STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of June 22, 2000,
by and between, on the one side, Xxxxxxxxxxx Xxx and all of the Persons
designated as "Sellers" on the signature pages hereto (collectively, the
"Sellers"); and, on the other side, TeleHubLink Corporation, a Delaware
corporation with its usual place of business at 00 Xxx Xxxxxxx Xxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx as Purchaser ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Sellers own all the issued and outstanding shares (the
"Shares") of MVP Systems, Inc., a California corporation (the "Company"), and
desire to sell the Shares to Purchaser pursuant to this Agreement as hereinafter
provided; and
WHEREAS, Purchaser desires to acquire the Shares from Sellers pursuant to
this Agreement as hereinafter provided; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
execution and delivery of this Agreement, and to set forth certain additional
agreements related to the transactions contemplated hereby;
NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. In this Agreement the following words and
phrases shall have the meanings hereinafter set forth:
"Affiliate" shall mean: (a) any Person directly or indirectly owning,
controlling or holding the power to vote 50% or more of the outstanding voting
securities of the Person in question; (b) any Person 50% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held with power to vote by the Person in question; (c) any Person directly or
indirectly controlling, controlled by or under common control with the Person in
question; and (d) any officer, director, member or partner of the Person in
question or any Person described in subsection (a), (b) or (c) of this
paragraph.
"Agreement" shall mean this Stock Purchase Agreement.
"Business Day" shall mean any day, other than a Saturday, Sunday or legal
holiday under the Federal laws of the United States or the Commonwealth of
Massachusetts.
"Claim" shall mean a claim brought against Purchaser or any Seller by a
Seller or Purchaser Indemnified Party pursuant to Article XI of this Agreement.
"Closing" shall have the meaning given such term in Section 2.03 hereof.
"Commercially Available Software" or "CAS" shall have the meaning given
such term in Section 4.25(a) hereof.
"Commission" shall mean the Securities and Exchange Commission of the
United States.
"Contracts" shall have the meaning given such term in Section 4.17(a)
hereof.
"Environmental Laws" shall have the meaning given such term in Section
4.27(a) hereof.
"Environmental Liabilities" shall have the meaning given such term in
Section 4.27(a) hereof.
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Financial Statements" shall have the meaning given such term in Section
4.08(a) hereof.
"Generally Accepted Accounting Principles" or "GAAP" shall mean generally
accepted accounting principles in the United States.
"Governmental Entity" shall mean any court, administrative agency or
commission or other United States federal, provincial, state, local, municipal
or foreign government or governmental authority or instrumentality.
"Hazardous Substance" shall have the meaning given such term in Section
4.27(a) hereof.
"Indemnified Losses" shall have the meaning given such term in Section
11.03 hereof.
"Indemnified Party" shall mean a Purchaser Indemnified Party or a Seller,
as the case may be, for purposes of Section 11.03.
"Indemnitor" shall have the meaning given such term in Section 11.03
hereof.
"IP Assets" shall have the meaning given such term in Section 4.25(a)
hereof.
"Knowledge" (or being aware or similar expressions) shall mean: (a) with
respect to an individual, knowledge of a particular fact or other matter only if
such individual is actually aware of such fact or other matter; and (b) with
respect to a corporation, knowledge of a particular fact or other matter only if
a director or officer of such corporation is actually aware of such fact or
other matter, and, with respect to both (a) and (b), including such knowledge as
a reasonably prudent person in such business or ownership position would have
obtained upon the exercise of reasonable diligence.
"Latest Balance Sheet" shall have the meaning given in Section 4.08(a)
hereof.
"Latest Financial Statements" shall have the meaning given in Section
4.08(a) hereof.
"Licenses" shall have the meaning given such term in Section 4.26 hereof.
"Liens" shall mean all liens, charges, security interests, pledges, rights
or claims of others, restraints on transfer or other encumbrances.
"Material Adverse Change" shall mean a change or a development that has or
would reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" shall mean, with respect to the Company, any
change, effect, event or condition that has had or could reasonably be expected
to have a material adverse effect on the assets, business, results of
operations, business prospects, or condition (financial or otherwise) of the
Company. With respect to Purchaser, a "Material Adverse Effect" shall mean any
change, effect, event or condition
2.
that has had or could reasonably be expected to have a material adverse effect
on the assets, business, results of operations, business prospects, or condition
(financial or otherwise) of Purchaser and its subsidiaries, taken as a whole.
Any change in the market price or trading volume of Purchaser's common stock
shall not in and of itself be deemed to be a Material Adverse Effect.
"NASDAQ National Market" shall mean the National Association of Securities
Dealers Automated Quotation National Market.
"Options" shall mean the issued and outstanding options to purchase shares
of the Company as listed on Schedule 4.03.
"Optionholders" shall mean the Persons holding the Options.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, trust or government agency.
"Purchaser Indemnified Parties" shall have the meaning given such term in
Section 11.01(a) hereof.
"Purchaser Losses" shall have the meaning given such term in Section
11.01(a) hereof.
"Purchaser Stock" shall have the meaning given such term in Section 3.01
hereof.
"Regulatory Authority" shall mean any United States, foreign, federal,
provincial, state, local or municipal government or governmental authority the
approval of which, or filing with, is legally required for consummation of the
transactions contemplated by this Agreement.
"Related Documents" shall have the meaning given such term in Section
11.01(a) hereof.
"SEC Filings" shall have the meaning given such term in Section 5.08(a)
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Seller Losses" shall have the meaning given such term in Section 11.02
hereof.
"Sellers' Representative" shall have the meaning given such term in Section
9.01.
"Shares" shall have the meaning given such term in the Recitals hereof.
"Software" means all proprietary software applications written, designed,
developed, sold or licensed by the Company and any translations or other
derivative works based thereon or derived therefrom, including, without
limitation those identified in Schedule 4.25 hereto.
"Subsidiaries" shall mean all subsidiaries of the Company.
"Tax" and "Taxes" shall have the meaning given such terms in Section
4.13(a) hereof.
"Tax Return(s)" shall have the meaning given such term in Section 4.13(a)
hereof.
"Year 2000 Compliance" shall have the meaning given such term in Section
4.21 hereof.
3.
ARTICLE II
PURCHASE AND SALE OF THE SHARES; CLOSING
Section 2.01. Purchase and Sale. Subject to the terms and conditions
herein contained, Sellers agree to sell, assign, transfer and deliver to
Purchaser at the Closing all of their right, title and interest in and to the
Shares, free and clear of any Liens. Subject to the terms and conditions herein
contained, Purchaser agrees to purchase from Sellers at the Closing the Shares
pursuant to the provisions of Article III below. Each Seller owns, and shall
sell to Purchaser, the number of Shares specified in Schedule 2.01 hereof. This
Agreement shall become effective when it has been signed by Purchaser and
Sellers holding all of the Shares. Each of the Sellers waives any preemptive
rights he, she or it may have relating to the sale of the Shares, whether
conferred by the Company's Articles of Organization or otherwise. Each of the
Sellers agrees to use his, her or its best efforts to cause each holder of the
Shares and/or options to purchase shares of the Company to sign and become a
party to either this Agreement and/or a Forward Option Agreement, as applicable.
Section 2.02. Delivery of the Shares. At the Closing, Sellers shall
transfer and deliver the Shares to a securities account specified in writing by
Purchaser or an exchange agent, as applicable.
Section 2.03. Closing. The consummation of the sale and transfer of the
Shares shall take place at the offices of Xxxxxxxx, Xxxxxx &Whipple, P.C., 000
Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx on August 7, 2000, provided that all of
the conditions set forth in Article VIII shall have been satisfied or waived by
such date, or on such other date and at such other place that Purchaser and
Sellers shall designate in writing (the "Closing").
ARTICLE III
CONSIDERATION
Section 3.01. Consideration.
In consideration of the sale of the Shares to Purchaser and
subject to Section 3.02 hereof, Sellers shall be entitled to receive:
(a) Stock of the Purchaser in the aggregate of 530,000 shares of
Rule 144 Stock, par value $0.01 per share ("Unregistered Stock"), and the
aggregate of 70,000 shares of Registered Stock, $0.01 per share. Collectively
the Unregistered Stock and the Registered Stock shall be referred to as the
"Purchaser Stock"; and
(b) The sum of One Hundred Thousand Dollars ($100,000.00) by
certified or cashier's check or wire transfer.
Section 3.02. Delivery of Certificates. Within thirty (30) days of the
Closing, Purchaser shall, subject to Section 12.02(b) hereof, deliver to Sellers
certificates representing the Purchaser Stock. Subsequent to the filing of the
10K, a registration of these shares, along with others, will be filed. The
shares of Unregistered Stock to be issued to Sellers shall bear the following
legend:
The securities represented by this certificate have not been registered under
the federal Securities Act of 1933, as amended, or applicable state securities
laws and may not be sold, transferred, assigned, pledged, offered or otherwise
disposed in the absence of an effective registration statement under applicable
securities laws or an opinion of counsel reasonably satisfactory to Purchaser
that such registration is not required.
4.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth in the Disclosure Schedule delivered concurrently with
and made a part of this Agreement, which identifies exceptions by specific
section references, each Seller hereby represents and warrants to Purchaser as
follows:
Section 4.01. Organization, Etc. The Company is a corporation duly
organized and validly existing under the laws of California and has full
corporate power and authority to conduct its business as it is now being
conducted and to own, operate or lease the properties and assets it currently
owns, operates or holds under lease. The Company is duly qualified or licensed
to do business in Massachusetts and to the knowledge of Sellers, in every
jurisdiction in which the nature of its business or its ownership of property
requires it to be qualified, except where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect. Attached
to Schedule 4.01 hereto are true and correct copies of the Company's Articles of
Organization, and any amendments thereto, and any Certificates of Registration
as in effect on the date hereof. The Company is not in violation of any
provisions of its Articles of Organization or any Certificates of Registration.
Section 4.02. Subsidiaries and Other Interests of the Company. The Company
does not have any Subsidiaries other than as set forth on Schedule 4.02 hereto,
is not a party to any partnerships or joint ventures and does not, directly or
indirectly, own or otherwise hold any legal or beneficial interest in any
Person. A copy of the Articles of Organization, and any amendments thereto,
and/or Certificate of Registration (or similar corporate governing documents)
and the most recent annual report for each Subsidiary are attached to Schedules
4.02 and 4.08. Except as set forth in Schedule 4.02, the Company is the
registered, record and beneficial owner of all of the outstanding shares of
capital stock (or other ownership interests having by their terms ordinary
voting power to elect a majority of directors or others performing similar
functions with respect to such Subsidiary) of each of its Subsidiaries, there
are no proxies with respect to such shares, and no equity securities of any of
such Subsidiaries are or may be required to be issued by reason of any options,
Options, scrip, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, share capital or shares of any capital stock of any such Subsidiary. There
are no contracts, commitments, understandings or arrangements by which the
Company or any such Subsidiary is bound to issue, transfer or sell any share
capital or shares of such capital stock or securities convertible into or
exchangeable for such shares. All of such shares so owned by the Company are
validly issued, fully paid and nonassessable and are owned by it free and clear
of any Liens with respect thereto other than restrictions on transfer pursuant
to applicable securities laws. All representations and warranties made by
Sellers in Sections 4.01, 4.05, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.14, 4.15,
4.16, 4.17, 4.18, 4.19, 4.20, 4.22, 4.23, 4.25, 4.26, 4.27, 4.28, 4.29, 4.30,
4.31 and 4.34 are, mutatis mutandis, made also with respect to each Subsidiary.
Section 4.03. Capitalization. The authorized share capital of the Company
is 10,000,000 shares of common stock, no par value. All of the Shares are owned,
of record and beneficially, by Sellers. Each Seller is the owner, beneficially
and of record, of the Shares set forth opposite such person's name in Schedule
2.01. At the Closing, the Shares will not be subject to any Liens, other than
restrictions imposed by applicable securities laws. No Persons other than
Sellers are or will be entitled to receive any payment with respect to the
Shares. All Shares have been duly authorized and validly issued and are fully
paid and non-assessable. All of the outstanding securities of the Company were
issued, offered, sold and delivered in compliance with all applicable securities
and corporate laws. None of the outstanding securities of the Company have been
issued in violation of any preemptive rights, rights of first refusal or similar
rights. Except for the Options listed on Schedule 4.03 hereto, there are no
outstanding options, warrants, convertible securities, calls, rights,
commitments, preemptive rights or agreements or instruments or understandings of
any character to which the Company is a party or by which the Company is bound,
obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, contingently or otherwise, additional shares of its share
capital or any securities or obligations convertible into or exchangeable for
such shares or to grant, extend or enter into any such option, warrant,
convertible
5.
security, call, right, commitment, preemptive right or agreement. Schedule 4.03
hereto sets forth the name and address of all holders of options, warrants or
convertible securities, the date of grant or issuance, the number of shares of
the Company's capital stock subject thereto, the exercise price and the vesting
schedule. Purchaser has been provided accurate and complete copies of all stock
option plans pursuant to which the Company or any Subsidiary has granted options
that are currently outstanding, and the form of all stock option and warrant
agreements. All issued and outstanding options, warrants and other convertible
securities of the Company have been offered, issued and delivered in compliance
with all applicable securities and corporate laws. There are no outstanding
obligations, contingent or other, of the Company to purchase, redeem or
otherwise acquire any shares of its share capital. There are no voting trust
agreements or other contracts, agreements, arrangements, commitments, plans or
understandings restricting or otherwise relating to voting, dividend or other
rights with respect to any of the Shares.
