do not
in the aggregate exceed $100,000.
(f) LITIGATION. Except as set forth in Schedule 6.1(f) hereof, there
is no claim, litigation, action, suit or proceeding, administrative or
judicial, pending or threatened against Seller, or involving the Assets or
the Business, at law or in equity, before any federal, state or local
court or regulatory agency, or other governmental authority. Seller has
received no notice of any of the above and to the best of each Executive
Officer's knowledge, no facts or circumstances exist which would, with the
passage of time or giving of notice (or both), give rise to any of the
above.
(g) EMPLOYEES; EMPLOYEE RELATIONS AND BENEFIT PLANS. Except as
otherwise expressly provided herein, Buyer shall not, by the execution and
delivery of this Agreement or otherwise, become obligated to employ any
employee of Seller or assume any liabilities or contractual obligations
with respect to such employees or otherwise become liable for or obligated
in any manner (contractual or otherwise) to any employee of Seller,
including, without limiting the generality of the foregoing, any liability
or obligation pursuant to any collective bargaining agreement, employment
agreement, or pension, profit sharing or other employee benefit plan
(within the meaning of Section 3(3) of the Employment Retirement Income
Security Xxx 0000, as amended) or any other fringe benefit program
maintained by Seller or to which Seller contributes or any liability for
the withdrawal or partial withdrawal from or termination of any such plan
or program by Seller.
(h) INTELLECTUAL PROPERTY.
(i) Seller owns or has the right to use, pursuant to license,
sublicense, agreement, or permission, all Intellectual Property
necessary for the operation of the Business of Seller as presently
conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by Seller immediately prior to
the Closing and that is being transferred to the Buyer hereunder
will be owned or available for use by the Buyer on identical terms
and conditions immediately subsequent to the Closing hereunder.
Seller has taken all necessary action to maintain and protect each
item of Intellectual Property that it owns or uses. Except as set
forth in Schedule 6.1(h)(i) hereof, no person or entity other than
Seller has any right, title or interest in or to any of the
Intellectual Property.
(ii) Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and Seller has not
ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or
violation (including any claim that Seller must license or refrain
from using any Intellectual Property rights of any third party). To
the best knowledge of Seller and each
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Executive Officer, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of Seller.
(iii) Schedule 6.1(h)(iii) identifies each patent or
registration which has been issued to Seller with respect to any of
its Intellectual Property, identifies each pending patent, trademark
and copyright application for registration which Seller has made
with respect to any of its Intellectual Property, and identifies
each license, agreement, or other permission which Seller has
granted to any third party with respect to any of its Intellectual
Property (together with any exceptions). Seller has delivered to the
Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions
(as amended to date) and has made available to the Buyer copies of
all other written documentation evidencing ownership and prosecution
(if applicable) of each such item that are correct and complete in
all material respects. Schedule 6.1(h)(iii) also identifies each
copyright, trademark, trade name, unregistered trademark or other
intellectual property owned or licensed by Seller. With respect to
each item of Intellectual Property required to be identified in
Schedule 6.1(h)(iii):
(A) Seller possess all right, title, and interest in and
to the item, free and clear of any security interest, pledge,
lien, charge or other encumbrance of any kind whatsoever,
license, or other restriction;
(B) Such item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) No action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the best
knowledge of Seller, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the
item; and
(D) Except as set forth on Schedule 6.1(h)(iii)(D),
Seller has never agreed to indemnify any person or entity for
or against any interference, infringement, misappropriation,
or other conflict with respect to the item.
