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ASSET PURCHASE AGREEMENT
among:
INTERACT CONFERENCING, LLC
a Georgia limited liability corporation;
XXXXXXX XXXXXXXXX,
an individual;
and
RAINDANCE COMMUNICATIONS, INC.
a Delaware corporation
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Dated as of April 17, 2002
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TABLE OF CONTENTS
PAGE
1. SALE OF ASSETS; RELATED TRANSACTIONS...........................................................1
1.1 Sale of Assets........................................................................1
1.2 Purchase Price........................................................................2
1.3 Sales Taxes...........................................................................4
1.4 Allocation............................................................................4
1.5 Closing...............................................................................4
1.6 Net Working Capital Adjustment........................................................6
1.7 Voting Agreement......................................................................6
1.8 Amendment to Lease Agreement..........................................................6
2. REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX AND THE SELLER.....................................6
2.1 Due Organization; No Subsidiaries; Etc................................................6
2.2 Certificate of Formation and Operating Agreement; Records.............................6
2.3 Capitalization........................................................................7
2.4 Financial Statements..................................................................7
2.5 Absence Of Changes....................................................................7
2.6 Title To Assets.......................................................................9
2.7 Bank Accounts.........................................................................9
2.8 Receivables; Working Capital..........................................................9
2.9 Customers; Distributors...............................................................9
2.10 Equipment, Etc.......................................................................10
2.11 Real Property........................................................................10
2.12 Proprietary Assets...................................................................10
2.13 Contracts............................................................................11
2.14 Liabilities; Major Suppliers.........................................................12
2.15 Compliance with Legal Requirements...................................................12
2.16 Governmental Authorizations..........................................................13
2.17 Tax Matters..........................................................................13
2.18 Employee And Labor Matters...........................................................14
2.19 Benefit Plans; ERISA.................................................................15
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.20 Environmental Matters................................................................16
2.21 Performance Of Services..............................................................17
2.22 Insurance............................................................................17
2.23 Related Party Transactions...........................................................17
2.24 Certain Payments, Etc................................................................17
2.25 Proceedings; Orders..................................................................18
2.26 Authority; Binding Nature Of Agreements..............................................18
2.27 Non-Contravention; Consents..........................................................18
2.28 Brokers..............................................................................19
2.29 Xxxxxxxxx............................................................................19
2.30 Full Disclosure......................................................................20
2.31 Securities Laws Matters..............................................................20
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...............................................21
3.1 Authority; Binding Nature Of Agreements..............................................21
3.2 Brokers..............................................................................21
3.3 Due Organization.....................................................................21
3.4 SEC Filings; Financial Statements....................................................21
4. PRE-CLOSING COVENANTS OF XXXXXXXXX AND THE SELLER.............................................22
4.1 Access And Investigation.............................................................22
4.2 Operation Of Business................................................................22
4.3 Filings and Consents.................................................................24
4.4 Investment Representation Statement..................................................24
4.5 Notification; Updates to Disclosure Schedule.........................................24
4.6 No Negotiation.......................................................................25
4.7 Best Efforts.........................................................................25
4.8 Confidentiality......................................................................25
4.9 FIRPTA Matters.......................................................................25
5. PRE-CLOSING COVENANTS OF THE PURCHASER........................................................25
5.1 Best Efforts.........................................................................25
5.2 Employment Offers....................................................................25
ii.
TABLE OF CONTENTS
(CONTINUED)
iii.
TABLE OF CONTENTS
(CONTINUED)
iv.
ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT is entered into as of April 17,
2002, by and among: INTERACT CONFERENCING, LLC, a Georgia limited liability
corporation (the "SELLER"); XXXXXXX XXXXXXXXX, ("XXXXXXXXX"); and RAINDANCE
COMMUNICATIONS, INC., a Delaware corporation (the "PURCHASER"). Certain
capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
X. Xxxxxxxxx owns 55.335% of the outstanding Equity Securities of the
Seller.
X. Xxxxxxxxx and the Seller wish to provide for the sale of
substantially all of the assets of the Seller to the Purchaser on the terms set
for in this Agreement.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. SALE OF ASSETS; RELATED TRANSACTIONS.
1.1 SALE OF ASSETS. Xxxxxxxxx and the Seller shall cause to be sold,
assigned, transferred, conveyed and delivered to the Purchaser, at the Closing
(as defined below), good and valid title to the Assets (as defined below), free
of any Encumbrances, on the terms and subject to the conditions set forth in
this Agreement. For purposes of this Agreement, "Assets" shall mean and include:
(a) all of the properties, rights, interests and other tangible and intangible
assets of the Seller (wherever located and whether or not required to be
reflected on a balance sheet prepared in accordance with generally accepted
accounting principles), including any assets acquired by the Seller during the
Pre-Closing Period; and (b) any other assets that are owned by any of Xxxxxxxxx
or any other Related Party and that are needed for the conduct of, or are useful
in connection with, the business of the Seller; provided, however, that the
Assets shall not include any Excluded Assets. Without limiting the generality of
the foregoing, the Assets shall include:
(1) all accounts receivable, notes receivable and
other receivables of the Seller (including all accounts receivable
identified in Part 2.8 of the Disclosure Schedule and all accounts
receivable of the Seller that have arisen since February 28, 2002);
(2) all inventories and work-in-progress of the
Seller, and all rights to collect from customers (and to retain) all
fees and other amounts payable, or that may become payable, to the
Seller with respect to services performed on behalf of the Seller on or
prior to the Closing Date;
(3) all equipment, materials, prototypes, tools,
supplies, vehicles, furniture, fixtures, improvements and other
tangible assets of the Seller (including the tangible assets identified
in Part 2.10 of the Disclosure Schedule);
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(4) all advertising and promotional materials
possessed by the Seller;
(5) all Proprietary Assets and goodwill of the Seller
(including the right to use the name "Interact Conferencing, LLC" and
variations thereof, and the Proprietary Assets identified in Part 2.12
of the Disclosure Schedule);
(6) all rights of the Seller under the Seller
Contracts (including the Seller Contracts identified in Part 2.13 of
the Disclosure Schedule);
(7) all Governmental Authorizations held by the
Seller (including the Governmental Authorizations identified in Part
2.16 of the Disclosure Schedule);
(8) all claims (including claims for past
infringement of Proprietary Assets) and causes of action of the Seller
against other Persons (regardless of whether or not such claims and
causes of action have been asserted by the Seller), and all rights of
indemnity, warranty rights, rights of contribution, rights to refunds,
rights of reimbursement and other rights of recovery possessed by the
Seller (regardless of whether such rights are currently exercisable);
and
(9) all books, records, files and data of the Seller;
provided that Seller shall be entitled to retain the originals of all
corporate and tax records.
1.2 PURCHASE PRICE.
(a) As consideration for the sale of the Assets to the
Purchaser (the "CONSIDERATION"):
(i) at the Closing, the Purchaser shall pay to the
Seller, in cash, a total of $3,050,000;
(ii) at the Closing, the Purchaser shall issue to the
Seller 1,200,982 shares of Purchaser common stock;
(iii) on the date occurring six (6) months after the
Closing, the Purchaser shall pay to the Seller $750,000, (the "CASH
ESCROW FUND"), subject to the provisions of Section 9 hereof;
(iv) at the Closing, the Purchaser shall place into
escrow with the Secretary of the Purchaser (the "ESCROW AGENT") 997,599
shares of Purchaser common stock (the "STOCK ESCROW FUND," together
with the Cash Escrow Fund, the "ESCROW FUNDS"), 332,533 shares of which
shall be delivered to Xxxxxxxxx on each successive anniversary of the
Closing over the next three years, subject to the provisions of
Sections 9 and 10 hereof;
(v) at the Closing, the Purchaser shall assume the
Assumed Liabilities by delivering to the Seller an Assumption Agreement
in substantially the form of Exhibit B (the "ASSUMPTION AGREEMENT").
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(vi) at the Closing, the Purchaser shall pay to Sun
Trust Bank the outstanding balance due under that certain Commercial
Variable Rate Revolving or Draw Note, dated December 15, 2001, up to a
maximum principal aggregate amount of $125,000.
(b) For purposes of this Agreement "Assumed Liabilities" shall
mean only the following liabilities of the Seller:
(i) the obligations of the Seller under the Contracts
identified on Exhibit C to the Agreement, but only to the extent such
obligations (A) arise after the Closing Date or are prepaid as of the
date of this Agreement, (B) do not arise from or relate to any Breach
by the Seller of any provision of any of such Contracts, (C) do not
arise from or relate to any event, circumstance or condition occurring
or existing on or prior to the Closing Date that, with notice or lapse
of time, would constitute or result in a Breach of any of such
Contracts, and (D) are ascertainable (in nature and amount) solely by
reference to the express terms of such Contracts; and
(ii) the obligations of the Seller as reflected under
the heading "Accounts Payable" contained in the Unaudited Interim
Financial Statements in addition to any other accounts payable incurred
by the Seller between February 28, 2002 and the Closing in the Ordinary
Course of Business consistent with past practices; provided however,
that any such accounts payable in excess of $5,000 incurred after the
date of this Agreement must be approved by the Purchaser.
provided, however, that notwithstanding the foregoing, and notwithstanding
anything to the contrary contained in this Agreement, the "Assumed Liabilities"
shall not include, and the Purchaser shall not be required to assume or to
perform or discharge:
(1) any Liability of any holder of Equity Securities
of the Seller or any other Person, except for the Seller and except for
the obligations of Xxxxxxxxx, up to a maximum aggregate principal
amount of $125,000, pursuant to that certain Commercial Variable
Revolving or Draw Note dated December 15, 2001;
(2) any Liability of the Seller arising out of or
relating to the execution, delivery or performance of any of the
Transactional Agreements;
(3) any Liability of the Seller for any fees, costs
or expenses of the type referred to in Section 12.3(a) of Agreement;
(4) any Liability of the Seller arising from or
relating to any action taken by the Seller, or any failure on the part
of the Seller to take any action, at any time after the Closing Date;
(5) any Liability of the Seller arising from or
relating to (x) any services performed by the Seller for any customer,
or (y) any claim or Proceeding against the Seller;
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(6) any Liability of the Seller for the payment of
any Tax payable prior to the Closing Date;
(7) any Liability of the Seller to any employee or
former employee of the Seller under or with respect to any Employee
Benefit Plan, profit sharing plan or dental plan or for severance pay;
(8) any Liability of the Seller to any holder of
Equity Securities of the Seller or any other Related Party;
(9) any Liability under any Contract, if the Seller
shall not have obtained, prior to the Closing Date, any Consent
required to be obtained from any Person with respect to the assignment
or delegation to the Purchaser of any rights or obligations under such
Contract;
(10) any Liability that is inconsistent with or
constitutes an inaccuracy in, or that arises or exists by virtue of any
Breach of, (x) any representation or warranty made by the Seller or
Xxxxxxxxx in any of the Transactional Agreements, or (y) any covenant
or obligation of the Seller or Xxxxxxxxx contained in any of the
Transactional Agreements; or
(11) any other Liability that is not referred to
specifically in clause "(i)", "(ii)" or "(iii)" of this sentence.
1.3 SALES TAXES. The Seller shall bear and pay, and shall reimburse the
Purchaser and the Purchaser's affiliates for, any sales taxes, use taxes,
transfer taxes, documentary charges, recording fees or similar taxes, charges,
fees or expenses that may become payable in connection with the sale of the
Assets to the Purchaser or in connection with any of the other Transactions, but
excluding corporate qualification fees and local business licenses that
Purchaser may incur upon completion of such Transactions.
1.4 ALLOCATION. Within 60 days following the Closing, the Purchaser
shall deliver to the Seller a statement setting forth the Purchaser's good faith
determination of the manner in which the consideration referred to in Sections
1.2(a)(i), 1.2(a)(ii), 1.2(a)(iii) and 1.2(a)(iv) is to be allocated among the
Assets. The allocation prescribed by such statement shall be conclusive and
binding upon Xxxxxxxxx and the Seller for all purposes, and neither the Seller
nor Xxxxxxxxx shall file any Tax Return or other document with, or make any
statement or declaration to, any Governmental Body that is inconsistent with
such allocation.
1.5 CLOSING.
(a) The closing of the sale of the Assets to the Purchaser
(the "CLOSING") shall take place at the offices of Xxxxxx Godward LLP in
Broomfield,
Colorado, at 10:00 a.m. on such date as the Purchaser may designate
in a written notice delivered to the Seller; provided, however, that if any
condition set forth in Section 6 has not been satisfied as of the date
designated by the Purchaser, then the Purchaser may, at its election,
unilaterally postpone the Scheduled Closing Time by up to 60 days. For purposes
of this Agreement, "Scheduled Closing
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Time" shall mean the time and date as of which the Closing is required to take
place pursuant to this Section 1.6(a); and "CLOSING DATE" shall mean the time
and date as of which the Closing actually takes place.
(b) At the Closing:
(i) the Seller shall execute and deliver to the
Purchaser such bills of sale, endorsements, assignments and other
documents as may (in the reasonable judgment of the Purchaser or its
counsel) be necessary or appropriate to assign, convey, transfer and
deliver to the Purchaser good and valid title to the Assets free of any
Encumbrances;
(ii) the Purchaser shall pay to the Seller $3,050,000
in cash as contemplated by Section 1.2(a)(i);
(iii) the Purchaser shall deliver to the Seller one
or more stock certificates representing an aggregate of 1,200,982
shares of Purchaser common stock;
(iv) the Purchaser shall deliver to the Secretary of
Purchaser one or more stock certificates representing an aggregate of
997,599 shares of Purchaser common stock to be distributed in
accordance with Section 1.2(a)(iv) hereof;
(v) the Purchaser shall execute and deliver to the
Seller the Assumption Agreement;
(vi) at the Closing, the Purchaser shall pay to Sun
Trust Bank the outstanding balance due under that certain Commercial
Variable Rate Revolving or Draw Note, dated December 15, 2001, up to a
maximum aggregate principal amount of $125,000.