Section 4.04. Authorization. Each Seller has all requisite power and
authority to enter into this Agreement and each of the other agreements
contemplated hereby, to carry out his/her obligations under this Agreement and
each of the other agreements contemplated hereby and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and each of the other agreements contemplated hereby, the consummation
of the transactions contemplated hereby and thereby and the performance by each
Seller of his/her obligations hereunder and thereunder have been duly authorized
by all necessary action on the part of each Seller. Each of this Agreement and
the other agreements contemplated hereby has been duly executed and delivered by
each Seller and constitutes the legal, valid and binding obligation of each
Seller, enforceable against such Seller in accordance with its terms (except as
the enforceability thereof may be limited by any applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally or by general
principles of equity, regardless of whether enforceability is considered in
equity or at law).
Section 4.05. No Violation. The execution and delivery of this Agreement
and each of the other agreements contemplated hereby by each Seller does not,
and the consummation by each Seller of the transactions contemplated hereby and
thereby, and compliance with the terms hereof and thereof will not: (a) conflict
with, or result in any violation of or default or loss of any benefit under, any
provision of the Company's organizational documents; (b) conflict with, or
result in any violation of or default or loss of any benefit under, any License,
grant, statute, law, rule or regulation, or any judgment, decree or order of any
court or other governmental agency or instrumentality to which the Company is a
party or to which its properties are subject; (c) conflict with, or result in a
modification of any provision, or breach or violation of or default or loss of
any benefit under, or accelerate the performance required by, the terms of any
agreement (written or unwritten), understanding, arrangement, contract,
indenture or other instrument to which the Company is a party or to which any of
its properties are subject, or constitute a default or loss of any right
thereunder or an event which, with the lapse of time or notice or both, might
result in a default or loss of any right thereunder or the creation of any Lien
upon any of the assets or properties of the Company; or (d) result in any
suspension, revocation, impairment, forfeiture or nonrenewal of any License,
except, in the case of clauses (b), (c) and (d), where any such conflict,
violation, default, loss of benefit, modification, breach, acceleration,
creation of Lien, suspension, revocation, impairment, forfeiture or nonrenewal
individually or in the aggregate does not and will not have a Material Adverse
Effect.
Section 4.06. Approvals. The execution and delivery of this Agreement and
each of the other agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby by each Seller will not require the
consent, approval, order or authorization of any Governmental Entity or
Regulatory Authority or any other Person under any statute, law, rule,
regulation, permit, license, agreement, indenture or other instrument to which
the Company is a party or to which its properties are subject, and no
declaration, filing or registration with any Governmental Entity or Regulatory
Authority is required or advisable by the Company or any Seller in connection
with the execution and delivery of this Agreement and each of the other
agreements contemplated hereby, the consummation of the transactions
contemplated hereby and thereby, or the performance by each Seller of his/her
obligations hereunder and thereunder. No Seller has any claim for pre-emptive
rights pursuant to the Articles of Organization or
6.
other organizational document of the Company with respect to any past or present
transfer of Shares of the Company.
Section 4.07. Business Assets. The Company owns or leases all of the
tangible and intangible assets necessary for or used in the conduct of the
business of the Company as such business is presently conducted by the Company.
Except as reflected on Schedule 4.07 hereto, the Company owns all assets
reflected on the Latest Balance Sheet or acquired since the date thereof, free
and clear of all Liens, except for assets disposed of since the date of the
Latest Balance Sheet in the ordinary course of business.
Section 4.08. Financial Statements and Other Information.
(a) Attached as Schedule 4.08 are true, correct and complete
copies of the audited balance sheets, as of December 31, 1999 and 1998, of the
Company and the audited statements of income, and shareholders' equity of the
Company for each of the years ended December 31, 1999 and 1998 (collectively,
the "Financial Statements"). The audited balance sheet, as of December 31, 1999
is herein referred to as the "Latest Balance Sheet". The audited statements of
income and shareholders' equity of the Company for the year ended December 31,
1999, and the Latest Balance Sheet are together herein referred to as the
"Latest Financial Statements".
(b) The Financial Statements are derived from and are consistent
with the books and records of the Company, have been prepared in accordance with
Generally Accepted Accounting Principles consistently applied throughout the
periods covered thereby, and the balance sheets included therein present the
financial condition of the Company fairly in all material respects as of their
respective dates. All liabilities and obligations, whether absolute, accrued,
contingent or otherwise, whether direct or indirect, and whether due or to
become due, that existed at the date of such Financial Statements have been
disclosed in the balance sheets included therein or in notes thereto to the
extent such liabilities were required, under Generally Accepted Accounting
Principles, to be so disclosed.
(c) Sellers have delivered to Purchaser a true and complete aging
schedule for the Company's accounts receivable as of March 31, 2000 (the
"Receivables"). The Receivables were generated in the ordinary course of the
Company's business and there do not exist any defenses, counterclaims and set-
offs that could materially adversely affect such Receivables. All of the
Receivables are actual and bona fide receivables representing obligations for
the total amount thereof shown on the books of the Company. The Company has
fully performed all obligations with respect thereto which they were obligated
to perform prior to the date hereof. The reserves for uncollectible accounts
established in the Latest Financial Statements have been determined in
accordance with the Company's past practices and, to the knowledge of Sellers,
are adequate.
Section 4.09. No Undisclosed Liabilities. Except as set forth in the notes
to the Latest Financial Statements or on Schedule 4.09, the Latest Financial
Statements disclose all liabilities of the Company other than liabilities that
have arisen after December 31, 1999, that were incurred in the ordinary course
of business and consistent with past practice (none of which is a material
uninsured liability for breach of contract, breach of warranty, tort,
infringement, claim or lawsuit).
Section 4.10. No Material Adverse Changes. Since the date of the Latest
Balance Sheet, there has been no change in the Company which change has had a
Material Adverse Effect.
Section 4.11. Corporate Action. All corporate action of the Board of
Directors of the Company taken on or prior to the date hereof have been duly
authorized, adopted or ratified in accordance with applicable law and the
organizational documents of the Company.
Section 4.12. Events Subsequent to December 31, 1999. Except as described
on Schedule 4.12, since December 31, 1999, the Company has not: (a) issued any
shares, bonds or other corporate securities (including without limitation
securities convertible into or rights to acquire share capital of the Company);
7.
(b) borrowed any amount or, to the knowledge of Sellers, incurred or become
subject to any liability absolute, accrued or contingent), except current
liabilities incurred or liabilities under contracts entered into, all in the
ordinary course of business; (c) discharged or satisfied any Lien or incurred or
paid any obligation or liability (absolute, accrued or contingent) other than
current liabilities shown on its balance sheet included in the Latest Financial
Statements and current liabilities incurred since December 31, 1999, in the
ordinary course of business; (d) declared or made any payment or distribution to
shareholders or purchased or redeemed any of its share capital or other
securities; (e) mortgaged, pledged or subjected to Lien any of its assets,
tangible or intangible; (f) sold, assigned or transferred any of its tangible
assets except in the ordinary course of business, or canceled any debt or claim;
(g) sold, assigned, transferred or granted any license with respect to, or
waived any material right to, any invention or discovery (whether or not
patentable), patent, patent application, trademark, trade name, service xxxx,
copyright, trade secret or other intangible asset or proprietary information;
(h) suffered any loss of property or, to the knowledge of Sellers, waived any
right of material value whether or not in the ordinary course of business or
consistent with past practice; (i) made any material change in the manner of its
business or operations; (j) made any material change in any method of accounting
or accounting practice, except as specifically disclosed in the Latest Financial
Statements; (k) entered into any transaction except in the ordinary course of
business or as otherwise contemplated hereby; (l) entered into or modified any
employment, severance or similar agreements or arrangements with or granted any
bonuses, salary or benefits increases, severance or termination pay to, any
officer or employee, or consultant other than in the ordinary course of business
and consistent with past practice; (m) adopted or amended any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, trust, fund or group arrangement for
the benefit or welfare of any employees or any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or
arrangements for the benefit or welfare of any employee, officer, director or
affiliate; (n) made any capital expenditure or commitment therefor in excess of
$100,000 individually or $500,000 in the aggregate; (o) made any loans or
advances to, or guarantees for the benefit of, any Persons; (p) acquired (by
merger, exchange, consolidation, acquisition of stock or assets or otherwise)
any corporation, partnership, limited liability company, joint venture or other
business organization or division or material assets thereof; (q) accelerated
collection of accounts receivable other than in the ordinary course of business;
(r) allowed any accounts payable owed to trade creditors to remain outstanding
more than 45 days, unless disputed in good faith, other than in the ordinary
course of business; or (s) entered into any commitment (contingent or otherwise)
to do any of the foregoing.
Section 4.13. Taxes.
(a) For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all United States and foreign taxes, assessments and
other governmental charges, duties, fees, levies, impositions and liabilities,
including without limitation, income, gross receipts, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental, personal property, real property, license, lease, service,
service use, severance, windfall profits, customs and other taxes, together with
all interest, fines, penalties and additions imposed with respect to such
amounts. For purposes of this Agreement, "Tax Returns" means all reports,
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes.
(b) The Company and its Subsidiaries have: (i) timely filed all
Tax Returns required to be filed by it and all such Tax Returns are true and
complete in all respects; (ii) paid all Taxes due, and paid all Taxes for which
a notice of assessment or collection has been received (other than amounts being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established on the books of the Company). No taxing authority
has asserted any claim for Taxes or, to the knowledge of Sellers, is threatening
to assert any claim for Taxes; no waivers of time to assess any Tax are in
effect and no requests for waiving of the time to assess any Tax are pending. No
Seller has knowledge of any dispute or claim concerning any Tax liability of the
Company. The Company and its Subsidiaries have
8.
withheld or collected and paid over to the appropriate governmental authorities
(or is properly holding for such payment) all Taxes required by law to be
withheld or collected. There are no Liens for Taxes upon the assets of the
Company (other than Liens for taxes that are not yet due or that are being
contested in good faith by appropriate proceedings). No Tax authority in a
jurisdiction where the Company or its Subsidiaries do not file Tax Returns has
made a claim, assertion or threat that the Company or any Subsidiary is or may
be subject to Tax in such jurisdiction.
(c) Notwithstanding Section 4.13(b) or any other provision of
this Agreement, no Seller shall be deemed to have made any representation or
warranty with respect to the tax implications for the Company or any Subsidiary
with respect to the options referred to in Schedule 4.03.
Section 4.14. Litigation. Except as set forth on Schedule 4.14, there is
no: (a) action, suit, investigation, arbitration or proceeding pending or, to
the Knowledge of Sellers, threatened against or affecting the Company or any of
its properties or rights by or before any Governmental Entity, or (b)
outstanding judgment, order, writ, injunction or decree, or application, request
or motion therefor, of any Governmental Entity in a proceeding to which the
Company or any of its properties was or is a party. There is no action, suit,
investigation, arbitration or proceeding pending, and, to Sellers' Knowledge, no
Person has threatened to commence any such proceeding that challenges, or that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with any Seller's ability to comply with or perform his/her
obligations and covenants under this Agreement or any agreement entered into
pursuant to this Agreement, and, to the Knowledge of Sellers, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
might directly or indirectly give rise to or serve as a basis for the
commencement of any such proceeding.
Section 4.15. Compliance with Laws. Sellers and the Company have complied
in all material respects with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings and charges
thereunder) of any Governmental Entity relating to or affecting the Company
except where any non-compliance has not and will not, individually or in the
aggregate, have a Material Adverse Effect. No investigation or review by any
Governmental Entity (including without limitation any audit or similar review by
any U.S., federal, foreign, state or local taxing authority) with respect to the
Company is pending or, to Sellers' Knowledge, threatened, nor has any
Governmental Entity indicated in writing to the Company or Sellers an intention
to conduct the same. None of Sellers, the Company nor any director, consultant
or employee of the Company (in all instances, in their capacity as such), is in
default with respect to any order, writ, injunction or decree known to or served
upon Sellers or the Company of any Governmental Entity with respect to the
Company. To the Knowledge of Sellers, there is no existing law, rule, regulation
or order which would prohibit or materially restrict the Company from, or
otherwise materially adversely affect the Company in, conducting its businesses
as presently conducted. The Company does not have and has not had in the past
any legal obligation to file any form, report, schedule, statement, proxy
statement or other document or information with the Commission, and the Company
has not filed with the Commission any such form, report, schedule, statement,
proxy statement or other document or information.