(iv) Schedule 6.1(h)(iv) identifies each item of Intellectual
Property that any third party owns and that Seller uses pursuant to
license, sublicense, agreement, or permission, except for generally
available software costing less than $500. Seller has delivered to
the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be
identified in Schedule 6.1(h)(iv):
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(A) The license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and
in full force and effect, subject to applicable bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization,
arrangement, moratorium or other similar laws from time to
time in effect that affect creditor's rights generally;
(B) The license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the
consummation of the transactions contemplated hereby, subject
to applicable bankruptcy, insolvency, fraudulent conveyance or
transfer, reorganization, arrangement, moratorium or other
similar laws from time to time in effect that affect
creditor's rights generally;
(C) Seller is not, and to the best knowledge of Seller
and each Executive Officer, no party to the license,
sublicense, agreement, or permission is, in breach or default,
and no event has occurred which with notice of lapse of time
would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) Seller has not repudiated, and to the best knowledge
of Seller and each Executive Officer, no party to the license,
sublicense, agreement, or permission has repudiated, any
provision thereof;
(E) With respect to each sublicense, the representations
and warranties set forth in subsections (A) through (D) above
are true and correct with respect to the underlying license;
(F) The underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(G) No action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the best
knowledge of Seller and each Executive Officer, is threatened
which challenges the legality, validity, or enforceability of
the underlying item of Intellectual Property; and
(H) Seller has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(v) Schedule 6.1(h)(v) identifies each filing made, and each
filing in the process of being prepared, by Seller that is intended
to perfect any intellectual property rights claims.
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(vi) To the best knowledge of Seller and each Executive
Officer, Seller does not interfere with, infringe upon,
misappropriate, or otherwise conflicts with, any Intellectual
Property rights of any third party as a result of the operation of
their businesses as presently conducted.
As used herein, the term "Intellectual Property" means (a) all inventions
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all masks works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium), that are or have been
owned, used, promoted or distributed by Seller or its affiliates or predecessors
and any intellectual property or asset that is equivalent thereto, related
thereto or is incorporated in any of the products that have been or intended to
be distributed by the Company, including, without limitation, the System and the
programs relating to a code library, light link technology, operating systems
and other technologies incorporated or used in connection with the System.
(i) TAXES. Buyer will have no liability for any taxes, assessments,
fees or other governmental charges imposed upon the Assets or Buyer,
whether as a transferee of the Assets or otherwise. All federal, state and
local taxes due and payable with respect to the Business or the Assets
have been paid, including, without limiting the generality of the
foregoing, all federal, state and local income, sales, use, franchise,
excise and property taxes. The Assets are and will be subject to no
encumbrance in respect of taxes. All taxes of any type incurred or accrued
by Seller in respect of the Assets or the Business for any period on or
prior to the date of Closing have been or will be paid by Seller.
(j) GOVERNMENT NOTICES. Seller has delivered to Buyer a description
and copies, as of the date of this Agreement, of all notifications, filed
or submitted, or required be filed or submitted, to governmental agencies
and of all material notifications from such governmental agencies relating
to Seller and the Assets or relating to the discharge or release of
materials into the environment or otherwise relating to the protection of
the public health or the environment.
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(k) PERMITS AND ENVIRONMENTAL MATTERS. Attached hereto as Schedule
6.1(k) is an accurate list and summary description as of the date hereof
of all permits, titles (including motor vehicles titles and current
registrations), fuel permits, licenses, franchises and other,
certificates, owned or held by the Seller, to the extent such relate to
the Business or operation thereof, none of which permits, titles,
licenses, franchises and certificates infringe on the rights of others and
all of which are now valid, in good standing and in full force and effect.
All such permits, titles, licenses, franchises and certificates required
by law have been obtained, are in good standing and are adequate for the
operation of the Business. No such permits, titles, licenses, franchises
or certificates will terminate, require any change or payment to be made
by Buyer or any other party, or in any respect be adversely affected as a
result of the acquisition of the Assets by Buyer or the consummation of
the transactions contemplated by this Agreement.
(l) APPLICABLE LAWS COMPLIANCE. Except as set forth in Schedule
6.1(l):
(i) Seller is, and at all times during its operation has been,
fully licensed, permitted and authorized under all federal, state
and local statutes, laws, rules, regulations, orders, permits
(including, without limitation, zoning restrictions and land use
requirements) and licenses affecting or otherwise applicable to the
Premises or Business and any operations or activities in connection
therewith (collectively, the "Applicable Laws").
