AGREEMENT AND PLAN OF REORGANIZATION dated as of June 28, 2000 (the
"Agreement") by and between GPC Acquisition Corp., a Delaware corporation
("Purchaser"), XxXxxx.xxx, Inc., a Delaware corporation ("MyTurn"), and Breadbox
Computer Company ("Seller").
RECITALS:
Seller is engaged primarily in the business of developing, marketing and
licensing certain proprietary computer software (the "Business").
Purchaser is a wholly owned subsidiary of MyTurn.
On the terms and conditions hereinafter set forth, Seller desires to sell,
and Purchaser desires to purchase, the Seller's assets as described in Section
1.1 hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration of the
recitals and the respective covenants, representations, warranties and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Sell. Except as otherwise specifically provided in this Section
1.1, at the Closing (as defined herein) Seller shall grant, sell, assign, and
deliver to Purchaser, upon and subject to the terms and conditions of this
Agreement, all of its right, title and interest in and to the assets, properties
and rights of every kind and description, tangible and intangible, real,
personal or mixed, wherever situated used by the Seller in connection with the
Business (collectively, the "Assets"), free and clear of any and all claims,
liens, pledges, options, changes, restrictions, security interests, conditional
sales agreements, encumbrances or other rights of third parties, whether
voluntarily incurred or arising by operation of law, and any agreement to give
any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof other than Permitted
Encumbrances (as defined herein) (collectively, "Liens").
1.1.1 Included Assets. The Assets include, but are not limited to, all of
Seller's right, title and interest in and to any and all patents, service marks,
tradenames and copyrights (including, without limitation, all registrations,
licenses and applications pertaining thereto), patent license rights, trade
secrets, franchises, inventions, processes, designs, specifications, plans,
drawings, system documentation, programming, databases, know-how, confidential
information, shop rights, licenses, and all other proprietary information,
processes and formulae related to or arising out of the computer software listed
on Schedule 1.1.1(a) attached hereto and made a part hereof (the "Computer
Software") and all other intellectual property rights related thereto
(collectively, with the
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Computer Software, the "Proprietary Rights"), or any of the previous described
materials currently under development by Seller (including, without limitation,
the right to make, use or sell under patent law; the right to copy, adapt,
distribute, display and perform under copyright law; and the right to use and
disclose under trade secret law), any source or object codes thereof or
documentation related thereto, any related technical or user documentation,
including, without limitation, all technical and descriptive materials relating
to the acquisition, design, development, use, or maintenance of computer code
and program documentation (the "Technical Documentation"), all other unused or
reusable materials, stores, and supplies, in each case to the extent relating to
or arising out of the Assets, all of the contracts, agreements, licenses, and
other commitments and arrangements, oral or written, with any person or entity
respecting the ownership, license, acquisition, design, development,
distribution, marketing, use or maintenance of computer code and all existing
and in-negotiation contracts between Seller and third parties in connection
with, or related to, the Computer Software (the "Computer Software Contracts"),
including, without limitation, the contracts set forth on Schedule 1.1.1(b).
1.1.2 Excluded Assets. Notwithstanding the foregoing, the Assets shall not
include any assets set forth on Schedule 1.1.2 (collectively, the "Excluded
Assets").
1.1.3 Third Party Consents. To the extent that Seller's rights under any
agreement, contract, commitment, lease, or other Asset to be assigned to
Purchaser hereunder may not be assigned without the consent of another person
which has not been obtained, this Agreement shall not constitute an agreement to
assign the same if an attempted assignment would constitute a breach thereof or
be unlawful, and Seller, at its expense, shall use its best efforts to obtain
any such required consent(s) as promptly as possible. If any such consent shall
not be obtained or if any attempted assignment would be ineffective or would
impair Purchaser's rights in and to the Asset in question so that Purchaser
would not in effect acquire the benefit of all such rights, Seller, to the
maximum extent permitted by law and the Asset, shall act after the Closing (as
defined herein) as Purchaser's agent in order to obtain for it the benefits
thereunder and shall cooperate, to the maximum extent permitted by law and the
Asset, with Purchaser in any other reasonable arrangement designed to provide
such benefits to Purchaser.
1.2 Agreement to Purchase. At the Closing, upon and subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants of Seller contained herein, Purchaser shall purchase the Assets
from Seller in exchange for the Purchase Price (as hereinafter defined).
1.3 Purchase Price and Other Payments.
1.3.1 Purchase Price. Subject to the provisions hereof, the consideration
for the Assets (the "Purchase Price") shall be equal to that number of fully
paid and nonassessable shares of common stock of MyTurn as determined in
accordance with the formula set forth below, free and clear of any restrictions
or encumbrances except as specifically provided in Section 2.16 herein (the
"Common Shares"). For purposes of the preceding sentence, the number of Common
Shares ("Y") shall be calculated pursuant to the following formula:
Y = 800,000X - 500,000
------------------
X
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Where "X" is equal to the closing price of MyTurn's common stock on the Nasdaq
SmallCap Market on the business day immediately preceding the Closing Date.
1.3.2 Payment of Purchase Price. Within five (5) business days after the
Closing Date, on account of the Purchase Price, MyTurn shall issue and deliver
stock certificates for the Common Shares in the name of the Seller, as provided
for in Section 8.1. In the event that MyTurn breaches the provisions of this
Section 1.3.2, the Seller shall be entitled to file a lawsuit for specific
performance of the provisions of this Section 1.3.2 and, if the Seller prevails
in such lawsuit, MyTurn shall reimburse Seller for the reasonable legal fees and
costs of Seller incurred in prosecuting such lawsuit.
1.3.3 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets acquired hereunder in accordance with the rules of Section
362(b) of the Internal Revenue Code of 1986, as amended, as determined by the
Board of Directors of Purchaser in its sole discretion. It is agreed that the
apportionments will properly reflect the respective fair market values of the
Assets. Seller and Purchaser each hereby covenants and agrees that it will not
take a position on any income tax return, before any governmental agency charged
with the collection of any income tax, or in any judicial proceeding that is in
any way inconsistent with the terms of this Section 1.3.3 and the allocation of
the Purchase Price as determined by the Purchaser's Board of Directors.
1.4 Assumption of Liabilities. At the Closing, subject to the terms and
conditions hereof, the Purchaser shall assume all liabilities and obligations of
the Seller arising under the Computer Software Contracts (collectively, the
"Assumed Liabilities"). Except as otherwise provided in this Section 1.4, in no
event shall Purchaser assume or incur any direct or indirect liability,
obligation, indebtedness, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any person of any type, whether accrued, absolute,
contingent, matured, unmatured or other of Seller (collectively, the "Excluded
Liabilities") including, without limitation:
(a) any product Liability or similar claim for injury to person or
property, or any other liability based on tortious or illegal conduct,
regardless of when made or asserted, which arises out of or is based upon any
express or implied representation, warranty, agreement or guarantee made by
Seller, or alleged to have been made by Seller, or which is imposed or asserted
to be imposed by operation of law, in connection with any service performed
and/or product sold, leased or delivered by or on behalf of Seller, or any claim
seeking recovery for consequential damage, lost revenue or income;
(b) any Liability with regard to any federal, state, local or foreign
income or other tax, including without limitation, any interest or penalties
thereon, (i) payable with respect to the Business or the Assets (but only to the
extent attributable to periods on or prior to the closing), or the Seller or
(ii) incident to or arising as a consequence of the negotiation or consummation
by Seller of this Agreement and the transactions contemplated hereby;
(c) any Liability arising prior to or as of the Closing Date to any
employees, agents, or independent contractors of Seller, whether or not employed
by Purchaser after the date hereof, or under any benefit arrangement with
respect thereto; and
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(d) any Liability of Seller arising or incurred in connection with the
negotiation, preparation and execution of this Agreement and the transactions
contemplated hereby and fees and expenses of counsel, accountants and other
experts.
1.5 Repurchase Option. Seller shall have the option (the "Repurchase Option") to
repurchase the Assets from Purchaser during the period commencing on the Closing
Date and ending on the Survival Date (as hereinafter defined) (the "Repurchase
Option Period"), if, during the Repurchase Option Period, Purchaser files for
liquidation under Chapter 7 of the United States Bankruptcy Code. To exercise
the Repurchase Option, Seller must return to MyTurn all of the Common Shares
issued to it as the Purchase Price for all of the Assets, as provided for in
Section 1.3.1, subject to any rights of third parties in the Assets, at the time
the Repurchase Option is exercised. If the Purchaser does not own certain of the
Assets at the time the Repurchase Option is exercised, the number of Common
Shares to be returned to MyTurn shall be reduced by a number calculated by
dividing the value of those Assets no longer owned by MyTurn, as mutually
determined by MyTurn and Seller, by the closing price of MyTurn's common stock
on (a) the Nasdaq SmallCap Market or, (b) if it is not traded on the Nasdaq
SmallCap Market at that time, then the closing price on the exchange, bulletin
board or over-the-counter market where the Common Shares then trade, or (c) if
there is no trading market for the Common Shares, then the value determined by
MyTurn's board of directors in good faith.
1.6 Permitted Encumbrances. The Purchaser acknowledges and agrees that the
Assets are subject to the restrictions and limitations set forth in the Computer
Software Contracts (collectively, the "Permitted Encumbrances").
1.7 Income Tax Treatment. The parties to this Agreement agree that purchase and
sale of the Assets contemplated hereby is intended to qualify as a tax-free
reorganization pursuant to Section 368(a)(1)(C) of the Internal Revenue Code of
1986 (the "Code"), as amended, and Treasury regulation Section 1.368-2(d) (a "C
Reorganization"). Seller, Purchaser and MyTurn each hereby covenants and agrees
that it will not take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is in any way inconsistent with the treatment of the
purchase and sale of the Assets as a C Reorganization. Seller has advised that,
following the consummation of the transactions contemplated by this Agreement,
it will be liquidated and all of Seller's assets, including the Common Shares,
will be distributed to its shareholders, in accordance with Section 368(a)(2)(G)
of the Code, pursuant to this Agreement, and pursuant to an exemption from
registration under Section 5 of the Securities Act of 1933, as amended (the
"Securities Act"), or pursuant to a then current prospectus related to a
registration statement which registers the Common Shares for resale under the
Securities Act.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby makes the following representations and warranties to
Purchaser and MyTurn, each of which shall be deemed material, and Purchaser, in
executing, delivering and consummating this Agreement, has relied upon the
correctness and completeness of each of such representations and warranties. For
purposes of the following representations and warranties, the Seller shall be
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deemed to possess all information actually known to the shareholders of the
Seller, or which should reasonably have been known to such shareholders.