Section 4.16. Title to and Condition of Property.
(a) The Company owns no real property. The lease agreements
described on Schedule 4.16(a), are the only leases to which the Company is a
party and are valid and binding lease agreements. The Company is not in default
thereunder and, to the Knowledge of Sellers, the landlords to such lease
agreements are not in default thereunder. Purchaser has been provided complete
and accurate copies of each lease, and none of the leases has been modified in
any respect, except to the extent that such modifications are disclosed by the
copies delivered to Purchaser.
9.
(b) All material items of machinery, equipment and other tangible
assets used by the Company are in good operating condition and repair, normal
wear and tear excepted, are usable in the ordinary course of business, and, to
the Knowledge of Sellers, conform in all material respects to all applicable
laws, ordinances, codes, rules, regulations and authorizations relating to their
construction, use and operation. The Company owns, or leases under valid leases,
all machinery, equipment and other tangible assets necessary for the conduct of
its business as currently conducted. The equipment of the Company is not in need
of maintenance or repairs other than ordinary routine maintenance and repairs
that are not material, individually or in the aggregate, in nature or cost.
10.
Section 4.17. Contracts
(a) Schedule 4.17 contains a complete list of all currently
effective contracts, agreements, arrangements or commitments: (i) to which the
Company is a party concerning a partnership or joint venture with another
Person, or relating to the voting of Shares or the election of directors; (ii)
to which the Company or any of its Affiliates (other than individuals) is a
party limiting the right of the Company prior to the Closing, or Purchaser or
any Subsidiaries or Affiliates (other than individuals) at or after the Closing,
to engage in, or to compete with any person in, any business, including each
Contract containing exclusivity provisions restricting the geographical area in
which, or the method by which, any business may be conducted by the Company or
Affiliates (other than individuals) prior to the Closing, or by Purchaser or any
Subsidiaries or Affiliates (other than individuals) after the Closing; (iii) to
which the Company is a party involving the license, development, assignment or
ownership of intellectual property, or providing for the payment or receipt of
royalties or other compensation by the Company in connection with intellectual
property rights; or (iv) to which the Company is a party and which is material
to the condition (financial or otherwise), results of operations, business,
properties, assets or liabilities of the Company (including but not limited to,
all existing contracts between the Company and manufacturers, suppliers, sales
representatives, distributors, OEM strategic partners or customers of the
Company) (all such contracts, agreements, arrangements or commitments, whether
or not listed on Schedule 4.17, being hereinafter referred to as "Contracts").
True and correct copies of all the Contracts listed on Schedule 4.17 have been
furnished to Purchaser. All Contracts are valid and binding obligations of the
respective parties thereto and the Company has duly performed its obligations
thereunder to the extent such obligations have accrued. The Company has not
breached or defaulted under any Contract where such breach or default (i) could
impair the ability of the Company to enforce any rights thereunder, or (ii)
would permit the acceleration of any obligation of any party thereto or the
creation of a Lien upon any asset of the Company. To the Knowledge of Sellers,
no other party to any Contract is in breach or default thereunder.
(b) The consummation of the transactions contemplated hereby will
not result in any violation or termination of, default or loss of benefit under,
or give rise to a right of termination under, the terms of any Contract.
Section 4.18. Employee Agreements. Sellers have furnished Purchaser with a
true and correct list (as of the date hereof) of the current employees of the
Company which shows, for each employee, such employee's hire date, current base
salary and all material benefits. Sellers have also provided Purchaser with a
true and correct copy of all written, and summaries of all binding oral,
employment agreements.
Section 4.19. Labor Matters.
(a) The Company is not a party to or bound by any collective
bargaining agreement of any union, or any other similar type of agreements. The
Company is not subject to any proceeding asserting that the Company has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor, as of the date of this Agreement, is
there pending or threatened, any material labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving the Company.
(b) Except as disclosed on the list referred to in Section 4.18
hereof, there is not in existence any written or unwritten contract of
employment with any person whose existing employment cannot be terminated by
statutory notice periods without giving rise to a claim for damages or further
compensation, provided the employment is terminated in accordance with the
regulations in the Protection of Employment Act.
(c) In relation to each of the employees, the Company has
substantially complied with all terms and conditions of employment, statutes,
regulations, codes, orders and awards relevant to their conditions of service or
the relations with employees. There are no workers' compensation claims pending
11.
against the Company or any Subsidiary nor, to the knowledge of Sellers, any
facts that would give rise to such a claim.
Section 4.20. Employee Benefits.
(a) The Company has duly and correctly conformed to the
requirements of applicable social security regulations and have and shall have
paid all contributions due from it as of the date of Closing. The Company has
made sufficient provisions in the Latest Balance Sheet in respect of holiday
pay.
(b) The Company is not a party to any agreement or has incurred
any liability for the provision of benefits other than those payable, as
required by law, or pursuant to, state social security schemes or schemes of
national insurance or collective bargaining agreements, or the like.
Section 4.21. Year 2000 Compliance. The Company has taken appropriate and
adequate measures in order to ensure Year 2000 Compliance, has not experienced
any problems in this regard, and Sellers do not foresee that the Company will
experience any Year 2000 Compliance problem that could have a Material Adverse
Effect. The term "Year 2000 Compliance" as used herein means that the Software
and computer systems: (1) are capable of recognizing, processing, managing,
representing, interpreting, and manipulating correctly date related data for
dates earlier and later than January 1, 2000, including, but not limited to,
calculating, comparing, sorting, storing, tagging and sequencing, without
resulting in or causing logical or mathematical errors or inconsistencies in any
user-interface functionalities or otherwise, including data input and retrieval,
data storage, data fields, calculations, reports, processing, or any other input
or output; (2) have the ability to provide data recognition for any data element
without limitation (including, but not limited to, date-related data represented
without a century designation, date-related data whose year is represented by
only two digits and date fields assigned special values), (3) have the ability
to automatically function into and beyond the year 2000 without human
intervention and without any change in operations associated with the advent of
the year 2000, (4) have the ability to correctly interpret data, dates and time
into and beyond the year 2000, (5) have the ability not to produce noncompliance
in existing information, nor otherwise corrupt such data into and beyond the
year 2000, (6) have the ability to correctly process after January 1, 2000 data
containing dates before that date, and (7) have the ability to recognize all
"leap years," including February 29, 2000.
Section 4.22. Insurance Policies. Schedule 4.22 contains a correct and
complete description of all insurance policies covering the Company or employees
of the Company. All of such insurance policies are in full force and effect.
The Company is not in default with respect to its obligations under any of the
insurance policies. The Sellers have no Knowledge of any threatened termination
of, or material premium increase with respect to, any of such policies.
Section 4.23. Records. The Company has records that accurately and validly
reflect its transactions and accounting controls sufficient to insure that such
transactions are in all material respects recorded in conformity with Generally
Accepted Accounting Principles.
Section 4.24. Brokerage Fees. Except as set forth on Schedule 4.24,
neither Sellers nor the Company has retained any financial advisor, broker,
agent or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement or any of the agreements contemplated hereby
or any transaction contemplated hereby or thereby or any transaction of like
nature that would be required to be paid by the Company, Sellers or Purchaser.
Section 4.25. Intellectual Property.
(a) The Company owns, and the Company's assets include, all
patents, patent applications, trademarks, service marks, trade names, and
copyrights and all other intellectual property rights, software (in executable,
object and source code formats), trade secrets, and other proprietary
12.
information, processes, and formulas used in the operation of its business as
currently conducted or currently planned to be conducted ("IP Assets"), other
than software products of third parties that are or have been made generally
commercially available by third parties ("Commercially Available Software" or
"CAS"). Except as set forth on Schedule 4.25(a), the Company does not have any
pending or registered
trademarks or service marks, reserved trade names, pending or registered
copyrights, filed patent applications or issued patents.
(b) All personnel, including employees, agents, consultants and
contractors, who have contributed protectible material (including any
copyrightable expression, any invention or discovery and/or any confidential or
proprietary information) to or participated in the conception and development of
the software programs, technical documentation, or intellectual property on
behalf of the Company have developed such intellectual property in a manner
that, in accordance with applicable law or pursuant to executed valid
assignments, has accorded the Company full, effective, exclusive and original
ownership of all tangible and intangible property thereby arising. Sellers have
delivered to Purchaser copies of the non-disclosure agreements with certain of
the Company's employees and customers by which the Company has sought to protect
the confidentiality of its trade secrets.
(c) Except as set forth on Schedule 4.25(c), the use of any of
the IP Assets (or assets embodying any such IP Asset) does not infringe on: (i)
any non-patent intellectual property rights or other rights of any person or
entity and/or; (ii) the patent rights of any person or entity. To the Knowledge
of the Sellers, no other Person has interfered with, infringed upon, or
otherwise come into conflict with any IP Assets or other proprietary information
of the Company or any of its Subsidiaries.
(d) As of the Closing, all of the Company Software (as defined
below) is free of material bugs or defects which have manifested themselves as
of the Closing. As of the Closing, any third party software that is reasonably
necessary to the operation of the Company's business is, to the Knowledge of
Sellers, free of any material bugs or defects. As used in this Section 4.25(d),
"Company Software" means software (including CD-ROMs) of the Company that the
Company makes available or is under development with the intention of making
available to third parties in connection with the Company's business, and
excludes CAS.
(e) The Company has good and marketable title to each item of its
IP Assets, free and clear of all Liens of any third party. The Company has the
unrestricted right to market, license and otherwise exploit each item of the IP
Assets. Schedule 4.25(e) lists all royalties, license fees, sublicense fees or
similar obligations reasonably expected to have a value in excess of $10,000 per
year payable by the Company or any Subsidiary for any third party intellectual
property rights that are used in the manufacture of, incorporated in, or forms a
part of any product sold by or expected to be sold by the Company or any of its
Subsidiaries.
(f) The operation of the business of the Company as it currently
is conducted or, to the Knowledge of Sellers, currently proposed to be
conducted, does not infringe or misappropriate the intellectual property or
other proprietary rights of any person or entity, violate any other rights of
any person or entity (including rights to privacy or publicity) or constitute
unfair competition or trade practices under applicable laws.
(g) The Company has not granted any rights to its IP Assets to
any third party that would conflict or compete with a product sold or expected
to be sold by the Company or any of its Subsidiaries, or otherwise be reasonably
likely to have a Material Adverse Effect.
Section 4.26. Licenses. The Company has all licenses, permits, consents
and other governmental certificates, authorizations and approvals required by
any Governmental Entity for the conduct of its business and the use of its
properties as presently conducted or used (collectively, "Licenses") and all of
the
13.
Licenses are in full force and effect and no action or claim is pending nor
threatened to revoke or terminate any License or declare any License invalid in
any material respect, except where the failure to have any License, or the
invalidity, revocation or termination of any License, has not had and will not
have a Material Adverse Effect individually or in the aggregate. A true and
complete list of all Licenses is set forth on Schedule 4.26.
Section 4.27. Environmental Matters.
(a) For the purposes of this Agreement: (1) "Environmental Laws"
shall mean any law, statute, rule, regulation, order or other requirement of law
relating to: (i) the manufacture, transport, use, treatment, storage, disposal,
release or threatened release of Hazardous Substances, or (ii) the protection of
human health or the environment (including, without limitation, natural
resources, air, and surface or subsurface land or waters); (2) "Environmental
Liabilities" shall mean any and all liabilities, responsibilities, claims,
suits, losses, costs (including remediation, removal, response, abatement,
clean-up, investigative and/or monitoring costs) and any other related costs and
expenses, other causes of action recognized now or at any later time, damages,
settlements, expenses, charges, assessments, liens, penalties, fines,
prejudgment and post-judgment interest, attorney fees and other legal fees: (a)
pursuant to any agreement, order, notice, requirement, responsibility or
directive (including directives embodied in Environmental Laws), injunction,
judgment or similar documents (including settlements) arising out of or in
connection with any Environmental Laws; or (b) pursuant to any claim by a
Governmental Entity or other Person for personal injury, property damage, damage
to natural resources, remediation or similar costs or expenses incurred or
asserted by such entity or person pursuant to common law or statute; and (3)
"Hazardous Substance" shall mean any material or substance that is: (i) listed,
classified or regulated pursuant to or under any applicable Environmental Law;
or (ii) any petroleum product or by-product, asbestos, urea formaldehyde
insulation, polychlorinated biphenyls or pesticides.