(vii) Purchaser and Xxxxxxxxx shall execute and
deliver the Employment Offer Letter in the form of Exhibit D attached
hereto and Xxxxxxxxx shall execute and deliver to the Purchaser a
Noncompetition and Non-Solicitation Agreement in the form of Exhibit E;
and
(viii) each of Xxxxxxxxx and the Seller shall execute
and deliver to the Purchaser a certificate (the "CLOSING CERTIFICATE")
setting forth the representations and warranties of Xxxxxxxxx and the
Seller that (A) each of the representations and warranties made by
Xxxxxxxxx and the Seller in this Agreement was accurate in all respects
as of the date of this Agreement, (B) each of the representations and
warranties made by Xxxxxxxxx and the Seller in this Agreement is
accurate in all respects as of the Closing Date as if made on the
Closing Date, (C) each of the covenants and obligations that any of
Xxxxxxxxx or the Seller is required to have complied with or performed
pursuant to this Agreement at or prior to the Closing has been duly
complied with and performed in all respects, and (D) each of the
conditions set forth in Sections 6.3 and 6.4 has been satisfied in all
respects.
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1.6 NET WORKING CAPITAL ADJUSTMENT.
(a) CALCULATION. "Net Working Capital" shall mean the current
assets of the Seller less its current liabilities on the applicable date.
Accounts receivable shall be valued at the face amount thereof. Except as
otherwise provided in the preceding sentence, the current assets and current
liabilities of the Company are all to be computed on a basis consistent with
past practices and in accordance with GAAP.
(b) POST-CLOSING ADJUSTMENT. To the extent that the Net
Working Capital as of the Closing (as determined by the Purchaser and the
Purchaser's independent auditors; but excluding the effect of the distribution
of $242,970 to certain of the Seller's members by the Seller) is less than the
Net Working Capital as of December 31, 2001 as reflected on the balance sheet as
of December 31, 2001 previously delivered to Purchaser, then there shall be
distributed to the Purchaser from the Cash Escrow Account an amount equal to (x)
the Net Working Capital as of December 31, 2001 minus (y) the Net Working
Capital as of the Closing. Any amounts payable pursuant to this Section 1.6(b)
shall be referred to herein as the "Net Working Capital Adjustment."
1.7 VOTING AGREEMENT. Concurrent with the execution and delivery of
this Agreement, as a material inducement to Purchaser to enter this Agreement,
Xxxxxxxxx shall enter into a Voting Agreement, in the form attached hereto as
Exhibit F, with the Purchaser.
1.8 AMENDMENT TO LEASE AGREEMENT. Concurrent with the execution and
delivery of this Agreement, as a material inducement to Purchaser to enter this
Agreement, that certain Lease Agreement, dated March 12, 2002, by and between
Xxxxxxxxx/Xxxxxxx, LLC and the Seller shall be amended and assigned to Purchaser
pursuant to the terms of the Lease Modification, Assignment and Assumption of
Lease Agreement and Letter of Intent, in the form attached hereto as Exhibit G.
2. REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX AND THE SELLER.
Xxxxxxxxx and the Seller, jointly and severally, represent and
warrant, to and for the benefit of the Purchaser Indemnitees, as follows:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC. The Seller is a limited
liability corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia. The Seller is not required to be
qualified, authorized, registered or licensed to do business as a foreign
corporation in any jurisdiction other than the jurisdictions listed in Part 2.1
of the Disclosure Schedule. The Seller is in good standing as a foreign
corporation in each of the jurisdictions listed in Part 2.1 of the Disclosure
Schedule. The Seller does not have any subsidiaries, and does not own,
beneficially or otherwise, any shares or other securities of, or any direct or
indirect interest of any nature in, any other Entity. The Seller has never
conducted any business under or otherwise used, for any purpose or in any
jurisdiction, any fictitious name, assumed name, trade name or other name, other
than "Interact Conferencing, LLC."
2.2 CERTIFICATE OF FORMATION AND OPERATING AGREEMENT; RECORDS. The
Seller has delivered to (or made available for inspection by) the Purchaser
accurate and complete copies of: (i) the certificate of formation and operating
agreement of the Seller, including all amendments
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thereto; (ii) the records relating to any Equity Securities of the Seller; and
(iii) the minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a meeting)
of the holders of Equity Securities of the Seller, the board of directors of the
Seller and all committees of the board of directors of the Seller. The books of
account of the Seller are accurate, up-to-date and complete, and have been
maintained in accordance with sound and prudent business practices. All of the
records of the Seller are in the actual possession and direct control of the
Seller.
2.3 CAPITALIZATION. Part 2.3 of the Disclosure Schedule sets forth the
capitalization of the Seller, including the name of each holder of Equity
Securities of the Seller and the ownership percentage of the Seller such Equity
Securities represent. Except as set forth in Part 2.3 of the Disclosure
Schedule, there is no: (a) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any Equity Securities of
the Seller; (b) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any Equity Securities of the Seller;
or (c) Contract under which the Seller is or may become obligated to sell or
otherwise issue any Equity Securities.
2.4 FINANCIAL STATEMENTS. The Seller has delivered to the Purchaser the
following financial statements (collectively, the "FINANCIAL STATEMENTS"): (a)
the unaudited balance sheets of the Seller as of December 31, 2000 and December
31, 2001, and the related statements of income and retained earnings and cash
flows for the years then ended, together with the notes thereto and the report
of Xxxxxxx & Xxxxxx, LLC with respect thereto; and (b) the balance sheet of the
Seller as of February 28, 2002 (the "UNAUDITED INTERIM BALANCE SHEET"), and the
related statements of income and retained earnings and cash flows for the three
months then ended. The Financial Statements are accurate and complete in all
respects, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered (except
that the financial statements referred to in clause "(b)" of this Section 2.4 do
not have notes) and present fairly the financial position of the Seller as of
the respective dates thereof and the results of operations and cash flows of the
Seller for the periods covered thereby.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since February 28, 2002:
(a) there has not been any adverse change in, and no event has
occurred that might have an adverse effect on, the business, condition,
assets, liabilities, operations, financial performance, net income or
prospects of the Seller;
(b) there has not been any loss, damage or destruction to, or
any interruption in the use of, any of the assets of the Seller
(whether or not covered by insurance);
(c) the Seller has not (i) declared, accrued, set aside or
paid any dividend or made any other distribution in respect of any
shares of capital stock or other securities, or (ii) repurchased,
redeemed or otherwise reacquired any shares of capital stock or other
securities;
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(d) the Seller has not purchased or otherwise acquired any
asset from any other Person, except for supplies acquired by the Seller
in the Ordinary Course of Business;
(e) the Seller has not leased or licensed any asset from any
other Person;
(f) the Seller has not made any capital expenditure;
(g) the Seller has not sold or otherwise transferred, or
leased or licensed, any asset to any other Person;
(h) the Seller has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account
receivable or other indebtedness;
(i) the Seller has not made any loan or advance to any other
Person;
(j) the Seller has not (i) established or adopted any Employee
Benefit Plan, or (ii) paid any bonus or made any profit-sharing or
similar payment to, or increased the amount of the wages, salary,
commissions, fees, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers, employees or
independent contractors;
(k) no Contract by which the Seller or any of the assets owned
or used by the Seller is or was bound, or under which the Seller has or
had any rights or interest, has been amended or terminated;
(l) the Seller has not incurred, assumed or otherwise become
subject to any Liability, other than accounts payable (of the type
required to be reflected as current liabilities in the "liabilities"
column of a balance sheet prepared in accordance with GAAP) incurred by
the Seller in bona fide transactions entered into in the Ordinary
Course of Business;
(m) the Seller has not discharged any Encumbrance or
discharged or paid any indebtedness or other Liability, except for
accounts payable that (i) are reflected as current liabilities in the
"liabilities" column of the Unaudited Interim Balance Sheet or have
been incurred by the Seller since February 28, 2002, in bona fide
transactions entered into in the Ordinary Course of Business, and (ii)
have been discharged or paid in the Ordinary Course of Business;
(n) the Seller has not forgiven any debt or otherwise released
or waived any right or claim;
(o) the Seller has not changed any of its methods of
accounting or accounting practices in any respect;
(p) the Seller has not entered into any transaction or taken
any other action outside the Ordinary Course of Business; and
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(q) the Seller has not agreed, committed or offered (in
writing or otherwise) to take any of the actions referred to in clauses
"(c)" through "(p)" above.
2.6 TITLE TO ASSETS. The Seller owns, and has good and valid title to,
all of the Assets. Except as set forth in Part 2.6 of the Disclosure Schedule,
all of the Assets are owned by the Seller free and clear of any Encumbrances.
Except for the Excluded Assets, the Assets will collectively constitute, as of
the Closing Date, all of the properties, rights, interests and other tangible
and intangible assets necessary to enable the Seller to conduct its business in
the manner in which such business is currently being conducted and in the manner
in which such business is proposed to be conducted.
2.7 BANK ACCOUNTS. Part 2.7 of the Disclosure Schedule accurately sets
forth, with respect to each account maintained by or for the benefit of the
Seller at any bank or other financial institution: (a) the name and location of
the institution at which such account is maintained; (b) the name in which such
account is maintained and the account number of such account; (c) a description
of such account and the purpose for which such account is used; (d) the current
balance in such account; (e) the rate of interest being earned on the funds in
such account; and (f) the names of all individuals authorized to draw on or make
withdrawals from such account. There are no safe deposit boxes or similar
arrangements maintained by or for the benefit of the Seller.
2.8 RECEIVABLES. Part 2.8 of the Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable, notes
receivable and other receivables of the Seller as of April 2, 2002. Except as
set forth in Part 2.8 of the Disclosure Schedule, all existing accounts
receivable of the Seller (including those accounts receivable reflected on the
Unaudited Interim Balance Sheet that have not yet been collected and those
accounts receivable that have arisen since April 2, 2002 and have not yet been
collected): (i) represent valid obligations of customers of the Seller arising
from bona fide transactions entered into in the Ordinary Course of Business; and
(ii) are current and will be collected in full (without any counterclaim or
setoff) on or before June 30, 2002 (net of an allowance for uncollectible
accounts in an aggregate amount not to exceed $5,000). Part 2.8 of the
Disclosure Schedule identifies all unreturned security deposits and other
deposits made by, or held by any Person for the benefit of, the Seller.
2.9 CUSTOMERS; DISTRIBUTORS. Part 2.9 of the Disclosure Schedule
accurately identifies, and provides an accurate and complete breakdown of the
revenues received from, each customer or other Person that (together which such
customer's or other Person's affiliates) accounted for (i) more than $5,000 of
the gross revenues of the Seller in 2000 or 2001, or (ii) more than $2,500 of
the gross revenues of the Seller in the first three months of 2002. Neither the
Seller nor Xxxxxxxxx has received any notice or other communication (in writing
or otherwise), and neither the Seller nor Xxxxxxxxx has received any other
information, indicating that any customer or other Person identified or required
to be identified in Part 2.9 of the Disclosure Schedule may cease dealing with
the Seller or may otherwise reduce the volume of business transacted by such
Person with the Seller below historical levels. Neither the Seller nor Xxxxxxxxx
has received any notice or other communication (in writing or otherwise), or has
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received any other information, indicating that any distributor of any of the
Seller's products may cease acting as a distributor of such products or
otherwise dealing with the Seller.
2.10 EQUIPMENT, ETC. Part 2.10 of the Disclosure Schedule accurately
identifies all equipment, materials, prototypes, tools, supplies, vehicles,
furniture, fixtures, improvements and other tangible assets owned by the Seller.
Part 2.10 of the Disclosure Schedule also accurately identifies all tangible
assets leased to the Seller. The assets identified in Part 2.10 of the
Disclosure Schedule are adequate for the conduct of the business of the Seller
in the manner in which such business is currently being conducted and in the
manner in which such business is proposed to be conducted.
2.11 REAL PROPERTY. The Seller does not own any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Part 2.11 of the Disclosure Schedule. Part 2.11 of
the Disclosure Schedule provides an accurate and complete description of the
premises covered by said leases and the facilities located on such premises. The
Seller enjoys peaceful and undisturbed possession of such premises.
2.12 PROPRIETARY ASSETS.
(a) Except as set forth in Part 2.12 of the Disclosure
Schedule, there is no Proprietary Asset that is owned by or licensed to Seller
or that is otherwise used or useful in connection with the business of Seller.
The Proprietary Assets identified in Part 2.12 of the Disclosure Schedule
constitute all of the Proprietary Assets necessary to enable Seller to conduct
its business in the manner in which such business is currently being conducted
and in the manner in which such business is proposed to be conducted. Seller is
not infringing or making any unlawful use of, and Seller has not at any time
infringed or made any unlawful use of, or received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement or unlawful use of, any Proprietary Asset owned or used
by any other Person.
(b) The Seller has taken reasonable measures and precautions
to protect and maintain the confidentiality, secrecy and value of all material
Seller Proprietary Assets (except Seller Proprietary Assets whose value would be
unimpaired by disclosure). Each current or former employee of the Seller who is
or was involved in, or who has contributed to, the creation or development of
any material Seller Proprietary Asset has executed and delivered to the Seller
an agreement (containing no exceptions to or exclusions from the scope of its
coverage) that is substantially identical to the form of Non-Compete Agreement
previously delivered by the Seller to the Purchaser, and (ii) each current and
former consultant and independent contractor to the Seller who is or was
involved in, or who has contributed to, the creation or development of any
material Seller Proprietary Asset has executed and delivered to the Seller an
agreement (containing no exceptions to or exclusions from the scope of its
coverage) that is substantially identical to the form of Consultant Confidential
Information and Invention Assignment Agreement previously delivered to the
Purchaser. No current or former employee, officer, director, stockholder,
consultant or independent contractor has any right, claim or interest in or with
respect to any Seller Proprietary Asset.
10
(c) All patents, trademarks, service marks and copyrights held
by the Seller are valid, enforceable and subsisting. The Seller has not (i)
licensed any of the material Seller Proprietary Assets to any Person on an
exclusive basis, or (ii) entered into any covenant not to compete or Contract
limiting or purporting to limit the ability of the Seller to exploit fully any
material Seller Proprietary Assets or to transact business in any market or
geographical area or with any Person. The Seller has, and the Purchaser will
acquire at the Closing, the right to use the name "Interact Conferencing, LLC"
and variations thereof. Seller has not granted to any party the right to use the
name "InterAct Conferencing, LLC" or any variation thereof. Except for the
representation made in the immediately preceding sentence, no representation or
warranty is made as to the rights of third parties to use such name(s). Seller
has not applied for trademark protection for such name(s).
2.13 CONTRACTS.
(a) Part 2.13 of the Disclosure Schedule identifies each
Seller Contract. The Seller has delivered to the Purchaser accurate and complete
copies of all written Contracts identified in Part 2.13 of the Disclosure
Schedule, including all amendments thereto. Each Seller Contract is valid and in
full force and effect.