2.1 Valid Existence; Qualification. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
Seller has the power to carry on its Business as now conducted and to own the
Assets. To the best of Seller's knowledge, Seller is not required to qualify in
any other jurisdiction in order to own the Assets or to carry on the Business as
now conducted, and there has not been any claim by any other jurisdiction to the
effect that Seller is required to qualify or otherwise be authorized to do
business as a foreign corporation therein. The copies of the Seller's Articles
of Incorporation, as amended to date (certified by the Secretary of the State of
Florida), and the Seller's By-Laws, as amended to date (certified by the
Secretary of the Seller), which have been delivered to Purchaser, or are
delivered herewith, are true and complete copies of those documents as in effect
on the date hereof.
2.2 Consents. Except as set forth on Schedule 2.2 attached hereto and made a
part hereof and except as otherwise described on Schedule 2.6.1(b), no consents
of federal, state and local governmental or other regulatory agencies, foreign
or domestic, or of any other parties are required to be received by or on the
part of Seller to enable it to enter into and carry out this Agreement and the
transactions contemplated hereby, including, without limitation, the transfer to
Purchaser of all of Seller's right, title and interest in and to the Assets.
2.3 Authority; Binding Nature of Agreement. Seller has the power to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors and the Shareholders
of Seller and no other proceedings, corporate or otherwise, on the part of
Seller are necessary to authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby. This Agreement
constitutes the valid and binding obligation of Seller and is enforceable in
accordance with its terms.
2.4 Liabilities. Except as set forth on Schedule 2.4, as of the date hereof,
Seller has no Liabilities, contingent or absolute, inchoate or otherwise, and
there is no basis for the assertion against Seller of any Liability, which would
have a material adverse effect on the Purchaser or the Assets.
2.5 Taxes. Except to the extent the following will have no material adverse
effect on the Purchaser or the Assets, all taxes, including, without limitation,
income, property, sales, use, utility, excise, value added, employees'
withholding, social security and unemployment taxes imposed by the United
States, any state, locality or any foreign country, or by any other taxing
authority, which have become due or payable by Seller, and all interest and
penalties thereon, whether disputed or not, have been paid in full; all deposits
required by law to be made by Seller or with respect to estimated income,
franchise and employees' withholding taxes have been duly made; and all tax
returns, including estimated tax returns, required to be filed have been duly
and timely filed. No extension of time for the assessment of deficiencies for
any year is in effect. No deficiency notice is proposed, or to the knowledge of
Seller threatened against Seller. The tax returns of Seller have not been
audited within the past six years.
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2.6 Ownership of Assets
2.6.1 Assets Generally.
(a) Seller owns outright, and has good and marketable title to, all of the
Assets, free and clear of all Liens. Upon consummation of the transactions
contemplated by this Agreement, Purchaser will own the Assets free and clear of
all Liens. The Assets are sufficient to permit Seller to conduct its Business as
now conducted.
(b) Seller represents and warrants that it has duly obtained the right and
license to use, copy, modify, and distribute any of the Computer Software that
require the consent of the other contracting party, or any other third party and
such rights and licenses are included in the Computer Software Contracts. Seller
represents and warrants that each Computer Software Contract is in full force
and effect in accordance with its terms without modification or amendment
(except as otherwise disclosed to Purchaser in Schedule 2.6.1(a) attached
hereto) and without default by either party thereto; that each Computer Software
Contract which relates to such rights and licenses (each a "License Computer
Software Contract") will have the effect of granting Purchaser the full and
effective right and license to use, copy, modify, and distribute the pertinent
software components as provided for therein; that each License Computer Software
Contract provides only for the payment of fees and royalties that, to the extent
accrued as of the date hereof, have been paid in full and, except as set forth
in Schedule 2.6.1(b), each Computer Software Contract is freely assignable to
and assumable by Purchaser pursuant to this Agreement, without the requirement
of obtaining any consent or approval, giving prior or subsequent notice, paying
any further royalty or fee to any party thereto or any other third party, or
performing a duty that has not already been performed by Seller. Seller hereby
agrees to notify all licensors, or any other parties, requiring notification
thereof under the License Computer Software Contracts of the transactions
provided for herein.
(c) The Technical Documentation includes the source code and, where it
exists, system documentation, statements of principles of operation, and
schematics for all Computer Software to which such Technical Documentation
applies, as well as any pertinent commentary or explanation that may be
necessary to render such materials understandable and usable by a trained
computer programmer.
(d) There are no agreements, options, commitments or understandings with,
of or to any person to acquire any of the Assets or any rights or interest
thereon, except as set forth on Schedule 2.6.1(d).
2.6.2 Trademarks, Patents, etc. Schedule 2.6.2(a) sets forth a true and
complete list of (including, without limitation, each application number, serial
number or registration number, the class of goods or services covered and the
expiration date for each country in which a Proprietary Right (as hereinafter
defined) has been registered) and a brief description of all Proprietary Rights
which are owned by Seller or in which, or in regard to which, it has any right
or interest. No other person, firm or corporation has any proprietary or other
interest in any such Proprietary Rights and Seller is not a party to or bound by
any contract requiring the payment to any person, firm or corporation of any
royalty. Neither the Assets, nor the Seller with respect to the Assets, is
infringing upon any Proprietary Rights or is otherwise violating the rights of
any third party with respect thereto, and no proceedings have been instituted,
and no claim has been received by Seller, and
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Seller is not aware of any claim alleging any such violation. There are no
pending applications with regard to any Proprietary Right. Seller has taken all
reasonable and prudent steps to protect the Proprietary Rights from infringement
by any other person. No other person, except as set forth on Schedule 2.6.2(b)
attached hereto and made a part hereof, (i) has the right to use any of Seller's
registered trademarks, registered service marks, trademark and service xxxx
applications and unregistered trademarks and service marks included in, or
related to, the Assets (collectively, the "Trademarks") on the goods on, or in
connection with the services for, which they are now being used, either in
identical form or, to the best of Seller's knowledge, in such near resemblance
thereto as to be likely, when applied to the goods of any such person, to cause
confusion with such Trademarks or to cause a mistake or to deceive, (ii) has a
license or the right to use any Proprietary Right of Seller, whether by license,
sublicense or other rights (iii) has notified Seller that it is claiming any
ownership of or right to use such Proprietary Rights, or (iv) to the best of
Seller's knowledge, is infringing upon any such Proprietary Rights in any way.
For the purposes hereof, "Proprietary Rights" shall mean all patents,
Trademarks, tradenames and copyrights (including, without limitation, all
registrations, licenses and applications pertaining thereto), patent license
rights, trade secrets, franchises, inventions, processes, designs,
specifications, plans, drawings, system documentation, programming, databases,
know-how, confidential information, shop rights, licenses, and all other
proprietary information, processes and formulae included in, or related to, the
Assets and all Computer Software as defined in Section 1.1.1 hereof or under
development.
2.7 Litigation; Compliance with Law. There are no actions, suits, proceedings or
governmental investigations relating to Seller or any of Seller's Assets or
Business pending or, to the knowledge of Seller, threatened, or any order,
injunction, award or decree outstanding, against Seller or against or relating
to any of its Assets or Business and there exists no basis for any such action,
suit, proceeding, governmental investigation, order, injunction, award or decree
which would have a material adverse effect on the Assets or the transactions
contemplated by this Agreement. Seller is not in violation of any law,
regulation, ordinance, order, injunction, decree, award, or other requirement of
any governmental or other regulatory body, court or arbitrator relating to its
Assets or Business, the violation of which would have a material adverse effect
on such Assets.
2.8 Agreements and Obligations; Performance. Except as listed and briefly
described in Schedule 2.8 attached hereto and made a part hereof (the "Listed
Agreements"), and/or further except if the following would not have an adverse
effect on the Assets or the transactions contemplated by this Agreement, Seller
is not party to, or bound by, any: (i) agreement, contract, note, loss, evidence
of indebtedness, purchase order, letter of credit, indenture, security or pledge
agreement, franchise agreement, undertaking, covenant not to compete, employment
agreement, license, instrument, obligation, commitment, course of dealing or
practice to which Seller is a party or is bound, whether oral or written (any of
which is hereafter referred to as a "Contract") which involves aggregate
payments or receipts in excess of $1,000 that cannot be terminated at will
without penalty or premium or any continuing obligation or Liability; (ii)
Contract of any kind with any officer, director or shareholder, of Seller; (iii)
Contract which is in violation of applicable law; (iv) Contract for the
purchase, sale or lease of any materials, products, supplies or services which
contains, or which commits or will commit it for, a fixed term; (v) license or
royalty Contract; (vi) Contract which, by its terms, requires the consent of any
party thereto to the consummation of the transactions contemplated hereby; (vii)
Contract containing covenants limiting the freedom of Seller or any officer,
employee or shareholder to engage or compete in any line or business or with any
person in any geographical area; (viii) Contract or option relating to the
acquisition or sale of any
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business; (ix) voting agreement or similar agreement or Contract; (x) option for
the purchase of any Asset, tangible or intangible; or (xi) distributor,
franchise, license, technical assistance agency or advertising Contracts; (xii)
Contract with the United States state or local government or any agency or
department thereof, and/or (xiii) other Contract which affects any of the
Assets, whether directly or indirectly, or which was entered into other than in
the ordinary and usual course of business consistent with past practice. A true
and correct copy of each of the written Listed Agreements has been delivered, or
made available, to Purchaser. Except as set forth on Schedule 2.8, Seller has in
all material respects performed all obligations required to be performed by it
to date under all of the Listed Agreements, is not in Default (as hereinafter
defined) under any of the Listed Agreements and has received no notice of any
dispute, Default or alleged Default thereunder which has not heretofore been
cured or which notice has not heretofore been withdrawn. Seller does not know of
any Default under any of the Listed Agreements by any other party thereto or by
any other person, firm or corporation bound thereunder. For purposes hereof,
"Default" shall mean any breach, default and or other violation of the Contract
and/or the occurrence of any event that with or without the passage of time or
the giving of notice or both would constitute a breach, default, or other
violation under, or give any party the right to accelerate, terminate or
renegotiate, any Contract.