(ii) The Premises are usable for their current uses, without
violating any Applicable Laws or private restriction, and such uses
are legal conforming uses.
(iii) All activities and operations conducted in connection
with the Business or on the Premises, whether by Seller or any third
parties, have at all times been and continue to be conducted in
compliance with all Applicable Laws.
(iv) Neither Seller, nor the Premises, are now nor have ever
been involved in any litigation or administrative proceedings
seeking to impose fines, penalties or other liabilities or seeking
injunctive relieve for violation of any Applicable Laws with regard
to the Business or the Premises and there are no facts or
circumstances that would give rise to same.
(v) Seller has provided Buyer all reports, notices, filings
and other disclosures related to the Premises or the Business
required by Applicable Laws to be filed with any government
agencies; and Seller has duly and timely filed all such reports with
such agencies.
(vi) Neither Company nor Seller is in default under any
Applicable Laws or under any order of any court or governmental
administrative body having jurisdiction over Company, the Premises,
or any operations or activities thereon
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or thereunder, and there are no claims, actions, suits or
proceedings, pending or threatened, against or affecting Company or
Seller at law or in equity, or before or by any administrative body
having jurisdiction; no notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received; and
there are no facts or circumstances which would give rise to the
same.
(m) PREMISES. With respect to the Premises:
(i) there are no pending or, to the knowledge of any Executive
Officer, threatened, condemnation proceedings, lawsuits, or
administrative actions relating to the Premises or other matters
affecting the current use, occupancy or value thereof;
(ii) the buildings and improvements on the Premises are
located within the boundary lines of such land and are not in
violation of applicable setback requirements, zoning laws, and
ordinances, and do not encroach on any easement which may burden
such Premises; such Premises does not serve any adjoining property
for any purpose inconsistent with the use of the Premises; and the
Premises are not located within any flood plain or subject to any
similar type restriction for which any permits or licenses necessary
to the use thereof have not been obtained;
(iii) all facilities on the Premises have received all
approvals of governmental authorities (including licenses and
permits) required in connection with the ownership or operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(iv) except for the lease agreement pursuant to which Seller
is leasing the Premises, there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of any portion of the
Premises; and
(v) there are no parties (other than Seller) in possession of
the Premises.
(n) CONTRACTS. Schedule 6.1(n) lists all contracts and other
agreements, written or oral, to which Seller is a party. Seller has
delivered to Buyer a correct and complete copy of each written agreement
listed on Schedule 6.1(n) (as amended to date) and a written summary
setting forth the terms of each oral agreement referred to in Schedule
6.1(n). To the best knowledge of Seller and each Executive Officer, with
respect to each such agreement: (i) the agreement is legal, valid,
binding, enforceable, and in full force and effect, subject to applicable
bankruptcy, insolvency, fraudulent conveyance or transfer, reorganization,
arrangement, moratorium or other similar laws from time to time in effect
that affect creditor's rights generally (collectively, "Creditor's
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Laws"); (ii) the agreement will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby, subject to
Creditor's Laws; (iii) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (iv) no party has repudiated any provision of the
agreement.
(o) DISCLOSURE. To the best knowledge of Seller and each Executive
Officer, the representations and warranties contained in this Article 6 do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statement and information
contained in this Article 6 not misleading.
SECTION 6.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller and Executive Officers that as of the date hereof and as of
the Closing Date, Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Buyer has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Buyer, enforceable in accordance with its terms and conditions. Buyer is not
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of, any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
SECTION 6.3 SURVIVAL. Each of the representations and warranties set forth
in this Agreement shall survive the Closing and the transfer of the Assets.
ARTICLE 7.
