STOCK PURCHASE AGREEMENT
Exhibit
10.1
This Stock Purchase Agreement (this
“Agreement”), dated as of October 5, 2017, is entered
into between SpendSmart Networks, Inc., a Delaware corporation
(“Seller”), and Eclipse Marketing LLC, a Delaware
limited liability company (“Buyer”).
WHEREAS, Seller owns all of the issued and
outstanding shares of stock (the “Shares”), of SpendSmart Networks, Inc., a
California corporation (the “Company”);
WHEREAS, prior to the Closing Date, the Seller
will assign and transfer to the Company the entire right, title and
interest in and to all of its operating assets which the Company
does not own as of the date hereof, including, without limitation,
those assets listed on Exhibit C attached hereto, and, in
connection therewith, will assign to the Company all related
Contracts, including, without limitation, those Contracts listed on
Exhibit C attached hereto (collectively, the
“Additional
Assets”).
WHEREAS,
Seller wishes to sell to Buyer, and Buyer wishes to purchase from
Seller, the Shares, subject to the terms and conditions set forth
herein;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
The
following terms have the meanings specified or referred to in this
ARTICLE I:
“Accounting
Firm” means a nationally
recognized or regionally recognized independent certified public
accountant selected by mutual agreement of the Buyer and the
Seller. If the Buyer and the Seller are unable to mutually agree
upon such an accountant within ten (10) days, then the Buyer and
the Seller shall each select a nationally recognized accountant and
within five (5) days after their selection, those two accountants
shall select a third nationally recognized accountant, which third
accountant shall act as the Accounting Firm.
“Acquisition
Proposal” has the meaning
set forth in Section 5.03(a).
“Action” means any claim, action, cause of action,
demand, lawsuit, arbitration, inquiry, audit, notice of violation,
proceeding, litigation, citation, summons, subpoena or
investigation of any nature, civil, criminal, administrative,
regulatory or otherwise, whether at law or in
equity.
“Additional
Assets” has the meaning
set forth in the preamble.
“Affiliate” of a Person means any other Person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
Person. The term “control” (including the terms
“controlled by” and “under common control
with”) means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
“Agreement” has the meaning set forth in the
preamble.
“Ancillary
Documents” means a
transition services agreement in form and substance reasonably
satisfactory to Buyer, and other documents, certificates and
agreements to be delivered in connection with this Agreement or
otherwise requested by Buyer, in form and substance satisfactory to
Buyer.
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“Assumed
Liabilities” means those
ordinary course trade accounts payable relating to the
Company’s business, the Company’s deferred revenue and
the accrued paid time off for the Company’s employees, all as
and to the extent expressly listed in Exhibit A attached hereto, as
amended pursuant to Section 7.02(q).
“Balance
Sheet” has the meaning
set forth in Section 3.06.
“Balance Sheet
Date” has the meaning set
forth in Section 3.06.
“Benefit Plan” has the meaning set forth in Section
3.20(a).
“Bonuses” means (i) any bonuses, commissions or
similar amounts (whether or not accrued, contingent, discretionary
or otherwise) that are required to be or are customarily paid by
the Company to Seller or any of the Company’s officers,
directors, employees or service providers with respect to any
periods prior to the Closing, including, without limitation, all
bonuses at amounts consistent with calendar year 2016 (if any
discretionary bonuses have not been fixed) or the actual amount
payable (if any discretionary bonuses have been fixed) related to
any period prior to the Closing which have not been paid prior to
the Closing and (ii) any vacation or paid time off of any officer,
director or employee of the Company that accrued prior to the
Closing.
“Buyer” has the meaning set forth in the
preamble.
“Buyer
Indemnitees” has the
meaning set forth in Section 8.02.
“CERCLA” means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
§§ 9601 et seq.
“Closing” has the meaning set forth in Section
2.04.
“Closing Date” has the meaning set forth in Section
2.04.
“Closing Date
Payment” has the meaning
set forth in Section 2.02.
“Code” means the Internal Revenue Code of 1986,
as amended.
“Common Stock” has the meaning set forth in Section
3.03(a).