2.9 Condition of Assets. All Computer Software compiles and runs on its intended
platform and has the status, i.e shipped, undergoing Q/A, or under development,
as set forth on Schedule 2.9.
2.10 Interest in Assets. Except for the Excluded Assets and as otherwise set
forth in this Agreement, including the Schedules annexed hereto and made a part
hereof, the Seller does not own any property or rights, tangible or intangible,
including, without limitation, the Proprietary Rights required to be used in or
related to, and material to the operation of, directly or indirectly, the
Assets, other than those Assets being conveyed hereunder.
2.11 No Breach. Neither the execution and delivery of this Agreement nor
compliance by Seller with any of the provisions hereof nor the consummation of
the transactions contemplated hereby, will:
(a) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Seller;
(b) violate or, alone or with notice or the passage of time, result in the
material breach or termination of, or otherwise give any contracting party the
right to terminate, or declare a Default under, the terms of any Contract to
which Seller is a party or by which the Seller or the Assets may be bound
(except as disclosed on Schedule 2.2 or 2.6.1 regarding required consents);
(c) result in the creation of any Lien upon any of the Assets;
(d) violate any judgment, order, injunction, decree or award against, or
binding upon, Seller, which would have a material adverse effect on the Assets,
or the transactions contemplated hereby; and/or
(e) violate any law or regulation of any jurisdiction relating to Seller,
the Assets or Seller's business.
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2.12 Brokers. Neither the Seller nor any of its shareholders has engaged,
consented to, or authorized any broker, finder, investment banker or other third
party to act on its behalf, directly or indirectly, as a broker or finder in
connection with the transactions contemplated by this Agreement.
2.13 Prior Names and Addresses. Since inception, Seller has not used any
business name (other than Breadbox Computer Company) or had any business address
other than its current name and the business address set forth in Schedule 2.13.
2.14 Permits and Licenses. Seller has all permits, licenses, orders, franchises,
certificates, consents, registrations and approvals (collectively, "Permits")
from all Federal, state, local and foreign governmental and other regulatory
bodies (collectively, "Bodies") required to carry on its business as presently
conducted; all such Permits are in full force and effect, and, to the knowledge
of Seller, no suspension or cancellation of any of such Permits is threatened
and Seller is in compliance in all material respects with all requirements,
standards and procedures of the Bodies which have issued such Permits. Schedule
2.14 attached hereto and made a part hereof sets forth a true and complete list
of all Permits from all Bodies held by Seller.
2.15 Investment Intent; Qualifications as Purchaser.
(a) Seller represents and warrants that the Common Shares to be acquired
pursuant to the terms hereof are being acquired for Seller's own account, for
investment and not for distribution or resale to others, except as otherwise
provided in Section 1.7. Except as otherwise provided in Section 1.7, Seller
will not sell, assign, transfer, encumber or otherwise dispose of any of such
Common Shares unless (i) a registration statement under the Securities Act of
1933, as amended (the "Securities Act") with respect thereto is in effect and
the prospectus included therein meets the requirements of Section 10 of the
Securities Act, or (ii) MyTurn has received a written opinion of its counsel
that, after an investigation of the relevant facts, such counsel is of the
opinion that such proposed sale, assignment, transfer, encumbrance or
disposition does not require registration under the Securities Act.
(b) Seller understands that, except as otherwise provided in this
Agreement, the Common Shares are not being registered under the Securities Act
and must be held indefinitely unless they are subsequently registered thereunder
or an exemption from such registration is available.
(c) Seller hereby represents that it and its purchaser representative, if
any, have reviewed MyTurn's reports, registration statements, proxy statements,
documentation and other information which MyTurn has filed under the Securities
Act or the Securities Exchange Act of 1934, as amended, since January 1, 1999
via the XXXXX system of the Securities and Exchange Commission ("the SEC")
(collectively, "MyTurn's SEC Reports"). Seller represents and warrants further
that it is either an "accredited investor," as such term is defined in Rule
501(a) promulgated by the SEC under the Securities Act, or that it, alone or
with its purchaser representative, if any, has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the acquisition of the Common Shares contemplated hereby. Seller will
execute and deliver to MyTurn such documents as MyTurn may reasonably request in
order to confirm the accuracy of the foregoing.
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(d) Seller understands that the Common Shares are not being registered
under the Securities Act in part on the ground that the issuance thereof is
exempt under Section 4(2) of the Securities Act as a transaction by an issuer
not involving any public offering and that MyTurn's reliance on such exemption
is predicated in part on the foregoing representations and warranties of Seller.
2.16 Restrictive Legend. Except as provided in Section 1.7, the Common Shares to
be issued to Seller may not be sold, assigned, transferred, encumbered or
disposed of unless they are registered under the Securities Act or unless an
exemption from such registration is available. Accordingly, the following
restrictive legend will be placed on any instrument, certificate or other
document evidencing the Common Shares:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933. These shares have been acquired for investment and
not for distribution or resale. They may not be sold, assigned, mortgaged,
pledged, hypothecated or otherwise transferred or disposed of without an
effective registration statement for such shares under the Securities Act of
1933 or an opinion of counsel for the Company that registration is not required
under such Act."
2.17 Certain Risk Factors. Seller acknowledges that there are significant risks
relating to the acquisition of the Common Shares, including, without limitation,
the risks set forth in MyTurn's SEC Reports.
2.18 Year 2000 Compliance. The Computer Software or any hardware related
thereto, owned or used by the Seller, or licensed or otherwise transferred by
the Seller, as licensor or as licensee, is Year 2000 Compliant (as hereinafter
defined) but only to the extent that the GEOS operating system is Year 2000
Compliant. For the purposes of this Agreement, "Year 2000 Compliant" shall mean
(i) all such Computer Software or hardware operates in four-digit year format,
without complications relating to the recognition, calculation and processing of
date data relating to century recognition, leap years, single and multi-century
formulae, date values and interfaces of date-related functionalities; (ii) all
date processing is conducted in a four-digit year format and all date sorting
that includes a "year filed" or "year category" is based upon a four-digit year
format; and (iii) any date arithmetic programs or calculations in the Computer
Software or hardware currently operate in accordance with the related user
documentation, and will continue to operate from and after the date hereof,
without degrading functionality or performance.
2.19 Untrue or Omitted Facts. No representation, warranty or statement by Seller
in this Agreement or contained in any Contract, agreement, document or item
furnished by Seller to Purchaser relating to this Agreement and the transactions
contemplated hereby, contains any untrue statement of a material fact, or omits
to state a fact necessary in order to make such representations, warranties or
statements not materially misleading. Without limiting the generality of the
foregoing, there is no fact known to Seller that has had, or which may be
reasonably expected to have, a material adverse effect on any of the Assets that
has not been disclosed in this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MY TURN
Purchaser and MyTurn, jointly and severally, make the following
representations and warranties to Seller, each of which shall be deemed
material, and Seller has relied upon the correctness and completeness of each of
such representations and warranties:
3.1 Valid Corporate Existence; Qualification. Purchaser and MyTurn are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of Purchaser and MyTurn has the power to
carry on its business as now conducted. Neither Purchaser nor MyTurn is required
to qualify in any other jurisdiction where it is not qualified as a foreign
corporation in order to own the Assets or to carry on its business as now
conducted, and there has not been any claim by any other jurisdiction to the
effect that Purchaser or MyTurn is required to qualify or otherwise be
authorized to do business as a foreign corporation therein.
3.2 Consents. No consents of any Bodies are required to be received by or on the
part of Purchaser or MyTurn to enable it to enter into and carry out this
Agreement and the transactions contemplated hereby, including, without
limitation, the transfer to Purchaser of all of Seller's right, title and
interest in and to the Assets and the issuance by MyTurn of the Common Shares.
All such requisite consents have been obtained.
3.3 Authority; Binding Nature of Agreement. Each of Purchaser and MyTurn has the
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the Purchaser and MyTurn and no other proceedings, corporate or
otherwise, on the part of Purchaser or MyTurn is necessary to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement constitutes the valid and
binding obligation of Purchaser and MyTurn and is enforceable in accordance with
its terms.
3.4 No Breach. Neither the execution and delivery of this Agreement nor
compliance by Purchaser or MyTurn with any of the provisions hereof nor the
consummation of the transactions contemplated hereby, will:
(a) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Purchaser or MyTurn;
(b) violate or, alone or with notice or the passage of time, result in the
material breach or termination of, or otherwise give any contracting party the
right to terminate, or declare a Default under, the terms of any Contract to
which Purchaser or MyTurn is a party or by which it may be bound;
(c) violate any judgment, order, injunction, decree or award against, or
binding upon, Purchaser or MyTurn or its properties or assets, the violation of
which would have a material adverse effect on Purchaser or MyTurn, as the case
may be; or
11
(d) violate any law or regulation of any jurisdiction relating to Purchaser
or MyTurn or their respective businesses, the violation of which would have a
material adverse effect on Purchaser or MyTurn, as the case may be.
3.5 Brokers. Neither Purchaser nor MyTurn has engaged, consented to, or
authorized any broker, finder, investment banker or other third party to act on
its behalf, directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement.
3.6 SEC Reports. As of the respective dates of MyTurn's SEC Reports, MyTurn's
SEC Reports did not contain any untrue statement of material fact or omit 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. MyTurn has filed all material forms (and necessary amendments),
reports and documents with the SEC required to be filed by it pursuant to
federal securities laws and the SEC rules and regulations thereunder, each of
which complied, in all material respects, with the applicable requirements of
the Securities Act and the Securities Exchange Act of 1934 and the applicable
rules and regulations thereunder.
3.7 Absence of Adverse Changes. MyTurn has suffered no material adverse change
in its business or assets since the date of the most recently filed of the
MyTurn's SEC Reports.
3.8 No Actual Knowledge of Breach. Neither Purchaser nor MyTurn has actual
knowledge of any facts indicating that Seller is in breach of the provisions of
Section 2.6.2.
