Exhibit 10
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of April 14, 2004 by and between Aladdin Systems Holdings, Inc., a
Nevada corporation ("Aladdin Holdings" or "Seller") and AES Management Buyout
Company, a Delaware corporation ("AMBO" or "Buyer").
AGREEMENT
In consideration of the terms hereof, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
SECTION 1.1 TRANSFER OF ALADDIN ENTERPRISE SOLUTIONS STOCK. Subject to
the terms and conditions hereof, on the Closing Date (as defined below):
(a) Aladdin Holdings shall sell, convey, transfer, assign and deliver
to AMBO and AMBO shall purchase from Aladdin Holdings, all of the issued and
outstanding capital stock (the "AES Stock") of Aladdin Enterprise Solutions,
Inc., a Delaware corporation ("AES" or the "Company").
(b) Aladdin Holdings shall waive, with respect to each person listed on
Schedule 1.4 from time to time, all rights under the Agreement and Plan of
Merger, dated October 17, 2002, by and among Seller, Erevu Acquisition
Corporation, and Erevu, Inc. (the "Erevu Merger Agreement"), with respect to:
(i) any reduction or forfeiture of stock previously issued pursuant to the terms
of the Erevu Merger Agreement, and (ii) any right to indemnification pursuant to
Section 9.3 of the Erevu Merger Agreement.
SECTION 1.2 THE CLOSING. The closing of this Agreement (the "Closing")
shall occur on April 14, 2004 (the "Closing Date") at 10:00 a.m. local time at
the offices of Xxxxxxx Xxxx & Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX
00000, or such other time or location as the parties hereto shall agree.
SECTION 1.3 DELIVERIES AT THE CLOSING. On the Closing Date in order to
effectuate the purchase and sale of the AES Stock:
(a) Aladdin Holdings shall deliver to AMBO certificates representing
all of the AES Stock, free and clear of any claim, lien, pledge, mortgage,
option, charge, easement, security interest, right-of-way, encumbrance,
restriction on sale, transfer, ownership, or voting, preemptive right or option
or any other right of any third party of any nature whatsoever ("Encumbrance"),
duly endorsed in blank for transfer or accompanied by stock powers duly executed
in blank.
(b) AMBO shall deliver the Purchase Price as set forth in Section 1.4
below.
(c) AMBO and Aladdin Holdings shall each deliver all documents,
certificates, agreements and instruments required to be delivered pursuant to
Articles IV and V; and
(d) All instruments and documents executed and delivered to any party
pursuant hereto shall be in a form and substance, and shall be executed in a
manner, reasonably satisfactory to the receiving party.
SECTION 1.4 PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, the total purchase price for the AES Stock (the "Purchase Price")
shall be as follows:
(a) a six (6) month secured promissory note in the amount of
$550,000.00 bearing interest at the LIBOR rate, in the form attached hereto as
Exhibit A, secured by the Stock Pledge Agreement in the form of Exhibit E, and
guaranteed by the Company pursuant to a Non-Recourse Guaranty in the form of
Exhibit D hereto, which Guaranty will be secured by an Intellectual Property
Security Agreement in the form of Exhibit C hereto;
(b) a thirty (30) month secured promissory note in the amount of
641,050 bearing interest at the LIBOR rate, in the form attached hereto as
Exhibit B, secured by the Stock Pledge Agreement in the form of Exhibit E, and
guaranteed by the Company pursuant to a Non-Recourse Guaranty in the form of
Exhibit D hereto, which Guaranty will be secured by an Intellectual Property
Security Agreement in the form of Exhibit C hereto;
(c) 1,146,246 newly issued shares of AMBO common stock;
(d) the surrender to Aladdin Holdings of 1,375,000 shares of Aladdin
Holdings common stock currently issued and outstanding; and
(e) the waiver of all rights of the persons listed on Schedule 1.4 to
obtain additional shares of Aladdin Holdings pursuant to the Erevu Merger
Agreement, including Section 1.3 thereof; Buyer shall, from time to time, have
the right to add additional persons to Schedule 1.4 of this Agreement without
the consent of Seller, whereupon the waiver contained in Section 1.1 of this
Agreement, without any further action, shall be expanded to include such
persons.
SECTION 1.5 ASSISTANCE IN CONSUMMATION OF THE PURCHASE AND SALE OF THE
AES STOCK. Aladdin Holdings and AMBO shall provide all reasonable assistance to,
and shall cooperate with, each other to bring about the consummation of the
purchase and sale of the AES Stock and the other transactions contemplated
herein as soon as possible in accordance with the terms and conditions of this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ALADDIN HOLDINGS
Aladdin Holdings represents and warrants to AMBO, as of the date of
this Agreement and as of the Closing (which representations and warranties shall
survive the Closing Date to the extent provided in Section 9.5 hereof), all as
follows in this Article II:
SECTION 2.1 GOOD TITLE. The AES Stock is owned by Aladdin Holdings with
good title thereto, free and clear of any Encumbrance.
