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EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 5th day of May, 2000 by and among CT Holdings, Inc., a Delaware
corporation ("Buyer"), Xxx Xxxxxxx ("Xxxxxxx"), X. Xxxxxxxx XxXxxx ("XxXxxx")
and Xxxxxx Xxxxxxxxx ("Xxxxxxxxx," and together with Xxxxxxx and XxXxxx, the
"Sellers"), and xXxxxx.xxx, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Xxxxxxxxx, Xxxxxxx and XxXxxx own not less than 477,333,
477,333 and 238,667 shares, respectively, of the Common Stock, $0.01 par value
per share, of the Company (collectively, the "Company Shares"), such Shares
constituting 4.68% of the fully-diluted issued and outstanding capital stock of
the Company; and
WHEREAS, the Sellers desire to sell and convey to Buyer, and Buyer
desires to purchase from the Sellers, all of the Company Shares.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties, covenants and agreements contained herein,
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.1 Purchase of Stock. On the Closing Date (as defined below), Buyer
agrees to purchase from each of the Sellers, and each of the Sellers agree to
sell to Buyer, the number of Company Shares owned by the Sellers indicated below
for a total consideration to be paid by the issuance and delivery by Buyer to
each Seller of the number of shares of unregistered Common Stock, $.01 par value
per share (the "CT Shares"), indicated below.
CT Shares Company Shares
Issued by Sold by
Buyer to Sellers to
Sellers Sellers Buyer
------- ---------------------- -----------------------
Xxxxxxx 133,333 477,333
Whitehair 133,333 477,333
XxXxxx 66,667 238,667
------- --------
Total 333,333 1,193,333
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
The Sellers and the Company, jointly and severally, represent and
warrant to Buyer as follows:
2.1 Authorization. This Agreement has been duly executed and delivered
by the Company and the Sellers and constitutes the valid, legal and binding
obligation of each such party, enforceable in accordance with its terms. The
Company has full corporate power, capacity and authority to execute, deliver and
perform this Agreement and all other agreements and documents contemplated
hereby. The execution, delivery and performance of this Agreement by the Company
has been duly authorized by the Company and no other corporate action on the
part of the Company is necessary. This Agreement has been duly executed and
delivered by the Company and the Sellers and constitutes the valid and binding
obligation of the Company and the Sellers, enforceable in accordance with its
terms.
2.2 Organization, Existence and Good Standing of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
2.3 Capital Stock of the Company. The Company's authorized capital
stock consists of 100,000,000 shares of Common Stock, $0.01 par value per share,
of which 17,040,688 shares of Common Stock are issued and outstanding
immediately prior to the date hereof, and 50,000,000 shares of Preferred Stock,
$0.01 par value per share, of which no shares of Preferred Stock are issued and
outstanding immediately prior to the date hereof. All of the Company Shares have
been validly issued and are fully paid and nonassessable and no holder thereof
is entitled to any preemptive rights.
2.4 Financial Statements. The Company has previously furnished to Buyer
the unaudited balance sheet and income statement of COR Decision Support Systems
for the two (2) month period ended February 29, 2000, and unaudited balance
sheet and income statement of ArtLog, Inc. for the three (3) month period ended
March 31, 2000, the predecessors of the Company (the "Predecessors"),
(collectively, the "Financial Statements"). The Financial Statements present
fairly the financial position and results of operations of the Company as of and
for the indicated date and have been prepared on an accounting and income tax
basis consistently applied.
2.5 Asset Contribution Agreement. Each representation and warranty
about the Company contained in Article II of that certain Asset Contribution
Agreement of even date herewith by and among the Buyer, the Sellers, the Company
and certain of the Company's shareholders is true and correct in all respects,
is incorporated herein by reference, and is hereby made a representation or
warranty, as the case may be, of the Sellers and the Company under this
Agreement.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to Buyer as
follows:
3.1 Title to Stock. The Sellers have good and marketable title to the
Company Shares to be sold and conveyed by such Sellers hereunder, free and clear
of all liens, encumbrances, equities, security interests and claims whatsoever,
with full right and authority to deliver the same hereunder, and upon the
delivery of the Company Shares by the Sellers to Buyer, Buyer shall receive good
and marketable title thereto, free and clear of all liens, encumbrances,
equities, security interests and claims whatsoever.
3.2 Access to Information. The Sellers have been furnished copies of
all financial and other information pertaining to Buyer requested by them and
have had an opportunity to discuss Buyer's business and financial condition,
properties, operations and prospects with the Buyer's management, including all
documents filed by Buyer with the Securities and Exchange Commission ("SEC")
under the Securities Act and the Securities and Exchange Act of 1934, and made
public pursuant thereto. Each of the Sellers has also had an opportunity to ask
questions of officers of Buyer, which questions were answered to his
satisfaction. The Sellers understand that such discussions were intended to
describe certain aspects of Buyer's business and financial condition,
properties, operations and prospects, but were not a thorough or exhaustive
description.