(b) The Company has been and is currently being operated in
compliance in all material respects with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and obligations
of Environmental Laws and related orders of any Governmental Entity; the Company
is not required to obtain any permits or licenses pursuant to any Environmental
Law to conduct its business and operations as presently conducted. The Company
has filed all reports and notifications required to be filed by it under and
pursuant to all applicable Environmental Laws, copies of which have been
provided to Purchaser.
c) There are not any existing, pending or threatened actions,
suits, claims, investigations, inquiries or proceedings by or before any
Governmental Entity directed against the Company that pertain or relate to: (1)
any remedial obligations under any applicable Environmental Law, (2) violations
by the Company of any Environmental Law; or (3) personal injury or property
damage claims relating to a release of chemicals or Hazardous Substances. The
Company has not received any notice alleging in any manner that it is, or might
potentially be responsible for, any release of Hazardous Substances, or any cost
arising under or for violation of Environmental Laws.
(d) (i) No Hazardous Substances have been generated, treated,
contained, handled, located, used, manufactured, processed, buried, incinerated,
deposited, stored, or released by the Company on, under or about any part of the
Company's assets, including the real property used by the Company; (ii) to the
Knowledge of Sellers, none of the assets, including the real property used by
the Company and any improvements thereon, contain any Hazardous Substances; and
(iii) no aboveground or underground storage tanks have been placed by the
Company on, under or about the real property used by the Company, or, to the
Knowledge of Sellers, have been located on, under or about the real property and
then subsequently been removed or filled.
14.
(e) No expenditure other than that currently made by the Company
in the ordinary course of business will be required in order for Purchaser to
comply with any Environmental Laws in effect at the time of the Closing, in a
manner consistent with the current operation thereof by the Company.
Section 4.28. No Illegal or Improper Transactions. Neither the Company,
nor, to Sellers' Knowledge, any of its directors, employees, agents or
Affiliates, has directly or indirectly used funds or other assets of the Company
or made any promise or undertaking in such regard, for: (a) contributions,
gifts, entertainment or other expenses relating to political activity; (b)
payments to or for the benefit of governmental officials or employees; (c)
payments to or for the benefit of any person, firm, corporation or other entity,
or any director, officer, employee, agent or representative thereof; or (d) the
establishment or maintenance of a secret or unrecorded fund; and there have been
no false or fictitious entries made in the books or records of the Company.
Except as disclosed in Schedule 4.28, no Seller nor any of his/her relatives or
"Affiliates" (as such term is defined in the Exchange Act (other than the
Company ) owns any material asset, tangible or intangible, which is used by the
Company or has any agreement with the Company (other than normal employment
arrangements).
Section 4.29. Restrictive Documents and Territorial Restrictions. Except
for routine confidentiality, non-disclosure and similar agreements entered into
in the ordinary course of business (none of which agreements will prevent or
restrict the Company from cooperating, subcontracting or otherwise conducting
business with Purchaser or any of Purchaser's Affiliates) or as set forth on
Schedule 4.29, the Company is not subject to, or a party to, any charter, by-
law, mortgage, Lien, lease, License, agreement, contract, instrument, law, rule,
ordinance, regulation, order, judgment or decree, or any other restriction of
any kind or character, which adversely affects the business, operations or
condition (financial or otherwise) of its business or any of its assets or
properties, or which would prevent consummation of the transactions contemplated
hereby, or the continued operation of its business after the date hereof on
substantially the same basis as heretofore operated or which would restrict the
ability of the Company to acquire any property or conduct business anywhere in
the world.
Section 4.30. Bank Accounts. Schedule 4.30 contains a true, correct and
complete list of the names and locations of all banks, trust companies, savings
and loan associations and other financial institutions at which the Company
maintains safe deposit boxes or accounts of any nature and the names of all
Persons authorized to draw thereon, make withdrawals therefrom or have access
thereto. All cash in such accounts is held in demand or short term (not more
than 30 days) deposits and is not subject to any restriction or documentation as
to withdrawal.
Section 4.31. Warranties. There are no claims outstanding, pending or, to
the Knowledge of the Sellers, threatened for breach of any warranty relating to
any products sold by the Company prior to the date hereof. The description of
the Company's product warranties set forth on Schedule 4.31 is correct and
complete. The reserves for warranty claims on the Latest Balance Sheet are
consistent with the Company's prior practices and are fully adequate in
accordance with GAAP to cover all warranty claims made or to be made against any
products of the Company sold prior to the date hereof.
Section 4.32. Accounting Matters. Neither the Company nor, to the
Knowledge of the Sellers, any of its Affiliates has taken or agreed to take any
action that (without regard to any action taken or agreed to be taken by
Purchaser or any of its Affiliates) would prevent Purchaser from accounting for
the purchase of the Shares as a pooling-of-interests.
Section 4.33. Indemnification Obligations. The Sellers have no Knowledge
of any action, proceeding or other event pending or threatened against any
officer or director of the Company which would give rise to any indemnification
obligation of the Company to its officers and directors under its Articles of
Organization, or any amendments thereto, or any agreement between the Company
and any of its officers or directors.
15.
Section 4.34. Purchase Entirely for Own Account. The shares of Purchaser
Stock being acquired by each Seller are being acquired for investment for such
Seller's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and such Seller has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, each Seller further represents that such
Seller does not have any contract, undertaking, agreement or arrangement with
any Person to sell, transfer or grant participations to such Person or to any
third Person, with respect to any of the shares of Purchaser Stock.
Section 4.35. Accredited Investor. Each Seller is an accredited investor
as such term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act, or if not, such Seller, either alone or with such Seller's
representatives, has such knowledge and experience in financial and business
matters that such Seller is capable of evaluating the merits and risks of the
prospective investment in the Purchaser Stock and is able to bear the economic
consequences thereof. In making such Seller's decision to invest in the
Purchaser Stock, such Seller has relied upon independent investigations made by
such Seller and, to the extent believed by such Seller to be appropriate, such
Seller's representatives, including such Seller's own professional, tax and
other advisors, and has not relied upon any representation or warranty from
Purchaser, or any of its directors, officers, employees, agents, affiliates or
representatives, with respect to the value of the Purchaser Stock. Purchaser has
not made any representation, warranty, acknowledgment or covenant, in writing or
otherwise, to such Seller regarding the tax consequences, if any, of the sale of
the Shares or of the resale of the Purchaser Stock by such Seller. Such Seller
and such Seller's representatives have been given a full opportunity to examine
all documents and to ask questions of, and to receive answers from, Purchaser
and its representatives concerning the terms of the sale of the Shares to
Purchaser, such Seller's investment in the Purchaser Stock and the business of
Purchaser and such other information as such Seller desires in order to evaluate
an investment in the Purchaser Stock, and all such questions have been answered
to the full satisfaction of such Seller. Such Seller has evaluated the merits
and risks of an investment in the Purchaser Stock and has determined that the
Purchaser Stock are a suitable investment for such Seller in light of such
Seller's overall financial condition and prospects. Such Seller has been
advised, and is aware, that the market prices of shares of stock of publicly
traded companies fluctuate and that there can be no assurance as to the future
performance of any given securities, including shares of Purchaser Stock. Such
Seller has been furnished with all publicly available information about
Purchaser's assets, operations, and business activities which such Seller has
requested and which such Seller considers necessary or relevant to enable such
Seller to make a prudent decision about the sale of such Seller's Shares to
Purchaser and such Seller's acquisition of the Purchaser Stock.
Section 4.36. Status of Seller. Except as set forth on Schedule 4.36, each
Seller is a United States person (as defined in Rule 902 under the Securities
Act) and such Seller's acquisition of shares of Purchaser Stock in exchange for
such Seller's Shares is made for the account or benefit of a United States
person (as defined in Rule 902 under the Securities Act).
Section 4.37. No Misleading Statements. This Agreement and the schedules
hereto do not contain any untrue statement of a material fact by Sellers and do
not omit to state any material fact necessary to make any of the statements by
Sellers contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
Section 5.01. Organization, Etc. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to conduct its business as
it is now being conducted and to own, operate or lease the properties and assets
it currently owns, operates or holds under lease.
16.
Section 5.02. Capitalization. The authorized capital stock of Purchaser
consists of 50,000,000 shares of common stock, $0.01 par value, and no shares of
preferred stock. The designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of authorized
share capital of Purchaser are as set forth in its Certificate of Incorporation,
and any amendments thereto, and as most recently filed in its SEC Filings, and
all such designations, powers, preferences, rights, qualifications, limitations
and restrictions are valid, binding and enforceable and in accordance with all
applicable corporate laws. None of the outstanding securities of Purchaser have
been issued in violation of any preemptive rights, rights of first refusal or
similar rights.
Section 5.03. Authorization. Purchaser has all requisite corporate power
and authority to enter into this Agreement and each of the other agreements
contemplated hereby, to carry out its obligations under this Agreement and each
of the other agreements contemplated hereby and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Purchaser of this
Agreement and each of the other agreements contemplated hereby to which it is a
party, the consummation of the transactions contemplated hereby and thereby and
the performance by Purchaser of its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action on the part of Purchaser.
Each of this Agreement and the other agreements contemplated hereby to which the
Purchaser is a party has been duly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms (except as the enforceability
thereof may be limited by any applicable bankruptcy, insolvency or other laws
affecting creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in equity or at law).
Section 5.04. No Violation. The execution and delivery of this Agreement
and each of the other agreements contemplated hereby by Purchaser do not, and
the consummation by Purchaser of the transactions contemplated hereby and
thereby, and compliance with the terms hereof and thereof will not: (a) conflict
with, or result in any violation of or default or loss of any benefit under, any
provision of Purchaser's Certificate of Incorporation, and any amendments
thereto, or its Bylaws; (b) conflict with, or result in any violation of or
default or loss of any benefit under, any License, grant, statute, law, rule or
regulation, or any judgment, decree or order of any court or other governmental
agency or instrumentality to which Purchaser is a party or to which any of any
of its properties are subject; (c) conflict with, or result in a breach or
violation of or default or loss of any benefit under, or accelerate the
performance required by, the terms of any agreement, contract, indenture or
other instrument to which Purchaser is a party or to which any of its properties
are subject, or constitute a default or loss of any right thereunder or an event
which, with the lapse of time or notice or both, might result in a default or
loss of any right thereunder or the creation of any Lien upon any of the assets
or properties of Purchaser; or (d) result in any suspension, revocation,
impairment, forfeiture or nonrenewal of any material license held by Purchaser,
except, in the case of clauses (b), (c) and (d), where any such conflict,
violation, default, loss of benefit, breach, acceleration, creation of Lien,
suspension, revocation, impairment, forfeiture or nonrenewal individually or in
the aggregate does not and will not have a Material Adverse Effect.
Section 5.05. Approvals. The execution and delivery of this Agreement and
each of the agreements contemplated hereby by Purchaser and the consummation of
the transactions contemplated hereby and thereby will not require the consent,
approval, order or authorization of any Governmental Entity or Regulatory
Authority or any other Person under any statute, law, rule, regulation, permit,
license, agreement, indenture or other instrument to which Purchaser is a party
or to which any of its property is subject, and no declaration, filing or
registration with any Governmental Entity or Regulatory Authority is required or
advisable by Purchaser in connection with the execution and delivery of this
Agreement and each of the other agreements contemplated hereby, the consummation
by Purchaser of the transactions contemplated hereby and thereby or the
performance by Purchaser of its obligations hereunder and thereunder, except
(i): (A) absent an applicable exemption therefrom, the filing of a registration
statement with the Commission, in accordance with the Securities Act, with
respect to the shares of Purchaser Stock to be issued as contemplated by this
Agreement; or (B) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the laws
17.
of any country other than the United States; or (ii) where the failure to obtain
any such consents, approvals, authorizations or permits, or to make such filings
or notifications, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 5.06. Purchaser Stock. The Purchaser Stock delivered to Sellers
pursuant to Section 3.02 hereof, will, when issued and delivered in accordance
with this Agreement, be (i) duly authorized, validly issued, and nonassessable
and free and clear of any Liens, and (ii) as to the Registered Stock only,
listed for trading on the NASDAQ National Market, as applicable.
Section 5.07. Litigation. There is no action, suit, investigation,
arbitration or proceeding pending, and, to Purchaser's Knowledge, no Person has
threatened to commence any such proceeding that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with
Purchaser's ability to comply with or perform its obligations and covenants
under this Agreement or any agreement entered into pursuant to this Agreement,
and, to the Knowledge of Purchaser, no event has occurred, and no claim, dispute
or other condition or circumstance exists, that might directly or indirectly
give rise to or serve as a basis for the commencement of any such proceeding.
Section 5.08. Reports and Financial Statements; Absence of Certain
Changes.