SECTION 2.2 ORGANIZATION, GOOD STANDING. AES is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware,
and has all requisite corporate power and authority to own, operate and lease
its properties and assets and to carry on its business as now conducted.
Schedule 2.2 includes true and correct copies of the Certificate of
Incorporation and Bylaws of AES. Aladdin Holdings is a corporation duly
incorporated, validly existing and in good standing under the laws of Nevada.
SECTION 2.3 AUTHORIZATION. Aladdin Holdings has the full corporate
power and authority to enter into this Agreement and each of the documents to
which it is a party, and to carry out the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by Aladdin
Holdings, and this Agreement is, and will be, on the Closing Date, a legal,
valid and binding obligation of Aladdin Holdings, enforceable against Aladdin
Holdings in accordance with the terms of this Agreement.
SECTION 2.4 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH
INSTRUMENTS. The execution, delivery and performance of this Agreement by
Aladdin Holdings and the consummation of the transactions contemplated hereby
will not (a) constitute a violation of any provision of Aladdin Holdings'
certificate or articles of incorporation, bylaws or other organizational or
charter documents, (b) constitute a violation (with or without the giving of
notice or lapse of time, or both) of any provision of law or any judgment,
decree, order, regulation or rule of any court or other governmental authority
applicable to Aladdin Holdings or contract to which Aladdin Holdings is part, or
subject, or (c) require any consent, approval or authorization of, or
declaration, filing or registration with, any person, corporation, partnership,
joint venture, association, organization, other entity or governmental or
regulatory authority (a "Person").
SECTION 2.5 AUTHORIZED CAPITALIZATION OF AES. AES's authorized capital
stock consists solely of common shares of which one (1) share is issued and
outstanding on the date of this Agreement and entirely held by Aladdin Holdings.
All issued and outstanding shares of AES Stock are validly issued, fully paid
and nonassessable. Aladdin Holdings is the sole owner of all issued and
outstanding shares of capital stock of AES. There are no outstanding or
authorized subscriptions, options, warrants, calls, rights, commitments or other
agreements of any character which obligate or may obligate Aladdin Holdings or
AES to issue any additional shares of any of its capital stock or any securities
convertible into or evidencing the right to subscribe for any shares of any such
capital stock. There are no voting trusts or other agreements or understandings
with respect to the capital stock of AES to which Aladdin Holdings or AES is a
party or by which Aladdin Holdings or AES is bound.
SECTION 2.6. ASSETS OF AES.
(a) AES, at the Closing will be, the true and lawful owner of the
assets set forth on the Disclosure Schedule, including but not limited to,
machinery, equipment, computers, telecommunication systems, office supplies,
fittings and other office equipment, furniture, prepaid expenses, mass market
and licensed computer software, trademarks, trade names, and computer software
products (the "Assets").
(b) Except as set forth on the Disclosure Schedule, at the Closing, the
Assets will be free and clear of all Encumbrances.
(c) The Assets: (i) are adequate to conduct the operations of the
Company in substantially the manner currently conducted, (ii) constitute all of
the assets of the Seller and its affiliates used principally in connection with
AES's business, and (iii) are in good condition, ordinary wear and tear
excepted.
SECTION 2.7. CONTRACTS AND COMMITMENTS.
(a) The Disclosure Schedule contains a true, complete and correct list
and description of the following contracts and agreements, whether written or
oral, which relate to AES (collectively, the "Material Contracts"):
(i) all contracts, agreements, commitments, purchase orders
(other than merchandise deliveries to customers in the normal course of
business upon standard terms) or other understandings or arrangements
to which the AES is a party;
(ii) all agency, distributor, sales representative and similar
agreements to which AES is a party;
(iii) all leases, whether operating, capital or otherwise,
under which AES is lessor or lessee; and
(iv) any licensing agreements, franchise agreements and other
material agreement or contract entered into by AES.