3.9 Untrue or Omitted Facts. No representation, warranty or statement by
Purchaser or MyTurn in this Agreement, or contained in any contract, agreement,
document or item furnished by Purchaser or MyTurn to Seller relating to this
Agreement and the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits to state a fact necessary in order to
make such representations, warranties or statements not materially misleading.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Seller Covenants. Seller hereby covenants that from and after the date
hereof and until the Closing or earlier termination of this Agreement:
(a) Access. Seller shall afford to the officers, attorneys, accountants and
other authorized representatives of MyTurn and Purchaser free and full
reasonable access, during regular business hours and upon reasonable notice, to
all of its books, records, information systems, technology (owned or licensed by
Seller) personnel and properties, but only to the extent that the foregoing
relate solely to the Assets or the transactions contemplated hereby, so that
MyTurn and Purchaser, at its own expense, may have full opportunity to make such
review, examination and investigation as MyTurn and Purchaser may desire of the
Assets and matters that relate to the Assets. Seller will cause the employees,
accountants, attorneys and other agents and representatives of Seller to
cooperate fully with said review, examination and investigation and to make full
disclosure to MyTurn and Purchaser and their representatives of all material
facts affecting the Assets. Seller acknowledges and agrees that no review,
examination or investigation heretofore or hereafter
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undertaken by MyTurn and Purchaser or their representatives shall limit or
affect any representation or warranty made by Seller in, or otherwise relieve
Seller from any liability under, this Agreement. Neither MyTurn nor Purchaser
shall disrupt Seller's business in connection with any such investigation.
(b) Actions Prior to Closing. Prior to the Closing, Seller will not without
the prior written consent of Purchaser:
(i) amend its Certificate of Incorporation or By-Laws, unless it does
not have an adverse effect on the Assets or the transactions contemplated
hereby;
(ii) sell, lease or dispose of any of the Assets;
(iii) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, limited liability company or other
business organization or division thereof or any material interest therein,
unless it does not have an adverse effect on the Assets or the transactions
contemplated hereby;
(iv) issue, sell or redeem any capital stock or otherwise change the
capitalization of Seller, unless it does not have an adverse effect on the
Assets or the transactions contemplated hereby;
(v) pledge any of the Assets or subject the Assets to any Lien;
(vi) enter into any material transaction not in the ordinary and usual
course of business consistent with past practice, unless it does not have
an adverse effect on the Assets or the transactions contemplated hereby;
(vii) take any other action outside the ordinary course of business
consistent with past practice, unless it does not have an adverse effect on
the Assets or the transactions contemplated hereby;
(viii) take any actions which would adversely effect the value of the
Assets; or
(ix) adopt any resolution, or enter into or amend any Contract, with
respect to any of the foregoing.
(c) Liabilities. Seller shall not incur any direct or indirect liability,
obligation, indebtedness, commitment, expense, claim, deficiency, guaranty or
endorsement of any person of any type, whether accrued, absolute, contingent,
matured, unmatured or otherwise ("Liability"), except for (i) those incurred in
the ordinary and usual course of its business consistent with past practice
which are not singly or in the aggregate with other liabilities, more than
$5,000 and do not have an adverse effect on the Assets or the transactions
contemplated hereby, or (ii) those incurred in connection with the consummation
of the transactions contemplated by this Agreement (the "Excepted Liabilities"),
without the prior written consent of Xxxxxxxxx.
00
(x) Preservation of Business. Seller shall use its best efforts to keep
available the services of its present officers, managers, employees and
consultants, and to maintain and preserve intact good relationships with
customers, suppliers, vendors and licensors and preserve its goodwill.
(e) No Breach.
(i) Seller will (A) use its best efforts to assure that all of its
representations and warranties contained herein are true in all material
respects as of the Closing as if repeated at and as of such time, that no
breach or default shall occur with respect to any of its covenants, repre
sentations or warranties contained herein that has not been cured by the
Closing and that all conditions to Purchaser's and/or MyTurn's obligation
to enter into and complete the Closing are satisfied in a timely manner;
(B) not voluntarily take any action or do anything which will cause a
breach of, or default respecting, such covenants, representations or
warranties or would impede the satisfaction of such conditions; and (C)
promptly notify Purchaser of any event or fact which repre sents or is
likely to cause such a breach or default or result in such an impediment.
(ii) Without limiting the generality of the foregoing, Seller agrees
to use its best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including,
without limitation, taking such actions as may reasonably be required to be
taken under applicable state securities or Blue Sky laws in connection with
the issuance of the Common Shares.
(f) Consents. Promptly following the execution of this Agreement, the
Seller use its best efforts to obtain consents of all third parties and
governmental and other regulatory authorities necessary to the consummation of
the transactions contemplated by this Agreement.
(g) Shareholders Approval. Seller will use its best efforts, in accordance
with applicable legal requirements and the Articles of Incorporation and Bylaws
of Seller, to have the transaction contemplated hereby approved by the holders
of the capital stock to the extent required by law, or the Articles of
Incorporation or Bylaws, or each of them.
(h) No Negotiations; No Solicitation. For as long as this Agreement shall
remain in effect and until it is closed or terminated in accordance with its
terms, neither Seller nor or any of its officers, directors, representatives or
agents will take any action to (i) initiate the submission of any acquisition,
sale, merger financing or capital transaction, (ii) enter into any agreement
with respect to any acquisition, sale, merger, financing or capital transaction
or (iii) participate in negotiations with, or provide information concerning
Seller or the Assets to any person in connection with any acquisition, sale,
merger financing or capital transaction. Seller will promptly communicate to
Purchaser any solicitation or inquiry received by Seller and the terms of any
proposal or inquiry that it may receive in respect of any acquisition, sale,
merger financing or capital transaction, or of any such information requested
from it, or of any such negotiations or discussions being sought to be initiated
with it. Nothing in this Section 4.1(h) shall be construed as prohibiting the
Board of Directors of Seller from (i) making any disclosure to Seller's
shareholders, (ii) responding to any unsolicited proposal or inquiry by advising
the person making such proposal or inquiry of the terms of this Section 4.1(h)
or (iii) entering into any sale with respect to the Excluded Assets.
"Acquisition, sale, merger, financing or capital transaction" means any proposed
(i)
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acquisition, sale, merger, consolidation, financing or similar transaction
involving Seller, (ii) sale, lease or other disposition, directly or indirectly,
acquisition, sale, merger, consolidation, financing, share exchange or otherwise
of Seller or any of the Assets, as the case may be, (iii) issue, sale or other
disposition of securities representing 5% or more of the voting power of
Seller's capital stock or (iv) transaction in which any person proposes to
acquire beneficial ownership (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of, or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Securities Exchange Act of 1934, as amended) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of 5% or more
of the outstanding Seller capital stock.
4.2 Purchaser and MyTurn Covenants. It is hereby agreed that, from and after the
date hereof and until the Closing or earlier termination of this Agreement:
(a) Access. Upon request, Purchaser and MyTurn will cause its officers,
attorneys, accountants and other agents and representatives to meet with the
officers, attorneys and accountants and other agents and representatives of
Seller during regular business hours and upon reasonable notice, to discuss the
financial condition and business operations of MyTurn and Purchaser. MyTurn
shall provide Seller with copies of all non-confidential filings with the SEC
made by MyTurn following the date hereof and prior to the Closing Date.
Purchaser and MyTurn acknowledge and agree that no review, examination or
investigation heretofore or hereafter undertaken by Seller or its
representatives shall limit or affect any representation or warranty made by
Purchaser and/or MyTurn in, or otherwise relieve Purchaser and/or MyTurn from
any liability under, this Agreement. Seller shall not disrupt Purchaser's and/or
MyTurn's business in connection with any such investigation.
(b) No Breach
(i) Purchaser and MyTurn will each (A) use its best efforts to assure
that all of its representations and warranties contained herein are true in
all material respects as of the Closing as if repeated at and as of such
time, that no material breach or default shall occur with respect to any of
its covenants, representations or warranties contained herein that has not
been cured by the Closing and that all conditions to Seller's obligation to
enter into and complete the Closing are satisfied in a timely manner; (B)
not voluntarily take any action or do anything which will cause a breach of
or default respecting such covenants, representations or warranties or
would impede the satisfaction of such conditions; and (C) promptly notify
Seller of any event or fact which represents or is likely to cause such a
breach or default or result in such an impediment.
(ii) Without limiting the generality of the foregoing, Purchaser and
MyTurn agree to use their best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement.
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ARTICLE V
CONDITIONS PRECEDENT TO THE
OBLIGATION OF PURCHASER AND MYTURN TO CLOSE
The obligation of Purchaser and MyTurn to consummate the transactions
contemplated hereby is subject to the fulfillment, prior to or at the Closing,
of each of the following conditions, any one or more of which may be waived by
Purchaser and MyTurn (except when the fulfillment of such condition is a
requirement of law):
5.1 Representations and Warranties. All representations and warranties of Seller
contained in this Agreement and in any written statement, exhibit, certificate,
schedule or other document delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be true and correct as at the Closing
Date, as if made at the Closing and as of the Closing Date.
5.2 Covenants. Seller shall have performed and complied with all covenants and
agreements required by this Agreement to be performed or complied with by it
prior to or at the Closing.
5.3 Certificate. Purchaser shall have received a certificate, dated the Closing
Date, signed by the Chairman, Chief Executive Officer, President or Principal
Executive Officer of Seller as to the satisfaction of the conditions contained
in Sections 5.1 and 5.2 hereof.
5.4 Documents of Title Seller shall have executed and delivered to Purchaser
documents of title, including without limitation, warranty deeds, bills of sale,
certificates of title, assignments, other instruments of conveyance and transfer
(the "Documents of Title"), to the extent required, in form satisfactory to the
Purchaser , pursuant to which Seller shall convey to Purchaser all of its right,
title and interest in and to the Assets which it owns as contemplated hereby.
5.5 Stockholder Approval. This Agreement and the transactions contemplated
hereby shall have been duly approved by a majority of the holders of the
outstanding voting shares of Seller.
5.6 Opinion of Counsel. Purchaser and MyTurn shall have received an opinion of
counsel to Seller in the form attached hereto as Exhibit 5.6 by Barnett, Bolt,
Kirkwood & Long, or such other counsel reasonably satisfactory to Purchaser and
MyTurn.