3.3 Risk Factors. The Sellers understand that the purchase of the CT
Shares involves substantial risks.
3.4 Knowledge, Skill and Experience. Each of the Sellers has such
knowledge, skill and experience in business, financial and investment matters so
that he is capable of evaluating the merits and risks of an investment in the CT
Shares. To the extent necessary, the Sellers have retained, at their own
expense, and relied upon, appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and owning
the CT Shares.
3.5 Accredited Investor. Each of the Sellers other than XxXxxx is an
"accredited investor" as defined in Rule 501(a) under the Securities Act of
1933, as amended (the "Securities Act"). XxXxxx has retained, at his own
expense, and relied upon, appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and owning
the CT Shares.
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3.6 Investment Intent. Each of the Sellers is acquiring his respective
CT Shares solely for his own beneficial account, for investment purposes, and
not with a view to, or for resale in connection with, any distribution of the CT
Shares. The Sellers have not offered or sold any portion of the CT Shares and
have no present intention of reselling or otherwise transferring the CT Shares
other than the pledge of the CT Shares to Buyer pursuant to a Pledge Agreement
dated as of the date hereof (the "Pledge"). The Sellers understand that the CT
Shares have not been registered under the Securities Act or any state securities
laws by reason of specific exemptions under the provisions thereof which depend
in part upon the investment intent of the Sellers and the other representations
made by the Sellers in this Agreement. The Sellers understand that Buyer is
relying upon the representations and agreements contained in this Agreement (and
any supplemental information) for the purpose of determining whether this
transaction meets the requirements for such exemptions.
3.7 Stock Transfer Restrictions. The Sellers agree: (A) that they will
not sell, assign, pledge, give, transfer or otherwise dispose of the CT Shares
or any interest therein, or make any offer or attempt to do any of the
foregoing, except pursuant to a registration of the CT Shares under the
Securities Act and all applicable state securities laws or in a transaction
which is exempt from the registration provisions of the Securities Act and all
applicable state securities laws; (B) that an opinion of counsel reasonably
acceptable to CT as to the effective registration of the CT Shares or the
applicability of an exemption from registration will be required prior to any
sale, assignment, pledge (other than the Pledge), gift, transfer or other
disposition of the CT Shares, and (C) that Buyer and any transfer agent for the
CT Shares shall not be required to give effect to any purported transfer of any
of the CT Shares except upon compliance with the foregoing provisions.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company and the Sellers as
follows:
4.1 Organization and Authorization. Buyer is a corporation duly
organized and validly existing under the laws of the State of Delaware with all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Buyer has all requisite
corporate power, capacity and authority to execute and deliver this Agreement
and all other agreements and documents contemplated hereby. The execution,
delivery and performance of this Agreement and such other agreements and
documents by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by Buyer and no other corporate
action on the part of Buyer is necessary to authorize the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Buyer and constitutes the valid and binding obligation of Buyer, enforceable in
accordance with its terms.
4.2 No Violations. The execution and delivery of this Agreement and the
other agreements and documents contemplated hereby by Buyer and the consummation
of the transactions contemplated hereby will not (a) violate any provision of
Buyer's Certificate of Incorporation or bylaws, (b) violate any statute, rule,
regulation, order or decree of any public body or authority by which Buyer or
its properties or assets are bound, or (c) result in a violation or breach of,
or constitute a default under or result in the creation of any encumbrance upon,
or
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create any rights of termination, cancellation or acceleration in any person
with respect to any material agreement, contract, indenture, mortgage or
instrument to which Buyer is a party or any of its properties or assets is
bound.
4.3 Issuance of CT Shares. The issuance of the CT Shares has been duly
authorized by Buyer and no other corporate action on the part of Buyer is
necessary to authorize the issuance of the CT Shares. Upon delivery, the CT
Shares will have been validly issued, fully paid and nonassessable and the
Sellers shall receive good and marketable title thereto, free and clear of all
liens, encumbrances, equities, security interests and claims whatsoever.
4.4 Consents. No consent, approval or other authorization of any
governmental authority or third party is required as a result of or in
connection with the execution and delivery of this Agreement and the other
agreements and documents to be executed by Buyer or the consummation by Buyer of
the transactions contemplated hereby.
4.5 Capitalization. The authorized capital stock of Buyer consists of
60,000,000 shares of Common Stock, $.01 par value per share, 43,535,105 shares
of which were outstanding as of May 1, 2000 and 1,000,000 shares of Preferred
Stock, $.01 par value per share, no shares of which are currently outstanding.
4.6 Risk Factors. Buyer understand that the purchase of the Company
Shares involves substantial risks.