“Company” has the meaning set forth in the
recitals.
“Company Intellectual
Property” means all
Intellectual Property that is owned by the
Company.
“Company IP
Agreements” means all
licenses, sublicenses, consent to use agreements, settlements,
coexistence agreements, covenants not to xxx, waivers, releases,
permissions and other Contracts, whether written or oral, relating
to Intellectual Property to which the Company is a party,
beneficiary or otherwise bound.
“Company IP
Registrations” means all
Company Intellectual Property that is subject to any issuance,
registration or application by, to or with any Governmental
Authority or authorized private registrar in any jurisdiction,
including issued patents, registered trademarks, domain names and
copyrights, and pending applications for any of the
foregoing.
“Company
Systems” has the meaning
set forth in Section 3.12(h).
“Contracts” means all contracts, leases, deeds,
mortgages, licenses, instruments, notes, commitments, undertakings,
indentures, joint ventures and all other agreements, commitments
and legally binding arrangements, whether written or
oral.
“Direct Claim” has the meaning set forth in
Section
8.05(c).
“Disclosure
Schedules” means the
Disclosure Schedules delivered by Seller and Buyer concurrently
with the execution and delivery of this
Agreement.
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“Dollars” or “$” means the lawful currency of the United
States.
“Encumbrance” means any charge, claim, community
property interest, pledge, condition, equitable interest, lien
(statutory or other), option, security interest, mortgage,
easement, encroachment, right of way, right of first refusal, or
restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of
ownership.
“Environmental
Claim” means any Action,
Governmental Order, lien, fine, penalty, or, as to each, any
settlement or judgment arising therefrom, by or from any Person
alleging liability of whatever kind or nature (including liability
or responsibility for the costs of enforcement proceedings,
investigations, cleanup, governmental response, removal or
remediation, natural resources damages, property damages, personal
injuries, medical monitoring, penalties, contribution,
indemnification and injunctive relief) arising out of, based on or
resulting from: (a) the presence, Release of, or exposure to, any
Hazardous Materials; or (b) any actual or alleged non-compliance
with any Environmental Law or term or condition of any
Environmental Permit.
“Environmental
Law” means any applicable
Law, and any Governmental Order or binding agreement with any
Governmental Authority: (a) relating to pollution (or the cleanup
thereof) or the protection of natural resources, endangered or
threatened species, human health or safety, or the environment
(including ambient air, soil, surface water or groundwater, or
subsurface strata); or (b) concerning the presence of, exposure to,
or the management, manufacture, use, containment, storage,
recycling, reclamation, reuse, treatment, generation, discharge,
transportation, processing, production, disposal or remediation of
any Hazardous Materials. The term “Environmental Law”
includes, without limitation, the following (including their
implementing regulations and any state analogs): the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of
1976, as amended by the Hazardous and Solid Waste Amendments of
1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water
Pollution Control Act of 1972, as amended by the Clean Water Act of
1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances
Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et
seq.; the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of
1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C.
§§ 7401 et seq.; and the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. §§ 651 et
seq.
“Environmental
Notice” means any written
directive, notice of violation or infraction, or notice respecting
any Environmental Claim relating to actual or alleged
non-compliance with any Environmental Law or any term or condition
of any Environmental Permit.
“Environmental
Permit” means any Permit,
letter, clearance, consent, waiver, closure, exemption, decision or
other action required under or issued, granted, given, authorized
by or made pursuant to Environmental Law.
“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, and the regulations promulgated
thereunder.
“ERISA
Affiliate” means all
employers (whether or not incorporated) that would be treated
together with the Company or any of its Affiliates as a
“single employer” within the meaning of Section 414 of
the Code or Section 4001 of ERISA.
“Financial
Statements” has the
meaning set forth in Section 3.06.
“Final
Liabilities” has the
meaning set forth in Section 7.02(q)
“GAAP” means United States generally accepted
accounting principles in effect from time to
time.
“Governmental
Authority” means any
federal, state, local or foreign government or political
subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated
organization or other non-governmental regulatory authority or
quasi-governmental authority (to the extent that the rules,
regulations or orders of such organization or authority have the
force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.