5.7 No Actions. No Action shall have been instituted, and be continuing before a
court or before or by a governmental or other regulatory body or agency, or
shall have been threatened and be unresolved, to restrain, or to prevent, or to
obtain any material amount of damages in respect of, the carrying out of the
transactions contemplated hereby, or which might materially affect the right of
Purchaser to own any of the Assets or to operate or control the Assets after the
Closing Date, or which might have a material adverse effect thereon.
5.8 Consents; Licenses and Permits. Seller, Purchaser and MyTurn shall have each
obtained all consents, licenses and permits of third parties necessary for the
performance by each of them of all of their respective obligations under this
Agreement, including, without limitation, the transfer of the Assets as
contemplated hereby, and such other consents, if any, to prevent (i) the
occurrence of a breach under any agreement of Seller with any person, the
termination of which would have a
16
material adverse effect on the Assets or (ii) any Assumed Liability from
becoming due or being subject to becoming due with the passage of time or on
notice as a result of the performance of this Agreement, any other provision of
this Agreement to the contrary notwithstanding.
5.9 Section 4(2) Compliance. Seller shall have delivered to MyTurn, upon
MyTurn's request, evidence reasonably satisfactory to MyTurn that its
representations set forth in Section 2.15 are true and correct and that the
issuance by MyTurn of the Common Shares hereto will be in conformity with the
requirements of Section 4(2) of the Securities Act.
5.10 Corporate Actions. All actions necessary to authorize the execution,
delivery and performance of this Agreement by Seller and the consummation of the
transactions contemplated hereby shall have been duly and validly taken and
Seller shall have full power and right to consummate the transactions
contemplated by this Agreement.
5.11 Escrow Agreement. Seller shall have executed and delivered to Purchaser an
escrow agreement (the "Escrow Agreement") in substantially the form attached
hereto as Exhibit 5.11, providing for, among other things, that fifty percent
(50%) of Common Shares issued to Seller on account of the Purchase Price
provided for in Section 1.3.1 hereof (the "Escrow Securities"), will be placed
in escrow with an escrow agent satisfactory to Purchaser and Seller and held in
accordance with the terms set forth in such Escrow Agreement. The Escrow
Securities shall be held as security for the indemnification obligations of
Seller pursuant to Section 9.2.1 hereof until the Survival Date (as defined in
Section 9.1).
5.12 Fairness Determination. The Board of Directors of MyTurn, in its sole
reasonable determination, has determined that the transactions contemplated by
this Agreement and the exhibits attached hereto are fair in all respects to
MyTurn, MyTurn's stockholders, and Purchaser, for the purposes of meeting the
Board of Directors' fiduciary obligations under applicable Delaware corporate
law relating to the approval or disapproval by a board of directors of a
Delaware corporation of the transaction contemplated by this Agreement.
5.13 Approval of Counsel. All actions, proceedings, instruments and documents
required to carry out this Agreement, or incidental thereto, and all other
related legal matters, shall have been approved as to form and substance by
counsel to Purchaser, which approval shall not be unreasonably withheld or
delayed.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATION OF
SELLER TO CLOSE
The obligation of Seller to consummate the transactions contemplated hereby
is subject to the fulfillment, prior to or at the Closing, of each of the
following conditions, any one or more of which may be waived by Seller (except
when the fulfillment of such condition is a requirement of law):
17
6.1 Representations and Warranties. All representations and warranties of
Purchaser and MyTurn contained in this Agreement and in any written statement
(including financial statements), exhibit, certificate, schedule or other
document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct as at the Closing Date, as if made
at the Closing and as of the Closing Date.
6.2 Covenants. Purchaser and MyTurn shall have performed and complied with all
covenants and agreements required by this Agreement to be performed or complied
with by it prior to or at the Closing.
6.3 Certificate. Seller shall have received a certificate, dated the Closing
Date, signed by the Chairman of the Board, Interim Chief Executive Officer, or
Executive Vice President - Office of the President of MyTurn as to the
satisfaction of the conditions contained in Sections 6.1 and 6.2 hereof.
6.4 Stockholder Approval. This Agreement and the transactions contemplated by
this Agreement shall, if required by applicable law, or Nasdaq rules, prior to
Closing, have been approved by the requisite holders of the outstanding Common
Shares of MyTurn.
6.5 No action, claim, suit, demand, litigation, governmental or other
proceeding, labor dispute, arbitral action, governmental audit, inquiry,
investigation, criminal prosecution, investigation or unfair labor practice
charges or complaint shall have been instituted, and be continuing, before a
court or by a governmental or other regulatory body or agency, or have been
threatened, and be unresolved, to restrain or prevent, or obtain any material
amount of damages in respect of, the carrying out of the transactions
contemplated hereby.
6.6 Consents; Licenses and Permits. Purchaser and MyTurn shall have obtained all
consents, licenses and permits of third parties, including, without limitation,
regulatory authorities, necessary for the performance by it of all of its
obligations under this Agreement.
6.7 Corporate Actions. All actions necessary to authorize the execution,
delivery and performance of this Agreement by Purchaser and MyTurn and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken and Purchaser and MyTurn shall have full power and right to
consummate the transactions contemplated by this Agreement.
6.8 Escrow Agreement. MyTurn and Purchaser shall have executed and delivered the
Escrow Agreement.
6.9 Approval of Counsel. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental thereto, and all other
related legal matters, shall have been approved as to form and substance by
counsel to Seller, which approval shall not be unreasonably withheld or delayed.
6.10 Documents of Assumption Purchaser shall have executed and delivered to
Seller such assumption documents ("Documents of Assumption"), to the extent
required, in form satisfactory to the Seller, pursuant to which Purchaser shall
assume the Assumed Liabilities as contemplated hereby.
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6.11 Minimum Stock Price. The closing price of MyTurn's common stock on the
business day immediately preceding the Closing Date shall be at least Two
Dollars and Fifty Cents ($2.50).
ARTICLE VII
CLOSING
7.1 Time and Location. The closing (the "Closing") provided for herein shall
take place at the offices of Seller at 10:00 a.m. on June 30, 2000 or a date
prior thereto as mutually determined by the parties, or on such other date and
at such other place as may be mutually agreed to by the parties (the "Closing
Date").
7.2 Items to be Delivered by Seller to Purchaser. At the Closing, Seller will
deliver or cause to be delivered to Purchaser the following, any one or more of
which may be waived by Purchaser:
(a) the certificates required by Section 5.3 hereof;
(b) the Documents of Title required by Section 5.4 hereof;
(c) a master copy of each software program included in the Assets
(including both the source code and object code of such software program);
(d) any operating manuals, warranties, and specifications for the Assets;
(e) all assignments (the "Assignments") of all Computer Software Contracts
referred to in Section 1.1.1;
(f) all consents to the Assignments required to make the Assignments valid;
(g) an opinion of Seller's counsel required by Section 5.6 hereof.
(h) satisfactory evidence of all actions required by Section 5.8 hereof;
(i) satisfactory evidence required by Section 5.9 hereof;
(j) certified copies of all corporate action required by Section 5.10
hereof;
(k) the Escrow Agreement required by Section 5.11 hereof;
(l) a Certificate of Good Standing with respect to Seller issued by the
Florida Department of State no more than ten (10) days prior to the Closing;
(m) certified copies of the Articles of Incorporation and Bylaws of Seller
(and any amendments thereto); and
19
(n) such other documents and certificates as are required to be delivered
to Purchaser pursuant to the provisions of this Agreement or to otherwise
confirm that all of the conditions precedent to the obligation of Seller to
close have been satisfied and as may be reasonably requested by Purchaser or its
counsel.
7.3 Items to be Delivered by Purchaser or MyTurn to Seller and Others. At the
Closing, Purchaser or MyTurn, as applicable will deliver or cause to be
delivered to Seller or the persons set forth below, as the case may be:
(a) the certificate required by Section 6.3 hereof;
(b) satisfactory evidence of all actions required by Section 6.6 hereof;
(c) certified copies of all corporate action required by Section 6.7
hereof;
(d) the Escrow Agreement required by Section 6.8 hereof;
(e) the Documents of Assumption required by Section 6.10 hereof;
(f) a Certificate of Good Standing with respect to each of Purchaser and
MyTurn issued by the Delaware Secretary of State no more than ten (10) days
prior to the Closing;
(g) certified copies of the Certificate of Incorporation and Bylaws of each
of Purchaser and MyTurn; and
(h) such other certified resolutions, documents and certificates as are
required to be delivered by Purchaser pursuant to the provisions of this
Agreement or otherwise confirm that all of the conditions precedent to the
obligation of Purchaser to close have been satisfied.
ARTICLE VIII
POST-CLOSING MATTERS
8.1 Common Shares. As soon as practically possible after the Closing, MyTurn
shall issue stock certificates for the Common Shares indicating that the Seller
is the beneficial owner of the Common Shares, and shall deliver such
certificates (a) representing fifty percent (50%) of the Common Shares into
escrow pursuant to the Escrow Agreement as provided for in Section 5.11 and
9.2.5; and (b) representing fifty percent (50%) of the Common Shares to the
Seller. MyTurn shall issue appropriate replacement stock certificates to the
shareholders of Seller when the Common Shares are distributed to the
shareholders of Seller as contemplated by Section 1.7.
8.2 Further Assurances. On and after the date hereof, Seller agrees to take the
following actions at Purchaser's sole expense:
(a) execute and deliver, from time to time after the date hereof upon the
request of the Purchaser or MyTurn, all such further instruments and documents
as may be necessary or desirable to convey and transfer to, and vest in,
Purchaser, and to protect Purchaser's right, title and interest
20
in and to, and enjoyment of, the Assets intended to be assigned, transferred,
conveyed and delivered pursuant to this Agreement;
(b) provide testimony in connection with any proceeding affecting the
right, title, interest or benefit of the Assets; and
(c) perform any other acts deemed necessary to carry out the intent of this
Agreement.