(b) Except as set forth in Part 2.13 of the Disclosure
Schedule: (i) no Person has violated or breached, or declared or committed any
default under, any Seller Contract; (ii) no event has occurred, and no
circumstance or condition exists, that might (with or without notice or lapse of
time) (A) result in a violation or breach of any of the provisions of any Seller
Contract, (B) give any Person the right to declare a default or exercise any
remedy under any Seller Contract, (C) give any Person the right to accelerate
the maturity or performance of any Seller Contract, or (D) give any Person the
right to cancel, terminate or modify any Seller Contract; (iii) the Seller has
not received any notice or other communication (in writing or otherwise)
regarding any actual, alleged, possible or potential violation or breach of, or
default under, any Seller Contract; and (iv) the Seller has not waived any right
under any Seller Contract.
(c) To the best of the knowledge of the Seller and Xxxxxxxxx,
each Person against which the Seller has or may acquire any rights under any
Seller Contract is solvent and is able to satisfy all of such Person's current
and future monetary obligations and other obligations and Liabilities
thereunder.
(d) Except as set forth in Part 2.13 of the Disclosure
Schedule, the Seller has never guaranteed or otherwise agreed to cause, insure
or become liable for, and the Seller has never pledged any of its assets to
secure, the performance or payment of any obligation or other Liability of any
other Person.
(e) No Person is renegotiating, or has the right to
renegotiate, any amount paid or payable to the Seller under any Seller Contract
or any other term or provision of any Seller Contract.
(f) The Seller has no knowledge of any basis upon which any
party to any Seller Contract may object to (i) the assignment to the Purchaser
of any right under such Seller
11
Contract, or (ii) the delegation to or performance by the Purchaser of any
obligation under such Seller Contract.
(g) The Contracts identified in Part 2.13 of the Disclosure
Schedule collectively constitute all of the Contracts necessary to enable the
Seller to conduct its business in the manner in which such business is currently
being conducted and in the manner in which such business is proposed to be
conducted.
(h) Part 2.13 of the Disclosure Schedule identifies each
proposed Contract as to which any bid, offer, written proposal, term sheet or
similar document has been submitted or received by the Seller.
2.14 LIABILITIES; MAJOR SUPPLIERS.
(a) Except as set forth in Part 2.14 of the Disclosure
Schedule, the Seller has no Liabilities, except for: (i) liabilities identified
as such in the "liabilities" columns of the Unaudited Interim Balance Sheet;
(ii) accounts payable (of the type required to be reflected as current
liabilities in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred by the Seller in bona fide transactions entered
into in the Ordinary Course of Business since February 28, 2002; and (iii)
obligations under the Contracts listed in Part 2.13 of the Disclosure Schedule,
to the extent that the existence of such obligations is ascertainable solely by
reference to such Contracts.
(b) Part 2.14 of the Disclosure Schedule: (i) provides an
accurate and complete breakdown and aging of the accounts payable of the Seller
as of February 28, 2002; (ii) provides an accurate and complete breakdown of any
customer deposits or other deposits held by the Seller as of the date of this
Agreement; and (iii) provides an accurate and complete breakdown of all notes
payable and other indebtedness of the Seller as of the date of this Agreement.
(c) The Seller has not, at any time, (i) made a general
assignment for the benefit of creditors, (ii) filed, or had filed against it,
any bankruptcy petition or similar filing, (iii) suffered the attachment or
other judicial seizure of all or a substantial portion of its assets, (iv)
admitted in writing its inability to pay its debts as they become due, (v) been
convicted of, or pleaded guilty or no contest to, any felony, or (vi) taken or
been the subject of any action that may have an adverse effect on its ability to
comply with or perform any of its covenants or obligations under any of the
Transactional Agreements.
2.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in Part
2.15 of the Disclosure Schedule: (a) the Seller is in full compliance with each
Legal Requirement that is applicable to it or to the conduct of its business or
the ownership or use of any of its assets; (b) the Seller has at all times been
in full compliance with each Legal Requirement that is or was applicable to it
or to the conduct of its business or the ownership or use of any of its assets;
(c) no event has occurred, and no condition or circumstance exists, that might
(with or without notice or lapse of time) constitute or result directly or
indirectly in a violation by the Seller of, or a failure on the part of the
Seller to comply with, any Legal Requirement; and (d) the Seller has not
received, at any time, any notice or other communication (in writing or
otherwise) from any
12
Governmental Body or any other Person regarding (i) any actual, alleged,
possible or potential violation of, or failure to comply with, any Legal
Requirement, or (ii) any actual, alleged, possible or potential obligation on
the part of the Seller to undertake, or to bear all or any portion of the cost
of, any cleanup or any remedial, corrective or response action of any nature.
Xxxxxxxxx and the Seller have delivered to the Purchaser an accurate and
complete copy of each report, study, survey or other document to which Xxxxxxxxx
or the Seller has access that addresses or otherwise relates to the compliance
of the Seller with, or the applicability to the Seller of, any Legal
Requirement.
2.16 GOVERNMENTAL AUTHORIZATIONS. Part 2.16 of the Disclosure Schedule
identifies each Governmental Authorization that is held by the Seller, each of
which is valid and in full force and effect. The Governmental Authorizations
identified in Part 2.16 of the Disclosure Schedule constitute all of the
Governmental Authorizations necessary (i) to enable the Seller to conduct its
business in the manner in which such business is currently being conducted and
in the manner in which such business is proposed to be conducted, and (ii) to
permit the Seller to own and use its assets in the manner in which they are
currently owned and used and in the manner in which they are proposed to be
owned and used.
2.17 TAX MATTERS.
(a) Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by the Seller has been duly paid in full on a
timely basis. Any Tax required to have been withheld or collected by the Seller
has been duly withheld and collected; and (to the extent required) each such Tax
has been paid to the appropriate Governmental Body.
(b) Part 2.17 of the Disclosure Schedule accurately identifies
each examination or audit of any Tax Return of the Seller that has been
conducted since December 31, 1999. Xxxxxxxxx and the Seller have delivered to
the Purchaser accurate and complete copies of all audit reports and similar
documents (to which any Shareholder or the Seller has access) relating to such
Tax Returns.
(c) Except as set forth in Part 2.17 of the Disclosure
Schedule, no claim or other Proceeding is pending or has been threatened against
or with respect to the Seller in respect of any Tax. There are no unsatisfied
Liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by the Seller. Seller has not received any notice
from states in which it does not file Tax Returns. Part 2.17 of the Disclosure
Schedule lists all states and jurisdictions in which the Seller has ever filed
Tax Returns.
(d) Xxxxxxxxx and the Seller have delivered to (or made
available for inspection by) the Purchaser accurate and complete copies of all
Tax Returns that have been filed on behalf of or with respect to the Seller
since December 31, 1999. The information contained in such Tax Returns is
accurate and complete in all respects.
(e) Purchaser will not be required to deduct and withhold any
amount pursuant to Section 1445(a) of the Code as a result of this Agreement.
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(f) The Seller has no liability for Taxes of any other Person
as a transferee or successor, by contract, or otherwise.
2.18 EMPLOYEE AND LABOR MATTERS.
(a) Part 2.18 of the Disclosure Schedule accurately sets
forth, with respect to each employee of the Seller (including any employee who
is on a leave of absence or on layoff status): (i) the name and title of such
employee; (ii) the aggregate dollar amounts of the compensation (including
wages, salary, commissions, director's fees, fringe benefits, bonuses,
profit-sharing payments and other payments or benefits of any type) received by
such employee from the Seller with respect to services performed in 2001 and
with respect to services performed in 2002; (iii) such employee's annualized
compensation as of the date of this Agreement; (iv) the number of hours of
sick-time which such employee has accrued as of the date hereof and the
aggregate dollar amount thereof; and (v) the number of hours of vacation time
which such employee has accrued as of the date hereof and the aggregate dollar
amount thereof.
(b) Part 2.18 of the Disclosure Schedule accurately identifies
each former employee of the Seller who is receiving or is scheduled to receive
(or whose spouse or other dependent is receiving or is scheduled to receive) any
benefits from the Seller relating to such former employee's employment with the
Seller; and Part 2.19 of the Disclosure Schedule accurately describes such
benefits.
(c) Except as set forth in Part 2.18 of the Disclosure
Schedule, the Seller is not a party to or bound by, and has never been a party
to or bound by, any employment contract or any union contract, collective
bargaining agreement or similar Contract.
(d) The employment of the employees of the Seller is
terminable by the Seller at will and no employee is entitled to severance pay or
other benefits following termination or resignation, except as otherwise
provided by law. Xxxxxxxxx and the Seller have delivered to the Purchaser
accurate and complete copies of all employee manuals and handbooks, disclosure
materials, policy statements and other materials relating to the employment of
the current and former employees of the Seller.
(e) To the best of the knowledge of the Seller and Xxxxxxxxx:
(i) no employee of the Seller intends to terminate his employment; (ii) no
employee of the Seller has received an offer to join a business that may be
competitive with the business of the Seller; and (iii) no employee of the Seller
is a party to or is bound by any confidentiality agreement, noncompetition
agreement or other Contract (with any Person) that may have an adverse effect on
(A) the performance by such employee of any of his duties or responsibilities as
an employee of the Seller or as an employee of the Purchaser, or (B) the
business of the Seller or the Purchaser.
(f) The Seller is not engaged in any unfair labor practice of
any nature. There has never been any slowdown, work stoppage, labor dispute or
union organizing activity, or any similar activity or dispute, affecting the
Seller or any of its employees, and no Person has threatened to commence any
such slowdown, work stoppage, labor dispute or union organizing activity or any
similar activity or dispute.
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2.19 BENEFIT PLANS; ERISA.
(a) Part 2.19 of the Disclosure Schedule identifies each Plan.
The Seller has never established, adopted, maintained, sponsored, contributed
to, participated in or incurred any Liability with respect to any Employee
Benefit Plan, except for the Plans identified in Part 2.19 of the Disclosure
Schedule; and the Seller has never provided or made available any fringe benefit
or other benefit of any nature to any of its employees, except as set forth in
Part 2.19 of the Disclosure Schedule.
(b) No Plan: (i) provides or provided any benefit guaranteed
by the Pension Benefit Guaranty Corporation; (ii) is or was a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA; or (iii) is or was subject to
the minimum funding standards of Section 412 of the Code or Section 302 of
ERISA. There is no Person that (by reason of common control or otherwise) is or
has at any time been treated together with the Seller as a single employer
within the meaning of Section 414 of the Code.
(c) Xxxxxxxxx and the Seller have caused to be delivered to
the Purchaser, with respect to each Plan: (i) an accurate and complete copy of
such Plan and all amendments thereto (including any amendment that is scheduled
to take effect in the future); (ii) an accurate and complete copy of each
Contract (including any trust agreement, funding agreement, service provider
agreement, insurance agreement, investment management agreement or recordkeeping
agreement) relating to such Plan; (iii) an accurate and complete copy of any
description, summary, notification, report or other document that has been
furnished to any employee of the Seller with respect to such Plan; (iv) an
accurate and complete copy of any form, report, registration statement or other
document that has been filed with or submitted to any Governmental Body with
respect to such Plan; and (v) an accurate and complete copy of any determination
letter, notice or other document that has been issued by, or that has been
received by the Seller from, any Governmental Body with respect to such Plan.
(d) Each Plan is being and has at all times been operated and
administered in full compliance with the provisions thereof. Each contribution
or other payment that is required to have been accrued or made under or with
respect to any Plan has been duly accrued and made on a timely basis. Each Plan
has at all times complied and been operated and administered in full compliance
with all applicable reporting, disclosure and other requirements of ERISA and
the Code and all other applicable Legal Requirements. The Seller has never
incurred any Liability to the Internal Revenue Service or any other Governmental
Body with respect to any Plan; and no event has occurred, and no condition or
circumstance exists, that might (with or without notice or lapse of time) give
rise directly or indirectly to any such Liability. Neither the Seller nor any
Person that is or was an administrator or fiduciary of any Plan (or that acts or
has acted as an agent of the Seller or any such administrator or fiduciary) has
engaged in any transaction or has otherwise acted or failed to act in a manner
that has subjected or may subject the Seller to any Liability for breach of any
fiduciary duty or any other duty. No Plan, and no Person that is or was an
administrator or fiduciary of any Plan (or that acts or has acted as an agent of
any such administrator or fiduciary): (i) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code; (ii) has failed to perform any of the responsibilities or obligations
imposed upon fiduciaries under Title I of ERISA; or (iii) has
15
taken any action that (A) may subject such Plan or such Person to any Tax,
penalty or Liability relating to any "prohibited transaction," or (B) may
directly or indirectly give rise to or serve as a basis for the assertion (by
any employee or by any other Person) of any claim under, on behalf of or with
respect to such Plan.
(e) No inaccurate or misleading representation, statement or
other communication has been made or directed (in writing or otherwise) to any
current or former employee of the Seller (i) with respect to such employee's
participation, eligibility for benefits, vesting, benefit accrual or coverage
under any Plan or with respect to any other matter relating to any Plan, or (ii)
with respect to any proposal or intention on the part of the Seller to establish
or sponsor any Employee Benefit Plan or to provide or make available any fringe
benefit or other benefit of any nature.
(f) The Seller has not advised any of its employees (in
writing or otherwise) that it intends or expects to establish or sponsor any
Employee Benefit Plan or to provide or make available any fringe benefit or
other benefit of any nature in the future.
2.20 ENVIRONMENTAL MATTERS.
(a) The Seller is not liable or potentially liable for any
response cost or natural resource damages under Section 107(a) of CERCLA, or
under any other so-called "superfund" or "superlien" law or similar Legal
Requirement, at or with respect to any site.
(b) The Seller has never received any notice or other
communication (in writing or otherwise) from any Governmental Body or other
Person regarding any actual, alleged, possible or potential Liability arising
from or relating to the presence, generation, manufacture, production,
transportation, importation, use, treatment, refinement, processing, handling,
storage, discharge, release, emission or disposal of any Hazardous Material. No
Person has ever commenced or threatened to commence any contribution action or
other Proceeding against the Seller in connection with any such actual, alleged,
possible or potential Liability; and no event has occurred, and no condition or
circumstance exists, that may directly or indirectly give rise to, or result in
the Seller becoming subject to, any such Liability.