4.7 Knowledge, Skill and Experience. Buyer has such knowledge, skill
and experience in business, financial and investment matters so that it is
capable of evaluating the merits and risks of an investment in the Company
Shares. To the extent necessary, Buyer has retained, at its own expense, and
relied upon, appropriate professional advice regarding the investment, tax and
legal merits and consequences of this Agreement and owning the Company Shares.
4.8 Accredited Investor. Buyer is an "accredited investor" as defined
in Rule 501(a) under the Securities Act of 1933, as amended (the "Securities
Act").
4.9 Investment Intent. Buyer is acquiring the Company Shares solely for
its own beneficial account, for investment purposes, and not with a view to, or
for resale in connection with, any distribution of the Company Shares. Buyer has
not offered or sold any portion of the Company Shares and has no present
intention of dividing the Company Shares with any party or of reselling the
Company Shares. Buyer understands that the Company Shares have not been
registered under the Securities Act or any state securities laws by reason of
specific exemptions under the provisions thereof which depend in part upon the
investment intent of the Sellers and the other representations made by Buyer in
this Agreement. Buyer understands that the Sellers are relying upon the
representations and agreements contained in this Agreement (and any supplemental
information) for the purpose of determining whether this transaction meets the
requirements for such exemptions.
4.10 Stock Transfer Restrictions. Buyer agrees: (A) that it will not
sell, assign, pledge, give, transfer or otherwise dispose of the Company Shares
or any interest therein, or make any offer or attempt to do any of the
foregoing, except pursuant to a registration of the Company Shares under the
Securities Act and all applicable state securities laws or in a transaction
which
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is exempt from the registration provisions of the Securities Act and all
applicable state securities laws; (B) that an opinion of counsel reasonably
acceptable to the Company as to the effective registration of the Company Shares
or the applicability of an exemption from registration will be required prior to
any sale, assignment, pledge, gift, transfer or other disposition of the Company
Shares; and (C) that the Company and any transfer agent for the Company Shares
shall not be required to give effect to any purported transfer of any of the
Company Shares except upon compliance with the foregoing provisions.
ARTICLE V.
CLOSING
5.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Xxxxx Xxxxxxx & Xxxx LLP in
Dallas, Texas, or such other place as is agreed to by Buyer and the Sellers, on
May __, 2000, or such other date as the parties may agree upon in writing (the
"Closing Date").
5.2 Closing Obligations of the Sellers. At the Closing the Sellers
shall deliver or cause to be delivered to Buyer the stock certificates
evidencing the Company Shares owned by them, duly endorsed or accompanied by
duly executed stock powers assigning the Company Shares to Buyer and otherwise
in good form for transfer.
5.3 Closing Obligations of Buyer. At the Closing Buyer shall deliver or
cause to be delivered to Sellers the stock certificates evidencing the CT Shares
to be issued by them.
ARTICLE VI.
RESTRICTIONS ON TRANSFER; RESALE LIMITATION; REGISTRATION
6.1 Legend. The certificates representing the Company Shares and the CT
Shares to be exchanged hereunder will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE
SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF COUNSEL TO THE
ISSUER, IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND SUCH LAWS.
6.2 Resale Restrictions. During any registration period as described in
Section 6.3 below, the Sellers shall not sell in any one (1) calendar week such
number of CT Shares of Buyer in excess of, on a collective basis, fifteen (15%)
percent of the average weekly trading volume for Buyer's Common Stock in the
public market for the immediately preceding four (4) calendar weeks. Neither
Buyer nor any transfer agent for Buyer shall be required to give effect to any
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purported sale or transfer of any CT Shares except upon full compliance with the
foregoing provisions.