8.3 Power of Attorney. Without limitation of any provision of this Agreement,
effective upon the date hereof, Seller constitutes and appoints Purchaser and
MyTurn and its successors and assigns, and each of them, the true and lawful
attorney of the Seller, with full power of substitution, in their own names or
in the name of the Seller, but for their own benefit and at their own expense,
but, on prior notice to Seller, (i) to institute and prosecute all proceedings
which any of them may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Assets transferred or intended to
be transferred to Purchaser hereunder, and to do all such acts and things in
relation thereto as any of them shall deem advisable, and (ii) to take all
actions which they may deem proper in order to provide for them the benefits
under any claims, contracts, agreements, arrangements, licenses, commitments, or
other documents or instruments transferred or intended to be transferred to
Purchaser hereunder, all at the sole expense of Purchaser.
8.4 Offers of Employment. Purchaser and/or MyTurn shall offer employment to the
individuals (the "Future Employees") on the terms and conditions contained on
Schedule 8.4 attached hereto and made a part hereof and provided such persons
accept employment by the Purchaser, Purchaser shall tender to such persons, or
to Seller on behalf of each such person who accepts employment, an Employment
Agreement in, or substantially in, the form attached hereto as Exhibit 8.4.
8.5 Consulting Engagements. Purchaser and/or MyTurn shall offer consulting
engagements to the individuals (the "Consultants") on the terms and conditions
contained on Schedule 8.5 attached hereto and made a part hereof and provided
such persons accept the consulting engagement, by the Purchaser, Purchaser shall
tender to such persons, or to Seller on behalf of each such person who accepts a
consulting engagement, a Consulting Agreement in, or substantially in the form
attached hereto as Exhibit 8.5.
8.6 Registration Rights.
8.6.1 MyTurn's Registration Obligations.
(a) Registration. If at any time after the date hereof MyTurn shall file
with the SEC a registration statement (a "Registration Statement") under the
Securities Act relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities (other than on
Form S-4 or Form S-8 or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans), MyTurn shall send to the Seller, or its assigns who are
shareholders that receive a distribution from the Seller in accordance with
Section 368(a)(2)(G) of the Code (the "Permitted Assigns"), written notice of
such determination and, if within fifteen (15) days after the date of such
notice, the Seller or its Permitted Assigns shall so request in writing, MyTurn
shall include in such Registration Statement all or any part of the
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Common Shares the Seller requests to be registered (including any Common Shares
delivered into escrow as provided for in Section 8.1), except that if, in
connection with any underwritten public offering, the managing underwriter(s)
thereof shall impose a limitation on the number of Common Shares which may be
included in the Registration Statement because, in such underwriter(s)'
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then MyTurn shall be obligated to include in
such Registration Statement only such limited portion of the Common Shares as
the underwriter shall permit (limited to zero if necessary); provided that any
such cutback shall be proportionate to that of any persons whose shares are to
be included in the Registration Statement.
(b) Underlying Offering. If an offering in connection with which the Seller
is entitled to registration under Section 8.6.1(a) is an underwritten offering,
then the Seller shall, unless otherwise agreed by MyTurn, offer and sell such
Common Shares in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other Common Shares included in such underwritten offering.
(c) Copies of Filings and Correspondence. MyTurn shall furnish to the
Seller if its Common Shares are included for resale in the Registration
Statement (A) promptly after the same is prepared and publicly distributed,
filed with the SEC, or received by MyTurn, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and prospectus
and each amendment or supplement thereto, and each item of correspondence from
the SEC or the staff of the SEC which comments upon or requests information
relating to the Seller and/or the Common Shares (including, without limitation,
the resale and plan of distribution hereof), in each case relating to such
Registration Statement (other than any portion, if any, thereof which contains
information for which MyTurn has sought confidential treatment), (B) on the date
of effectiveness of the Registration Statement or any amendment thereto, a
notice stating that the Registration Statement or amendment has been declared
effective, and (C) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such the Seller may reasonably request in order to facilitate
the disposition of the Common Shares by the Seller.
8.6.2 Obligations of The Seller. In connection with a registration of the
Common Shares the Seller shall have the following obligations:
(a) The Seller's Information. It shall be a condition precedent to the
obligations of MyTurn to complete the registration pursuant to this Section 8.6
that the Seller shall furnish to MyTurn such information regarding itself, the
Common Shares and the intended method of disposition of the Common Shares as
shall be required to effect the registration of such registrable securities and
shall execute such documents in connection with such registration as MyTurn may
reasonably request. At least ten (10) business days prior to the first
anticipated filing date of the Registration Statement, MyTurn shall notify the
Seller of the information MyTurn requires from the Seller.
(b) Cooperation. The Seller agrees to cooperate with MyTurn as requested by
MyTurn in connection with the preparation and filing of the Registration
Statement hereunder, unless the Seller does not include any of the Common Shares
in the Registration Statement.
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(c) Underwritten Offering. In the event the Seller determines to engage the
services of an underwriter, the Seller agrees to enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Common Shares.
(d) Method of Underwritten Distribution. The Seller may not participate in
any underwritten distribution of the Common Shares unless the Seller (A) agrees
to sell the Common Shares on the basis provided in any underwriting arrangements
in the usual and customary form entered into by MyTurn, (B) completes, in a
manner reasonably acceptable to MyTurn, and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, and (C) agrees to
pay its pro rata share of all underwriting discounts and commissions and its pro
rata share of any expenses in excess of those payable by MyTurn pursuant to
Section 8.6.3 below.
8.6.3 Expenses of Registration. All reasonable expenses, other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications, relating to one (1) Registration
Statement pursuant to this Section 8.6, except that if a portion of the Common
Shares are not permitted to be included in one (1) Registration Statement by an
underwriter as provided in Section 8.6.1(a), then relating to the least number
of Registration Statements which will cover the resale of all the Common Shares,
including all registration, listing and qualifications fees, printers and
accounting fees, the fees and disbursements of counsel for MyTurn hereof, shall
be borne by MyTurn.
8.6.4 Registration Obligation. MyTurn hereby agrees that, on or before
September 30, 2000, it shall file a Registration Statement with respect to the
Common Shares and shall use its reasonable best efforts to cause such
Registration Statement to become effective within thirty (30) days and
thereafter remain effective for a period of six (6) months following the
expiration of the Survival Period. In the event that MyTurn breaches the
provisions of this Section 8.6.4, the Seller or its assigns shall be entitled to
file a lawsuit for specific performance of the provisions of this Section 8.6
and, if the Seller or its assigns prevails in such lawsuit, MyTurn shall
reimburse Seller or its assigns for the reasonable legal fees and costs of
Seller or its assigns incurred in prosecuting such lawsuit.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival. The parties agree that their respective representations and
warranties contained in this Agreement shall survive the making of this
Agreement until the earlier of (i) April 15, 2001 or (ii) the date of delivery
of the first auditor's report of the independent auditors of MyTurn's audited
consolidated financial statement for the period which covers the Closing Date of
this Agreement (the "Survival Date").
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9.2 Indemnification.
9.2.1 General Indemnification Obligation of Seller. From and after the date
hereof, Seller will reimburse, indemnify and hold harmless Purchaser and MyTurn
(each an "Indemnified Purchaser Party") against and in respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered by any Indemnified Purchaser Party that result
from, relate to or arise out of:
(i) any and all Excluded Liabilities and obligations of Seller of any
kind, nature and description whatsoever, fixed or contingent, inchoate or
otherwise;
(ii) any and all actions, claims, suits, demands, litigations,
governmental or other proceedings, labor disputes, arbitral actions,
governmental audits, inquiries, investigations, criminal prosecutions,
investigations of unfair labor practice charges or complaints
(collectively, "Actions") against any Indemnified Purchaser Party that
relate to the Business or the Assets in which the principal event giving
rise thereto occurred prior to the Closing Date or which result from or
arise out of any action or inaction prior to the Closing Date of Seller or
any director, officer, employee, shareholder, agent or representative of
Seller;
(iii) any misrepresentation, breach of warranty or nonfulfillment of
any agreement or covenant on the part of Seller under this Agreement, or
from any misrepresentation in or omission from any certificate, schedule,
statement, document or instrument furnished to Purchaser or MyTurn pursuant
hereto or in connection with the negotiation, execution or performance of
this Agreement; and
(iv) any untrue statement or omission of a material fact which was
included in any of MyTurn's public disclosures which was based on
information furnished in writing to Purchaser or MyTurn by Seller or its
representatives or agents; and
(b) any and all Actions, assessments, audits, fines, judgments, costs and
other expenses (including, without limitation, reasonable legal fees) incident
to any of the foregoing or to the enforcement of this Section 9.2.1.
Notwithstanding anything to the contrary contained herein, the indemnification
obligations of the Seller hereunder shall be subject to the following
limitations: (i) no Indemnified Purchaser Party shall be entitled to
indemnification hereunder unless and until the aggregate indemnificable damages
suffered or incurred by the Indemnified Purchaser Parties exceeds $15,000,
except with respect to liquidated damages (the "Liquidated Damages") set forth
in Section 11.3.1 and Section 11.3.2 hereof and (ii) except with respect to
Liquidated Damages, the Indemnified Purchaser Parties' sole recourse for
indemnification shall be to the Escrow Securities.
9.2.2 General Indemnification Obligation of Purchaser and MyTurn. From and
after the date hereof, Purchaser and MyTurn, jointly and severally, will
reimburse, indemnify and hold harmless Seller and its officers, directors,
employees, shareholders, agents, successors and assigns (each an "Indemnified
Seller Party") against and in respect of:
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(a) any and all damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered by any Indemnified Seller Party that result from,
relate to or arise out of:
(i) the Assumed Liabilities on or after the Closing Date;
(ii) any and all Actions against any Indemnified Seller Party that
relate to the Business or the Assets in which the principal event giving
rise thereto occurred on or after the Closing Date or which result from or
arise out of any action or inaction on or after the Closing Date of
Purchaser or MyTurn, or any director, officer, employee, shareholder, agent
or representative of Purchaser or MyTurn (except to the extent such Action
arises from the negligence or willful misconduct of an Indemnified Seller
Party); and
(iii) any misrepresentation, breach of warranty or non-fulfillment of
any agreement or covenant on the part of Purchaser or MyTurn under this
Agreement, or from any misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished to
Seller pursuant hereto or in connection with the negotiation, execution or
performance of this Agreement; and
(b) any and all Actions, assessments, audits, fines, judgments, costs and
other expenses (including, without limitation, reasonable legal fees) incident
to any of the foregoing or to the enforcement of this Section 9.2.2.