“Governmental
Order” means any order,
writ, judgment, injunction, decree, stipulation, determination or
award entered by or with any Governmental
Authority.
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“Hazardous
Materials” means: (a) any
material, substance, chemical, waste, product, derivative,
compound, mixture, solid, liquid, mineral or gas, in each case,
whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect
under Environmental Laws; and (b) any petroleum or
petroleum-derived products, radon, radioactive materials or wastes,
asbestos in any form, lead or lead-containing materials, urea
formaldehyde foam insulation, and polychlorinated
biphenyls.
“Indebtedness” means, without duplication and with
respect to the Company, all: (a) all obligations for borrowed money
or accounts payable; (b) obligations evidenced by any note,
debenture or other similar instrument or debt security; (c)
obligations under swaps, xxxxxx or similar instruments; (d)
obligations in respect of letters of credit and bankers’
acceptances issued for the account of the Company; (e) obligations
arising from checks in transit, uncleared checks or unreconciled
cash; (f) obligations for the deferred purchase price of property
or services or the acquisition of a business or portion thereof or
insurance premium financing, in each case, whether contingent or
otherwise, as obligor or otherwise (including any so called
“earn-out” or similar payments or obligations; (g)
obligations created or arising under any conditional sale or other
title retention agreement with respect to acquired property; (h)
obligations, contingent or otherwise, arising from deferred
compensation arrangements; (i) obligations under capitalized
leases; (j) obligations secured by any Encumbrance on any of the
Company’s assets; (k) any liability (whether accrued,
absolute, contingent, unliquidated or otherwise, whether due or to
become due and regardless of when or by whom asserted) for Taxes;
(l) obligations for Bonuses; (m) obligations to any Related Person;
(n) the amount of any deferred revenue and customer deposits; (o)
all accrued interest, prepayment premiums, penalties, expenses or
other amounts due related to any of the foregoing; and (p)
guarantees by the Company of any obligations of the types described
in clauses (a) through (o) above.
“Indemnified
Party” has the meaning
set forth in Section 8.05.
“Indemnifying
Party” has the meaning
set forth in Section 8.05.
“Insurance
Policies” has the meaning
set forth in Section 3.16.
“Intellectual
Property” means any and
all rights in, arising out of, or associated with any of the
following in any jurisdiction throughout the world: (a) issued
patents and patent applications (whether provisional or
non-provisional), including divisionals, continuations,
continuations-in-part, substitutions, reissues, reexaminations,
extensions, or restorations of any of the foregoing, and other
Governmental Authority-issued indicia of invention ownership
(including certificates of invention, xxxxx patents, and patent
utility models) (“Patents”); (b) trademarks, service marks, brands,
certification marks, logos, trade dress, trade names, and other
similar indicia of source or origin, together with the goodwill
connected with the use of and symbolized by, and all registrations,
applications for registration, and renewals of, any of the
foregoing (“Trademarks”); (c) copyrights and works of authorship,
whether or not copyrightable, and all registrations, applications
for registration, and renewals of any of the foregoing
(“Copyrights”); (d) internet domain names and social
media account or user names (including “handles”),
whether or not Trademarks, all associated web addresses, URLs,
websites and web pages, social media accounts and pages, and all
content and data thereon or relating thereto, whether or not
Copyrights; (e) mask works, and all registrations, applications for
registration, and renewals thereof; (f) industrial designs, and all
Patents, registrations, applications for registration, and renewals
thereof; (g) trade secrets, know-how, inventions (whether or not
patentable), discoveries, improvements, technology, business and
technical information, databases, data compilations and
collections, tools, methods, processes, techniques, and other
confidential and proprietary information and all rights therein
(“Trade
Secrets”); (h) computer
programs, operating systems, applications, firmware, and other
code, including all source code, object code, application
programming interfaces, data files, databases, protocols,
specifications, and other documentation thereof; (i) rights of
publicity; and (j) all other intellectual or industrial property
and proprietary rights.
“Knowledge of
Seller”
or “Seller’s
Knowledge” or any other
similar knowledge qualification, means the actual or constructive
knowledge of any director or officer of Seller or the Company,
after due inquiry.