(b) Except as set forth on the Disclosure Schedule:
(i) each contract or agreement, whether written or oral, which
relates to AES (collectively, the "Contracts") is a valid and binding
agreement of AES, enforceable against AES in accordance with its terms,
and the Seller has no knowledge that any Contract is not a valid and
binding agreement of the other parties thereto:
(ii) AES has (and to Seller's knowledge the other party has)
fulfilled all material obligations required pursuant to the Contracts
to have been performed by it prior to the Closing Date;
(iii) AES is not in breach of or default under any Contract,
and no event has occurred which with the passage of time or giving of
notice or both would constitute such a default, result in a loss of
rights or result in the creation of any lien, charge or encumbrance,
thereunder or pursuant thereto (an "Inchoate Default");
(iv) to the best knowledge of AES, there is no existing breach
or default by any other party to any Contract, and no Inchoate Default
by any such other party;
(v) neither the execution and delivery of this Agreement nor
the consummation or performance of any of the transactions contemplated
hereby will, directly or indirectly (with or without notice or lapse of
time) contravene, conflict with, or result in a violation or breach of
any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any Contract;
(vi) there are no Contracts between the Company and Seller or
any affiliate of Seller; and
(vii) Seller has not received written notice, nor does it have
knowledge, that any party to a Contract intends to cancel, terminate or
renew such Contract or to exercise or decline to exercise any option or
right hereunder.
SECTION 2.8. SUBSIDIARIES AND AFFILIATES OF AES. AES has no
Subsidiaries. As used in this Agreement, "Subsidiary," shall mean any
corporation of which outstanding securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation are owned
directly or indirectly by such Person. AES does not own, directly or indirectly,
any ownership, equity, profits or voting interest in, or otherwise control, any
corporation, partnership, joint venture or other entity, and has no agreement or
commitment to purchase any such interest.
SECTION 2.9. UNDISCLOSED LIABILITIES. As of the Closing Date, the
Company will have no Liabilities, except for Liabilities: (a) under the accounts
payable to Linsang International LP and its affiliates, which as of March 31,
2004 were $494,570, (b) relating to performance obligations under Contracts in
accordance with the terms and conditions thereof which are not required by
generally accepted accounting principles to be reflected on a regularly prepared
balance sheet, or (c) as set forth on Schedule 2.9. "Liability" means any
liability or obligation (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated and whether due or to become due) including,
without limitation, any liability for Taxes.
SECTION 2.10. COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is in
compliance with, and has not received any notice of violation of any federal,
state, local, municipal, foreign, international, multinational, or other
administrative order, constitution, law, rule, ordinance, permit, principle of
common law, regulation, statute, or treaty.
SECTION 2.11. INTELLECTUAL PROPERTY.
(a) Except as set forth on Schedule 2.11 the Company is the owner of
all right, title, and interest in the intellectual property used in connection
with, or which relates to, its business (the "Intellectual Property"), free and
clear of all Encumbrances, and has the right to use without payment to a third
party all of the Intellectual Property.
(b) Schedule 2.11 contains a complete and accurate list and summary
description, including any royalties paid or received by the Company, of all
Contracts relating to the Intellectual Property to which the Company is a party
or by which the Company is bound, except for any license implied by the sale of
a product and perpetual, paid-up licenses for commonly available software
programs with a value of less than $500 under which the Company is the licensee.
There are no outstanding and, to Seller's knowledge, no threatened disputes or
disagreements with respect to any such agreement.
(c) To the knowledge of the Seller, there are no conflicts with or
infringements of any Intellectual Property by any third party. The conduct of
the Company's business as currently conducted does not conflict with or infringe
in any way with any proprietary right of any third party, which conflict or
infringement would have a material adverse effect on the Company, the
Intellectual Property or the business of the Company. There is no claim, suit,
action or proceeding pending or threatened against the Company (i) alleging any
such conflict or infringement with any third party's proprietary rights or (ii)
challenging the ownership, use, validity or enforceability of the Intellectual
Property.
(d) No former or present employees, officers or directors of the
Company hold any right, title or interest directly or indirectly, in whole or in
part, in or to any Intellectual Property.
(e) The Intellectual Property is sufficient, adequate and all that is
necessary for the Company to carry on its business as presently conducted.
SECTION 2.12. EMPLOYEE BENEFITS. Schedule 2.12 sets forth a list of all
employees of the Company and all employee benefit arrangements or payroll
practices, including, without limitation, any such arrangements or payroll
practices providing severance pay, sick leave, vacation pay, salary continuation
for disability, retirement benefits, deferred compensation, bonus pay, incentive
pay, stock options, hospitalization insurance, medical insurance, life
insurance, scholarships or tuition reimbursements, maintained by the Company or
to which the Company is obligated to contribute for employees.