Notwithstanding anything to the contrary contained herein, the indemnification
obligations of the Purchaser or MyTurn hereunder shall be subject to the
limitation that no Indemnified Seller Party shall be entitled to indemnification
hereunder unless and until the aggregate indemnificable damages suffered or
incurred by the Indemnified Purchaser Parties exceeds $15,000, except with
respect to the Liquidated Damages.
9.2.3 Method of Asserting Claims, Etc.
(a) In the event that any claim or demand for which Seller would be liable
to any Indemnified Purchaser Party hereunder is asserted against or sought to be
collected from such Indemnified Purchaser Party by a third party, such
Indemnified Purchaser Party shall notify Seller of such claim or demand,
specifying the nature of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim and demand) (the "Claim Notice").
Seller may thereafter, at its sole cost and expense, defend such Indemnified
Purchaser Party against such claim or demand with counsel reasonably
satisfactory to such Indemnified Purchaser Party.
(b) In the event that Seller elects to defend such Indemnified Purchaser
Party, Seller shall not, without the prior written consent of such Indemnified
Purchaser Party, consent to the entry of any judgment against such Indemnified
Purchaser Party or enter into any settlement or compromise which does not
include, as an unconditional term thereof (i.e., there being no requirement that
such Indemnified Purchaser Party pay any amount of money or give any other
consideration), the giving by the claimant or plaintiff to such Indemnified
Purchaser Party of a release, in form and substance satisfactory to such
Indemnified Purchaser Party, from all liability in respect of such claim or
litigation. If such Indemnified Purchaser Party desires to participate in, but
not control, any such
25
defense or settlement, it may do so at its sole cost and expense. If, in the
reasonable opinion of such Indemnified Purchaser Party, any such claim or demand
or the litigation or resolution of any such claim or demand involves an issue or
matter which could have a materially adverse effect on the business, operations,
assets, properties or prospects of such Indemnified Purchaser Party or its
affiliates, or if Seller does not elect to defend such Indemnified Purchaser
Party, then such Indemnified Purchaser Party shall have the right to control the
defense or settlement of any such claim or demand and its costs and expenses
shall be included as part of the indemnification obligation of Seller hereunder;
provided, however, that such Indemnified Purchaser Party shall not settle any
such claim or demand without the prior written consent of Seller, which consent
shall not be unreasonably withheld or delayed. If such Indemnified Purchaser
Party defends such claim or demand, Seller shall have the right to participate
in, but not control, the defense or settlement of such claim or demand at its
and/or his sole cost and expense.
(c) In the event any Indemnified Purchaser Party should have a claim
against Seller hereunder that does not involve a claim or demand being asserted
against or sought to be collected from it by a third party, such Indemnified
Purchaser Party shall send a Claim Notice with respect to such claim to Seller.
If Seller does not notify such Indemnified Purchaser Party, within ten (10) days
from receipt of notice of a claim, that it disputes such claim, the amount of
such claim shall be conclusively deemed a liability of Seller.
(d) All claims for indemnification by the Indemnified Seller Party or any
Additional Indemnified Seller Party under this Agreement shall be asserted and
resolved under the procedures set forth hereinabove by substituting in the
appropriate place "Indemnified Seller Party" or "Additional Indemnified Seller
Party", as the case may be, for "Indemnified Purchaser Party" and variations
thereof and "Purchaser and/or MyTurn" for "Seller" and variations thereof.
9.2.4 Escrow Agreement. In order to provide the sole source of security for
the indemnification rights of the Indemnified Purchaser Parties under this
Article IX, the Escrow Securities shall be held in escrow and disposed of as
provided in the Escrow Agreement described in Section 5.11 hereof. Any Escrow
Securities Shares returned to MyTurn to satisfy an indemnification obligation of
Seller hereunder shall be valued at the fair market value of such shares on the
Closing Date.
9.3 Payment. Upon the determination of liability under Section 9.2 hereof, the
appropriate party shall pay to the other, within ten (10) days after such
determination, the amount of any claim for indemnification made hereunder. Upon
the final payment in full of any claim, the entity making payment shall be
subrogated to the rights of the indemnified party against any person, firm or
corporation with respect to the subject matter of such claim.
9.4 Other Rights and Remedies Not Affected. The indemnification rights of the
parties under this Article IX are independent of and in addition to such rights
and remedies as the parties may have at law or in equity or otherwise for any
misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including, without
limitation, the right to seek specific performance, rescission or any remedy
other than monetary damages, none of which rights or remedies shall be affected
or diminished hereby.
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ARTICLE X
DISPUTE RESOLUTION
10.1 Dispute Resolution. Except as otherwise provided in Sections 1.3.2, 8.6.4
and 11.3 disputes and controversies of any kind and nature between the parties
relating to the existence, construction, validity, interpretation or meaning,
performance, nonperformance, enforcement, operation, breach, continuance or
termination of this Agreement shall be resolved in the following manner:
10.1.1 Meeting of Principals. In the event that either party hereto
notifies the other in writing of the existence of a dispute hereunder, each
party shall designate a representative and the representatives shall attempt in
good faith to resolve the dispute in a timely manner.
10.1.2 Mediation. In the event that the representatives of the parties are
unable to resolve the dispute within thirty (30) days after delivery of the
notice described in Section 10.1.1, either party may deliver a written notice to
the other party demanding that the dispute be submitted to mediation before an
arbitrator certified by the State of Florida to mediate commercial disputes. The
parties shall cooperate in good faith to select a mutually agreeable mediator
and a mutually convenient date and location for mediation.
10.1.3 Arbitration.
(a) If the dispute is not resolved by mediation in accordance with Section
10.1.2 within sixty (60) days after delivery of the notice described in Section
10.1.1, then either party may demand arbitration by delivering a written demand
for arbitration to the other party within thirty (30) days after any controversy
arises, which written demand shall include the name of the arbitrator appointed
by the party demanding arbitration.
(b) Within ten (10) days after receipt of such demand, the other party
shall appoint an arbitrator by notifying the demanding party in writing of the
name of such arbitrator. If the other party shall fail to appoint an arbitrator
within such time period, an arbitrator shall be appointed for such other party
by the Arbitration Committee of the American Arbitration Association. The
arbitrator appointed by the demanding party and the arbitrator appointed by or
on behalf of the other party shall then appoint a third arbitrator, or if they
cannot agree on a third arbitrator within twenty (20) days after receipt of the
demand for arbitration, the third arbitrator shall be appointed by the
Arbitration Committee of the American Arbitration Association.
(c) The three arbitrators shall conduct a hearing in Tampa, Florida, in
accordance with the latest Commercial Arbitration Rules of the American
Arbitration Association, at which each party shall be allowed to present such
party's case, evidence and witnesses, if any, in the presence of the other
party. The arbitrators shall render their award, including a provision for
payment of costs and expenses of arbitration to be paid by one or both of the
parties, as the arbitrators deem just.
(d) The award of the majority of the arbitrators shall be binding on the
parties and judgment thereon may be entered in any court having jurisdiction.
(e) The parties stipulate that the provisions of this Section 10.1.3 shall
be a complete defense to any suit, action or proceeding instituted in any
federal, state or local court or before any
27
administrative tribunal with respect to any controversy or dispute which is
arbitrable under this Agreement. This Agreement shall survive the closing of the
transactions contemplated by this Agreement.
(f) The agreement contained in this Section 10.3.1 is made pursuant to the
provisions of the Florida International Arbitration Act, Sections 684.01 through
684.35, of the Florida Statutes.
(g) Notwithstanding anything to the contrary, this Article X shall not
apply to any dispute which is not arbitrable under applicable law.
ARTICLE XIV
TERMINATION; WAIVER AND LIQUIDATED DAMAGES
11.1 Termination. Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated and the transactions provided for herein
abandoned at any time prior to the Closing:
(a) By mutual consent of the respective Boards of Directors of Purchaser
and the Seller;
(b) By Purchaser if any of the conditions set forth in Article V hereof
shall not have been fulfilled on or prior to June 30, 2000 or shall become
incapable of fulfillment, in each case except as such shall have been the
result, directly or indirectly, of any action or inaction by Purchaser or its
officers and directors, and shall not have been waived.
(c) By Seller, if any of the conditions set forth in Article VI hereof
shall not have been fulfilled on or prior to June 30, 2000 or shall have become
incapable of fulfillment, in each case except as such shall have been the
result, directly or indirectly, of any action or inaction by Seller or its
officers and directors, and shall not have been waived.
If this Agreement is terminated as described above, this Agreement shall be
of no further force and effect, without any liability or obligation on the part
of any of the parties except for any liability which may arise pursuant to
Sections 11.3, 12.1 or 12.4 hereof or as a result of a party's willful failure
to consummate the transactions contemplated hereby.
11.2 Waiver. Any condition to the performance of the parties which legally may
be waived on or prior to the Closing Date may be waived at any time by the party
entitled to the benefit thereof by action taken or authorized by an instrument
in writing executed by the relevant party or parties. The failure of any party
at any time or times to require performance of any provision hereof shall in no
manner affect the right of such party at a later time to enforce the same. No
waiver by any party of the breach of any term, covenant, representation or
warranty contained in this Agreement as a condition to such party's obligations
hereunder shall release or affect any liability resulting from such breach, and
no waiver of any nature, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or of any breach of any other term, covenant,
representation or warranty of this Agreement.
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11.3 Liquidated Damages.
11.3.1 Breach by Seller of Section 4.1(h). Seller acknowledges that
Purchaser and MyTurn are investing a significant amount of resources, time,
expense and reputation in pursuing the potential acquisition contemplated
hereby. Seller further acknowledges that Purchaser would be irreparably harmed
by a breach of Section 4.1(h) hereof and that monetary damages to Purchaser for
such breach would be immeasurable. Accordingly, in the event Seller breaches
Section 4.1(h), Seller shall pay Purchaser the sum of $1,000,000 as liquidated
damages immediately. Seller acknowledges that Seller has received good, valuable
and sufficient consideration for the foregoing agreement, and that Purchaser and
MyTurn are relying on the agreement in Section 4.1(h) and the enforceability in
Section 4.1(h) and this Section 11.3.1 entering into this Agreement and pursuing
the transaction contemplated hereby.