6.3 Registration of Buyer's Common Stock.
(a) Buyer shall prepare and file with the Securities and
Exchange Commission (the "SEC") a registration statement, on the
appropriate form under the Securities Act, within ninety (90) days of
the Closing, covering the registration of the resale of the CT Shares
issued hereunder (the "Registrable Shares"). In connection with such
registration statement, Buyer shall:
(i) Use commercially reasonable efforts to cause such
registration statement to become and remain effective until
the earlier of (x) one hundred twenty (120) days from the date
of effectiveness or (y) the period of time required for
Sellers' disposition of all of the Registrable Shares;
(ii) Use its reasonable best efforts to prepare and
file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply
with the applicable provisions of the Securities Act with
respect to the disposition of the Registrable Shares covered
by such registration statement;
(iii) Use its reasonable best efforts to register and
qualify the Registrable Shares covered by such registration
statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Sellers,
and to keep such registration or qualification effective
during the period such registration statement is to be kept
effective, provided that Buyer shall not be required to become
subject to taxation, qualify to do business or file a general
consent to service of process in any such jurisdictions;
(iv) Use its reasonable best efforts to maintain the
authorization for quotation of the securities covered by such
registration statement on the Nasdaq Stock Market;
(v) Notify the Sellers as set forth herein, at any
time when the Sellers must suspend offers or sales of the
Registrable Shares under the registration statement, either
because the prospectus included in such registration statement
is required to be amended for any reason, such as an amendment
under the Securities Act to provide current information, or
because the prospectus includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and
at the request of a Seller, promptly prepare and furnish such
Seller a reasonable number of copies of a supplement or an
amendment of such prospectus as may be reasonably requested by
such Seller. Buyer shall use its reasonable best efforts to
enable Seller to promptly recommence offers and sales under
the registration statement. Notwithstanding the foregoing and
anything to the contrary set forth in this Section 6.3, the
Sellers acknowledge that there may occasionally be times when
Buyer must suspend the
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use of the prospectus included in such registration statement
until such time as an amendment to the registration statement
has been filed by Buyer and declared effective by the SEC, or
until such time as Buyer has filed an appropriate report with
the SEC pursuant to the Securities Exchange Act of 1934, as
amended (the "1934 Act"). The Sellers hereby covenant that
they will not offer or sell any shares of the Registrable
Shares pursuant to such prospectus during the period
commencing when Buyer notifies the Sellers of the suspension
of the use of such prospectus and the reason therefor, and
ending when Buyer notifies Sellers in writing that they may
thereafter effect offers and sales pursuant to such prospectus
PROVIDED, HOWEVER, that the provisions of this Section 6.3
will be applicable to Sellers only if each officer and
director of Buyer, and all other 5% stockholders of Buyer are
subject to similar restrictions as those set forth in this
Section 6.3 with respect to the Sellers.
(vi) Use commercially reasonable efforts to register
or qualify the securities covered by the registration
statement under such other securities or blue sky laws of such
jurisdiction within the United States and Puerto Rico as each
holder of such securities reasonably request (PROVIDED,
HOWEVER, Buyer will not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction
in which it is not then qualified or to file any general
consent to service or process), and do such other reasonable
acts and things as may be required of it to enable such Seller
to consummate the disposition in such jurisdiction of the
securities covered by such registration statement;
(vii) Cause all such Registrable Shares to be listed
on each securities exchange on which similar securities issued
by Buyer are then listed and, if not listed, to be listed on a
securities exchange or the NASD automated quotation system
and, if listed on the NASD automated quotation system, to
secure designation of all such Registrable Shares;
(viii) Make available for inspection by any seller of
Registrable Shares, any underwriter participating in any
disposition pursuant to such registration statement, and any
attorney or accountant retained by any such seller or
underwriter, all financial and other records, pertinent
corporate documents and properties of Buyer, and cause Buyer's
officers and directors to supply all information reasonably
requested by any such seller, underwriter, attorney or
accountant in connection with such registration statement;
PROVIDED, HOWEVER, that such seller, underwriter, attorney or
accountant shall agree to hold in confidence and trust all
information so provided;
(ix) Furnish to each Seller a signed counterpart,
addressed to the Seller, of an opinion of counsel for Buyer,
dated the effective date of the registration statement, and
"comfort" letters signed by the Buyer's independent public
accountants who have examined and reported on Buyer's
financial statements included in the registration statement,
to the extent permitted by the standards of the AICPA or other
relevant authorities, covering substantially the same matters
with respect to the registration statement (and the prospectus
included therein) and (in the case of the accountants'
"comfort" letters) with respect to events subsequent to the
date of the financial statements, as are customarily covered
in
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opinions of issuer's counsel and in accountants' "comfort"
letters delivered to the underwriters in underwritten public
offerings of securities;
(x) Furnish to each Seller a copy of all documents
filed with and all correspondence from or to the SEC in
connection with any such offering other than non-substantive
cover letters and the like;
(xi) Otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen (18) months,
beginning with the first month after the effective date of the
registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act; and
(xii) In connection with any underwritten offering
pursuant to a registration statement filed pursuant to Section
6.3 hereof, enter into any underwriting agreement reasonably
necessary to effect the offer and sale of Registrable Shares
on terms reasonably acceptable to Buyer, provided such
underwriting agreement contains customary underwriting
provisions and is entered into by the Sellers and PROVIDED,
FURTHER, that if the underwriter so requests the underwriting
agreement will contain customary contribution provisions.
(b) It is a condition precedent to the obligations of Buyer to
take any action pursuant to this Section 6.3 hereof with respect to the
Registrable Shares of Sellers that such Sellers shall furnish to Buyer
such information regarding such Sellers, the Registrable Shares held
thereby and the intended method of disposition of such securities as
shall be required to effect the registration of such Registrable Shares
and as may be required from time to time to keep such registration
current.