(a) Purchaser has filed all forms, reports, schedules, statements and other
documents required to be filed with the Commission pursuant to the Exchange Act
(collectively, as supplemented and amended since the time of filing, the "SEC
Filings"). All of such SEC Filings complied at the time they were filed in all
material respects with applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder. None of such SEC Filings,
as of their respective dates (as amended through the date hereof), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited
financial statements of Purchaser included in the SEC Filings comply in all
material respects with the published rules and regulations of the Commission
with respect thereto, and such audited financial statements: (i) were derived
from and are consistent with the books and records of Purchaser; (ii) were
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein or
in the notes or schedules thereto); and (iii) present fairly in all material
respects the financial position of Purchaser as of the dates thereof and the
results of operations and cash flows for the periods then ended. The unaudited
financial statements included in the SEC Filings comply in all material respects
with the published rules and regulations of the SEC with respect thereto; and
such unaudited financial statements: (i) were derived from and are consistent
with the books and records of Purchaser; (ii) were prepared in accordance with
United States generally accepted accounting principles, except as otherwise
permitted under the Exchange Act and the rules and regulations thereunder, on a
consistent basis (except as may be indicated therein or in the notes or
schedules thereto); and (iii) present fairly in all material respects the
financial position of Purchaser as of the dates thereof and the results of
operations and cash flows (or changes in financial condition) for the periods
then ended, subject to normal year-end adjustments and any other adjustments
described therein or in the notes or schedules thereto.
(b) Except as specifically contemplated by this Agreement or reflected in
the SEC Filings, since January 31, 2000 there has not been: (i) any change or
event having a Material Adverse Effect on Purchaser; (ii) any declaration
setting aside or payment of any dividend or distribution with respect to the
common stock of Purchaser; or (iii) any material change in Purchaser's
accounting principles, procedures or methods.
Section 5.09. Compliance with Laws. Except as disclosed in the SEC Filings
filed prior to the date of this Agreement, Purchaser has complied in all
material respects with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings and charges thereunder)
of any Governmental Entity relating to or affecting Purchaser except where any
non-compliance has not and
18.
will not, individually or in the aggregate, have a Material Adverse Effect. No
investigation or review by any Governmental Entity (other than tax audits in the
ordinary course of Purchaser's business) with respect to Purchaser is pending
or, to Purchaser's Knowledge, threatened, nor has any Governmental Entity
indicated in writing to Purchaser an intention to conduct the same. Purchaser is
not in default with respect to any order, writ, injunction or decree known to or
served upon Purchaser, except where any default has not had and will not,
individually or in the aggregate, have a Material Adverse Effect.
Section 5.10. Purchase Entirely for Own Account. The Shares being
purchased by Purchaser are being acquired for investment for Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. By
executing this Agreement, Purchaser further represents that it does not have any
contract, undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third Person, with
respect to any of the Shares.
Section 5.11. Accredited Investor. Purchaser is an accredited investor as
such term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
Section 5.12. Brokerage Fees. Except as set forth on Schedule 5.12 hereto,
Purchaser has not retained any financial advisor, broker, agent or finder or
paid or agreed to pay any financial advisor, broker, agent or finder on account
of this Agreement or any of the agreements contemplated hereby or any
transaction contemplated hereby or thereby or any transaction of like nature
that would be required to be paid by the Company or Sellers.
Section 5.13. No Misleading Statements. This Agreement and the schedules
hereto do not contain any untrue statement of a material fact by Purchaser and
do not omit to state any material fact necessary to make any of the statements
by Purchaser contained herein or therein not misleading.
ARTICLE VI
CONDUCT PRIOR TO THE CLOSING
Section 6.01. Conduct of the Business. The Sellers hereby covenant and
agree that, from the date hereof until the Closing, unless otherwise consented
to by Purchaser in writing, they shall cause the Company to observe each term
set forth in this Section 6.01, and shall be accountable for any failure by the
Company in this regard pursuant to Article XI hereof:
(a) The business of the Company shall be conducted only in, and
the Company shall not take any action except in, the ordinary course of the
Company's business, on an arm's-length basis and in accordance in all material
respects with all applicable laws, rules and regulations and the Company's past
custom and practice;
(b) The Company shall not cancel or terminate its current
insurance policies or cause any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under the
canceled, terminated or lapsed policies for, to the extent feasible,
substantially similar premiums are in full force and effect;
(c) The Company shall: (i) use its best efforts to preserve
intact the Company's business organization and goodwill, keep available the
services of the Company's officers and employees as a group and maintain
satisfactory relationships with suppliers, distributors, customers and others
having business relationships with the Company; (ii) confer on a regular and
frequent basis with representatives of Purchaser to report operational matters
and the general status of ongoing operations; (iii) not intentionally take any
action which would render, or which reasonably may be expected to render, any
representation or warranty made by Sellers in this Agreement untrue at the
Closing; and (iv) notify Purchaser of any
19.
emergency or other change in the normal course of the Company's business or in
the operation of the Company's properties and of any governmental or third party
complaints, investigations or hearings (or communications indicating that the
same may be contemplated);
(d) The Company (for purposes of this Section 6.01(d), all
references to the Company shall include the Affiliates, and any former
Subsidiaries and Affiliates, of the Company) shall file (or cause to be filed)
at its own expense, on or prior to the due date, all Tax Returns for all Tax
periods ending on or before the Closing where the due date for such Tax Returns
or reports (taking into account valid extensions of the respective due dates)
falls on or before the Closing (all Tax Returns described in this Section
6.01(d) and any schedules to be included therewith shall be prepared on a basis
consistent with those of the Company prepared for prior Tax periods); provided,
however, that the Company shall not file any such Tax Returns, or other returns,
elections, claims for refund or information statements with respect to any
liabilities for Taxes (other than federal, state or local sales, use,
withholding or employment tax returns or statements) for any Tax period, or
consent to any adjustment or otherwise compromise or settle any matters with
respect to Taxes, without prior consultation with and approval by Purchaser. The
Company shall provide Purchaser with a copy of appropriate workpapers,
schedules, drafts and final copies of each federal and state income Tax Return
or election of the Company at least ten days before filing such return or
election and shall reasonably cooperate with any request by Purchaser in
connection therewith;
(e) The Company shall not: (i) make or rescind any express or
deemed election or take any other discretionary position relating to Taxes, (ii)
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, or (iii)
change any of its methods of reporting income or deductions for income Tax
purposes from those employed in the preparation of the Tax Returns for the
taxable year ended December 31, 1999;
(f) The Company shall not change any of its methods of accounting
in effect at December 31, 1999, other than those required by Generally Accepted
Accounting Principles; and
(g) The Company shall not perform any act referenced by (or omit
to perform any act which omission is referenced by) the terms of Section 4.12
hereof.
Section 6.02. Access to Books and Records. Between the date hereof and the
Closing, the Company shall afford to Purchaser and its authorized
representatives (the "Purchaser Representatives") full access at all reasonable
times and upon reasonable notice to the offices, properties, books, records,
officers, employees and other items of the Company, and the work papers of the
Company's independent accountants, and otherwise provide such assistance as is
reasonably requested by Purchaser in order that Purchaser may have a full
opportunity to make such investigation and evaluation as it shall reasonably
desire to make of the business and affairs of the Company. In addition, the
Company and its officers and directors shall cooperate fully (including
providing introductions where necessary) with Purchaser to enable Purchaser to
contact such third parties, including customers, prospective customers,
specifying agencies, vendors or suppliers of the Company, as Purchaser deems
reasonably necessary.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01. Nonsolicitation. During the period beginning on the Closing
and ending on the date which is three (3) years after the Closing (the "Term"),
Seller will not, directly or indirectly, as employee, agent, consultant,
principal or otherwise: (i) seek to influence or alter the relationship between
the Company and any Person to whom the Company provided services or to whom the
Company made a presentation related to the business of the Company at any time
during the one-year period immediately preceding the Closing or during the Term;
or (ii) solicit for employment or other services or hire or otherwise seek to
influence or alter the relationship between the Company and any Person who is or
was an
20.
employee of the Company at any time during the one-year period immediately
preceding the Closing or during the Term, except on behalf of the Company or
Purchaser; provided, however, that general solicitation or hire shall not
constitute a breach of this covenant so long as Seller shall not offer
employment to any such employee of the Company within six (6) months following
the termination of such employee's employment by the Company.
Section 7.02. Confidentiality. Following the Closing, each Seller shall
strictly maintain the confidentiality of all information, documents and
materials relating to the Company, except to the extent disclosure of any such
information is required by law or authorized by Purchaser. In the event that any
Seller reasonably believes after consultation with counsel that he/she is
required by law to disclose any confidential information described in this
Section 7.02, such Seller will: (i) provide Purchaser with prompt notice before
such disclosure in order that Purchaser may attempt to obtain a protective order
or other assurance that confidential treatment will be accorded to confidential
information; and (ii) cooperate with Purchaser, at Purchaser's sole cost and
expense, in attempting to obtain such order or assurance. The provisions of this
Section 7.02 shall not apply to any information, documents or materials which
are in the public domain or shall come into the public domain, other than by
reason of default by any Seller of this Agreement.
Section 7.03. Remedies. Without limiting the right of Purchaser and the
Company to pursue all other legal and equitable rights available to them,
including without limitation, damages for the actual or threatened violation of
this Article VII by Sellers, it is agreed that other remedies cannot fully
compensate Purchaser or the Company for such a violation and that Purchaser and
the Company shall be entitled to injunctive relief and/or specific performance
to prevent violation or continuing violation thereof. It is the intent and
understanding of each party hereto that if, in any action before any court or
agency legally empowered to enforce this Article VII, any term, restriction,
covenant or promise in this Article VII is found to be unreasonable and for that
reason unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency.
Section 7.04. Maintenance of the Company. Except as set forth in the
Recitals to this Agreement, Purchaser will not sell, transfer or otherwise
dispose of the Shares or take any other action that would result in Purchaser
not holding, beneficially and of record, Shares representing more than fifty
percent (50%) of the total votes of the Company from the Closing through and
including December 31, 2000. Notwithstanding the foregoing, nothing in this
Section shall prevent Purchaser from merging the Company into another company.
Section 7.05. Change in Management. Immediately upon Closing, Purchaser
shall cause extraordinary shareholders' meetings of the Company and the
Subsidiaries to be held for purposes of electing new directors and auditors.
Sellers covenant that the present directors and auditors will be removed from
their positions without any claim for compensation or remuneration except for
compensation in the ordinary course of business and that these directors will
not exercise their formal authority to represent the respective companies. If
requested by Purchaser, Sellers agree to cause general powers of attorney to be
duly and validly issued in favor of persons appointed by Purchaser, which
individuals shall have unlimited authority to represent the Company and the
Subsidiaries in all matters until the new Boards of Directors have been
officially registered.
Section 7.06. Preparation of Registration Statement; Blue Sky Laws. As
promptly as practicable and no later than 10 Business Days after the Closing,
Purchaser shall prepare and file with the Commission a registration statement on
Form S-3 with respect to the shares of Purchaser Stock to be issued pursuant to
this Agreement (the "Registration Statement"). Purchaser shall use all
commercially reasonable efforts to have such Registration Statement declared
effective under the Securities Act as promptly as practicable after filing. Each
of Purchaser and the Sellers shall indemnify and hold harmless the other from
any obligations, claims or liabilities arising from any statement supplied by
such party for inclusion in the Registration Statement which, at the time such
statement was made, is false or misleading with respect to any material fact, or
omits to state any material fact necessary in order to make the statement, in
light of the
21.
circumstances under which is was made, not false or misleading. Purchaser shall
also take any action required to be taken under any applicable provincial or
state securities laws (including "Blue Sky" laws) in connection with the
issuance of the Purchaser Stock pursuant to this Agreement; provided, however,
that Purchaser shall not be required to register or qualify as a foreign
corporation or to take any action that would subject it to service of process in
any jurisdiction where Purchaser is not now so subject, except as to matters and
transactions arising solely from the offer and sale of Purchaser Stock.
Section 7.07. Additional Agreements, Cooperation.
(a) Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate, subject to
compliance with applicable law, with each other in connection with the
foregoing, including using its best efforts: (i) to obtain all necessary
waivers, consents and approvals from other parties to loan agreements, material
leases and other material contracts; (ii) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any United
States federal, state, or foreign law or regulations; (iii) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby; (iv) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby; (v)
to effect all necessary registrations and filings and submissions of information
requested by Governmental Entities; and (vi) to fulfill all conditions to this
Agreement; provided, however, that Purchaser shall not be required to agree to
any divestiture by Purchaser or the Company or any of Purchaser's Subsidiaries
or Affiliates shares of capital stock or of any business, assets or property of
Purchaser or its Subsidiaries or Affiliates or of the Company or its Affiliates
or the imposition of any material limitation on the ability of any of them to
conduct their business or to own or exercise control of such assets, properties
and stock.
(b) Each of the parties hereto agrees, subject to compliance with
applicable law, to furnish to each other party hereto such necessary information
and reasonable assistance as such other party may request in connection with its
preparation of necessary filings or submissions to any Regulatory Authority or
Governmental Entity, including, without limitation, any filing necessary under
the provisions of the Securities Act, the Exchange Act or any other United
States federal, state, or foreign statute or regulation. Each party hereto shall
promptly inform each other party of any material communication from any
Governmental Entity regarding any of the transactions contemplated hereby.