(c) The Seller has never generated, manufactured, produced,
transported, imported, used, treated, refined, processed, handled, stored,
discharged, released or disposed of any Hazardous Material (whether lawfully or
unlawfully). The Seller has never permitted (knowingly or otherwise) any
Hazardous Material to be generated, manufactured, produced, used, treated,
refined, processed, handled, stored, discharged, released or disposed of
(whether lawfully or unlawfully): (i) on or beneath the surface of any real
property that is, or that has at any time been, owned by, leased to, controlled
by or used by the Seller; (ii) in or into any surface water, groundwater, soil
or air associated with or adjacent to any such real property; or (iii) in or
into any well, pit, pond, lagoon, impoundment, ditch, landfill, building,
structure, facility, improvement, installation, equipment, pipe, pipeline,
vehicle or storage container that is or was located on or beneath the surface of
any such real property or that is or has at any time been owned by, leased to,
controlled by or used by the Seller.
16
(d) All property that is owned by, leased to, controlled by or
used by the Seller, and all surface water, groundwater, soil and air associated
with or adjacent to such property: (i) is in clean and healthful condition; (ii)
is free of any Hazardous Material and any harmful chemical or physical
conditions; and (iii) is free of any environmental contamination of any nature.
2.21 PERFORMANCE OF SERVICES. All services that have been performed by
the Seller were performed properly and in full conformity with the terms and
requirements of all applicable warranties and other Contracts and with all
applicable Legal Requirements. The Purchaser will not incur or otherwise become
subject to any Liability arising directly or indirectly from any services
performed by the Seller. There is no claim pending or being threatened against
the Seller relating to any services performed by the Seller, and, to the best of
the knowledge of Xxxxxxxxx and the Seller, there is no basis for the assertion
of any such claim.
2.22 INSURANCE. Part 2.22 of the Disclosure Schedule accurately sets
forth each insurance policy maintained by or at the expense of, or for the
direct or indirect benefit of, the Seller. Each of the policies identified in
Part 2.22 of the Disclosure Schedule is valid, enforceable and in full force and
effect, and has been issued by an insurance carrier that, to the best of the
knowledge the Seller and Xxxxxxxxx, is solvent, financially sound and reputable.
The Seller has not received: (i) any notice or other communication (in writing
or otherwise) regarding the actual or possible cancellation or invalidation of
any of the policies identified in Part 2.22 of the Disclosure Schedule or
regarding any actual or possible adjustment in the amount of the premiums
payable with respect to any of said policies; (ii) any notice or other
communication (in writing or otherwise) regarding any actual or possible refusal
of coverage under, or any actual or possible rejection of any claim under, any
of the policies identified in Part 2.22 of the Disclosure Schedule; or (iii) any
indication that the issuer of any of the policies identified in Part 2.22 of the
Disclosure Schedule may be unwilling or unable to perform any of its obligations
thereunder.
2.23 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.23 of
the Disclosure Schedule: (a) no Related Party has any direct or indirect
interest of any nature in any of the assets of the Seller; (b) no Related Party
is indebted to the Seller; (c) no Related Party has entered into, or has had any
direct or indirect financial interest in, any Seller Contract, transaction or
business dealing of any nature involving the Seller; (d) no Related Party is
competing directly or indirectly, with the Seller; (e) no Related Party has any
claim or right against the Seller; and (f) no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any claim or
right in favor of any Related Party against the Seller.
2.24 CERTAIN PAYMENTS, ETC. The Seller has not, and no officer,
employee, agent or other Person associated with or acting for or on behalf of
the Seller has, at any time, directly or indirectly: (a) used any corporate
funds (i) to make any unlawful political contribution or gift or for any other
unlawful purpose relating to any political activity, (ii) to make any unlawful
payment to any governmental official or employee, or (iii) to establish or
maintain any unlawful or unrecorded fund or account of any nature; (b) made any
false or fictitious entry, or failed to make any entry that should have been
made, in any of the books of account or other records of the Seller; (c) made
any payoff, influence payment, bribe, rebate, kickback or unlawful payment
17
to any Person; or (d) agreed, committed or offered (in writing or otherwise) to
take any of the actions described in clauses "(a)" through "(c)" above.
2.25 PROCEEDINGS; ORDERS. There is no pending Proceeding, and no Person
has threatened to commence any Proceeding: (i) that involves the Seller or that
otherwise relates to or might affect the business of the Seller or any of the
Assets (whether or not the Seller is named as a party thereto); or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Transactions, and no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
might directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding. There is no Order to which the Seller, or
any of the assets owned or used by the Seller, is subject; and neither Xxxxxxxxx
or any other Related Party is subject to any Order that relates to the Seller's
business or to any of the assets of the Seller. To the best of the knowledge of
the Seller and Xxxxxxxxx, no employee of the Seller is subject to any Order that
may prohibit employee from engaging in or continuing any conduct, activity or
practice relating to the business of the Seller. There is no proposed Order
that, if issued or otherwise put into effect, (i) may have an adverse effect on
the business, condition, assets, liabilities, operations, financial performance,
net income or prospects of the Seller or on the ability of Xxxxxxxxx or the
Seller to comply with or perform any covenant or obligation under any of the
Transactional Agreements, or (ii) may have the effect of preventing, delaying,
making illegal or otherwise interfering with any of the Transactions.
2.26 AUTHORITY; BINDING NATURE OF AGREEMENTS.
(a) The Seller has the absolute and unrestricted right, power
and authority to enter into and to perform its obligations under each of the
Transactional Agreements to which it is or may become a party; and the
execution, delivery and performance by the Seller of the Transactional
Agreements to which it is or may become a party have been duly authorized by all
necessary action on the part of the Seller and its holders of Equity Securities,
board of directors and officers. This Agreement constitutes the legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms. Upon the execution of each of the other Transactional Agreements
at the Closing, each of such other Transactional Agreements to which the Seller
is a party will constitute the legal, valid and binding obligation of the Seller
and will be enforceable against the Seller in accordance with its terms.
(b) Xxxxxxxxx has the absolute and unrestricted right, power
and capacity to enter into and to perform her obligations under each of the
Transactional Agreements to which she is or may become a party. This Agreement
constitutes the legal, valid and binding obligation of each Xxxxxxxxx,
enforceable against Xxxxxxxxx in accordance with its terms. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements to which Xxxxxxxxx is a party will constitute the
legal, valid and binding obligation of Xxxxxxxxx and will be enforceable against
Xxxxxxxxx in accordance with its terms.
2.27 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.27 of
the Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the
18
consummation or performance of any of the Transactions, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which any of Xxxxxxxxx or
the Seller, or any of the assets of the Seller, is subject;
(b) cause the Purchaser or any affiliate of the Purchaser to
become subject to, or to become liable for the payment of, any Tax;
(c) cause any of the Assets to be reassessed or revalued by
any taxing authority or other Governmental Body;
(d) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is to be included in the Assets or is
held by the Seller or any employee of the Seller;
(e) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Contract;
(f) give any Person the right to (i) declare a default or
exercise any remedy under any Contract, (ii) accelerate the maturity or
performance of any Contract, or (iii) cancel, terminate or modify any
Contract; or
(g) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets.
Except as set forth in Part 2.27 of the Disclosure Schedule, neither the Seller
nor Xxxxxxxxx was, is or will be required to make any filing with or give any
notice to, or to obtain any Consent from, any Person in connection with the
execution and delivery of any of the Transactional Agreements or the
consummation or performance of any of the Transactions.
2.28 BROKERS. Neither the Seller nor Xxxxxxxxx has agreed or become
obligated to pay, or has taken any action that might result in any Person
claiming to be entitled to receive, any brokerage commission, finder's fee or
similar commission or fee in connection with any of the Transactions.
2.29 XXXXXXXXX.
(a) Xxxxxxxxx has not ever (i) made a general assignment for
the benefit of creditors, (ii) filed, or had filed against her, any bankruptcy
petition or similar filing, (iii) suffered the attachment or other judicial
seizure of all or a substantial portion of her assets, (iv) admitted in writing
the inability to pay her debts as they become due, or (v) taken or been the
subject of any action that may have an adverse effect on his ability to comply
with or perform any of his covenants or obligations under any of the
Transactional Agreements.
19
(b) Xxxxxxxxx is not subject to any Order or bound by any
Contract that may have an adverse effect on her ability to comply with or
perform any of his or her covenants or obligations under any of the
Transactional Agreements. There is no Proceeding pending, and no Person has
threatened to commence any Proceeding, that may have an adverse effect on the
ability of Xxxxxxxxx to comply with or perform any of her covenants or
obligations under any of the Transactional Agreements. No event has occurred,
and no claim, dispute or other condition or circumstance exists, that might
directly or indirectly give rise to or serve as a basis for the commencement of
any such Proceeding.
2.30 FULL DISCLOSURE. None of the Transactional Agreements contains or
will contain any untrue statement of fact; and none of the Transactional
Agreements omits or will omit to state any fact necessary to make any of the
representations, warranties or other statements or information contained therein
not misleading. There is no fact within the knowledge of Seller or Xxxxxxxxx
(other than publicly known facts relating exclusively to political or economic
matters of general applicability) that may have an adverse effect on Seller or
may have the effect of interfering with any of the Transactions that has not
been disclosed to Purchaser. All of the information set forth in the Disclosure
Schedule, and all other information regarding the Seller and its business,
condition, assets, liabilities, operations, financial performance, net income
and prospects that has been furnished to the Purchaser or any of the Purchaser's
Representatives by or on behalf of Xxxxxxxxx or the Seller or by any
Representative of Xxxxxxxxx or of the Seller, is accurate and complete in all
respects.
2.31 SECURITIES LAWS MATTERS. Each of Seller and Xxxxxxxxx understands
that the Purchaser common stock to be issued in the Transactions (the
"SECURITIES") has not been registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT") and that the Securities are being offered and
sold pursuant to an exemption from registration contained in the Securities Act,
based in part upon the Seller's representations contained in this Agreement and
the representations of the holders of outstanding Equity Securities of the
Seller contained in the Investor Questionnaires of such holders, substantially
in the form of Exhibit H. Seller represents and warrants as follows:
(a) Each of Seller and Xxxxxxxxx, acting upon advice of its
professional advisors, shareholders and board of directors, has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Purchaser so that it is capable of
evaluating the merits and risks of this investment in the Purchaser and has the
capacity to protect its, and its shareholders, interests in the Transactions.
Each of Seller and Xxxxxxxxx represents that by reason of its business or
financial experience, it has the capacity to protect its own interests in
connection with the Transactions. Further, Seller and Xxxxxxxxx are aware of no
publication of any advertisement in connection with the Transactions. Seller and
Xxxxxxxxx must bear the economic risk of this investment until the Securities
are registered pursuant to the Securities Act. Each of Seller and Xxxxxxxxx has
been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.
(b) Each of Seller and Xxxxxxxxx is an "accredited investor"
within the meaning of Rule 501 of the rules and regulations promulgated under
the Securities Act.
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(c) Each of Seller and Xxxxxxxxx has received and read
Purchaser's Information Statement, which includes its Annual Report on Form 10-K
for the year ended December 31, 2001, and has had an opportunity to discuss
Purchaser's business, management and financial affairs, both as currently
conducted and as proposed to be conducted following the Transaction, with
directors, officers and management of Purchaser and has had the opportunity to
review Purchaser's operations and facilities. Seller and Xxxxxxxxx have also had
the opportunity to ask questions of, and receive answers from, Purchaser and its
management regarding the terms and conditions of this investment.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants, to and for the benefit of the
Seller and Xxxxxxxxx, as follows:
3.1 AUTHORITY; BINDING NATURE OF AGREEMENTS. The Purchaser has the
absolute and unrestricted right, power and authority to enter into and perform
its obligations under this Agreement, and the execution and delivery of this
Agreement by the Purchaser have been duly authorized by all necessary action on
the part of the Purchaser and its board of directors. The Purchaser has the
absolute and unrestricted right, power and authority to enter into and perform
its obligations under the Assumption Agreement, and the execution, delivery and
performance of the Assumption Agreement by the Purchaser have been duly
authorized by all necessary action on the part of the Purchaser and its board of
directors. This Agreement constitutes the legal, valid and binding obligation of
the Purchaser, enforceable against it in accordance with its terms. Upon the
execution and delivery of the Assumption Agreement at the Closing, the
Assumption Agreement will constitute the legal, valid and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with their terms.
3.2 BROKERS. The Purchaser has not become obligated to pay, and has not
taken any action that might result in any Person claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee in
connection with any of the Transactions.
3.3 DUE ORGANIZATION. Purchaser is a corporation duly organized,
existing and in good standing under the laws of the State of Delaware and has
all necessary power and authority under applicable corporate law and its
organizational documents to own or lease its properties and to carry on its
business as presently conducted.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) As of the time it was filed with the Securities and
Exchange Commission (the "SEC") (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) each report,
registration statement (on a form other than Form S-8) and definitive proxy
statement filed by Purchaser with the SEC between July 25, 2000 and the date of
this Agreement (the "Purchaser SEC Documents") complied in all material respects
with the applicable requirements of the Securities Act or the Securities
Exchange Act of 1934 (as the case may be).
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(b) The consolidated financial statements contained in the
Purchaser SEC Documents: (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered, except as may be indicated in the notes to such financial
statements and (in the case of unaudited statements) as permitted by Form 10-Q
of the SEC, and except that unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end audit adjustments
(which will not, individually or in the aggregate, be material in magnitude);
and (iii) fairly present the consolidated financial position of Purchaser and
its subsidiaries as of the respective dates thereof and the consolidated results
of operations of Purchaser and its subsidiaries for the periods covered thereby.
(c) Since December 31, 2001, there has not been any change in
the assets, liabilities, financial condition or operations of the Purchaser
which has had or is expected to have a material adverse effect on such assets,
liabilities, financial condition, operations or prospects of the Purchaser such
that such change would be required to be stated in a Purchaser SEC Document, or
would be necessary in order to make the statements in a Purchaser SEC Document,
in light of the circumstances under which they were made, not misleading.
4. PRE-CLOSING COVENANTS OF XXXXXXXXX AND THE SELLER.
4.1 ACCESS AND INVESTIGATION. Xxxxxxxxx and the Seller shall ensure
that, at all times during the Pre-Closing Period: (a) the Seller and its
Representatives provide the Purchaser and its Representatives with free and
complete access to the Seller's Representatives, personnel and assets and to all
existing books, records, Tax Returns, work papers and other documents and
information relating to the Seller and its business; (b) the Seller and its
Representatives provide the Purchaser and its Representatives with such copies
of existing books, records, Tax Returns, work papers and other documents and
information relating to the Seller and its business as the Purchaser may request
in good faith; and (c) the Seller and its Representatives compile and provide
the Purchaser and its Representatives with such additional financial, operating
and other data and information relating to the Seller and its business as the
Purchaser may request in good faith.