(c) Except as otherwise provided, all expenses incurred by or
on behalf of Buyer in connection with registrations, filings or
qualifications pursuant to this Section 6.3, including without
limitation all registration, filing and qualification fees, the fees
and expenses incurred in connection with the listing of the Registrable
Shares to be registered on each security exchange on which shares of
Common Stock of Buyer are then listed, printer's and accounting fees,
and fees and disbursements of counsel for Buyer, shall be borne by
Buyer. In no event shall Buyer be obligated to bear underwriting,
brokerage or related fees, discounts or commissions or the fees or
expenses of counsel or advisors to Seller.
(d) Each of Buyer and the Sellers shall agree to such other
reasonable and customary arrangements and undertakings with respect to
the registration of the Registrable Shares to be received by the
Sellers pursuant to the Agreement as may be reasonably requested by any
of them, but shall not be obligated to enter into any underwriting
arrangements.
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(e) Indemnification.
(i) In the event of any registration of any
Registrable Shares under the Securities Act pursuant to this
Agreement, Buyer will indemnify and hold harmless the Sellers,
and each underwriter who participated in the offering of such
Registrable Shares and each other person if any, who controls
such participating person within the meaning of the Securities
Act against any claims, losses, damages and liabilities, joint
or several (or actions, proceedings or settlements in respect
thereof) arising out of or based on (i) any untrue statement
(or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including
any related registration statement, notification or the like)
incident to any such registration, qualification or
compliance, (ii) based on any omission (or alleged omission)
to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
(iii) any violation by Buyer of the Securities Act or any rule
or regulation thereunder applicable to Buyer and relating to
action or inaction required of Buyer in connection with any
such registration qualification or compliance, and will
reimburse each such Seller and each such underwriter and each
person who controls any such underwriter, for any legal and
any other expenses as they are reasonably incurred in
connection with investigating and defending any such claim,
loss, damage, liability or action, PROVIDED, HOWEVER, that
Buyer will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out
of or based on any untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in any
prospectus, offering circular or other document (i) based upon
written information furnished to Buyer by such Seller or
underwriter and stated to be specifically for use therein, or
(ii) if such Seller failed to deliver a copy of such document
to the person asserting such loss, claim, damage, liability,
or expense after Buyer had furnished such Seller with a
sufficient number of copies of the same and at a time
sufficient to permit timely delivery of same and such document
corrected such untrue statement or omission; and, PROVIDED,
FURTHER, that Buyer shall not be liable with respect to any
preliminary prospectus to any person from whom the person
asserting any such loss, claim, damage or liability, purchased
shares which are the subject thereof if such person did not
receive a copy of the final prospectus (or the final
prospectus as supplemented) at or prior to the confirmation of
the sale of such shares to such person in any case where such
delivery is required by the Securities Act and (i) the defect
in such preliminary prospectus was cured by the final
prospectus (or the final prospectus as supplemented) and (ii)
such person had previously been furnished by or on behalf of
Buyer (prior to the date of mailing by the underwriter of the
applicable confirmation) with a sufficient number of copies of
the prospectus as so amended or supplemented. Such indemnity
will remain in full force and effect regardless of any
investigation made by or on behalf of such holder or such
director, officer or participating person or controlling
person and will survive the transfer of such securities of
such holder.
(ii) In the event of any registration of any
Registrable Shares under the Securities Act pursuant to this
Agreement, each Seller of any Registrable Shares will furnish
to Buyer in writing such information as Buyer reasonably
requests in
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connection with the registration of such Registrable Shares,
including any such information as the SEC will request, and
each Seller will, request, and each such Seller will,
severally and not jointly, indemnify and hold harmless Buyer
against any losses, claims, damages or liabilities to which
Buyer may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus,
the registration statement or the prospectus, offering
circular or other document, or any amendment or supplement
thereto or arise out of or are based upon the omission or
alleged omission to the state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in any preliminary prospectus, the
registration statement or the prospectus or any such amendment
or supplement thereto in reliance upon and in conformity with
written information furnished to Buyer by such holder
expressly for use therein or (in the case of an unwritten
offering) furnished for such purpose by any underwriter.
(iii) Each party entitled to indemnification under
this Section 6.3(e) (the "Indemnified Party") shall give
notice in writing to the party required to provide
indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, PROVIDED that counsel for
the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be approved
by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may
participate in such defense at such Indemnified Party's
expense, and PROVIDED, FURTHER, that the failure of any
Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this
Section 6.3(e), unless such failure prejudices the ability of
the Indemnifying Party to defend against the claims asserted
against the Indemnified Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and
litigation resulting therefrom.