“Law” means any statute, law, ordinance,
regulation, rule, code, order, constitution, treaty, common law,
judgment, decree, other requirement or rule of law of any
Governmental Authority.
“Liabilities” has the meaning set forth in Section
3.07.
“Losses” means losses, damages, liabilities,
deficiencies, Actions, judgments, interest, awards, penalties,
fines, costs or expenses of whatever kind, including reasonable
attorneys’ fees and the cost of enforcing any right to
indemnification hereunder and the cost of pursuing any insurance
providers.
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“Material Adverse
Effect” means any event,
occurrence, fact, condition or change that is, or could reasonably
be expected to become, individually or in the aggregate, materially
adverse to (a) the business, results of operations, condition
(financial or otherwise) or assets of the Company, or (b) the
ability of Seller to consummate the transactions contemplated
hereby on a timely basis.
“Material
Contracts” has the
meaning set forth in Section 3.09(a).
“Multiemployer
Plan” has the meaning set
forth in Section 3.20(c).
“Non-U.S. Benefit
Plan” has the meaning set
forth in Section 3.20(a).
“Permits” means all permits, licenses, franchises,
approvals, authorizations, registrations, certificates, variances
and similar rights obtained, or required to be obtained, from
Governmental Authorities.
“Person” means an individual, corporation,
partnership, joint venture, limited liability company, Governmental
Authority, unincorporated organization, trust, association or other
entity.
“Post-Closing Tax
Period” means any taxable
period beginning after the Closing Date and, with respect to any
taxable period beginning before and ending after the Closing Date,
the portion of such taxable period beginning after the Closing
Date.
“Post-Closing
Taxes” means Taxes of the
Company for any Post-Closing Tax Period.
“Pre-Closing Tax
Period” means any taxable
period ending on or before the Closing Date and, with respect to
any taxable period beginning before and ending after the Closing
Date, the portion of such taxable period ending on and including
the Closing Date.
“Pre-Closing
Taxes” means Taxes of the
Company for any Pre-Closing Tax Period.
“Purchase
Price” has the meaning
set forth in Section 2.02.
“Qualified Benefit
Plan” has the meaning set
forth in Section 3.20(c).
“Real
Property” means the real
property owned, leased or subleased by the Company, together with
all buildings, structures and facilities located
thereon.
“Related
Person” means, with
respect to the Company or Seller, (i) any Person that directly or
indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with, such specified
Person; (ii) any Person that holds a Material Interest in such
specified Person; (iii) each Person that serves as a director,
officer, partner, manager, executor or trustee of such specified
Person (or in a similar capacity); (iv) any Person in which such
specified Person holds a Material Interest; and (v) any Person with
respect to which such specified Person serves as a general partner,
manager or a trustee (or in a similar capacity). For purposes of
this definition, (x) “control” (including
“controlling,” “controlled by,” and
“under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise, and
shall be construed as such term is used in the rules promulgated
under the Exchange Act, and (y) “Material Interest”
means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of voting securities or other voting
interests representing at least ten percent (10%) of the
outstanding voting power of a Person or equity securities
representing at least ten percent (10%) of the outstanding equity
securities in a Person.
“Release” means any actual or threatened release,
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, abandonment,
disposing or allowing to escape or migrate into or through the
environment (including, without limitation, ambient air (indoor or
outdoor), surface water, groundwater, land surface or subsurface
strata or within any building, structure, facility or
fixture).
“Representative”
means, with respect to any Person, any and all directors, officers,
employees, consultants, financial advisors, counsel, accountants
and other agents of such Person.
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“Restricted
Business” means
developing, selling, marketing or otherwise providing (a) loyalty
systems or digital engagement or marketing services to merchants,
including, without limitation, merchant funded rewards, loyalty
rewards tablets/kiosks, rewards management systems, mobile
marketing technology (including text and email messaging), customer
analytics and propensity marketing and other automated engagement
engines, sweepstakes and the like, (b) loyalty and mobile marketing
consulting , including, without limitation, periodic reviews,
campaign creation and optimization and localized support, and (c)
website building platforms, including, without limitation, software
that assists in the administration of websites, audits of websites
and integration of social media streams and consumer reviews into
websites.