11.3.2 Other Breach by Seller. Seller acknowledges that Purchaser and
MyTurn are investing a significant amount of resources, time, expense and
reputation in pursuing the potential acquisition contemplated hereby. Seller
further acknowledges that Purchaser and MyTurn would be irreparably harmed if
the Seller terminated or abandoned this Agreement at a time when the conditions
set forth in Article VI have been met (provided that any reference in Article VI
to the conditions shall be construed to mean only those conditions that were
required to be met prior to the date of termination, expiration or abandonment
of the Agreement) and that monetary damages to Purchaser and/or MyTurn in such
event would be immeasurable. Accordingly, in such event Seller shall pay
Purchaser's and MyTurn's accounted for costs and expenses relating to the review
and negotiation of this Agreement and the transaction contemplated hereby and
related hereto (including, without limitation, legal fees and disbursements) as
liquidated damages for the breach of this Agreement immediately. Seller
acknowledges that Seller has received good, valuable and sufficient
consideration for the foregoing agreement, and that Purchaser and MyTurn is
relying on this Section 11.3.2 entering into this Agreement and pursuing the
transaction contemplated hereby.
11.3.3 Breach by Purchaser/MyTurn. Purchaser and MyTurn acknowledge that
Seller is investing a significant amount of resources, time, expense and
reputation in pursuing the potential acquisition contemplated hereby. Purchaser
and MyTurn further acknowledge that Seller would be irreparably harmed if the
Purchaser and/or MyTurn terminated or abandoned this Agreement at a time when
the conditions set forth in Article V have been met (provided that any reference
in Article V to the conditions shall be construed to mean only those conditions
that were required to be met prior to the date of termination, expiration or
abandonment of the Agreement), and that monetary damages to Seller in such event
would be immeasurable. Accordingly, in such event. Purchaser and/or MyTurn shall
pay Seller's accounted for costs and expenses relating to the review and
negotiation of this Agreement and the transaction contemplated hereby and
related hereto (including, without limitation, legal fees and disbursements) as
liquidated damages for the breach of this Agreement immediately. Purchaser and
MyTurn acknowledges that Purchaser and MyTurn has received good, valuable and
sufficient consideration for the foregoing agreement, and that Seller is relying
on this Section 11.3.3 entering into this Agreement and pursuing the transaction
contemplated hereby.
11.3.4 Legal Action. Any party may commence a lawsuit for specific
performance of the provisions of this Section 11.3 applicable to it and, if such
party prevails in such lawsuit, the other parties shall reimburse such party for
the reasonable legal fees and costs of such party incurred in prosecuting such
lawsuit.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Expenses. Except as otherwise specifically provided in this Agreement, each
of the parties shall bear its or his own expenses in connection herewith and
with respect to any transactions and negotiations contemplated hereby, whether
or not consummated for any reason.
12.2 Sales, Transfer and Documentary Taxes. Seller shall pay all federal, state
and local sales, documentary and other transfer taxes, if any, due as a result
of the purchase, sale and transfer of the Assets in accordance herewith whether
imposed by law on Seller or Purchaser and Seller shall indemnify, reimburse and
hold harmless Purchaser in respect of the liability for payment of or failure to
pay any such taxes or the filing of or failure to file any reports required in
connection therewith.
12.3 Publicity. Any press releases, announcements and other public disclosures
made by the Purchaser regarding the transactions contemplated hereby will not
reveal any dollar amounts and stock or option amounts and instead will refer to
the consideration as "for an undisclosed amount" or wording of similar meaning.
The foregoing notwithstanding, if (i) the Purchaser is required to make any
disclosure about the transactions contemplated hereby under federal or state
securities laws and the rules and regulations promulgated thereunder
(collectively the "Securities Laws") or the rules and regulations of the Nasdaq
Stock Market, Inc. or any other exchange applicable to the Purchaser or (ii) if
such disclosure is determined by the Board of Directors of the Purchaser in its
reasonable good faith to be required in order for (A) the Board of Directors to
fulfill its fiduciary duties to the Purchaser's stockholders or (B) the
Purchaser to be in compliance with the anti-fraud provisions of the Securities
Laws such that all information publicly disclosed by or on behalf of the
Purchaser is true, accurate, complete and not misleading at any time, the
Purchaser shall be allowed to disclose such information.
12.4 Confidential Information. All information that a disclosing party furnishes
in connection with the transactions described herein and all information which a
disclosing party previously furnished which is confidential under Paragraph 10
of that certain Letter of Intent dated January 18, 2000, as subsequently
extended, among the Purchaser, Seller and the Seller's principal shareholder
(the "Information"), will be kept confidential, and will not, without prior
written consent of the
disclosing party, be used or disclosed, directly or indirectly, in any manner
whatsoever, in whole or in part.
Notwithstanding anything hereinabove to the contrary, the obligations
imposed upon the parties herein shall not apply to Information:
(a) which is publicly available prior to the date hereof; or
(b) which hereafter becomes available to the public through no wrongful act
of the receiving party; or
(c) which was in the possession of the receiving party prior to the
commencement of negotiations between the parties with regard to the transactions
contemplated hereby and not subject to an existing agreement of confidence
between the parties; or
30
(d) which was or is received from a third party without restriction, not in
violation of an agreement of confidence and without breach of this Agreement;
(e) which was or is independently developed by the receiving party; or
(f) which is disclosed pursuant to a requirement or request of a government
agency, arbitrator or court.
Additionally, the obligation imposed on Purchaser in this Section 12.4
shall not apply to Information which is included in the Assets.
12.5 Equitable Relief. The parties agree that the remedy at law in any breach or
threatened breach of the provisions of Section 12.3 or 12.4 will be inadequate
and the aggrieved party shall be entitled to injunctive relief to compel the
breaching party to perform or refrain from action required or prohibited
thereunder. Reference is made to Section 1.3.2 which also has provision for
specific performance.
12.6 Entire Agreement. This Agreement, including the schedules and exhibits
attached hereto, which are a part hereof, constitutes the entire agreement of
the parties with respect to the subject matter hereof. The representations,
warranties, covenants and agreements set forth in this Agreement constitute all
the representations, warranties, covenants and agreements of the parties and
upon which the parties have relied, shall not be deemed waived or otherwise
affected by any investigation made by any party hereto and, except as may be
specifically provided herein, no change, modification, amendment, addition or
termination of this Agreement or any part thereof shall be valid unless in
writing and signed by or on behalf of the party to be charged therewith.
12.7 Notices. Any and all notices or other communications or deliveries required
or permitted to be given or made pursuant to any of the provisions of this
Agreement shall be deemed to have been duly given or made for all purposes when
in writing and hand delivered or sent by certified or registered mail, return
receipt requested and postage prepaid, overnight mail, nationally recognized
overnight courier or telecopier as follows:
If to Purchaser and/or MyTurn at:
0000 Xxxxxx Xxxxxxx Xxxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
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If to Seller:
Breadbox Computer Company
P.O. 808
Port Xxxxxx, Florida 34673-0808
Attention: Xxxxx Xxxxxxx
Telecopier: (000) 000-0000
With a copy to:
Barnett, Bolt, Kirkwood & Long
000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
or at such other address as any party may specify by notice given to the other
party in accordance with this Section 12.7.
12.8 Choice of Law; Severability. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of Florida,
excluding choice of law principles thereof. In the event any clause, section or
part of this Agreement shall be held or declared to be void, illegal or invalid
for any reason, all other clauses, sections or parts of this Agreement which can
be effected without such void, illegal or invalid clause, section or part shall
nevertheless continue in full force and effect.
12.9 Successors and Assigns; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns; provided, however, that neither party may assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of the other party.
12.10 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
12.11 Facsimile Signatures. Signatures hereon which are transmitted via
facsimile shall be deemed original signatures.
12.12 Representation by Counsel; Interpretation. Seller acknowledges that it has
been represented by counsel or has had the opportunity to be represented by
counsel in connection with this Agreement and the transactions contemplated by
this Agreement. Accordingly, any rule or law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived by such
parties. The provisions of this Agreement shall be interpreted in a reasonable
manner to effect the intent of the parties hereto.
12.13 Headings; Gender. The headings, captions and/or use of a particular gender
under sections
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of this Agreement are for convenience and reference only and do not in any way
modify, interpret or construe the intent of the parties or affect any of the
provisions of this Agreement.
12.14 Certain References. For purposes of Sections 1.5, 8.6, 9.2.3 and 11.3, all
references to Seller shall, after the liquidation of Seller, be deemed to refer
to the shareholders of Seller.
[Rest of Page Intentionally Left Blank; Signature Page Follows]
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WITNESS the execution of this Agreement as of the date first above written.
GPC ACQUISITION CORP.
By: /s/ Xxxx X. Theale
--------------------------------------
Xxxx X. Theale, Jr., Vice Chairman
BREADBOX COMPUTER COMPANY
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx, President
XXXXXX.XXX, INC.
By: /s/ Xxxx X. Theale
--------------------------------------
Xxxx X. Theale, Jr., Vice-Chairman
of the Board
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1.1.1(a): Computer Software
Schedule 1.1.1(b): Computer Software Contracts
Schedule 1.1.2: Excluded Assets
Schedule 2.2: Required Consents
Schedule 2.4: Liabilities Affecting the Assets
Schedule 2.6.1(a): Modifications/Amendments to Computer Software Contracts
Schedule 2.6.1(d): Agreements with Respect to the Assets
Schedule 2.6.2(a): Proprietary Rights Owned By Seller
Schedule 2.6.2(b): Third Parties Rights to Use Seller's Proprietary Rights
Schedule 2.8: Listed Agreements
Schedule 2.9: Computer Software Excluded from Representation re Functionality
Schedule 2.13: Prior Names and Addresses
Schedule 2.14: Permits, Licenses, etc.
Exhibit 5.6: Form of Opinion of Seller's Counsel
Exhibit 5.11: Form of Escrow Agreement
Schedule 8.4: Terms and Conditions of Offers of Employment
Exhibit 8.4: Form of Employment Agreement
Schedule 8.4: Terms and Conditions of Offers of Consultancy
Exhibit 8.5: Form of Consulting Agreement
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