4.2 OPERATION OF BUSINESS. Xxxxxxxxx and the Seller shall ensure that,
during the Pre-Closing Period:
(a) no holder of Equity Securities of the Seller sells or
otherwise transfers, any Equity Securities of the Seller or any
interest in or right relating to any such Equity Securities;
(b) Xxxxxxxxx will not permit, or agree, commit or offer (in
writing or otherwise) to permit, any Equity Securities of the Seller to
become subject, directly or indirectly, to any Encumbrance;
(c) the Seller conducts its operations exclusively in the
Ordinary Course of Business and in the same manner as such operations
have been conducted prior to the date of this Agreement;
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(d) the Seller (i) preserves intact its current business
organization, (ii) keeps available the services of its current officers
and employees, (iii) maintains its relations and good will with all
suppliers, customers, landlords, creditors, licensors, licensees,
employees, independent contractors and other Persons having business
relationships with the Seller, and (iv) promptly repairs, restores or
replaces any assets that are destroyed or damaged;
(e) the Seller keeps in full force all insurance policies
identified in Part 2.22 of the Disclosure Schedule;
(f) the officers of the Seller confer regularly with the
Purchaser concerning operational matters and otherwise report regularly
to the Purchaser concerning the status of the Seller's business,
condition, assets, liabilities, operations, financial performance and
prospects;
(g) the Purchaser is notified immediately of any inquiry,
proposal or offer from any Person relating to any Acquisition
Transaction;
(h) the Seller and its officers use their Best Efforts to
cause the Seller to operate profitably and to maximize its revenues and
net income;
(i) the Seller does not (i) declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any Equity
Securities of the Seller, or (ii) repurchase, redeem or otherwise
reacquire any Equity Securities of the Seller;
(j) the Seller does not sell or otherwise issue any Equity
Securities of the Seller;
(k) the Seller does not effect or become a party to any
Acquisition Transaction;
(l) the Seller does not form any subsidiary or acquire any
equity interest or other interest in any other Entity;
(m) the Seller does not make any capital expenditure;
(n) the Seller does not enter into or permit any of its assets
to become bound by any Contract;
(o) the Seller does not incur, assume or otherwise become
subject to any Liability, except for current liabilities (of the type
required to be reflected in the "liabilities" column of a balance sheet
prepared in accordance with GAAP) incurred in the Ordinary Course of
Business;
(p) the Seller does not establish or adopt any Employee
Benefit Plan, or pay any bonus or make any profit-sharing or similar
payment to, or increase the amount of the
23
wages, salary, commissions, fees, fringe benefits or other compensation
or remuneration payable to, any of its directors, officers, employees
or independent contractors;
(q) the Seller does not change any of its methods of
accounting or accounting practices in any respect;
(r) the Seller does not commence or settle any Proceeding;
(s) the Seller does not enter into any transaction or take any
other action of the type referred to in Section 2.5;
(t) the Seller does not enter into any transaction or take any
other action outside the Ordinary Course of Business;
(u) the Seller does not enter into any transaction or take any
other action that might cause or constitute a Breach of any
representation or warranty made by Xxxxxxxxx or the Seller in this
Agreement or in the Closing Certificate; and
(v) the Seller does not agree, commit or offer (in writing or
otherwise) to take any of the actions described in clauses "(i)"
through "(u)" of this Section 4.2.
4.3 FILINGS AND CONSENTS. Xxxxxxxxx and the Seller shall ensure that:
(a) all filings, notices and Consents required to be made, given and obtained in
order to consummate the Transactions are made, given and obtained on a timely
basis; and (b) during the Pre-Closing Period, Xxxxxxxxx and the Seller and their
respective Representatives cooperate with the Purchaser and with the Purchaser's
Representatives, and prepare and make available such documents and take such
other actions as the Purchaser may request in good faith, in connection with any
filing, notice or Consent that the Purchaser is required or elects to make, give
or obtain.
4.4 INVESTMENT REPRESENTATION STATEMENT. Xxxxxxxxx and the Seller shall
ensure that every holder of the Seller's Equity Securities has: (a) received an
Information Statement, substantially in the form of Exhibit I, describing the
Transactions; (b) completed an Investor Questionnaire in the form of Exhibit H;
and, (c) if necessary, has appointed a "purchaser representative" in accordance
with the provisions of Regulation D of the Securities Act.
4.5 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE. During the
Pre-Closing Period, Xxxxxxxxx and the Seller shall promptly notify the Purchaser
in writing of: (a) the discovery by Xxxxxxxxx or the Seller of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes a Breach of any representation
or warranty made by Xxxxxxxxx or the Seller in this Agreement; (b) any event,
condition, fact or circumstance that occurs, arises or exists after the date of
this Agreement and that would cause or constitute a Breach of any representation
or warranty made by Xxxxxxxxx or the Seller in this Agreement if (i) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (ii)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (c) any Breach of any covenant or
obligation of Xxxxxxxxx or the Seller; and (d) any event, condition, fact or
circumstance that may make the timely satisfaction of any of the
24
conditions set forth in Section 6 or Section 7 impossible or unlikely. If any
event, condition, fact or circumstance that is required to be disclosed pursuant
to this Section 4.5 requires any change in the Disclosure Schedule, or if any
such event, condition, fact or circumstance would require such a change assuming
the Disclosure Schedule were dated as of the date of the occurrence, existence
or discovery of such event, condition, fact or circumstance, then Xxxxxxxxx and
the Seller shall promptly deliver to the Purchaser an update to the Disclosure
Schedule specifying such change. No such update shall be deemed to supplement or
amend the Disclosure Schedule for the purpose of (i) determining the accuracy of
any representation or warranty made by any of Xxxxxxxxx or the Seller in this
Agreement or in the Closing Certificate, or (ii) determining whether any of the
conditions set forth in Section 6 has been satisfied.
4.6 NO NEGOTIATION. Xxxxxxxxx and the Seller shall ensure that, during
the Pre-Closing Period, neither the Seller, Xxxxxxxxx, nor any Representative of
Xxxxxxxxx or of the Seller, directly or indirectly: (a) solicits or encourages
the initiation of any inquiry, proposal or offer from any Person (other than the
Purchaser) relating to any Acquisition Transaction; (b) participates in any
discussions or negotiations with, or provides any non-public information to, any
Person (other than the Purchaser) relating to any proposed Acquisition
Transaction; or (c) considers the merits of any unsolicited inquiry, proposal or
offer from any Person (other than the Purchaser) relating to any Acquisition
Transaction.
4.7 BEST EFFORTS. During the Pre-Closing Period, Xxxxxxxxx and the
Seller shall use their Best Efforts to cause the conditions set forth in Section
6 to be satisfied on a timely basis.
4.8 CONFIDENTIALITY. Xxxxxxxxx and the Seller shall ensure that, during
the Pre-Closing Period: (a) neither the Seller nor Xxxxxxxxx, nor any
Representative of Xxxxxxxxx or of the Seller, issues or disseminates any press
release or other publicity or otherwise makes any disclosure of any nature (to
any supplier, customer, landlord, creditor or employee of the Seller or to any
other Person) regarding any of the Transactions or the existence or terms of
this Agreement, except to the extent that the Seller is required by law to make
any such disclosure; and (b) if the Seller is required by law to make any such
disclosure, Xxxxxxxxx and the Seller shall advise the Purchaser, at least five
business days before making such disclosure, of the nature and content of the
intended disclosure.
4.9 FIRPTA MATTERS. At the Closing, Seller shall execute and deliver to
Purchaser a statement (in such form as may be reasonably requested by counsel to
Purchaser) conforming to the requirements of Section 1.1445-2(b)(2)(i) of the
United States Treasury Regulations.
5. PRE-CLOSING COVENANTS OF THE PURCHASER.
5.1 BEST EFFORTS. During the Pre-Closing Period, the Purchaser shall
use its Best Efforts to cause the conditions set forth in Section 7 to be
satisfied.
5.2 EMPLOYMENT OFFERS. During the Pre-Closing Period, the Purchaser
shall offer employment to the individuals set forth on Exhibit J on terms
substantially similar to those reflected in such Exhibit.
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6. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION TO CLOSE.
The Purchaser's obligation to purchase the Assets and to take the other
actions required to be taken by the Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part, in writing):
6.1 ACCURACY OF REPRESENTATIONS. All of the representations and
warranties made by Xxxxxxxxx and the Seller in this Agreement (considered
collectively), and each of said representations and warranties (considered
individually), shall have been accurate in all material respects as of the date
of this Agreement, and shall be accurate in all material respects as of the
Scheduled Closing Time as if made at the Scheduled Closing Time, without giving
effect to any update to the Disclosure Schedule.
6.2 PERFORMANCE OF OBLIGATIONS.
(a) Each of the documents referred to in Sections 1.5(b)(i),
1.5(b)(iv), 1.5(b)(vi) and 1.5(b)(vii) shall have been executed by each of the
parties thereto and delivered to the Purchaser.
(b) All of the covenants and obligations that Xxxxxxxxx and
the Seller are required to comply with or to perform at or prior to the Closing
(considered collectively), and each of said covenants and obligations
(considered individually), shall have been duly complied with and performed in
all material respects.
6.3 CONSENTS. Each of the Consents identified in Part 2.27 of the
Disclosure Schedule shall have been obtained and shall be in full force and
effect.
6.4 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, condition, assets, liabilities, operations,
financial performance, net income or prospects of the Seller since the date of
this Agreement, and no event shall have occurred and no condition or
circumstance shall exist that could be expected to give rise to any such
material adverse change.
6.5 APPROVAL OF HOLDERS OF SELLER'S EQUITY SECURITIES. Each of the
holders of the Seller's Equity Securities shall have (a) executed the Investment
Representation Statement and delivered it to the Purchaser; and (b) approved
this Agreement, the transaction and the ultimate distribution of the
Consideration as set forth in Exhibit K.
6.6 ADDITIONAL DOCUMENTS. Purchaser shall have received the following
documents:
(a) an opinion letter from R. Xxxxx Xxx LLC, dated the Closing
Date, in the form of Exhibit L;
26
(b) estoppel certificates executed on behalf of the Person(s)
identified on Exhibit M dated as of a date not more than three days prior to the
Closing Date and reasonably satisfactory in form and content to the Purchaser;
and
(c) such other documents as the Purchaser may request in good
faith for the purpose of (i) evidencing the accuracy of any representation or
warranty made by Xxxxxxxxx or the Seller, (ii) evidencing the compliance by
Xxxxxxxxx or the Seller with, or the performance by Xxxxxxxxx or the Seller of,
any covenant or obligation set forth in this Agreement, (iii) evidencing the
satisfaction of any condition set forth in this Section 6, or (iv) otherwise
facilitating the consummation or performance of any of the Transactions.
(d) the FIRPTA statement referred to in Section 4.9, executed
by Seller;
6.7 NO PROCEEDINGS. Since the date of this Agreement, there shall not
have been commenced or threatened against the Purchaser, or against any Person
affiliated with the Purchaser, any Proceeding (a) involving any material
challenge to, or seeking material damages or other material relief in connection
with, any of the Transactions, or (b) that may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
6.8 NO PROHIBITION. Neither the consummation nor the performance of any
the Transactions will, directly or indirectly (with or without notice or lapse
of time), contravene or conflict with or result in a violation of, or cause the
Purchaser or any Person affiliated with the Purchaser to suffer any adverse
consequence under, any applicable Legal Requirement or Order.
6.9 KEY EMPLOYEES. Each of the individuals listed on Exhibit N shall
have accepted employment with the Purchaser.
7. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO CLOSE.
The Seller's obligation to sell the Assets and to take the other
actions required to be taken by the Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller, in whole or in part, in writing):
7.1 ACCURACY OF REPRESENTATIONS. All of the representations and
warranties made by the Purchaser in this Agreement (considered collectively),
and each of said representations and warranties (considered individually), shall
have been accurate in all material respects as of the date of this Agreement and
shall be accurate in all material respects as of the Scheduled Closing Time as
if made at the Scheduled Closing Time.
7.2 PURCHASER'S PERFORMANCE.
(a) The Purchaser shall have executed and delivered the
Assumption Agreement and shall have made the payments contemplated by Sections
1.5(b)(ii) and 1.5(b)(iii) and the deposit contemplated by Section 1.5(b)(iv).
27
(b) All of the other covenants and obligations that the
Purchaser is required to comply with or to perform pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of said covenants
and obligations (considered individually), shall have been complied with and
performed in all material respects.
8. TERMINATION.
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by the Purchaser if (i) there is a material Breach of any
covenant or obligation of Xxxxxxxxx or the Seller and such Breach shall not have
been cured within ten days after the delivery of notice thereof to Seller and
Xxxxxxxxx, or (ii) the Purchaser reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible or
impractical (other than as a result of any failure on the part of the Purchaser
to comply with or perform its covenants and obligations set forth in this
Agreement);
(b) by Seller if (i) there is a material Breach of any
covenant or obligation of the Purchaser and such Breach shall not have been
cured within ten days after the delivery of notice thereof to the Purchaser, or
(ii) Seller reasonably determines that the timely satisfaction of any condition
set forth in Section 7 has become impossible or impractical (other than as a
result of any failure on the part of any Shareholder or the Seller to comply
with or perform any covenant or obligation set forth in this Agreement);
(c) by the Purchaser at or after the Scheduled Closing Time if
any condition set forth in Section 6 has not been satisfied by the Scheduled
Closing Time;
(d) by Seller at or after the Scheduled Closing Time if any
condition set forth in Section 7 has not been satisfied by the Scheduled Closing
Time;
(e) by the Purchaser if the Closing has not taken place on or
before June 30, 2002 (other than as a result of any failure on the part of the
Purchaser to comply with or perform its covenants and obligations under this
Agreement);
(f) by Seller if the Closing has not taken place on or before
June 30, 2002 (other than as a result of any failure on the part of Xxxxxxxxx or
the Seller to comply with or perform any covenant or obligation set forth in
this Agreement); or
(g) by the mutual written consent of the Purchaser, Xxxxxxxxx
and Seller.
8.2 TERMINATION PROCEDURES. If the Purchaser wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), the
Purchaser shall deliver to Seller and Xxxxxxxxx a written notice stating that
the Purchaser is terminating this Agreement and setting forth a brief
description of the basis on which the Purchaser is terminating this Agreement.