“Restricted
Period” has the meaning
set forth in Section 5.07(a).
“Seller” has the meaning set forth in the
preamble.
“Seller
Indemnitees” has the
meaning set forth in Section 8.03.
“Shares” has the meaning set forth in the
recitals.
“Single Employer
Plan” has the meaning set
forth in Section 3.20(c).
“Straddle
Period” has the meaning
set forth in Section 6.04.
“Taxes” means all federal, state, local, foreign
and other income, gross receipts, sales, use, production, ad
valorem, transfer, franchise, registration, profits, license,
lease, service, service use, withholding, payroll, employment,
unemployment, estimated, excise, severance, environmental, stamp,
occupation, premium, property (real or personal), real property
gains, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any
interest, additions or penalties with respect thereto and any
interest in respect of such additions or
penalties.
“Tax Claim” has the meaning set forth in Section
6.06.
“Tax Return” means any return, declaration, report,
claim for refund, information return or statement or other document
relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
“Territory” means North America
“Third Party
Claim” has the meaning
set forth in Section 8.05(a).
“Transaction
Expenses” means all fees
and expenses incurred by the Company or Seller at or prior to the
Closing in connection with the preparation, negotiation and
execution of this Agreement and the Ancillary Documents, and the
performance and consummation of the transactions contemplated
hereby and thereby.
“Union” has the meaning set forth in Section
3.21(b).
“WARN Act” means the federal Worker Adjustment and
Retraining Notification Act of 1988, and similar state, local and
foreign laws related to plant closings, relocations, mass layoffs
and employment losses.
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ARTICLE II
PURCHASE AND
SALE
Section 2.01 Purchase and Sale.
Subject to the terms and conditions
set forth herein, at the Closing, Seller shall sell to Buyer, and
Buyer shall purchase from Seller, the Shares, free and clear of all
Encumbrances, for the consideration specified in Section
2.02.
Section 2.02 Purchase Price.
The aggregate purchase price for the
Shares shall be $2,150,000 (the “Purchase
Price”) and payable as
follows: at Closing, the Buyer shall pay $2,150,000 to Seller by
wire transfer of immediately available funds to an account
designated by Seller to Buyer in writing, less outstanding balances
of Company credit cards as reasonably determined by Buyer as of
Closing (the “Closing Date
Payment”). In the event
that a 338(h)(10) or 336(e) election is made, the parties agree to
allocate the Purchase Price for tax purposes as provided in Section
6.05.
Section 2.03 Transactions to be Effected at
the Closing.
(a) At
the Closing, Buyer shall deliver to Seller the Closing Date Payment, and the Ancillary Documents and all other agreements,
documents, instruments or certificates required to be delivered by
Buyer at or prior to the Closing pursuant to Section 7.03 of this
Agreement.
(b) At
the Closing, Seller shall deliver to Buyer stock certificates evidencing the Shares, free
and clear of all Encumbrances, duly endorsed in blank or
accompanied by stock powers or other instruments of transfer duly
executed in blank, with all required stock transfer tax stamps
affixed thereto; and the
Ancillary Documents and all other agreements, documents,
instruments or certificates required to be delivered by Seller at
or prior to the Closing pursuant to Section 7.02 of this
Agreement.
Section 2.04 Closing. Subject to the terms and conditions of this
Agreement, the purchase and sale of the Shares contemplated hereby
shall take place at a closing (the “Closing”) to be held at 10:00 a.m., Eastern
Standard Time, no later than two business days after the last of
the conditions to Closing set forth in ARTICLE VII have been
satisfied or waived (other than conditions which, by their nature,
are to be satisfied on the Closing Date), at the offices of
Xxxxxxxxx Xxxxxx PLLC, 0000 X. Xxx Xxxxxx Xx., Xxxxx 000, Xxxx, XX
00000, or at such other time or on such other date or at such other
place as Seller and Buyer may mutually agree upon in writing (the
day on which the Closing takes place being the
“Closing Date”).