SECTION 2.13. LITIGATION. Except as set forth in Schedule 2.13, there
are no claims, actions, suits, proceedings, labor disputes or investigations
pending or to Seller's knowledge by or against the Seller, the Company or any of
their respective officers, directors, employees, agents or affiliates involving,
affecting or relating to any Assets, properties or operations of the Company or
the transactions contemplated by this Agreement.
SECTION 2.14. TAX MATTERS.
(a) Except as otherwise disclosed in Schedule 2.14,
(i) the Company has filed (or joined in the filing of) when
due all tax returns required by applicable law to be filed with respect
to the Company and all taxes shown to be due on such tax returns have
been paid;
(ii) all such tax returns were true, correct and complete as
of the time of each such filing;
(iii) all taxes relating to periods ending on or before the
Closing Date owed by the Company (whether or not shown on any tax
return) at any time on or prior to the Closing Date, if required to
have been paid, have been paid;
(iv) there is no action, suit, proceeding, investigation,
audit or claim now pending against, or with respect to, the Company in
respect of any tax or assessment, nor is any claim for additional tax
or assessment asserted by any governmental agency;
(v) no claim has been made by any governmental agency in a
jurisdiction where the Company does not currently file a tax return
that it is or may be subject to tax by such jurisdiction, nor to
Seller's knowledge is any such assertion threatened;
(vi) there is no outstanding request for any extension of time
within which to pay any taxes or file any tax returns;
(vii) the Company is not a party to any agreement, whether
written or unwritten, providing for the payment of taxes, payment for
tax losses, entitlements to refunds or similar tax matters;
(viii) no ruling with respect to taxes has been requested by
or on behalf of the Company; and
(ix) the Company has withheld and paid all taxes required to
be withheld in connection with any amounts paid or owing to any
employee, creditor, independent contractor or other third party.
(b) (i) no property of the Company is "tax-exempt use property" within
the meaning of Section 168(h) of the Internal Revenue Code of 1986, as amended
(the "Code"); (ii) the Company is not a party to any lease made pursuant to
former Section 168(f)(8) of the Internal Revenue Code of 1954; (iii) the Company
has not filed any agreement or consent under Section 341(f) of the Code; and
(iv) the Seller is not a "foreign person" within the meaning of Section 1445 of
the Code.
SECTION 2.15. UNAUDITED BALANCE SHEET. The unaudited balance sheet of
the Company at December 31, 2003 (the "Unaudited Balance Sheet"), together with
the related schedules: (i) are included as Schedule 2.15, (ii) were prepared in
accordance with generally accepted accounting principles, (iii) present fairly
the financial condition of the Company as of December 31, 2003, and (iv) are
complete, correct and accordance with the books of account and records of the
Company.
SECTION 2.16. BROKERS AND FINDERS. Neither Aladdin Holdings nor the
Company has retained any broker or finder in connection with the transactions
contemplated by this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF AMBO
AMBO represents and warrants to Aladdin Holdings, as of the date of
this Agreement and as of the Closing (which representations and warranties shall
survive the Closing to the extent provided in Section 9.5 hereto), all as
follows in this Article III:
SECTION 3.1. ORGANIZATION, GOOD STANDING. AMBO is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own, operate
and lease its properties and assets and to carry on its business as now
conducted.
SECTION 3.2. AUTHORITY. AMBO has full corporate power and authority to
execute, deliver and perform this Agreement to which either is a party and to
carry out the transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by AMBO, and this Agreement is, and will be, on
the Closing Date, a legal, valid and binding obligation AMBO, enforceable
against AMBO in accordance with its terms.
SECTION 3.3. NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH
INSTRUMENTS. The execution, delivery and performance of this Agreement by AMBO
and the consummation of the transactions contemplated hereby will not (a)
constitute a violation (with or without the giving of notice or lapse of time,
or both) of any provision of law or any judgment, decree, order, regulation or
rule of any court or other governmental authority applicable to AMBO, or (b)
require any consent, approval or authorization of, or declaration, filing or
registration with, any Person.
SECTION 3.4. CAPITALIZATION. AMBO authorized capital stock consists of
100,000,000 shares of common stock, $.01 par value of which 13,298,575 are
issued and outstanding as of the date hereof (excluding the shares to be issued
pursuant to the terms of this Agreement), and 10,000,000 shares of preferred
stock, $.01 par value, none of which have been designated or issued. Except as
set forth on Schedule 3.4, there are no outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments or other agreements of any
character which obligate or may obligate AMBO to issue any additional shares of
any of its capital stock or any securities convertible into or evidencing the
right to subscribe for any shares of any such capital stock. Section 3.5.
Brokers and Finders. AMBO has not retained any broker or finder in connection
with the transactions contemplated by this Agreement.