(iv) If the indemnification provided for in this
Section 6.3(e) is unavailable to an Indemnified Party in
respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of
Buyer on the one hand and the Sellers on the other in
connection with the statements or
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omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative fault of Buyer on the one hand
and the Sellers on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of material fact or the omission or alleged omission
to state a material fact relates to information supplied by
Buyer or by the Sellers and the parties' relevant intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. Buyer and the Sellers
agree that it would not be just and equitable if contribution
pursuant to this Section 6.3(e)(iv) were based solely upon the
number of entities from whom contribution was requested or by
any other method of allocation which does not take account of
the equitable considerations referred to above in this Section
6.3(e)(iv). The amount paid or payable by an Indemnified Party
as a result of the losses, claims, damages and liabilities
referred to above in this Section 6.3(e) shall be deemed to
include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or
defending any such action or claim, subject to the provisions
of Section 6.3(e) hereof. No person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act)
shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(f) Buyer covenants that it will at all times use its
reasonable best efforts to timely file any reports and other documents
required to be filed by it under the Securities Act and the 1934 Act
and that it will take such other actions as may be reasonably necessary
to enable Seller to sell the Common Stock without registration under
applicable exemptions provided for under the Securities Act including,
without limitation, Rule 144.
ARTICLE VII.
INDEMNIFICATION
For the purposes of this Article VII, "Losses" shall mean any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs, and expenses, including without limitation, interest,
penalties, and reasonable attorneys' and other professional fees, and expenses
incurred in the investigation, preparation, defense, and settlement of any
claim, loss, damage, or liability.
7.1 Agreement of Company and Sellers to Indemnify.
(a) Subject to the terms and conditions of this Article VII,
the Company and the Sellers, jointly and severally, agree to indemnify,
defend, and hold harmless the Buyer, its officers, directors,
employees, agents and representatives (collectively the "CT
Representatives"), from, against, for, and in respect of any and all
Losses asserted against, relating to, imposed upon, or incurred by the
Buyer or the CT Representatives by reason of, resulting from, based
upon, or arising out of:
(i) the inaccuracy, untruth, or incompleteness of any
representation or warranty of the Company or the Sellers
contained in, incorporated by reference pursuant to Section
2.5, or otherwise made pursuant to this Agreement or in any
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certificate, schedule, or exhibit furnished by the Company and
the Sellers in connection herewith; and
(ii) a material breach or partial material breach of
any covenant or agreement of the Company and/or the Sellers
contained in or made pursuant to this Agreement.
(b) The obligation of the Company and the Sellers to indemnify
the Buyer for any Losses is subject to the condition that the Company
and the Sellers shall have received notice of the Losses for which
indemnity is sought within ninety (90) days after the Closing Date.
Notice of Losses pertaining to the representations and warranties set
forth in Section 2.3 hereof shall be effective for all purposes
hereunder without limitation as to the time within which such notice
may be given.
(c) The indemnification obligations of each Seller hereunder
shall be secured by a pledge to Buyer of certain shares of the Buyer's
common stock owned by such Seller as of the Closing Date, in accordance
with the terms of that certain Pledge Agreement between each Seller and
the Buyer of even date herewith (the "Pledge"). Each Seller's
indemnification obligations shall be satisfied only by the Pledge, and
no other assets owned by any Seller shall be available to the Buyer to
satisfy such obligations.
(d) The remedies of the Buyer against the Company and the
Sellers for any Losses hereunder shall be cumulative, and the exercise
by the Buyer of its right to indemnification hereunder shall not affect
the right of the Buyer to exercise any other remedy at law or in
equity, to recover damages, or to obtain equitable or other relief.
7.2 Agreement of Buyer to Indemnify the Company and the Sellers.
(a) Subject to the terms of this Article VII, Buyer agrees to
indemnify, defend, and hold harmless the Company and the Sellers from,
against, for, and in respect of any and all Losses asserted against,
relating to, imposed upon, or incurred by the Company and the Sellers
by reason of, resulting from, based upon, or arising out of:
(i) the inaccuracy, untruth, or incompleteness of any
representation or warranty, of Buyer contained in or made
pursuant to this Agreement or in any certificate, schedule,
exhibit, or document delivered to the Company and the Sellers
in connection herewith; or
(ii) a material breach or partial material breach of
any covenant or agreement of the Buyer made in or pursuant to
this Agreement.
(b) The obligation of Buyer to indemnify the Company and the
Sellers for any Losses is subject to the condition that Buyer shall
have received notice of the Losses for which indemnity is sought within
ninety (90) days after the Closing Date.
(c) The remedies of the Company and the Sellers against Buyer
for any Losses hereunder shall be cumulative, and the exercise by the
Company and the Sellers of its right to indemnification hereunder shall
not affect the right of the Company and the
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Sellers to exercise any other remedy at law or in equity, to recover
damages, or to obtain equitable or other relief.
7.3 Procedures for Indemnification. As used herein, the term
"Indemnitor" means the party against whom indemnification hereunder is sought,
and the term "Indemnitee" means the party seeking indemnification hereunder.