Section 2.05 Withholding Tax.
Buyer and the Company shall be
entitled to deduct and withhold from the Purchase Price all Taxes
that Buyer and the Company may be required to deduct and withhold
under any provision of Tax Law. All such withheld amounts shall be
treated as delivered to Seller hereunder.
ARTICLE
III
REPRESENTATIONS AND
WARRANTIES OF SELLER
Except
as set forth in the correspondingly numbered Section of the
Disclosure Schedules and subject to the transfer of the Additional
Assets, Seller represents and warrants to Buyer that the statements
contained in this ARTICLE III are true and correct as of the date
hereof; it being understood that the following representations and
warranties assume and are based upon the assignment and transfer to
the Company of the Additional Assets as set forth in the Recitals
so that such Additional Assets are assets and Contracts of the
Company.
Section 3.01 Organization and Authority of
Seller. Seller is a corporation
duly organized, validly existing and in good standing under the
Laws of the state of Delaware. Seller has full corporate power and
authority to enter into this Agreement and the Ancillary Documents
to which Seller is a party, to carry out its obligations hereunder
and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by Seller of this
Agreement and any Ancillary Document to which Seller is a party,
the performance by Seller of its obligations hereunder and
thereunder, and the consummation by Seller of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of Seller. This Agreement
has been duly executed and delivered by Seller, and (assuming due
authorization, execution and delivery by Buyer) this Agreement
constitutes a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms. When each
other Ancillary Document to which Seller is or will be a party has
been duly executed and delivered by Seller (assuming due
authorization, execution and delivery by each other party thereto),
such Ancillary Document will constitute a legal and binding
obligation of Seller enforceable against it in accordance with its
terms.
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Section 3.02 Organization, Authority and
Qualification of the Company. The Company is a corporation duly organized,
validly existing and in good standing under the Laws of the state
of California and has full corporate power and authority to own,
operate or lease the properties and assets now owned, operated or
leased by it and to carry on its business as it has been and is
currently conducted. Section 3.02 of the Disclosure Schedules sets
forth each jurisdiction in which the Company is licensed or
qualified to do business, and the Company is duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the
operation of its business as currently conducted makes such
licensing or qualification necessary. All corporate actions taken
by the Company in connection with this Agreement and the Ancillary
Documents will be duly authorized on or prior to the
Closing.
Section 3.03 Capitalization.
(a) The
authorized capital stock of the Company consists of 30,000,000
shares of common stock (“Common Stock”), of which 7,720,000 shares are issued and
outstanding and constitute the Shares; and 20,000,000 shares of
Preferred Stock none of which are issued and outstanding. All of
the Shares have been duly authorized, are validly issued, fully
paid and non-assessable, and are owned of record and beneficially
by Seller, free and clear of all Encumbrances. Upon consummation of
the transactions contemplated by this Agreement, Buyer shall own
all of the Shares, free and clear of all
Encumbrances.
(b) All
of the Shares were issued in compliance with applicable Laws. None
of the Shares were issued in violation of any agreement,
arrangement or commitment to which Seller or the Company is a party
or is subject to or in violation of any preemptive or similar
rights of any Person.
(c) There
are no outstanding or authorized options, warrants, convertible
securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of the Company or
obligating Seller or the Company to issue or sell any shares of
capital stock of, or any other interest in, the Company. The
Company does not have outstanding or authorized any stock
appreciation, phantom stock, profit participation or similar
rights. There are no voting trusts, stockholder agreements, proxies
or other agreements or understandings in effect with respect to the
voting or transfer of any of the Shares.
Section 3.04 No Subsidiaries.
The Company does not own, or have any
interest in any shares or have an ownership interest in any other
Person.
Section 3.05 No Conflicts; Consents.