Section 7.08. No Negotiations. From and after the date of this Agreement
until the earlier to occur of the Closing or termination of this Agreement
pursuant to its terms, the Sellers shall not, and shall cause the Company and
its officers, directors, employees, agents, representatives and affiliates, not
to, directly or indirectly, solicit, initiate or encourage submission of any
proposal or offer from any Person (including any of its or their officers or
employees, representatives, agents, or affiliates) relating to any liquidation,
dissolution, recapitalization, tender or exchange offer, solicitation of
proxies, merger, consolidation or acquisition or purchase of all or a material
portion of the assets of, or any equity interest in, the Company or other
similar transaction or business combination involving the Company, or
participate in any discussions or negotiations regarding, or furnish to any
other Person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing. The Sellers
shall promptly notify Purchaser if any such proposal or offer, or any inquiry
from or contact with any Person with respect thereto, is made and shall promptly
provide Purchaser with such information regarding such proposal, offer, inquiry
or contact as Purchaser may request. In addition, from and after the date of
this Agreement, until the earlier to occur of the Closing or the termination of
this Agreement pursuant to its terms, the Sellers shall not, and shall cause the
Company and its directors, officers, employees, representatives, agents and
affiliates not to, directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of any proposal made by any
Person or group (other than Purchaser) relating to any of the foregoing;
provided, however, that nothing contained herein shall prohibit Sellers, the
Company or
22.
any of its officers, directors, employees, agents or representatives from
maintaining existing relations related to the current plans for raising of
capital for the Company, which plans do not involve any transaction described
above or that would otherwise cause a change of control of the Company.
Section 7.09. Approvals and Consents. The Sellers shall, and shall cause
the Company to, use best efforts to obtain all consents and approvals, if any,
required to be obtained by them or it to carry out the transactions contemplated
by this Agreement, including all consents, waivers or approvals under any of the
Contracts in order to preserve the benefits thereunder for the Company and
otherwise, and will cooperate with Purchaser to obtain all such approvals and
consents required of Purchaser.
Section 7.10. Notification of Certain Matters. Sellers or Purchaser, as
the case may be, shall promptly notify the other of: (i) its obtaining of
knowledge as to the matters set forth in clauses (x), (y) and (z) below; or (ii)
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur would be likely to cause; (x) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Closing; (y) any material failure of Sellers, the
Company or Purchaser, as the case may be, or of any officer, director, employee
or agent thereof, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement; or (z) the
institution of any claim, suit, action or proceeding arising out of or related
to this Agreement or the transactions contemplated hereby; provided, however,
that no such notification shall affect the representations or warranties of the
parties or the conditions to the obligations of the parties hereunder.
Section 7.11. Tax Matters.
(a) Purchaser will file (or cause to be filed) all Tax Returns of
the Company for all Tax periods ending after the Closing. After the Closing,
Purchaser, to the extent permitted by law, shall have the right to amend, modify
or to otherwise change all Tax Returns of the Company for all Tax periods.
(b) In the event that any tax authority conducts an audit of the
Company's Tax Returns for any periods ending after the Closing, such audit
proceedings shall be the sole responsibility, and under the sole control, of
Purchaser. In the event of an audit of the Company's Tax Returns for any period
ending on or before the Closing, the Company (prior to the Closing) or the
Seller's' Representative (after the Closing) shall be entitled to participate,
at its or his own cost and expense, in such audit proceedings; provided,
however, that any settlement with the tax authority with respect to such audit
proceedings may be entered into only with the prior written consent of
Purchaser, which consent shall not be unreasonably withheld. Purchaser shall
notify the Sellers' Representative promptly after receipt by Purchaser of
written notice of pending audit proceedings for Tax periods ending on or before
the Closing. If, in accordance with the foregoing, the Sellers' Representative
elects to participate in such audit proceedings, it shall, within thirty (30)
calendar days after receiving such notice from Purchaser, notify Purchaser of
its intent to do so. The parties agree to cooperate with each other in the
conduct of any audit proceedings relating to the Company's Tax Returns.
Section 7.12. NASDAQ National Market. If necessary, prior to the Closing,
Purchaser shall apply for the listing on the NASDAQ National Market of the
shares of Registered Stock issuable pursuant to this Agreement, upon official
notice of issuance and shall take all other acts as necessary or appropriate to
cause such shares to become and remain so listed.
Section 7.13. Resales of Purchaser Stock. Each Seller agrees to resell the
shares of Purchaser Stock only in accordance with the provisions of Regulation S
under the Securities Act, pursuant to registration under the Securities Act, or
pursuant to an available exemption from registration; and agrees not to engage
in hedging transactions with regard to such securities unless in compliance with
the Securities Act.
ARTICLE VIII
23.
CONDITIONS TO CLOSING
Section 8.01. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to this Agreement to effect
the transactions contemplated by this Agreement shall be subject to the
satisfaction of each of the following conditions on or before the Closing:
(a) No Injunctions or Restraints. No action or proceeding shall
be instituted by any Governmental Entity, and no judgment, order, decree,
statute, law, ordinance, rule or regulation entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition shall be in effect (i)
imposing or seeking to impose material sanctions, damages, or liabilities
arising out of the transaction contemplated by this Agreement on the Company, or
any of its officers or directors; or (ii) otherwise preventing the consummation
of the transaction contemplated by this Agreement.
(b) Governmental Approvals. All material governmental filings,
authorizations and approvals that are required for the consummation of the
transactions contemplated hereby will have been duly made and obtained.
Section 8.02. Additional Conditions to Purchaser's Obligations. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is subject to the satisfaction or waiver (in Purchaser's sole
discretion) of each of the following conditions on or before the Closing:
(a) Representations and Warranties True and Correct. The
representations and warranties set forth in Article IV hereof shall be true and
correct in all material respects at and as of the Closing as though then made
and as though the date of the Closing had been substituted for the date of this
Agreement throughout such representations and warranties (without taking into
account any disclosures by the Company or Sellers of discoveries, events or
occurrences arising on or after the date hereof), except that any such
representation or warranty made as of a specified date (other than the date
hereof) shall only need to have been true on and as of such date; provided that,
this condition shall be deemed satisfied, solely for purposes of this Section
8.02(a) and not for any other purpose (including, without limitation, any
purpose in Article XI hereof), if all of the changes in the representations and
warranties in Article IV between the date hereof and the Closing do not, in the
aggregate, have a Material Adverse Effect;
(b) Covenants Performed. Sellers and the Company shall have
performed in all material respects all of the covenants and agreements required
to be performed and complied with by them under this Agreement prior to the
Closing;
(c) Consents Obtained. Sellers or the Company shall have
obtained, or caused to be obtained, each consent and approval, if any, referred
to in Section 7.12 hereof;
(d) No Material Adverse Change. Between the date of this
Agreement and the Closing, there shall not have occurred any Material Adverse
Change to the Company;
(e) No Injunctions or Restraints. No action or proceeding shall
be instituted by any Governmental Entity, and no judgment, order, decree,
statute, law, ordinance, rule or regulation entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition shall be in effect: (i)
imposing or seeking to impose limitations on the ability of Purchaser to acquire
or hold or to exercise full rights of ownership of any securities of the
Company; (ii) imposing or seeking to impose limitations on the ability of
Purchaser to combine and operate the business and assets of the Company with any
of its affiliates or other operations; (iii) imposing or seeking to impose
material sanctions, damages, or liabilities arising out of the transaction
contemplated by this Agreement on Purchaser, or any of its officers or
directors; or (iv) requiring or seeking to require divestiture by Purchaser of
all or any portion of the business, assets, or property of the Company.
24.
(f) Acquisition of Shares and Option to Acquire Options. Sellers
holding all of the Shares shall have signed this Agreement, and Optionholders
holding all of the Options shall have signed the Forward Option Agreement.
(g) Key Employee Agreements. Employment agreements shall have
been entered into between Purchaser and: (A) Xxxxxxxxxxx Xxx; and (B) the
persons identified in paragraph (b) on Schedule 8.02g (the "Key Employees"). All
such employment agreements shall be in full force and effect and without any
indication from the Key Employees of not fulfilling his or her obligations
thereunder.
(h) Shareholders' Agreement. The Shareholders' Agreement, if any,
as amended from time to time, by and between the Sellers shall have been
terminated by the parties thereto.
(i) At, and immediately following the Closing, the Company shall
have cash and collectable accounts receivable of no less that seven hundred
sixty thousand dollars and no cents ($760,000.00);
(j) Delivery of Certain Documents. On the date of Closing,
Sellers shall have delivered to Purchaser all of the following:
(i) a certificate of the President and the Chief Financial
Officer of the Company, dated the date of Closing, stating that the conditions
precedent set forth in subsections (a), (b) and (d) above have been satisfied;
(ii) copies of the third party and governmental consents and
approvals, if any, referred to in subsection (c) above;
(iii) all of the Company's minutes of meetings of shareholders
and minutes of meetings of the board of directors;
(iv) a certified copy of the Articles of Organization, and any
Amendments, of the Company;
(v) Purchaser shall have received the resignation in writing of
the directors of the Company effective as of the Closing;
(vi) copies of Affiliate Agreements executed by each affiliate
of the Company as set forth in Section 7.14;
(vii) an Irrevocable Stock Power executed by each Seller;
(viii) a copy, dated as of the date of Closing and certified by
the President of the Company, of Schedules 2.01 and 4.03; and
(ix) such other certificates, documents and instruments as
Purchaser reasonably requests related to the transactions contemplated hereby.
Section 8.03. Additional Conditions to Sellers' Obligations. The
obligations of Sellers to consummate the transactions contemplated by this
Agreement are subject to the satisfaction or waiver (in their sole discretion)
of each of the following conditions on or before the Closing:
(a) Representations and Warranties True and Correct. The
representations and warranties set forth in Article V hereof will be true and
correct in all material respects at and as of the Closing as though then made
and as though the date of Closing had been substituted for the date of this
25.
Agreement throughout such representations and warranties, except that any such
representation or warranty made as of a specified date (other than the date
hereof) shall only need to have been true on and as of such date; provided that,
this condition shall be deemed satisfied, solely for purposes of this Section
8.03(a) and not for any other purpose (including, without limitation, any
purpose of Article XI hereof), if all of the changes in the representations and
warranties in Article V between the date hereof and the Closing do not, in the
aggregate, have a Material Adverse Effect;
(b) Covenants Performed. Purchaser shall have performed in all
material respects all the covenants and agreements required to be performed by
it under this Agreement prior to the Closing;
(c) Delivery of Certain Documents. On the Closing Date, Purchaser
will have delivered to Sellers:
(i) a certificate of an officer of Purchaser dated the Closing
Date, stating that the conditions precedent set forth in subsections (a)
and (b) above have been satisfied;
(ii) a copy of the resolutions adopted by Purchaser approving the
transactions contemplated by this Agreement, certified by the Secretary or
Assistant Secretary of Purchaser;
(iii) certificates representing shares of Purchaser Stock issued
to the Sellers in connection with the transactions contemplated by this
Agreement;
(iv) such other certificates, documents and instruments as
Sellers reasonably request related to the transactions contemplated hereby.
ARTICLE IX
THE SELLERS' REPRESENTATIVE
Section 9.01. Appointment. As used in this Agreement, the "Sellers'
Representative" shall mean Xxxx Xxx or any person appointed as a successor
Sellers' Representative pursuant to Section 9.02 hereof.
Section 9.02. Election and Replacement. During the period ending upon the
date when all obligations under this Agreement have been discharged (including
all indemnification obligations pursuant to Article XI hereof), the holders of
Shares who immediately prior to the Closing held Shares representing an
aggregate number of Shares which exceeds 50% of the amount of such Shares
outstanding immediately prior to the Closing (a "Majority") may from time to
time upon written notice to the Sellers' Representative and Purchaser remove the
Sellers' Representative or appoint a new Sellers' Representative to fill any
vacancy created by the death, incapacitation, resignation or removal of the
Sellers' Representative, and if the Sellers' Representative dies, becomes
incapacitated, resigns or is removed by a Majority, the Majority shall appoint a
successor Sellers' Representative to fill the vacancy so created. If the
Majority is required to but has not appointed a successor Sellers'
Representative within fifteen (15) business days from a request by Purchaser to
appoint a successor Sellers' Representative, Purchaser shall have the right to
appoint a Sellers' Representative to fill the vacancy so created, and shall
advise all those who were holders of Shares immediately prior to the Closing of
such appointment by written notice. A copy of any appointment by the Majority of
any successor Sellers' Representative shall be provided to Purchaser promptly
after it shall have been effected.