If Seller wishes to terminate this Agreement pursuant to Section 8.1(b), Section
8.1(d) or Section 8.1(f), Seller shall deliver to the Purchaser a written notice
stating that
28
Seller is terminating this Agreement and setting forth a brief description of
the basis on which Seller is terminating this Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) no party shall be relieved of any
obligation or other Liability arising from any Breach by such party of any
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 12; and (c)
Xxxxxxxxx and the Seller shall, in all events, remain bound by and continue to
be subject to Section 4.8.
8.4 NONEXCLUSIVITY OF TERMINATION RIGHTS. The termination rights
provided in Section 8.1 shall not be deemed to be exclusive. Accordingly, the
exercise by any party of its right to terminate this Agreement pursuant to
Section 8.1 shall not be deemed to be an election of remedies and shall not be
deemed to prejudice, or to constitute or operate as a waiver of, any other right
or remedy that such party may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations, warranties, covenants and obligations
of each party to this Agreement shall survive (without limitation): (i) the
Closing and the sale of the Assets to the Purchaser; (ii) any sale or other
disposition of any or all of the Assets by the Purchaser; and (iii) the death or
dissolution of any party to this Agreement. All of said representations,
warranties, covenants and obligations shall remain in full force and effect and
shall survive until the second anniversary of the Closing; provided, however,
that if a Claim Notice (as defined below) relating to any representation or
warranty set forth in any of said Sections is given to an Indemnitor on or prior
to the second anniversary of the Closing Date, then, notwithstanding anything to
the contrary contained in this Section 9.1(a), such representation or warranty
shall not so expire, but rather shall remain in full force and effect until such
time as each and every claim (including any indemnification claim asserted by
any Indemnitee under Section 9.2 that is based directly or indirectly upon, or
that relates directly or indirectly to, any Breach or alleged Breach of such
representation or warranty has been fully and finally resolved, either by means
of a written settlement agreement executed on behalf of Seller, Xxxxxxxxx and
the Purchaser or by means of a final, non-appealable judgment issued by a court
of competent jurisdiction.
(b) The representations, warranties, covenants and obligations
of the parties, and the rights and remedies that may be exercised by the
Indemnitees, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or any knowledge of, any
of the Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, a "CLAIM NOTICE" relating
to a particular representation or warranty shall be deemed to have been given if
any Indemnitee, acting in good faith, delivers to an Indemnitor a written notice
stating that such Indemnitee believes that there is or has been a possible
Breach of such representation or warranty and containing (i) a brief
29
description of the circumstances supporting such Indemnitee's belief that there
is or has been such a possible Breach, and (ii) a non-binding, preliminary
estimate of the aggregate dollar amount of the actual and potential Damages that
have arisen and may arise as a direct or indirect result of such possible
Breach.
(d) For purposes of this Agreement, each statement or other
item of information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
Xxxxxxxxx and the Seller in this Agreement.
9.2 INDEMNIFICATION.
(a) Xxxxxxxxx and Seller, jointly and severally, shall hold
harmless and indemnify each of the Purchaser Indemnitees from and against, and
shall compensate and reimburse each of the Purchaser Indemnitees for, any
Damages that are directly or indirectly suffered or incurred by any of the
Purchaser Indemnitees or to which any of the Purchaser Indemnitees may otherwise
become subject at any time (regardless of whether or not such Damages relate to
any third-party claim) and that arise directly or indirectly from or as a direct
or indirect result of, or are directly or indirectly connected with:
(i) any Breach of any of the representations or
warranties made by Xxxxxxxxx or Seller in this Agreement (without
giving effect to any update to the Disclosure Schedule) or in the
Closing Certificate or any of the other Transactional Agreements;
(ii) any Breach of any representation, warranty,
statement, information or provision contained in the Disclosure
Schedule or in any other document delivered or otherwise made available
to the Purchaser or any of its Representatives by or on behalf of
Xxxxxxxxx, Seller or any Representative of Xxxxxxxxx or of Seller;
(iii) any Breach of any covenant or obligation of
Xxxxxxxxx or Seller contained in any of the Transactional Agreements;
(iv) any Liability of Seller or of any Related Party,
other than the Assumed Liabilities; any Liability of Seller or of any
Related Party, other than the Assumed Liabilities;
(v) any Liability (other than the Assumed
Liabilities) to which the Purchaser or any of the other Indemnitees may
become subject and that arises directly or indirectly from or relates
directly or indirectly to any services performed by or on behalf of
Seller, or the operation by Seller of its business; Seller of its
business;
(vi) any Proceeding relating directly or indirectly
to any Breach, alleged Breach, Liability or matter of the type referred
to in clause "(i)," "(ii)," "(iii)," "(iv)," "(v)" or "(vi)" above
(including any Proceeding commenced by any Purchaser Indemnitee for the
purpose of enforcing any of its rights under this Section 9). enforcing
any of its rights under this Section 9).
30
(b) Purchaser shall hold harmless and indemnify each of the Seller Indemnitees
from and against, and shall compensate and reimburse each of the Seller
Indemnitees for, any Damages that are directly or indirectly suffered or
incurred by any of the Seller Indemnitees or to which any of the Seller
Indemnitees may otherwise become subject at any time (regardless of whether or
not such Damages relate to any third-party claim) and that arise directly or
indirectly from or as a direct or indirect result of, or are directly or
indirectly connected with:
(i) any Breach of any of the representations or
warranties made by Purchaser in this Agreement or in the Purchaser
Closing Certificate or any of the other Transactional Agreements;
Purchaser Closing Certificate or any of the other Transactional
Agreements;
(ii) any Breach of any representation, warranty,
statement, information or provision contained in document delivered or
otherwise made available to the Seller or Xxxxxxxxx by or on behalf of
the Purchaser or any Representative of the Purchaser; Representative of
the Purchaser;
(iii) any Breach of any covenant or obligation of the
Purchaser contained in any of the Transactional Agreements; or
Agreements; or
(iv) any Proceeding relating directly or indirectly
to any Breach, alleged Breach, Liability or matter of the type referred
to in clause "(i)," "(ii)" or "(iii)," above (including any Proceeding
commenced by any Seller Indemnitee for the purpose of enforcing any of
its rights under this Section 9). this Section 9).
9.3 RECOVERY FOR DAMAGES
(a) Escrow Fund. The Escrow Funds shall be available to
compensate the Purchaser Indemnitees for any claims by such parties for any
Damages suffered or incurred by them and for which they are entitled to recovery
under Section 9.2(a). Recovery for any such claims for Damages shall first come
from the Cash Escrow Fund, then, following depletion or payment of the Cash
Escrow Fund, from the Stock Escrow Fund.
(b) Escrow Periods; Distribution upon Termination of Escrow
Periods. Subject to the following requirements, the Escrow Funds shall be in
existence immediately following the Closing and shall terminate as set forth in
Sections 1.2(a) (collectively, the "ESCROW PERIODS"); provided, however, that
the Escrow Periods shall not terminate with respect to any amount which, in the
reasonable judgment of Purchaser, is necessary to satisfy any then pending and
unsatisfied claims specified in any Claim Notice delivered to the Seller or
Xxxxxxxxx, as applicable pursuant to Section 9.3(d) below prior to the
termination of the respective Escrow Period with respect to facts and
circumstances existing prior to the termination of such Escrow Period. As soon
as all such claims have been resolved, the Purchaser shall deliver to the Seller
or Xxxxxxxxx, as applicable, the remaining portion of such Escrow Fund, if any,
not required to satisfy such claims.
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(c) Distribution of Interest from Stock Escrow Fund.
(i) Any shares of Purchaser common stock or other
equity securities issued or distributed by Purchaser in connection with a stock
split ("NEW SHARES") in respect of Purchaser common stock in the Stock Escrow
Fund which have not been released from the Stock Escrow Fund shall be added to
the Stock Escrow Fund and become a part thereof.
(ii) Xxxxxxxxx shall not have the right to (i)
receive any dividends declared by the Purchaser with respect to or (ii) vote the
shares of Purchaser common stock contributed to the Stock Escrow Fund (or any
securities added to the Stock Escrow Fund constituting New Shares).
(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Seller or Xxxxxxxxx, as
applicable, at any time on or before the end of the respective Escrow Period of
a Claim Notice, the Purchaser shall subject to the provisions of Section 9.3(e)
hereof, reduce the Cash Escrow Fund by the amount of such changes, or, if the
Cash Escrow Fund has been depleted or payed to the Seller pursuant to Section
1.2(a)(iii), then the Escrow Agent shall, subject to the provisions of Section
9.3(e) hereof, deliver to Purchaser out of the Stock Escrow Fund, as promptly as
practicable, shares of Purchaser common stock held in the Stock Escrow Fund in
an amount equal to such Damages.
(ii) For the purposes of determining the number of
shares of Purchaser common stock to be delivered to Purchaser out of the Stock
Escrow Fund pursuant to this Section 9.3, the shares of Purchaser common stock
shall be valued at $2.82.
(e) Objections to Claims. For a period of thirty (30) days
after delivery of a Claim Notice to the Seller or Xxxxxxxxx, the Purchaser shall
not reduce the Cash Escrow Fund or deliver any shares from the Stock Escrow Fund
pursuant to Section 9.3(d)(i) hereof unless the Purchaser shall have received
written authorization from the Seller or Xxxxxxxxx, as applicable, to make such
reduction or delivery. After the expiration of such thirty (30) day period, the
Purchaser shall either reduce the Cash Escrow Fund or make delivery of shares of
Purchaser common stock from the Stock Escrow Fund in accordance with Section
9.3(d) hereof, provided that no such reduction or delivery may be made if the
Seller or Xxxxxxxxx, as applicable, shall object in a written statement to the
claim made in the Claim Notice, and such statement shall have been delivered to
the Purchaser prior to the expiration of such thirty (30) day period.
(f) Resolution of Conflicts; Arbitration.
(i) In case an Indemnitor, as applicable, shall
object in writing to any claim or claims made in any Claim Notice to recover
Damages within thirty (30) days after delivery of such Claim Notice, the parties
shall attempt in good faith to agree upon the rights of the respective parties
with respect to each of such claims. If the parties should so agree, a
memorandum setting forth such agreement shall be prepared and signed by the
parties.
(ii) If no such agreement can be reached after good
faith negotiation and prior to sixty (60) days after delivery of a Claim Notice,
any party, as applicable, may demand arbitration of the matter unless the amount
of the Damages is at issue in pending litigation with a third party, in which
event arbitration shall not be commenced until such amount
32
is ascertained or all parties agree to arbitration, and in either such event the
matter shall be settled by arbitration conducted by one arbitrator mutually
agreeable to Purchaser and Seller or Xxxxxxxxx, as applicable. In the event
that, within thirty (30) days after submission of any dispute to arbitration,
Purchaser and Seller or Xxxxxxxxx, as applicable, cannot mutually agree on one
arbitrator, then, within fifteen (15) days after the end of such thirty (30) day
period, Purchaser and Seller or Xxxxxxxxx, as applicable, shall each select one
arbitrator. The two arbitrators so selected shall select a third arbitrator.
(iii) Any such arbitration shall be held in Boulder
County,
Colorado, under the rules then in effect of the American Arbitration
Association. The arbitrator(s) shall determine how all expenses relating to the
arbitration shall be paid, including without limitation, the respective expenses
of each party, the fees of each arbitrator and the administrative fee of the
American Arbitration Association. The arbitrator or arbitrators, as the case may
be, shall set a limited time period and establish procedures designed to reduce
the cost and time for discovery while allowing the parties an opportunity,
adequate in the sole judgment of the arbitrator or majority of the three
arbitrators, as the case may be, to discover relevant information from the
opposing parties about the subject matter of the dispute. The arbitrator or a
majority of the three arbitrators, as the case may be, shall rule upon motions
to compel or limit discovery and shall have the authority to impose sanctions,
including attorneys' fees and costs, to the same extent as a competent court of
law or equity, should the arbitrators or a majority of the three arbitrators, as
the case may be, determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of the arbitrator or a majority of the three
arbitrators, as the case may be, as to the validity and amount of any claim in
such Claim Notice shall be final, binding, and conclusive upon the parties to
this Agreement. Such decision shall be written and shall be supported by written
findings of fact and conclusions which shall set forth the award, judgment,
decree or order awarded by the arbitrator(s). Within thirty (30) days of a
decision of the arbitrator(s) requiring payment by one party to another, such
party shall make the payment to such other party.
(iv) Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.
(g) Third Party Claims. In the event Purchaser becomes aware
of a third party claim which Purchaser believes may result in a demand against
the Escrow Funds, Purchaser shall notify Xxxxxxxxx and Seller of such claim, and
Xxxxxxxxx and Seller shall be entitled, at its expense, to participate in, but
not to determine or conduct, the defense of such claim. Purchaser shall have the
right in its sole discretion to conduct the defense of and settle any such
claim; provided, however, that except with the consent of Xxxxxxxxx and Seller,
no settlement of any such claim with third party claimants shall alone be
determinative of the amount of Damages relating to such matter.
9.4 NONEXCLUSIVITY OF INDEMNIFICATION REMEDIES. The indemnification
remedies and other remedies provided in this Section 9 shall not be deemed to be
exclusive. Accordingly, the exercise by any Person of any of its rights under
this Section 9 shall not be deemed to be an election of remedies and shall not
be deemed to prejudice, or to constitute or operate as a waiver of, any other
right or remedy that such Person may be entitled to exercise (whether under this
33
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
9.5 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PURCHASER OR
XXXXXXXXX. No Indemnitee (other than the Purchaser, Xxxxxxxxx or any heir,
successor thereto or assign thereof) shall be permitted to assert any
indemnification claim or exercise any other remedy under this Agreement unless
the Purchaser or Xxxxxxxxx, as applicable (or any heir, successor thereto or
assign thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.
10. ADDITIONAL RESTRICTIONS ON THE STOCK ESCROW FUND.
10.1 CONTINUED EMPLOYMENT OF XXXXXXXXX. If Xxxxxxxxx voluntarily
terminates her employment with the Purchaser or is terminated for "Cause" (as
defined below), then, notwithstanding anything to the contrary contained herein,
the Escrow Agent shall deliver all shares of Purchaser Common Stock contained in
the Stock Escrow Fund on the date of such termination to the Purchaser. In the
event that Xxxxxxxxx is terminated for any reason other than Cause, the Stock
Escrow Fund will continue to be delivered to Xxxxxxxxx as set forth in Section
1.2(a)(iv) hereof, subject to the provisions of Section 9 hereof.