ARTICLE IV.
CONDITIONS PRECEDENT TO OBLIGATIONS OF AMBO
The obligations of AMBO to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by them at or
prior to the Closing Date shall be subject to the satisfaction of the following
conditions on or prior to the Closing Date, which condition may be expressly
waived in writing by AMBO.
SECTION 4.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Aladdin Holdings contained herein shall have
been true in all material respects when made and shall be true as of the Closing
Date as though made on that date, except as affected by transactions
contemplated hereby and except to the extent that such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true as of the specified date.
SECTION 4.2. PERFORMANCE OF AGREEMENT. Aladdin Holdings shall have
performed in all material respects all obligations and agreements and complied
with all covenants and conditions contained in this Agreement to be performed
and complied with by it at or prior to the Closing Date.
SECTION 4.3. RESIGNATIONS. AMBO shall have received resignations
effective as of the Closing Date of all the officers and directors of AES.
SECTION 4.4. OFFICERS' CERTIFICATE. AMBO shall have received a
certificate of the President and the Secretary of Aladdin Holdings dated the
Closing Date, certifying that all of the conditions to the obligations of
Aladdin Holdings have been fulfilled in all material respects.
SECTION 4.5. DELIVERY OF SHARES. AMBO shall have received certificates
representing the AES Stock.
SECTION 4.6. CORPORATE DOCUMENTS. Purchaser shall have received from
each Seller certified copies of the resolutions duly adopted by the board of
directors of Seller approving the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, and such resolutions
shall be in full force and effect as of the Closing Date.
SECTION 4.7. FIRPTA. Seller shall have delivered an affidavit, dated
the Closing Date, pursuant to Section 1445 of the Code (Foreign Investment in
Real Property Tax Act of 1980 affidavit) in substantially the form of Exhibit F.
SECTION 4.8. NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There
must not have been made or threatened by any Person any claim asserting that
such Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any AES Stock of, or any other
voting, equity, or ownership interest in, the Company, or (b) is entitled to all
or any portion of the Purchase Price payable for the AES Stock.
ARTICLE V.
CONDITIONS PRECEDENT TO
OBLIGATIONS OF ALADDIN HOLDINGS
The obligations of Aladdin Holdings to perform and observe the
covenants, agreements and conditions hereof to be performed and observed by them
at or prior to the Closing Date shall be subject to the satisfaction of the
following conditions on or prior to the Closing Date, which conditions may be
expressly waived in writing by Aladdin Holdings, by the President of Aladdin
Holdings.
SECTION 5.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of AMBO contained herein shall have been true in
all material respects when made and shall be true in all material respects as of
the Closing Date as though made on that date, except as affected by transactions
contemplated hereby and except and to the extent that such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true as of the specified date.
SECTION 5.2. PERFORMANCE OF AGREEMENT. AMBO shall have performed all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed and complied with by it at or prior
to the Closing Date.
SECTION 5.3. OFFICERS' CERTIFICATE. Aladdin Holdings shall have
received a certificate of the President of AMBO dated the Closing Date,
certifying that the conditions to the obligations of AMBO have been fulfilled.
SECTION 5.4. SECRETARY'S CERTIFICATE. Aladdin Holdings shall have
received a certificate of the Secretary of AMBO dated the Closing Date,
certifying copies of (i) resolutions by AMBO's Board of Directors approving this
Agreement, and the transactions contemplated hereby and thereby, (ii) the
Certificate of Incorporation of AMBO and certifying that there are no
proceedings currently in progress or contemplated to amend the Certificate of
Incorporation, and (iii) AMBO's Bylaws, indicating that they have been adopted
by the Company's Board of Directors and certifying that there are no proceedings
currently in progress or contemplated to amend such Bylaws.
SECTION 5.5. PLEDGE AND SECURITY AGREEMENTS. Aladdin Holdings shall
have received: (a) the Stock Pledge Agreement, in the form attached hereto as
Exhibit E duly executed by AMBO, and (b) the Non-Recourse Guaranty and the
Intellectual Property Security Agreement in the form of Exhibits D and C
respectively, duly executed by the Company.
SECTION 5.6. PROMISSORY NOTES. Aladdin Holdings shall have received
each of the two promissory notes, in the form attached hereto as Exhibit A and
Exhibit B, duly executed by AMBO
SECTION 5.7. SURRENDER OF ALADDIN SHARES. Aladdin Holdings shall have
received the surrender of 1,375,000 shares of Aladdin Holdings common stock.