GENERAL
SECTION 7.1 USE OF NAMES. Subject to the Closing of the transactions
contemplated hereby, Seller and/or the Executive Officers shall execute any
instruments reasonably necessary to permit Buyer to use the name "Scottsdale
Technologies" in all jurisdictions in which Seller has the right to use such
names in such jurisdictions and to disclaim any right either Seller or Executive
Officers might have to use any such name in such jurisdictions. Without limiting
the generality of the foregoing, Seller shall change its name to a name that is
not similar to "Scottsdale Technologies" as soon as reasonably practicable
following the Closing.
SECTION 7.2 NOTICES. All notices or communications required or permitted
under this Agreement shall be given in writing and served either by personal
delivery, overnight courier or by deposit in the United States mail and sent by
first class registered or certified mail, return receipt requested, postage
prepaid:
If to Seller:
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Scottsdale Technologies, Inc.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
If to Executive Officers:
c/o Xx. Xxxx X. Xxxxxxxxx
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
If to Buyer:
WO Consulting, Inc.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
With a copy to:
Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxx
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier and three days after deposit in the U.S.
mail as provided above, or when actually received, if earlier. Either party may
change the address for notices or communications to be given to it by written
notice to the other party given as provided in this Section.
SECTION 7.3 ENTIRE AGREEMENT. This Agreement, the Schedules hereto and the
other agreements referred to herein constitute the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements and understandings, oral or
written, relative to said subject matter.
SECTION 7.4 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties and
such consent shall not be unreasonably withheld; provided that Buyer may assign
this Agreement and its rights, interests and obligations hereunder to any
subsidiary of Buyer.
SECTION 7.5 EXPENSES OF TRANSACTION. Each party hereto shall pay all costs
and expenses incurred by such party in connection with this Agreement and the
transactions
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contemplated hereby, including, without limitation, the fees and expenses of
such party's attorneys and accountants. No party hereto has employed any
investment banker, broker or finder or has incurred any liability for any
brokerage fee, commission or finder's fee in connection with the transactions
contemplated hereby.
SECTION 7.6 MODIFICATION; Remedies Cumulative. This Agreement may not be
changed, amended, terminated, augmented, rescinded or otherwise altered, in
whole or in part, except by a writing executed by all of the parties hereto. No
right, remedy or election given by any term of this Agreement shall be deemed
exclusive but each shall be cumulative with all other rights, remedies and
elections available at law or in equity.
SECTION 7.7 SPECIFIC PERFORMANCE. Each party hereto acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
terms and provisions hereof are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each party hereto agrees that the
other party shall be entitled to one or more injunctions to prevent breaches of
this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court having jurisdiction over
the parties and the matter in addition to any other remedy to which a party may
be entitled at law or in equity.
SECTION 7.8 FURTHER ASSURANCES. From time to time after the Closing,
Seller will, without further consideration, execute and deliver such other
instruments of conveyance and transfer, and take such other action including,
without limitation, assistance in connection with litigation, as Buyer
reasonably may request to more effectively convey and transfer to and vest in
Buyer and to put Buyer in possession of the Assets to be transferred hereunder.
SECTION 7.9 SALES AND OTHER TAXES. Seller shall pay any and all sales,
transfer or similar taxes due and owing as a result of the sale, transfer,
conveyance and assignment of Assets provided for herein, and shall furnish to
Buyer receipts, certificates or other evidence of such payment satisfactory to
Buyer.
SECTION 7.10 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of Arizona,
without regard to its conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BUYER: SELLER:
WO CONSULTING, INC. SCOTTSDALE TECHNOLOGIES, INC.
By: /s/ XXXXXX X. XXXXX By: /s/ XXXX X. XXXXXXXXX
-------------------- ----------------------
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Xxxxxx X. Xxxxx, President Xxxx X. Xxxxxxxxx, President
EXECUTIVE OFFICERS:
/s/ XXXX X. XXXXXXXXX
--------------------------------------
Xxxx X. Xxxxxxxxx
/s/ C. XXXXXXX XXXXXXXX
--------------------------------------
C. Xxxxxxx XxXxxxxx
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