Section 9.03. Authority. The Sellers' Representative shall be authorized
to take action and to make and deliver any certificate, notice, consent or
instrument required or permitted to be made or delivered under this Agreement or
under the documents referred to in this Agreement (including, without
limitation, the Escrow Agreement, the Registration Rights Agreement, and the
Bills of Sale) (an "Instrument") which the Sellers' Representative determines in
his discretion to be necessary, appropriate or desirable, and, in connection
therewith, to hire or retain, at the sole expense of the Sellers, such counsel,
investment bankers, accountants, representatives and other professional advisors
as he determines in his
26.
sole and absolute discretion to be necessary, advisable or appropriate in order
to carry out and perform the Sellers' Representative's rights and obligations
hereunder. Any party receiving an Instrument from the Sellers' Representative
shall have the right to rely in good faith upon such certification, and to act
in accordance with the Instrument without independent investigation.
Section 9.04. No Liability of Purchaser. Purchaser shall have no liability
to any shareholder of the Company or otherwise arising out of the acts or
omissions of the Sellers' Representative or any disputes among the Sellers.
Purchaser shall have no direct liability to the Sellers under this Agreement or
the other agreements referred to herein and may rely entirely on its dealings
with, and notices to and from, the Sellers' Representative to satisfy any
obligations it might have under this Agreement, any agreement referred to herein
or otherwise to the Sellers.
ARTICLE X
TERMINATION
Section 10.01. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual consent of the parties hereto;
(b) by either Purchaser or the Sellers if there has been a
material misrepresentation, breach of warranty or breach of covenant on the part
of the other in the representations, warranties and covenants set forth in this
Agreement, which breach has not been cured by such other party within thirty
(30) days following receipt of notice thereof;
(c) by either Purchaser or the Sellers if the transactions
contemplated hereby have not been consummated by August 1, 2000; provided, that,
neither Purchaser nor the Sellers will be entitled to terminate this Agreement
pursuant to this Section 10.01(c) if such party's willful breach of this
Agreement has prevented the consummation of the transactions contemplated
hereby;
(d) by Purchaser if, after the date hereof, there shall have been
a Material Adverse Effect with respect to the Company or if, after the date
hereof, an event shall have occurred which, so far as reasonably can be
foreseen, would result in any Material Adverse Effect with respect to the
Company; or
(e) by the Sellers if, after the date hereof, there shall have
been a Material Adverse Effect with respect to Purchaser or if, after the date
hereof, an event shall have occurred which, so far as reasonably can be
foreseen, would result in any Material Adverse Effect with respect to Purchaser.
Section 10.02. Effect of Termination. In the event of termination of this
Agreement by either Purchaser or the Sellers as provided in Section 10.01
hereof, all provisions of this Agreement shall terminate and there shall be no
liability on the part of Purchaser, Sellers or Purchaser's shareholders,
officers, or directors, except that: (i) Section 12.02 (expenses) and Section
12.06 (applicable law) hereof shall survive indefinitely, and (ii) the parties
shall remain liable for their willful breaches of this Agreement prior to the
time of such termination.
ARTICLE XI
INDEMNIFICATION
Section 11.01. Sellers' Promise to Indemnify.
(a) Each Seller agrees to, jointly and severally, indemnify,
defend and hold harmless Purchaser against any and all losses, claims, damages
or liabilities and actions, and any reasonable legal or other expenses or costs
incurred by Purchaser, the Company and their respective officers, directors,
27.
employees, agents and subsidiaries (collectively, the "Purchaser Indemnified
Parties") in connection with investigating or defending any such loss, claim,
damage, liability or action, regardless of whether an action or claim has been
filed or asserted against a Purchaser Indemnified Party after the Closing,
caused by, arising or resulting from the following items (the "Purchaser
Losses"): (i) any breach or inaccuracy of any representation or warranty made by
such Seller under this Agreement, including the Schedules hereto, or in any
other agreement entered into in connection herewith or certificates or other
documents delivered with the closing of the transactions contemplated hereby
(collectively, the "Related Documents"); (ii) any nonfulfillment of or failure
to comply with any agreement, condition or covenant on the part of such Seller
under this Agreement or any Related Documents; (iii) any Claim asserted by a
third party against an Indemnified Party arising out of the actions or inactions
of the Company with respect to the Company's business prior to the Closing; or
(iv) any Tax liability of the Company for periods up to and including the
Closing to the extent that such Tax liability has not been reserved for in the
Latest Financial Statements or reserved on the books of the Company prior to the
Closing. In the case of Taxes that are imposed on a periodic basis and that are
payable for a period that includes the Closing, the portion of such Tax which
relates to the portion of such Taxable period ending on the Closing shall (x) in
the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing and the denominator of which is the number
of days in the entire Taxable period, and (y) in the case of any Tax based upon
or related to income or receipts be deemed equal to the amount which would be
payable if the relevant Taxable period ended on the Closing.
(b) Notwithstanding the provisions of Section 11.01(a) hereof, the
parties hereto understand and agree that: (i) the representations relating to
Sellers and their respective Shares in Sections 4.03, 4.04, 4.05, 4.06, the last
sentence of Section 4.14, 4.35, 4.36 and 4.37 are made severally by each Seller
with respect to such Seller only and the Shares represented as being owned by
such Seller, and each Seller does not make any representations with respect to
the other Sellers and the Shares represented as being owned by the other
Sellers; and (ii) each Seller shall severally, and not jointly, indemnify
against any Purchaser Losses caused by a breach of such Seller of any of
Sections 4.03, 4.04, 4.05, 4.06, the last sentence of Section 4.14, 4.35, 4.36
and 4.37 and Sections 7.01, 7.02 and 7.16.
Section 11.02. Purchaser's Promise to Indemnify. Purchaser agrees to
indemnify, defend and hold harmless each Seller against any and all losses,
claims, damages or liabilities and actions, and any reasonable legal or other
expenses or costs incurred by such Seller in connection with investigating or
defending any such loss, claim, damage, liability or action regardless of
whether an action or claim has been filed or asserted against such Seller after
the Closing, caused by, arising or resulting from the following items (the
"Seller Losses"): (a) a material loss in market value of the shares of Purchaser
Stock held by the Sellers as a direct result of any breach or inaccuracy of any
representation or warranty made by Purchaser under this Agreement or any Related
Documents; and (b) any nonfulfillment of or failure to comply with any
agreement, condition or covenant on the part of Purchaser under this Agreement
or any Related Documents.
Section 11.03. Procedure for Indemnification of Third Party Claims.
(a) Notice. Subject to the provisions of Sections 11.01 and
11.02 above, in the event any Claim for indemnification is made thereunder, if
there is asserted by a third party any Claim that in the judgment of an
Indemnified Party may give rise to any Purchaser Losses or Seller Losses
("Indemnified Losses"), or if the Indemnified Party determines the existence of
a Claim, whether or not the same shall have been asserted, such Indemnified
Party shall give the indemnifying party or parties (the "Indemnitor") notice
within ten (10) Business Days of the assertion of any Claim or within twenty
(20) days of receipt of notice of the filing of any lawsuit based upon such
assertion, or, with respect to a Claim not yet asserted against the Indemnified
Party, promptly upon the determination by an executive officer of the
Indemnified Party of the existence of the same, which notice shall describe the
Claim in reasonable detail, and shall include the amount (estimated if
necessary) of the related Indemnified Loss. Failure by the Indemnified Party to
give timely notice pursuant to this Section 11.03 shall not relieve the
Indemnitor of its obligations,
28.
except to the extent that the Indemnitor is actually materially prejudiced by
such failure to give timely notice.
(b) Defense. The Indemnified Party shall permit the Indemnitor to
assume the defense of such Claim and any litigation resulting therefrom (and to
prosecute by way of counterclaim or third party complaint any claim against such
third party arising out of or relating to the Claim in question) upon receipt by
the Indemnified Party of the Indemnitor's written acknowledgment of its
obligation to indemnify the Indemnified Party with respect to the Claim and
agreement to assume the defense of all claims or counts of such Claim. After
giving such written agreement, the Indemnitor shall not be liable under this
Agreement for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with such defense but the Indemnitor shall be
responsible for all such expenses incurred by the Indemnified Party in
connection with the Claim prior to the assumption of the defense by the
Indemnitor. Notwithstanding the foregoing, any Indemnified Party shall be
entitled to conduct its own defense at the cost and expense of the Indemnitor if
the Indemnified Party can establish, by reasonable evidence, that the conduct of
its defense by the Indemnitor would reasonably be likely to prejudice the
Indemnified Party due to the nature of any claims or counterclaims presented or
by virtue of a conflict between the interest of the Indemnified Party and the
Indemnitor, and provided further that in any event the Indemnified Party may
participate in such defense at its own expense. Counsel selected by the
Indemnitor or by the Indemnified Party to defend any Claim shall be subject to
the reasonable approval of the other party. If the Indemnitor fails to assume
the defense of any such Claim as provided above within a reasonable time (which
shall be such period of time as will not, in the reasonable judgment of the
Indemnified Party, result in prejudice to the rights of the Indemnified Party)
after due notice has been given of a Claim, then until such time as the
Indemnitor shall make such assumption, the Indemnified Party shall have the
right to prosecute and conduct its own defense by counsel of its choice;
provided, however, that the Indemnified Party may not enter into any compromise
or settlement thereof without the consent of the Indemnitor, which consent shall
not be unreasonably withheld, conditioned or delayed. Such defense shall be at
the cost and expense of the Indemnitor if the Indemnitor subsequently assumes
such defense as provided above, or if it is subsequently determined that the
Indemnitor is or was obligated to indemnify the Indemnified Party with respect
to such Claim. Notwithstanding the foregoing: (i) if a Claim seeks equitable
relief; or (ii) if the subject matter of a Claim relates to the ongoing business
of any of the Purchaser Indemnified Parties, which Claim, if decided against any
of the Purchaser Indemnified Parties, would have a Material Adverse Effect on
the ongoing business or reputation of any of the Purchaser Indemnified Parties,
then, in each such case, the Purchaser Indemnified Parties alone shall be
entitled to, acting as a reasonable person under similar circumstances, contest,
defend and settle such Claim in the first instance and, if the Purchaser
Indemnified Parties do not contest, defend or settle such Claim, the Sellers'
Representative shall then have the right to contest and defend (but not settle)
such Claim.
(c) Settlement. The Indemnitor shall not, without the prior
written consent of the Indemnified Party, consent to the terms of any compromise
or settlement of any Claim or litigation defended by the Indemnitor in
accordance herewith (other than terms related solely to the payment of money
damages and only after the Indemnitor has furnished the Indemnified Party with
such evidence as the Indemnified Party may reasonably request of the
Indemnitor's capacity to pay promptly the amount of such money damages at such
times as provided in the compromise or settlement) which consent will not be
unreasonably withheld, conditioned or delayed. The Indemnitor shall not, except
with the prior written consent of the Indemnified Party, consent to entry of any
judgment or enter into any compromise or settlement of an action or portion of
an action relating to the Indemnified Party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnified Party of an unconditional release in respect of such Claim or
litigation. If the Indemnitor chooses to defend any Claim, the Indemnified Party
shall cooperate with the Indemnitor and make available to the Indemnitor any
personnel or any books, records or other documents within its control that are
necessary or appropriate for such defense, provided that such cooperation shall
not unduly disrupt the operation of the business of the Indemnified Party or
cause the Indemnified Party to waive any statutory or common law privileges,
breach any confidentiality obligations owed to third parties or otherwise cause
any trade secret or confidential
29.
information of such Indemnified Party to become public. The Indemnitor shall pay
the Indemnified Party's actual and reasonable out-of-pocket expenses incurred in
connection with such cooperation.
Section 11.04. Limitations on Indemnification.
(a) No Claim for breach of a representation or warranty shall be made
unless written notice thereof shall have been given by the Indemnified Party to
the Indemnitor within one (1) year from the date of the Closing. No Claim for
a breach of a covenant or agreement to be performed prior to or at the Closing
shall be made unless written notice thereof shall have been given by the
Indemnified Party to the Indemnitor within six (6) months after the Closing.
(b) An Indemnitor shall be required to indemnify, defend and hold
harmless an Indemnified Party with respect to Indemnified Losses incurred by
such Indemnified Party arising or resulting from a breach of or inaccuracy in
any representation or warranty other than those contained in Sections 4.01
through 4.06, 4.24, 5.01 through 5.06 and 5.12 only: (i) if the amount of
Indemnified Losses from an individual Claim is equal to or greater than
$5,000.00, and (ii) to the extent that the aggregate amount of all Indemnified
Losses, for all Claims which satisfy the preceding clause (i) exceeds
$10,000.00, in which case only the excess over $10,000.00 shall be subject to
indemnification.
(c) Absent fraud, the total aggregate liability of the Sellers for
all breaches of any of the provisions of this Agreement shall not exceed
$1,000,000.00. The total aggregate liability of Purchaser for all breaches of
any of the provisions of this Agreement shall not exceed $1,000,000.00.