(a) For the purposes of this Section 10, the term "CAUSE"
shall mean with respect to Xxxxxxxxx, Xxxxxxxxx'x (i) conviction of any felony
or any crime involving moral turpitude or dishonesty, (ii) participation in a
fraud or act of material dishonesty against the Purchaser, or (iii) intentional,
material violation of any contract between the Purchaser and Xxxxxxxxx or any
statutory duty of Xxxxxxxxx to the Purchaser that Xxxxxxxxx does not correct
within thirty (30) days after written notice to Xxxxxxxxx thereof.
11. CERTAIN POST-CLOSING COVENANTS.
11.1 FURTHER ACTIONS. From and after the Closing Date, Xxxxxxxxx and
the Seller shall cooperate with the Purchaser and the Purchaser's affiliates and
Representatives, and shall execute and deliver such documents and take such
other actions as the Purchaser may reasonably request, for the purpose of
evidencing the Transactions and putting the Purchaser in possession and control
of all of the Assets. Without limiting the generality of the foregoing, from and
after the Closing Date, the Seller shall promptly remit to the Purchaser any
funds that are received by the Seller and that are included in, or that
represent payment of receivables included in, the Assets. The Seller: (a) hereby
irrevocably authorizes the Purchaser, at all times on and after the Closing
Date, to endorse in the name of the Seller any check or other instrument that is
made payable to the Seller and that represents funds included in, or that
represents the payment of any receivable included in, the Assets; and (b) hereby
irrevocably nominates, constitutes and appoints the Purchaser as the true and
lawful attorney-in-fact of the Seller (with full power of substitution)
effective as of the Closing Date, and hereby authorizes the Purchaser, in the
name of and on behalf of the Seller, to execute, deliver, acknowledge, certify,
file and record any document, to institute and prosecute any Proceeding and to
take any other action (on or at any time after the Closing Date) that the
Purchaser may deem appropriate for the purpose of (i) collecting, asserting,
enforcing or perfecting any claim, right or interest of any kind that is
included in or relates to any of the Assets, (ii) defending or compromising any
claim or
34
Proceeding relating to any of the Assets, or (iii) otherwise carrying out or
facilitating any of the Transactions. The power of attorney referred to in the
preceding sentence is and shall be coupled with an interest and shall be
irrevocable, and shall survive the dissolution or insolvency of the Seller.
11.2 OPERATIONS FOLLOWING CLOSING. Seller agrees that, (a) Seller shall
not transact any business following the Closing Date except as necessary to wind
up its affairs and to be liquidated and dissolved, (b) Seller shall use its best
efforts to become liquidated and dissolved within 120 days following the
Closing, (c) Seller shall not issue any Equity Securities on or after the
Closing Date, and (d) Seller shall not transfer, encumber or dispose of any
stock or other securities of Seller at any time after the Closing Date other
than as expressly set forth herein. Prior to the liquidation and dissolution of
Seller, Seller shall pay and fully discharge all of its Liabilities (other than
the Assumed Liabilities), including (i) all Liabilities to its current and
former employees, (ii) all accounts payable and all short-term and long-term
indebtedness relating to its business and (iii) all Taxes.
11.3 DISTRIBUTION OF CONSIDERATION. Seller agrees that it will not
distribute any of the Consideration to the holders of its Equity Securities,
other than the distribution of 395,745 shares of Purchaser common stock to be
registered for resale in accordance with Section 12, until it has been
liquidated and dissolved in accordance with Section 11.2 above, at which xxxx
Xxxxxx will distribute the Consideration in the amounts and to the entities as
set forth on Exhibit K attached hereto.
11.4 PUBLICITY. Without limiting the generality of anything contained
in Section 4.8, each Shareholder and the Seller shall ensure that, on and at all
times after the Closing Date: (a) no press release or other publicity concerning
any of the Transactions is issued or otherwise disseminated by or on behalf of
Xxxxxxxxx or the Seller without the Purchaser's prior written consent; (b)
Xxxxxxxxx and the Seller continue to keep the terms of this Agreement and the
other Transactional Agreements strictly confidential; and (c) Xxxxxxxxx and the
Seller keep strictly confidential, and neither the Seller nor Xxxxxxxxx uses or
discloses to any other Person, any non-public document or other information that
relates directly or indirectly to the business of the Seller, the Purchaser or
any affiliate of the Purchaser.
11.5 CHANGE OF NAME. Immediately after the Closing, the Seller shall
change its name to a name that does not include the words "Interact" or
"Conferencing" or any variation thereof and that is satisfactory to Purchaser.
11.6 CERTAIN TAXES.
(a) All real property taxes, personal property taxes, ad
valorem obligations and similar taxes imposed on a periodic basis, in each case
levied with respect to the Assets, other than sales taxes provided for in
Section 1.3, for a taxable period which includes (but does not end on) the
Closing Date (collectively the "Apportioned Obligations") shall be apportioned
between Seller and Purchaser as of the Closing Date based on the number of days
of such taxable period included in the Pre-Closing Tax Period and the number of
days of such taxable period included in the Post-Closing Tax Period. Seller and
Xxxxxxxxx shall be liable for the proportionate amount of such Taxes that is
attributable to the Pre-Closing Tax Period and
35
Purchaser shall be liable for the proportionate amount of such Taxes that is
attributable to the Post-Closing Tax Period.
(b) With respect to each taxable period which includes (but
does not end on) the Closing Date, (i) the Pre-Closing Tax Period means the
period beginning with the first day of such taxable period and ending with the
close of business on the Closing Date and (ii) the Post-Closing Tax Period means
the period beginning with the day after the Closing Date and ending with the
close of business on the last day of such taxable period. Purchaser shall notify
Seller and Xxxxxxxxx upon receipt of any xxxx for real or personal property
taxes related to the Assets, part or all of which are attributable to the
Pre-Closing Tax Period, and shall promptly deliver such xxxx to Seller and
Xxxxxxxxx who shall pay the same to the appropriate taxing authority, provided
that if such xxxx covers the Post-Closing Tax Period, Purchaser shall also remit
prior to the due date of assessment to Seller and Xxxxxxxxx payment for the
proportionate amount of such xxxx that is attributable to the Post-Closing Tax
Period. Seller and Xxxxxxxxx shall notify Purchaser upon receipt of any xxxx for
real or personal property taxes related to the Assets, part or all of which are
attributable to the Post-Closing Tax Period, and shall promptly deliver such
xxxx to Purchaser who shall pay the same to the appropriate taxing authority,
provided that if such xxxx covers the Pre-Closing Tax Period, Seller and
Xxxxxxxxx shall also remit prior to the due date of assessment to Purchaser
payment for the proportionate amount of such xxxx that is attributable to the
Pre-Closing Tax Period.
(c) In the event that Seller, Xxxxxxxxx or Purchaser shall
make a payment for which it is entitled to reimbursement under section 11.6(a),
the other party shall make such reimbursement promptly but in no event later
than 30 days after the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of the
reimbursement.
11.7 COOPERATION. To the extent relevant to the Assets, each party
shall (i) provide the other with such assistance as may reasonably be required
in connection with the preparation of any Tax Return and the conduct of any
audit or other examination by any taxing authority or in connection with
judicial or administrative proceedings relating to any liability for Taxes and
(ii) retain and provide the other with all records or other information that may
be relevant to the preparation of any Tax Returns, or the conduct of any audit
or examination or other proceeding relating to Taxes. The Seller shall retain
all relevant documents, including prior years' Tax Returns, supporting work
schedules and other records or information that may be relevant to such Tax
Returns and shall not destroy or otherwise dispose of any such records without
the prior written consent of Purchaser.
12. REGISTRATION OF CERTAIN SHARES.
12.1 DEFINITIONS. As used in this Section 12, the following terms shall
have the following respective meanings:
"FORM S-3" means such form under the Securities Act as in effect on the date
hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC which
36
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Purchaser with the SEC.
"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration
statement or document.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Purchaser in
complying with Sections 12.2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Purchaser, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Purchaser which shall be paid in
any event by the Purchaser).
"SEC" shall have the meaning set forth in Section 3.11 of this Agreement.
"SELLING EXPENSES" shall mean all underwriting discounts and selling commissions
applicable to the sale.
12.2 OBLIGATIONS OF THE PURCHASER. The Purchaser shall, as
expeditiously as reasonably possible following the Closing:
(a) Prepare and file with the SEC a registration statement
with respect to 395,745 shares of Purchaser common stock to be issued to the
Seller on the Closing (the "REGISTRABLE SHARES") and use all reasonable efforts
to cause such registration statement to become effective within 120 days
following the Closing, and, upon the request of a Person participating in such
registration (a "PARTICIPATING PERSON"), keep such registration statement
effective for up to 120 days or, if earlier, until such Participating Person has
completed the distribution related thereto; provided, however, that at any time,
upon written notice to the Participating Person and for a period not to exceed
60 days thereafter (the "SUSPENSION PERIOD"), the Purchaser may suspend the use
or effectiveness of any registration statement (and the Participating Persons
shall agree not to offer or sell any Registrable Shares pursuant to such
registration statement during the Suspension Period) if the Purchaser reasonably
believes that the Purchaser may, in the absence of such suspension hereunder, be
required under state or federal securities laws to disclose any corporate
development the disclosure of which could reasonably be expected to have an
adverse effect upon the Purchaser, its stockholders, a potentially significant
transaction or event involving the Purchaser, or any negotiations, discussions,
or proposals directly relating thereto. In the event that the Purchaser shall
exercise its rights hereunder, the applicable time period during which the
registration statement is to remain effective shall be extended by a period of
time equal to the duration of the Suspension Period; provided, further, the
Suspension Period must be approved by a majority of the Purchaser's Board of
Directors.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the
37
disposition of all securities covered by such registration statement for the
period set forth in paragraph (a) above.
(c) Furnish to the Participating Persons such number of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they reasonably
may request in order to facilitate the disposition of the Registrable Shares.
(d) Use its reasonable best efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Participating Persons; provided that the Purchaser shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(e) Notify the Participating Persons at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing.
12.3 EXPENSES OF REGISTRATION. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 12.2 shall be borne by the
Purchaser. All Selling Expenses incurred in connection with any registrations
hereunder shall be borne pro rata by the Investors participating in the
registration in proportion to the number of Shares sold.
12.4 FURNISHING INFORMATION.
(a) No Participating Person shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 12.
(b) It shall be a condition precedent to the obligations of
the Purchaser to take any action pursuant to Section 11.2 that any Participating
Person shall furnish to the Purchaser such information regarding itself, the
Registrable Shares and the intended method of disposition of such Registrable
Shares as shall be required to effect the registration of the Registrable Shares
and such Participating Person enters into an agreement with Purchaser whereby
such Participating Person agrees to be bound by the provisions of this Section
12.
12.5 INDEMNIFICATION.
(a) To the extent permitted by law, the Purchaser will
indemnify and hold harmless each Participating Person participating in such
registration, the partners, members, officers and directors of such
Participating Person, and each person, if any, who controls such Participating
Person within the meaning of the Securities Act or the Exchange Act against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under
38
the Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "VIOLATION") by the Purchaser: (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto; (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading; or (iii) any
violation or alleged violation by the Purchaser of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Purchaser will pay as incurred to such Participating Person, its partners,
members, officers, directors or controlling persons any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 12.5(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Purchaser, which consent shall
not be unreasonably withheld or delayed, nor shall the Purchaser be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Investor, its partners,
members, officers, directors or controlling persons.
(b) To the extent permitted by law, each Participating Person
will indemnify and hold harmless the Purchaser, each of its directors, its
officers and each person, if any, who controls the Purchaser within the meaning
of the Securities Act, against any losses, claims, damages or liabilities (joint
or several) to which the Purchaser or any such director, officer or controlling
person may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Participating Person under an instrument duly executed by such Participating
Person and stated to be specifically for use in connection with such
registration; and such Participating Person will pay as incurred any legal or
other expenses reasonably incurred by the Purchaser or any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action if it is judicially determined
that there was such a Violation; provided, however, that the indemnity agreement
contained in this Section 12.5(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of such Participating Person, which consent shall
not be unreasonably withheld or delayed; provided further, that in no event
shall any indemnity payable by any Participating Person under this Section 12.5
exceed the net proceeds from the offering received by such Participating Person.
(c) Promptly after receipt by an indemnified party under this
Section 12.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 12.5, deliver to
the indemnifying party a written notice of the commencement
39
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 12.5, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
12.5.
(d) If the indemnification provided for in this Section 12.5
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided that in no event shall any contribution by an
Investor hereunder exceed the net proceeds from the offering received by such
Investor.
(e) The obligations of the Purchaser and each Participating
Person under this Section 12.5 shall survive completion of any offering of the
shares in a registration statement and the termination of this agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which (i) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation and (ii) does include a non-monetary remedy.
13. MISCELLANEOUS PROVISIONS.
13.1 JOINT AND SEVERAL LIABILITY. Xxxxxxxxx agrees that she shall be
jointly and severally liable Xxxxxxxxx'x with the Seller for the due and timely
compliance with and performance of each of the covenants and obligations of the
Seller and Xxxxxxxxx set forth in the Transactional Agreements. Xxxxxxxxx'x
obligations and liability under this Agreement and the other Transactional
Agreements shall survive her death (and shall be binding upon her personal
representatives, executors, administrators, estate, heirs and successors) and
shall not be limited in
40
any way by: (i) any failure on the part of the Purchaser or any other Indemnitee
to exercise any right or assert any claim against the Seller; (i) the
dissolution or insolvency of, or the appointment of any receiver, conservator or
liquidator for, or the commencement of any bankruptcy, reorganization,
moratorium, arrangement or other proceeding by, against or with respect to, the
Seller; (iii) any merger or consolidation of the Seller with or into any other
Entity; or (iv) the sale or other disposition by her of any or all of her shares
of the stock of the Seller or Purchaser.
13.2 FURTHER ASSURANCES. Each party hereto shall execute and/or cause
to be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
13.3 FEES AND EXPENSES.
(a) Subject to the provisions of Section 12.5(c), Xxxxxxxxx
and the Seller shall bear and pay all fees, costs and expenses (including all
legal fees and expenses payable to R. Xxxxx Xxx LLC) that have been incurred or
that are in the future incurred by, on behalf of or for the benefit of Xxxxxxxxx
or the Seller in connection with: (i) the negotiation, preparation and review of
any letter of intent or similar document relating to any of the Transactions;
(ii) the investigation and review conducted by the Purchaser and its
Representatives with respect to the business of the Seller (and the furnishing
of information to the Purchaser and its Representatives in connection with such
investigation and review); (iii) the negotiation, preparation and review of this
Agreement (including the Disclosure Schedule), the other Transactional
Agreements and all bills of sale, assignments, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions; (iv) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions, and the
obtaining of any Consent required to be obtained in connection with any of the
Transactions; and (v) the consummation and performance of the Transactions.