(a) A claim for indemnification hereunder ("Indemnification
Claim") shall be made by Indemnitee by delivery of a written
declaration to Indemnitor requesting indemnification and specifying the
basis on which indemnification is sought and the amount of asserted
Losses and, in the case of a Third Party Claim (as defined
hereinafter), containing (by attachment or otherwise) such other
information as Indemnitee shall have concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim
the procedures set forth in Section 7.4 hereof shall be observed by
Indemnitee and Indemnitor.
(c) If the Indemnification Claim involves a matter that is not
a Third Party Claim, the Indemnitor shall have ten (10) days from the
date Indemnitee delivers a written declaration to the Indemnitor
requesting indemnification to object to such Indemnification Claim by
delivery of a written notice of such objection to Indemnitee specifying
in reasonable detail the basis for such objection. Failure to timely so
object shall constitute a final and binding acceptance of the
Indemnification Claim by the Indemnitor and the Indemnification Claim
shall be paid in accordance with Section 7.3(d) hereof. If an objection
is timely interposed by the Indemnitor and the dispute is not resolved
within thirty (30) days from the date (such period is hereinafter the
"Negotiation Period") Indemnitee receives such objection, such dispute
shall be resolved by (i) arbitration in accordance with the rules of
the American Arbitration Association, if the amount in controversy is
less than Fifty Thousand Dollars ($50,000) or (ii) institution of such
proceedings as Indemnitee may elect if the amount in controversy is
Fifty Thousand Dollars ($50,000) or more.
(d) Upon a final determination of the amount of an
Indemnification Claim whether (i) by agreement between Indemnitor and
Indemnitee, or by an arbitration award, or by any other final judgment
or another final nonappealable order, Indemnitor shall pay the amount
of such Indemnification Claim.
7.4 Defense of Third Party Claims. Should any claim be made, or suit or
proceeding (including, without limitation, a binding arbitration or an audit by
any taxing authority) be instituted against Indemnitee by a third party not a
party to this Agreement which, if prosecuted successfully, would be a matter for
which Indemnitee is entitled to indemnification under this Agreement (a "Third
Party Claim"), the obligations and liabilities of the parties hereunder with
respect to such Third Party Claim shall be subject to the following terms and
conditions:
(a) The Indemnitee shall give the Indemnitor written notice of
any such claim promptly after receipt by the Indemnitee of notice
thereof, and the Indemnitor will undertake the defense thereof by
representatives of its own choosing reasonably acceptable to the
Indemnitee. The assumption of the defense of any such claim by the
Indemnitor shall be an acknowledgment by the Indemnitor of its
obligation to indemnify
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the Indemnitee with respect to such claim hereunder. If, however, the
Indemnitor fails or refuses to undertake the defense of such claim
within ten (10) days after written notice of such claim has been given
to the Indemnitor by the Indemnitee, the Indemnitee shall have the
right to undertake the defense, compromise and, subject to Section 7.5,
settlement of such claim with counsel of its own choosing. In the
circumstances described in the preceding sentence, the Indemnitee
shall, promptly upon its assumption of the defense of such claim, make
an Indemnification Claim as specified in Section 7.3(a) which shall be
deemed an Indemnification Claim that is not a Third Party Claim for the
purposes of the procedures set forth herein.
(b) The Indemnitee and Indemnitor shall cooperate with
each other in all reasonable respects in connection with the defense of
any Third Party Claim, including making available records relating to
such claim and furnishing, without expense to the Indemnitor,
management employees of the Indemnitee as may be reasonably necessary
for the preparation of the defense of any such claim or for testimony
as witness in any proceeding relating to such claim.
7.5 Settlement of Third Party Claims. No settlement of a Third Party
Claim involving the asserted liability of Indemnitor under this Article VII
shall be made without the prior written consent by or on behalf of Indemnitor,
which consent shall not be unreasonably withheld or delayed. Consent shall be
presumed in the case of settlements of twenty-thousand ($20,000) dollars or less
where the Indemnitor has not responded within ten (10) business days notice of a
proposed settlement. In the event of any dispute regarding the reasonableness of
a proposed settlement, the party that will bear the larger financial loss
resulting from such settlement shall make the final determination in respect
thereto, which determination shall be final and binding on all involved parties.
ARTICLE VIII.
MISCELLANEOUS
8.1 Entire Agreement. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof. All exhibits and schedules annexed
hereto are expressly made a part of this Agreement as though fully set forth
herein.
8.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of all other parties hereto. Any purported
assignment in violation of this Section 8.2 shall be null and void.
8.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
8.4 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this
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Agreement may be modified or amended by a written instrument executed by Buyer,
the Company and the Sellers. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by all of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
8.5 Notices. All notices of communication required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt request, (b) delivering the same in
person to an officer or agent of such party, (c) telecopying the same with
electronic confirmation of receipt.