(d) Any indemnity payment payable pursuant to this Agreement shall be
decreased to the extent of any insurance proceeds received by the Indemnified
Party in respect of the Indemnified Losses giving rise to such indemnity
payment.
(e) If the amount with respect to which any Claim is made gives rise
to a currently realizable direct Tax Benefit to the party making the Claim, the
indemnity payment shall be reduced by the amount of the Tax Benefit available to
the Indemnified Party making the Claim. To the extent such Claim does not give
rise to a currently realizable direct Tax Benefit, but if the amount with
respect to which such Claim is made gives rise to a subsequently realized Tax
Benefit to the Indemnified Party that made the Claim, such Indemnified Party
shall refund to the Indemnitor the amount of such Tax Benefit when, as and if
realized. For the purposes of this Agreement, any subsequently realized Tax
Benefit shall be treated as though it was a reduction in the amount of the
initial Claim; provided, however, no subsequently realized Tax Benefit shall
require a payment to the Indemnitor merely because such Tax Benefit exceeds the
initial Claim. For purposes of this Section 11.04(e), a "Tax Benefit" means an
amount by which the tax liability of the Indemnified Party (or group of
corporations including the Indemnified Party) is reduced within one year of
making the Claim (including, without limitation, by deduction, reduction of
income, by virtue of increased tax basis or otherwise, entitlement to refund,
credit or otherwise) plus any related interest received from the relevant taxing
authority. Where an Indemnified Party has other losses, deductions, credits or
items available to it, the Tax Benefit from any losses, deductions, credits or
items relating to the Claim shall be deemed to be realized proportionately with
any other losses, deductions, credits or items. For purposes of this Section
11.04(e), a Tax Benefit is "currently realizable" to the extent it can in fact
be realized in the current taxable period or year or in any tax return with
respect thereto (including through a carryback to a prior taxable period) or in
any taxable period or year prior to the date of the Claim. In the event that
there should be a determination disallowing the Tax Benefit, the Indemnitor
shall be liable to refund to the Indemnified Party the amount of any related
reduction previously allowed or payments previously made to the Indemnitor
pursuant to this Section 11.04(e). The amount of the refunded reduction or
payment shall be deemed a payment under this Section 11.04(e) and thus shall be
paid subject to any applicable reductions under this Section 11.04(e).
30.
(f) The parties agree that any indemnification payments made by
Purchaser or Sellers pursuant to this Agreement shall be treated for tax
purposes as an adjustment to the consideration unless otherwise required by
applicable Law.
Section 11.05 Satisfaction of Indemnification Obligations. Any shares of
Purchaser Stock transferred for the purpose of satisfying a Claim shall be
deemed to have a value equal to its closing value on NASDAQ on the day prior to
payment or transfer. Sellers and Purchaser shall have the right to satisfy any
liability under Section 11.08 with Purchaser Stock, at the value agreed in this
Section 11.05.
Section 11.06 No Rescission Right. No party hereto shall be entitled to
any remedy, including in connection with an action under Section 11.08, that
would result in a rescission, termination or cancellation of this Agreement or
the unwinding of the transactions consummated pursuant hereto.
Section 11.07. Sellers' Representative Acknowledgment. The Sellers'
Representative hereby acknowledges and agrees, for himself and on behalf of the
Sellers and each of their respective heirs, successors and/or assigns, that, in
the event that they become liable pursuant to the terms of this Article XI to
indemnify any Indemnified Party, he shall have no rights and shall make no claim
against the Company with respect to any matter which is the subject of or
otherwise related to the Purchaser Loss requiring such indemnification.
Purchaser acknowledges and agrees that, until such time as the Sellers have
become so liable, the Sellers' Representative shall retain all rights that he
may have to contest or dispute the Sellers' responsibility to indemnify such
Indemnified Party in accordance with the terms of Section 11.04 hereof.
Section 11.08 Sole and Exclusive Remedy. After the Closing, the rights
set forth in this Article XI shall be each party's sole and exclusive remedies
against the other party hereto for misrepresentations or breaches of covenants
contained in this Agreement and the Related Documents. Notwithstanding the
foregoing, nothing herein shall prevent Purchaser, on the one hand, or the
Sellers, on the other, from bringing an action against the Sellers
(collectively) or Purchaser, respectively, based upon allegations of fraud or
other intentional breach by such other party or parties of an obligation of or
with respect to the other parties in connection with this Agreement and the
Related Documents; provided, however, that: (1) Purchaser shall not have the
right to bring any action against the Sellers on a joint basis pursuant to this
Section 11.08 after the first anniversary of the Closing; and (2) under no
circumstances shall the joint liability of any Seller under this Section 11.08
exceed an amount equal to fifty percent (50%) of the value of the shares of
Purchaser Stock such Seller is entitled to receive at the Exchange Ratio
pursuant to Section 3.01, nor shall the liability of Purchaser under this
Section 11.08 exceed an amount equal to fifty percent (50%) of the value of the
aggregate number of shares of Purchaser Stock issued to Sellers pursuant to
Section 3.01, valued at the closing value on NASDAQ on the day prior to closing;
provided, further, Purchaser shall maintain the right to bring any action on a
several basis against an individual Seller allegedly responsible for such fraud
or intentional breach to the full extent and for the full amount of damages
permitted by applicable law.
ARTICLE XII
GENERAL PROVISIONS
Section 12.01. Taking of Necessary Action. Purchaser and Sellers shall
each use its or their best efforts to take all action as promptly as possible as
may be necessary or appropriate to effectuate the sale of the Shares to
Purchaser. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
parties hereto agrees, subject to applicable law, to use all reasonable efforts
promptly to take or cause to be taken all further action and promptly to do or
cause to be done all further things (including the execution and delivery of
such further instruments and documents) as any party reasonably may request.
31.
Section 12.02. Expenses.
(a) Except as provided in Article XI, all costs and expenses incurred
by Purchaser in connection with this Agreement and the transactions contemplated
hereby shall be paid by Purchaser, and all costs and expenses incurred by
Sellers in connection with this Agreement and the transactions contemplated
hereby shall be paid by Sellers.
Section 12.03. Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other parties hereto.
Section 12.04. Entire Agreement. This Agreement, the Schedules and the
Exhibits contain the entire agreement among the parties hereto with respect to
the transactions contemplated hereby, and controls and supersedes any prior
understandings, agreements or representations by or between the parties, written
or oral, which conflicts with, or may have related to, the subject matter hereof
in any way. No party has made any representations or warranties regarding the
transactions contemplated by this Agreement other than those contained in this
Agreement.
Section 12.05. Notices. All notices or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by telefax communication, by recognized overnight courier
marked for overnight delivery, or by registered or certified mail, postage
prepaid, addressed as follows:
If to any of the Sellers, to the applicable Seller at the address of such Seller
set forth in Schedule 12.05(a)
If to the Sellers' Representative, to:
Xxxxxxxxxxx Xxx
00000 Xxxxxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
If to Purchaser, to:
TeleHubLink Corporation
24 New England Executive Park
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Chief Technology Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxxx, Xxxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Xx., Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
32.
or such other addresses as shall be furnished by like notice by such party. All
such notices and communications shall, when telefaxed (immediately thereafter
confirmed by telephone), be effective when telefaxed, or if sent by
internationally recognized courier service, be effective two (2) Business Days
after the same has been delivered to such courier service marked for express
delivery, or, if mailed, be effective when received.
Section 12.06. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts,
without reference to or application of any conflicts of laws principles;
provided however, that any dispute or issue under this Agreement primarily
relating to the United States securities laws shall be governed by the Federal
Securities Laws of the United States of America.
Section 12.07. Consent to Jurisdiction; Receipt of Process. Each party
hereby consents to the jurisdiction of, and confers exclusive jurisdiction over
any action, suit or proceeding arising out of or relating to this Agreement, or
any of the transactions contemplated hereby, upon the federal district court for
the District of Massachusetts with respect to matters governed by Massachusetts
Law or the Federal Securities Laws of the United States of America pursuant to
Section 12.06 (and, in each case, appropriate appellate courts). Each party
hereby irrevocably waives, and agrees not to assert as a defense in any such
action, suit or proceeding, any objection which it may now or hereafter have to
venue of any such action, suit or proceeding brought in any such court and
hereby irrevocably waives any claim that any such action, suit or proceeding
brought in any such court or tribunal has been brought in an inconvenient forum.
Process in any such action, suit or proceeding may be served on any party
anywhere in the world; provided, that notice thereof is provided pursuant to
provisions for notice under this Agreement.
Section 12.08. No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
Section 12.09. Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
each of the parties hereto. No waiver by any party of any default or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
Section 12.10. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
Section 12.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12.12. Headings. The headings used in this Agreement are for
convenience only and are not to be considered in construing or interpreting any
term or provision of this Agreement.
Section 12.13. Press Releases and Announcements. Immediately after this
Agreement shall have become effective, as provided in Section 2.01 hereof,
Sellers and Purchaser shall jointly issue a press release substantially in the
form set forth in Exhibit 12.13 hereto. Notwithstanding the foregoing, the
Sellers acknowledge and agree that Purchaser, as a public company, is subject to
certain disclosure requirements under applicable securities laws. For this
reason, Purchaser reserves the right to disclose the existence of and the status
of negotiations at any time it decides that securities laws or the rules of any
stock exchange require such disclosure, and Purchaser shall have the right to
issue a press release regarding the transactions contemplated hereby upon the
signing of this Agreement and upon the Closing; provided
33.
that, Purchaser agrees to notify the Company if Purchaser intends to make a
disclosure and, to the extent feasible, to provide the Sellers' Representative
with the text of the disclosure and opportunity to comment in advance of its
release to the public.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto or their duly authorized officer as of the date first written
above.
SELLERS:
/s/ Xxxxxxxxxxx Xxx
--------------------------------
Xxxxxxxxxxx Xxx
/s/ Padma Vathi Xxxxxxxxxxx
--------------------------------
Padma Vathi Xxxxxxxxxxx
TELEHUBLINK CORPORATION
/s/ Xxxxx X. Xxxxxx
--------------------------------
By: Xxxxx X. Xxxxxx
Title: Chief Technology Officer
34.
SCHEDULE 2.01
Shareholder Number of Shares
----------- ----------------
Xxxxxxxxxxx Xxxxxxx Xxx 2,000,000
Padma Vathi Xxxxxxxxxxx 2,000,000
35.
SCHEDULE 4.01
Articles of Organization and Amendments of MVP Systems, Inc.
------------------------------------------------------------
Attached.
Certificates of Foreign Registration
------------------------------------
None.
36.
SCHEDULE 4.02
Subsidiaries, Copies of Organizing Documents and Most Recent Annual Reports
---------------------------------------------------------------------------
None.
37.
SCHEDULE 4.03
Holders of Options, Warrants and/or Convertible Securities
----------------------------------------------------------
Date of Grant No. of Shares Subject Exercise Vesting
Name and Address or Issuance to Option/Conversion Price Schedule
---------------- ------------- -------------------- -------- --------
NONE
38.
SCHEDULE 4.07
Assets Subject to Liens
-----------------------
NONE
39.
SCHEDULE 4.08
Financial Statements
--------------------
40.
SCHEDULE 4.12
Events Subsequent to December 31, 1999
--------------------------------------
NONE
41.
SCHEDULE 4.14
Litigation
----------
NONE
42.
SCHEDULE 4.17
List of Contracts
-----------------
43.
SCHEDULE 4.22
Insurance Policies
------------------
Attached.
44.
SCHEDULE 4.24
Brokerage Fees
--------------
A broker's fee of $35,000 for performance of due diligence, preliminary
negotiations and follow up has been paid by the Purchaser.
45.
SCHEDULE 4.25(a)
Pending or Registered Trademarks, Servicemarks, Tradenames,
-----------------------------------------------------------
Copyrights, Patents, Patent Applications
----------------------------------------
None.
46.
SCHEDULE 4.25 (c)
Intellectual Property Infringements
-----------------------------------
NONE
47.
SCHEDULE 4.25(e)
Royalties, License and Sub-License Fees
---------------------------------------
NONE
----
48.
SCHEDULE 4.26
Licenses
--------
49.
SCHEDULE 4.28
Material Assets Owned by Seller or Seller Affiliate
---------------------------------------------------
50.
SCHEDULE 4.29
Restrictive Documents and Territorial Restrictions
--------------------------------------------------
NONE
51.
SCHEDULE 4.30
Bank Accounts
-------------
Union Bank of California
Freemont Xxxxxx 000
XX Xxx 00000
Xxx Xxxxx, XX 00000
Account Number: 1180013489
52.
SCHEDULE 4.31
Product Warranties
------------------
None.
53.
SCHEDULE 4.36
Status of Seller
----------------
NONE
54.
SCHEDULE 5.12
Purchaser's Brokerage Fees
--------------------------
A broker's fee of $35,000 for performance of due diligence, preliminary
negotiations and follow up has been paid by the Purchaser
55.