SECTION 5.8. CANCELLATION OF NOTE. The promissory note from Aladdin
Holdings to Linsang Partners, LLC dated June 27, 2003, in the amount of
$40,000.00 has been assumed by the Company and Aladdin Holdings shall have been
released from all liability thereunder.
ARTICLE VI.
POST-CLOSING COVENANTS
SECTION 6.1. OBLIGATION TO FILE TAX RETURNS.
(a) Any sales, recording, transfer, stamp, conveyance, value added,
use, or other similar taxes, duties, excise, governmental charges or fees
imposed as a result of the sale of the AES Stock to Purchaser pursuant to this
Agreement shall be borne by Seller.
(b) Seller shall cause to be prepared and filed all tax returns with
the appropriate federal, state, local and foreign governmental agencies relating
to the Company for periods ending on or prior to the Closing Date and shall pay
all taxes due with respect to such tax returns. Purchaser shall prepare and
file, or cause to be prepared and filed, all tax returns required to be filed by
the Company covering a tax year commencing prior to the Closing Date and ending
after the Closing Date (a "Straddle Tax Return") and shall cause the Company to
pay the taxes shown to be due thereon, provided, however, that Seller shall
promptly reimburse Purchaser for the portion of such Tax that relates to a
Pre-Closing Tax Period (as defined below). The Seller will furnish to Purchaser
all information and records reasonably requested by Purchaser for use in
preparation of any Straddle Tax Returns. Purchaser and Seller agree to cause the
Company to file all tax returns for any Straddle Period (as defined below) on
the basis that the relevant taxable period ended as of the close of business on
the Closing Date, unless the relevant governmental agency will not accept a Tax
Return filed on that basis. For purposes of this Agreement "Pre-Closing Tax
Period" shall mean any taxable period ending on or before the Closing Date and
the portion ending on and including the Closing Date of any taxable period that
includes (but does not end on) the Closing Date ("Straddle Period").
(c) In the case of any Straddle Period, (i) real, personal and
intangible property taxes ("Property Taxes") of the Company for the Pre-Closing
Tax Period shall be equal to the amount of such property taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which is the number
of days during the Straddle Period that are in the Pre-Closing Tax Period and
the denominator of which is the number of days in the Straddle Period; and (ii)
the taxes of the Company (other than property Taxes) for the portion of the
Straddle Period that constitutes a Pre-Closing Tax Period shall be computed as
if such taxable period ended as of the close of business on the Closing Date
SECTION 6.2. TRANSFER OF ASSETS. In the event that it is determined
following the Closing that either (a) any asset principally used in connection
with the business of the Company is owned by the Seller or an affiliate of the
Seller, or (b) any asset the ownership of which by the Company is necessary for
the representations and warranties contained in Article II of the Agreement to
be true and correct, then, such asset shall be deemed to be an Asset, and Seller
shall transfer such Asset to the Company for no additional consideration.
SECTION 6.3. TRANSITION SERVICES. In the event that prior to the
Closing Date Seller or any affiliate of Seller provided any services to the
Company, such as accounting, human resources, employee benefits or other
administrative services ("Administrative Services"), then Seller shall continue
to provide such Administrative Services to the Company after the Closing Date
until the earlier of: (a) closing of Seller's sale of all or substantially all
of its assets, or (b) six months from the date hereof.
SECTION 6.4. LICENSE OF NAME. Seller hereby grants to the Company a 12
month, royalty free, worldwide license to use the name "Aladdin" and all
derivatives thereof. Such license shall terminate at such time, if any, as
either (a) Seller settles its pending disputed with Aladdin Knowledge Systems,
Inc. regarding the use of the "Aladdin" name, and in connection with such
settlement surrenders all rights to the "Aladdin" name, and (b) a court
determines that Seller does not have the right to license such name.
SECTION 6.5. PREPARATION OF FINANCIAL STATEMENTS. Seller shall cause to
be prepared and delivered to Buyer by April 15, 2004 an audit of the Company's
consolidated balance sheet, and the related statements of income, retained
earnings and cash flow as of and for the year ended December 31, 2003. Buyer
shall reimburse Seller for the cost of such audit in an amount no to exceed
$15,000.
SECTION 6.6. NONDISCLOSURE. From and after the Closing Date, Seller
shall not use, divulge, furnish or make accessible to anyone any proprietary,
material non-public, confidential or secret information to the extent relating
to the Company (including, without limitation, any Intellectual Property), and
Seller shall cooperate reasonably with Purchaser in preserving such proprietary,
confidential or secret aspects of the Company except to the extent required by
the Exchange Act of 1934, as amended (the "Exchange Act").