(i) If to Buyer, addressed to it at:
CT Holdings, Inc.
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy Number: (000) 000-0000
(ii) If to the Sellers, addressed to each of them at:
Xxx Xxxxxxx
000X Xxxxxxxx Xxxxxx, Xxxx. 000
Xxxxxxx, XX 00000
Telecopy Number: (000) 000-0000 x.000
X. Xxxxxxxx XxXxxx
000X Xxxxxxxx Xxxxxx, Xxxx. 000
Xxxxxxx, XX 00000
Telecopy Number; (000) 000-0000
Xxxxxx Xxxxxxxxx
000X Xxxxxxxx Xxxxxx, Xxxx. 000
Xxxxxxx, XX 00000
Telecopy Number; (000) 000-0000
or to such other address as any party hereto shall specify pursuant to this
Section 8.5 from time to time.
8.6 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
LAWS OF THE STATE OF TEXAS. ALL REMEDIES AT LAW, IN EQUITY, BY STATUTE OR
OTHERWISE SHALL BE CUMULATIVE AND MAY BE ENFORCED CONCURRENTLY OR FROM TIME TO
TIME AND, SUBJECT TO THE EXPRESS TERMS OF THIS AGREEMENT, THE ELECTION OF ANY
REMEDY OR REMEDIES SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO PURSUE ANY
OTHER AVAILABLE REMEDIES.
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8.7 Arbitration. Any dispute pursuant to this Agreement ("Dispute")
shall be settled by binding arbitration in Dallas, Texas and, except as herein
specifically stated, in accordance with the commercial arbitration rules of the
American Arbitration Association ("AAA Rules") then in effect. However, in all
events, these arbitration provisions shall govern over any conflicting rules
that may now or hereafter be contained in the AAA Rules. Any judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
over the subject matter thereof. The arbitrator shall have the authority to
grant any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve a Dispute.
(a) Any such arbitration will be conducted (i) before a single
arbitrator chosen by the parties, or, (ii) if the parties cannot agree
on a single arbitrator, before a panel of three arbitrators of which
each party will select one person and the two persons so selected will
select the third person (whether one or more, collectively, the
"Arbitrator"). The Arbitrator will be compensated for his or her
services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon a reasonable hourly or daily
consulting rate for the arbitrator if the parties are not able to agree
upon his or her rate of compensation. The Arbitrator will be a lawyer
familiar with Texas contract law; provided, however, that such lawyers
cannot work for a firm previously or then performing services for
either party.
(b) The Company and the Sellers will each pay 50% of the
initial compensation to be paid to the Arbitrator in any such
arbitration and 50% of the costs of transcripts and other normal and
regular expenses of the arbitration proceedings; provided, however,
that the prevailing party in any arbitration will be entitled to an
award of reasonable attorneys' fees and costs, and all costs of
arbitration, including those provided for above, will be paid by the
non-prevailing party, and the Arbitrator will be authorized to make
such determinations.
(c) For any Dispute submitted to arbitration, the burden of
proof will be as it would be if the claim were litigated in a Texas
judicial proceeding. Upon the conclusion of any arbitration proceedings
hereunder, the Arbitrator will render findings of fact and conclusions
of law and a written opinion setting forth the basis and reasons for
any decision reached and will deliver such documents to each party to
this Agreement along with a signed copy of the award.
(d) The Arbitrator chosen in accordance with these provisions
will not have the power to alter, amend or otherwise affect the terms
of these arbitration provisions or the provisions of this Agreement.
Except as specifically otherwise provided in this Agreement,
arbitration will be the sole and exclusive remedy of the parties for
any Dispute.
8.8 Survival of Covenants, Agreements, Representations and Warranties.
All representations, warranties, covenants and agreements made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
survive the Closing and shall continue in full force and effect thereafter for a
period of ninety (90) days following the Closing.
8.9 Expenses. The Sellers and the Company, on the one hand, and Buyer,
on the other hand, shall be solely responsible for their respective costs and
expenses incurred in connection with the transactions contemplated hereby.
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8.10 Further Assurances. From time to time after the Closing, at the
request of any other party but at the expense of the requesting party, Buyer,
the Company or the Sellers, as the case may be, will execute and deliver any
such other instruments of conveyance, assignment and transfer, and take such
other action as the other party may reasonably request in order to consummate or
evidence the transactions contemplated hereby.
8.11 Brokers and Agents. Each party represents and warrants that it has
employed no broker or agent in connection with this transaction and agrees to
indemnify and hold harmless the other parties against all loss, cost, damages or
expense arising out of claims for fees or commissions of brokers employed or
alleged to have been employed by such indemnifying party.
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