(b) Subject to the provisions of Section 9 (including the
indemnification and other obligations of the Seller thereunder) and Section
12.5(c), the Purchaser shall bear and pay all fees, costs and expenses
(including all legal fees and expenses payable to Xxxxxx Godward LLP) that have
been incurred or that are in the future incurred by or on behalf of the
Purchaser in connection with: (i) the negotiation, preparation and review of any
letter of intent or similar document relating to any of the Transactions; (ii)
the investigation and review conducted by the Purchaser and its Representatives
with respect to the business of the Seller; (iii) the negotiation, preparation
and review of this Agreement, the other Transactional Agreements and all bills
of sale, assignments, certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the Transactions; and (iv) the
consummation and performance of the Transactions.
13.4 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to any of the Transactional Agreements or the enforcement of any
provision of any of the Transactional Agreements is brought against any party to
this Agreement, the prevailing party shall be entitled
41
to recover reasonable attorneys' fees, costs and disbursements (in addition to
any other relief to which the prevailing party may be entitled).
13.5 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Xxxxxxxxx:
Xxxxxxx Xxxxxxxxx
--------------------------
--------------------------
Facsimile:
---------------
if to the Seller:
Interact Conferencing LLC
--------------------------
Facsimile:
---------------
if to the Purchaser:
Raindance Communications, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: General Counsel
cc: Xxxx Xxxxx
Xxxxxx Godward LLP
000 Xxxxxxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
13.6 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
13.7 HEADINGS. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
13.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
42
13.9 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of
Colorado (without
giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to
this Agreement or the enforcement of any provision of this Agreement may be
brought or otherwise commenced in any state or federal court located in the
County of Boulder,
Colorado. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of each state and federal court located in the County
of Boulder,
Colorado (and each appellate court located in the State of
Colorado) in connection with any such legal proceeding; connection with
any such legal proceeding;
(ii) agrees that each state and federal court located
in the County of Boulder,
Colorado shall be deemed to be a convenient
forum; and be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any
state or federal court located in the County of Boulder,
Colorado, any
claim that such party is not subject personally to the jurisdiction of
such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or
that this Agreement or the subject matter of this Agreement may not be
enforced in or by such court. court.
(c) Xxxxxxxxx and the Seller agree that, if any Proceeding is
commenced against any Indemnitee by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnitee may proceed against
Xxxxxxxxx and the Seller in or before such court or other tribunal with respect
to any indemnification claim or other claim arising directly or indirectly from
or relating directly or indirectly to such Proceeding or any of the matters
alleged therein or any of the circumstances giving rise thereto.
(d) Nothing in this Section 12.9 shall be deemed to limit or
otherwise affect the right of any Indemnitee to commence any legal proceeding
against Xxxxxxxxx or the Seller in any forum or jurisdiction.
(e) Xxxxxxxxx irrevocably constitute and appoint Xxxxxxxxx'
Representative as their agent to receive service of process in connection with
any legal proceeding relating to this Agreement or the enforcement of any
provision of this Agreement.
13.10 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.
(a) This Agreement shall be binding upon: the Seller and its
successors and assigns (if any); Xxxxxxxxx and Xxxxxxxxx'x personal
representatives, executors, administrators, estate, heirs, successors and
assigns (if any); and the Purchaser and its successors and assigns (if any).
This Agreement shall inure to the benefit of: the Seller; Xxxxxxxxx; the
Purchaser; the other Indemnitees (subject to Section 9.7); and the respective
successors and assigns (if any) of the foregoing.
43
(b) The Purchaser may freely assign any or all of its rights
under this Agreement (including its indemnification rights under Section 9), in
whole or in part, to any other Person without obtaining the consent or approval
of any other Person. Neither the Seller nor Xxxxxxxxx shall be permitted to
assign any of his or its rights or delegate any of his or its obligations under
this Agreement without the Purchaser's prior written consent.
(c) Except for the provisions of Section 9 Section 12 hereof,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties to this Agreement and their
respective successors and assigns (if any). Without limiting the generality of
the foregoing, (i) no employee of the Seller shall have any rights under this
Agreement or under any of the other Transactional Agreements, and (ii) no
creditor of the Seller shall have any rights under this Agreement or any of the
other Transactional Agreements.
13.11 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative).
Xxxxxxxxx and the Seller agree that: (a) in the event of any Breach or
threatened Breach by Xxxxxxxxx or the Seller of any covenant, obligation or
other provision set forth in this Agreement, the Purchaser shall be entitled (in
addition to any other remedy that may be available to it) to (i) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision, and (ii) an
injunction restraining such Breach or threatened Breach; and (b) neither the
Purchaser nor any other Indemnitee shall be required to provide any bond or
other security in connection with any such decree, order or injunction or in
connection with any related action or Proceeding.
13.12 WAIVER.
(a) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
13.13 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser, the Seller and Xxxxxxxxx.
13.14 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is
44
determined to be invalid, unlawful, void or unenforceable, shall not be impaired
or otherwise affected and shall continue to be valid and enforceable to the
fullest extent permitted by law.
13.15 ENTIRE AGREEMENT. The Transactional Agreements set forth the
entire understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.
13.16 KNOWLEDGE. For purposes of this Agreement, a Person shall be
deemed to have "knowledge" of a particular fact or other matter if any
Representative of such Person has knowledge of such fact or other matter.
13.17 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "INCLUDE" and
"INCLUDING," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "WITHOUT
LIMITATION."
(d) Except as otherwise indicated, all references in this
Agreement to "SECTIONS" and "EXHIBITS" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
45
The parties to this Agreement have caused this Agreement to be executed
and delivered as of April 17, 2002.
INTERACT CONFERENCING, LLC
a Georgia limited liability corporation
By:
-------------------------------------
Xxxxxxx Xxxxxxxxx, President
XXXXXXX XXXXXXXXX
By:
-------------------------------------
RAINDANCE COMMUNICATIONS, INC.
a Delaware corporation
By:
-------------------------------------
Title:
----------------------------------
46
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving: (a) the sale or other disposition of all or any portion
of the business or assets of the Seller (other than in the Ordinary Course of
Business); (b) the issuance, sale or other disposition of (i) any capital stock
or other securities of the Seller, (ii) any option, call, warrant or right
(whether or not immediately exercisable) to acquire any capital stock or other
securities of the Seller, or (iii) any security, instrument or obligation that
is or may become convertible into or exchangeable for any capital stock or other
securities of the Seller; or (c) any merger, consolidation, business
combination, share exchange, reorganization or similar transaction involving the
Seller.
AGREEMENT. "Agreement" shall mean the
Asset Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may be
amended from time to time.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
Person desiring to achieve a particular result would use in order to ensure that
such result is achieved as expeditiously as possible.
BREACH. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been (a)
any inaccuracy in or breach (including any inadvertent or innocent breach) of,
or any failure (including any inadvertent failure) to comply with or perform,
such representation, warranty, covenant, obligation or other provision, or (b)
any claim (by any Person) or other circumstance that is inconsistent with such
representation, warranty, covenant, obligation or other provision; and the term
"Breach" shall be deemed to refer to any such inaccuracy, breach, failure, claim
or circumstance.
CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPARABLE ENTITIES. "Comparable Entities" shall mean Entities (other
than the Seller) that are engaged in businesses similar to the business of the
Seller.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, warranty, deed, assignment, power of attorney,
certificate, purchase order, work order, insurance policy, benefit plan,
commitment, covenant, assurance or undertaking of any nature.
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DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, Liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense of
any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to the Purchaser on behalf of
Xxxxxxxxx and the Seller, a copy of which is attached to the Agreement and
incorporated in the Agreement by reference.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
EQUITY SECURITIES. "Equity Securities" of the Seller shall mean (a) all
common stock, preferred stock, participations, shares, partnership interests,
membership interests or other equity interests in and of the Seller (regardless
of how designated and whether or not voting or non-voting) and (b) all warrants,
options and other rights to acquire any of the foregoing.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974.
ERISA AFFILIATE. "ERISA Affiliate" shall mean any Person that is, was
or would be treated as a single employer with any of the Specified Entities
under Section 414 of the Code.
EXCLUDED ASSETS. "Excluded Assets" shall mean the assets identified on
Exhibit O (to the extent owned by the Seller on the Closing Date).
GAAP. "GAAP" shall mean generally accepted accounting principles.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the
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authority of any Governmental Body or pursuant to any Legal Requirement; or (b)
right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
principality, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental division, subdivision,
department, agency, bureau, branch, office, commission, council, board,
instrumentality, officer, official, representative, organization, unit, body or
Entity and any court or other tribunal); (d) multi-national organization or
body; or (e) individual, Entity or body exercising, or entitled to exercise, any
executive, legislative, judicial, administrative, regulatory, police, military
or taxing authority or power of any nature.
HAZARDOUS MATERIAL. "Hazardous Material" shall include: (a) any
petroleum, waste oil, crude oil, asbestos, urea formaldehyde or polychlorinated
biphenyl; (b) any waste, gas or other substance or material that is explosive or
radioactive; (c) any "hazardous substance," "pollutant," "contaminant,"
"hazardous waste," "regulated substance," "hazardous chemical" or "toxic
chemical" as designated, listed or defined (whether expressly or by reference)
in any statute, regulation or other Legal Requirement (including CERCLA and any
other so-called "superfund" or "superlien" law and the respective regulations
promulgated thereunder); (d) any other substance or material (regardless of
physical form) or form of energy that is subject to any Legal Requirement which
regulates or establishes standards of conduct in connection with, or which
otherwise relates to, the protection of human health, plant life, animal life,
natural resources, property or the enjoyment of life or property from the
presence in the environment of any solid, liquid, gas, odor, noise or form of
energy; and (e) any compound, mixture, solution, product or other substance or
material that contains any substance or material referred to in clause "(a)",
"(b)", "(c)" or "(d)" above.
INDEMNITEES. "Indemnitees" shall mean, as applicable, Purchaser
Indemnitees and Seller Indemnities. "Purchaser Indemnitees" include the
following Persons: (a) the Purchaser; (b) the Purchaser's current and future
affiliates; (c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of
the Persons referred to in clauses "(a)", "(b)" and "(c)" above. "Seller
Indemnitees" include the following Persons: (x) the Seller; (y) Xxxxxxxxx; (z)
the respective heirs, estates, successors and assigns of the Persons referred to
in clauses "(x)" and "(y)" above.
INDEMNITORS. "Indemnitors" shall mean any Person owing an obligation of
Indemnification hereunder. As to Purchaser, the Indemnitors shall include the
following Persons: (a) the Purchaser; and (b) the respective successors and
assigns of the Purchaser. As to Seller and Xxxxxxxxx, the Indemnitors shall
include the following Persons: (x) the Seller; (y) Xxxxxxxxx; (z) the respective
heirs, estates, successors and assigns of the Persons referred to in clauses
"(x)" and "(y)" above.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation,
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ruling, directive, pronouncement, requirement, specification, determination,
decision, opinion or interpretation issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by or under the
authority of any Governmental Body.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
ORDER. "Order" shall mean any: (a) order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or otherwise
put into effect by or under the authority of any court, administrative agency or
other Governmental Body or any arbitrator or arbitration panel; or (b) Contract
with any Governmental Body entered into in connection with any Proceeding.
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of the
Seller shall not be deemed to have been taken in the "Ordinary Course of
Business" unless:
(a) such action is recurring in nature, is consistent with the
past practices of the Seller and is taken in the ordinary course of the
normal day-to-day operations of the Seller;
(b) such action is taken in accordance with sound and prudent
business practices;
(c) such action is not required to be authorized by the
shareholders of the Seller, the board of directors of the Seller or any
committee of the board of directors of the Seller and does not require
any other separate or special authorization of any nature; and
(d) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in
the ordinary course of the normal day-to-day operations of Comparable
Entities.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PLAN. "Plan" shall mean an Employee Benefit Plan maintained or
administered for the benefit of employees of the Seller.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall mean the period from the
date of the Agreement through the Closing Date.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or
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investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or any arbitrator or arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service xxxx (whether registered or unregistered), service xxxx
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, customer
list, franchise, system, computer software, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset.
RELATED PARTY. Each of the following shall be deemed to be a "Related
Party": (a) each individual who is, or who has at any time been, an officer or
holder of Equity Securities of the Seller; (b) each member of the family of each
of the individuals referred to in clause "(a)" above; and (c) any Entity (other
than the Seller) in which any one of the individuals referred to in clauses
"(a)" and "(b)" above holds or held (or in which more than one of such
individuals collectively hold or held), beneficially or otherwise, a controlling
interest or a material voting, proprietary or equity interest.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SELLER CONTRACT. "Seller Contract" shall mean any Contract: (a) to
which the Seller is a party; (b) by which the Seller or any of its assets is or
may become bound or under which the Seller has, or may become subject to, any
obligation; or (c) under which the Seller has or may acquire any right or
interest.
SELLER PROPRIETARY ASSET. "Seller Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Seller or otherwise used by the
Seller.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax-sharing
agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
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TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean: (a)
the Agreement; (b) the Assumption Agreement; (c) the Employment and
Noncompetition Agreement referred to in Section 1.6(b)(v) of the Agreement; and
(e) the Closing Certificate.
TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery
of the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements, including: (i) the sale
of the Assets by the Seller to the Purchaser in accordance with the Agreement;
(ii) the assumption of the Assumed Liabilities by the Purchaser pursuant to the
Assumption Agreement; and (iii) the performance by the Seller, Xxxxxxxxx and the
Purchaser of their respective obligations under the Transactional Agreements,
and the exercise by the Seller, Xxxxxxxxx and the Purchaser of their respective
rights under the Transactional Agreements.
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LIST OF EXHIBITS
Certain Definitions Exhibit A
Assumption Agreement Exhibit B
Assumed Contracts Exhibit C
Employment Offer Letter Exhibit D
Noncompetition and
Non-Solicitation Agreement Exhibit E
Voting Agreement Exhibit F
Lease Modification, Assignment
and Assumption of Lease Agreement,
and Letter of Intent Exhibit G
Forms of Investor Questionnaires Exhibit H
Form of Information Statement Exhibit I
Employment Offers Exhibit J
Distribution of Consideration Exhibit K
Opinion of R. Xxxxx Xxx, LLC Exhibit L
Estoppel Certificates Exhibit M
Key Employees Exhibit N
Excluded Assets Exhibit O
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