SECTION 6.7. REMOVAL OF RESTRICTIVE LEGENDS. Upon request, Aladdin
Holdings shall remove any and all restrictive legends relating to the Erevu
Merger Agreement from certificates for shares of capital stock of Aladdin
Holdings held by persons listed, from time to time, on Schedule 1.4.
SECTION 6.8. ACKNOWLEDGMENT BY ALADDIN HOLDINGS. Aladdin Holdings,
solely in its capacity as a stockholder of Buyer acknowledges that from time to
time persons who are former stockholders of Erevu, Inc. may, in order to have
their names added to Schedule 1.4, contribute capital stock in Aladdin Holdings
and rights under the Erevu Merger Agreement to Buyer, and that Buyer may use
such capital stock to redeem the stock in Buyer held by persons listed on
Schedule 1.4.
ARTICLE VII.
TERMINATION
This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual consent of AMBO and Aladdin Holdings;
(b) by either party if the Closing has not occurred by April 30, 2004.
In the event of any termination pursuant to this Article VII (other than
pursuant to clause (a) above), written notice setting forth the reasons therefor
shall forthwith be given by the terminating party to the other parties hereto.
Such termination shall not prejudice any party's right to seek remedies for
another party's breach of this Agreement.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1. INDEMNIFICATION BY ALADDIN. Aladdin shall indemnify,
defend and hold harmless AMBO from and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including but not limited to, interest, penalties and attorneys' fees and
expenses (collectively, "Damages"), asserted against, imposed upon or incurred
by the AMBO, by reason of or resulting from the breach of any representation or
warranty made by Aladdin hereunder or the failure of Aladdin to perform any of
its obligations hereunder.
SECTION 8.2. INDEMNIFICATION BY AMBO. AMBO shall indemnify, defend and
hold harmless Aladdin from and against all Damages asserted against, imposed
upon or incurred by Aladdin, by reason of or resulting from the breach of any
representation or warranty made by Purchaser hereunder or the failure of
Purchaser to perform any of its obligations hereunder.
ARTICLE IX.
GENERAL
SECTION 9.1. COOPERATION. Each party hereto will fully cooperate with
the other parties, their counsel and accountants in connection with any steps
required to be taken as part of its obligations under this Agreement. Each party
will use its reasonable best efforts to cause all conditions to this Agreement
to be satisfied as promptly as possible and to obtain all consents and approvals
necessary for the due and punctual performance of this Agreement and for the
satisfaction of the conditions hereof. No party will undertake any course of
action inconsistent with this Agreement or which would make any representations,
warranties or agreements made by such party in this Agreement untrue or any
conditions precedent to this Agreement unable to be satisfied at or prior to the
Closing.
SECTION 9.2. CONFIDENTIALITY. In connection with the transactions
contemplated herein, Aladdin Holdings and AMBO are furnishing each other with
certain information which is either nonpublic, confidential or proprietary in
nature. All such information furnished by one party to the other or its
representatives is hereinafter referred to as the "Confidential Information." As
used in this Agreement, the "representatives" of any party shall mean such
party's officers, employees, agents or other representatives, including, without
limitation, attorneys, accountants, consultants and financial advisors. In
consideration of each party's being furnished with the Confidential Information
of the other, each party agrees that:
(a) For two years from the date hereof, the Confidential Information
will be kept confidential and except as required by law will not, without the
prior written consent of the party supplying the information, be disclosed by
the receiving party or its representatives during such two-year period in any
manner whatsoever, in whole or in part, and will not be used by the receiving
party or its representatives directly or indirectly for any purpose other than
evaluating and facilitating the transactions contemplated herein. Each party
agrees to transmit the Confidential Information only to those of its
representatives who need to know the Confidential Information for the purpose of
advising it regarding any of the purposes for which it is permitted to use the
Confidential Information under the terms of this Agreement, who are informed by
the party supplying such information of the confidential nature of the
Confidential Information and who are directed by such party to comply with the
terms of this Agreement. Each party will be responsible for any material breach
of this Agreement by its representatives.
(b) Prior to the Closing Date without the prior written consent of the
other parties to this Agreement, no party or any of its representatives will
disclose to any other Person the fact that the Confidential Information has been
made available, or any of the terms, conditions or other facts with respect to
the transactions contemplated herein, including the status thereof, except as
required by law or permitted under the terms of this Agreement.
(c) In the event the parties do not proceed with the transactions
contemplated herein, the Confidential Information and all copies thereof will be
destroyed or returned promptly without retaining any copies thereof.
(d) This Section 9.2 shall be inoperative as to such portions of the
Confidential Information which (i) are or become generally available to the
public other than as a result of a disclosure by the receiving party or its
representatives which is not required by law; (ii) become available to the
receiving party from a source with no obligation of confidentiality to the other
party; (iii) describe technology independently developed by the receiving party;
or (iv) were known to the receiving party on a non-confidential basis prior to
its disclosure to the receiving party by the supplying party or one of its
representatives.
(e) In the event that a receiving party or any of its representatives
is requested or becomes legally compelled (by written or oral interrogatories,
subpoena, civil investigative demand or similar process or by the disclosure
requirements of the Exchange Act) to disclose any of the Confidential
Information for purposes not permitted by this Agreement, the receiving party
will provide the supplying party with prompt written notice so that the
supplying party may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. In the event that such
protective order or other remedy is not obtained, or that the supplying party
waives compliance with the provisions of this Agreement, the receiving party
will furnish only that portion of the Confidential Information which is legally
required, and will exercise good-faith efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information.
(f) From and after the Closing Date, Confidential Information relating
to the Company shall be deemed to be Confidential Information for which AMBO is
the supplying party and Aladdin Holdings is the receiving party.
(g) Each party agrees that the other parties shall be entitled to
equitable relief, including injunction and specific performance, in the event of
any breach of the provisions of clause (a), (b), (c) or (e) of this Section 9.2.
Such remedies shall not be deemed to be the exclusive remedies for a breach of
this Section 9.2 by any party or its representatives but shall be in addition to
all other remedies available at law or equity. (h) It is further understood and
agreed that no failure or delay by any party in exercising any right, power or
privilege under this Section 9.2 shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege hereunder.
SECTION 9.3. FURTHER ACTS. After the Closing Date, each party hereto,
at the request of and without any further cost or expense to the other parties,
will take any further actions necessary or desirable to carry out the purposes
of this Agreement.
SECTION 9.4. AMENDMENT. The parties may amend, modify or supplement
this Agreement at any time, but only in writing duly executed on behalf of each
of the parties to be bound thereby.
SECTION 9.5. SURVIVAL OF WARRANTIES. The representations and warranties
contained in Sections 2.1 and 2.5 of this Agreement shall survive the Closing
forever, the representations and warranties contained in Section 2.9 of this
Agreement shall survive the closing until April 15, 2005 and all other
representations and warranties shall survive the Closing for a period of one (1)
year from the Closing.
SECTION 9.6. COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 9.7. HEADINGS. The headings preceding the text of Articles and
Sections of this Agreement are for convenience only and shall not be deemed
parts thereof.
SECTION 9.8. APPLICABLE LAW. This Agreement, including all matters of
construction, validity and performance, shall be governed by and construed and
enforced in accordance with the laws of the state of New York, as applied to
contracts executed and to be fully performed in such state by citizens of such
state.
SECTION 9.9. PARTIES IN INTEREST. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties hereto,
whether herein so expressed or not, but neither this Agreement nor any of the
rights, interests or obligations hereunder of any party hereto shall be assigned
without the prior written consent of the other parties. This Agreement is not
intended, nor shall it be construed, to confer any enforceable rights on any
Person not a party hereto.
SECTION 9.10. NOTICES. Any notice or demand desired or required to be
given hereunder shall be in writing given by personal delivery or certified or
registered mail, reputable overnight courier service, telegram or confirmed
facsimile transmission, addressed as respectively set forth below or to such
other address as any party shall have previously designated by such a notice,
The effective date of any notice or request shall be three days from the date it
is mailed by the addressor, upon delivery of the courier package if it is sent
by courier, upon confirmation of a successful facsimile transmission, or in any
event upon personal delivery.
Notices to AMBO and Aladdin Holdings shall be sent as follows:
To AMBO:
0000 Xxxxxxxx Xxxxx Xxxx,
Xxxxxxxxxx, XX 00000,
attn: Xxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Copy to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile (000) 000-0000
To Aladdin Holdings:
Aladdin Systems Holdings, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Copy to:
Cyruli Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, X.X. 00000
Attention: Xxxx Xxxxxxx
SECTION 9.11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof,
supersedes and is in full substitution for any and all prior agreements and
understandings among them relating to such subject matter, and no party shall be
liable or bound to the other party hereto in any manner with respect to such
subject matter by any warranties, representations, indemnities, covenants, or
agreements except as specifically set forth herein. The Exhibits and Schedules
to this Agreement are hereby incorporated and made a part hereof and are an
integral part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into and signed
this Agreement as of the date and year first above written.
AES MANAGEMENT BUYOUT COMPANY
By:
Its
ALADDIN SYSTEM HOLDINGS, INC.
By:
Its