The execution, delivery and
performance by Seller of this Agreement and the Ancillary Documents
to which it is a party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not: (a) conflict
with or result in a violation or breach of, or default under, any
provision of the certificate of incorporation, by-laws or other
organizational documents of Seller or the Company; (b) conflict
with or result in a violation or breach of any provision of any Law
or Governmental Order applicable to Seller or the Company; (c)
require the consent, notice or other action by any Person under,
conflict with, result in a violation or breach of, constitute a
default or an event that, with or without notice or lapse of time
or both, would constitute a default under, result in the
acceleration of or create in any party the right to accelerate,
terminate, modify or cancel any Contract to which Seller or the
Company is a party or by which Seller or the Company is bound or to
which any of their respective properties and assets are subject
(including any Material Contract) or any Permit affecting the
properties, assets or business of the Company; or (d) result in the
creation or imposition of any Encumbrance on any properties or
assets of the Company. No consent, approval, Permit, Governmental
Order, declaration or filing with, or notice to, any Governmental
Authority is required by or with respect to Seller or the Company
in connection with the execution and delivery of this Agreement and
the Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby.
Section 3.06 Financial Statements.
Complete copies of the Company’s
pro forma financial statements consisting of the balance sheet of
the Company as at December 31, 2016 and the related statements of
income and retained earnings, stockholders’ equity and cash
flow for the year then ended and the unaudited pro forma financial
statements consisting of the balance sheet of the Company (the
“Balance
Sheet”) as at June 30,
2017 (the “Balance Sheet
Date”) and the related
statements of income and retained earnings, stockholders’
equity and cash flow for the six-month period then ended
(collectively, the “Financial
Statements”) have been
delivered to Buyer. The Financial Statements are based on the books
and records of the Company, and fairly present the financial
condition of the Company as of the respective dates they were
prepared and the results of the operations of the Company for the
periods indicated.
-8-
Section 3.07 Undisclosed Liabilities.
The Company has no liabilities,
obligations or commitments of any nature whatsoever, asserted or
unasserted, known or unknown, absolute or contingent, accrued or
unaccrued, matured or unmatured or otherwise
(“Liabilities”), except (a) those which are adequately
reflected or reserved against in the Balance Sheet as of the
Balance Sheet Date, and (b) those which have been incurred in the
ordinary course of business consistent with past practice since the
Balance Sheet Date and which are not, individually or in the
aggregate, material in amount.
Section 3.08 Absence of Certain Changes,
Events and Conditions. Since
the Balance Sheet Date, and other than in the ordinary course of
business consistent with past practice and subject to the
assignment and transfer of the Additional Assets to the Company,
there has not been, with respect to the Company,
any:
(a) event,
occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect;
(b) amendment
of the charter, by-laws or other organizational documents of the
Company;
(c) split,
combination or reclassification of any shares of its capital
stock;
(d) issuance,
sale or other disposition of any of its capital stock, or grant of
any options, warrants or other rights to purchase or obtain
(including upon conversion, exchange or exercise) any of its
capital stock;
(e) declaration
or payment of any dividends or distributions on or in respect of
any of its capital stock or redemption, purchase or acquisition of
its capital stock or repayment of any notes, loans or other
Indebtedness outside of the ordinary course of
business;
(f) material
change in any method of accounting or accounting practice of the
Company, except as required by GAAP or as disclosed in the notes to
the Financial Statements;
(g) material
change in the Company’s cash management practices and its
policies, practices and procedures with respect to collection of
accounts receivable, establishment of reserves for uncollectible
accounts, accrual of accounts receivable, inventory control,
prepayment of expenses, payment of trade accounts payable, accrual
of other expenses, deferral of revenue and acceptance of customer
deposits;
(h) entry
into any Contract that would constitute a Material
Contract;
(i) incurrence,
assumption or guarantee of any indebtedness for borrowed money
except unsecured current obligations and Liabilities incurred in
the ordinary course of business consistent with past
practice;
(j) transfer,
assignment, sale or other disposition of any of the assets shown or
reflected in the Balance Sheet or cancellation of any debts or
entitlements;
(k) transfer
or assignment of or grant of any license or sublicense under or
with respect to any Company Intellectual Property or Company IP
Agreements;
(l) abandonment
or lapse of or failure to maintain in full force and effect any
Company IP Registration, or failure to take or maintain reasonable
measures to protect the confidentiality or value of any Trade
Secrets included in the Company Intellectual Property;
(m) material
damage, destruction or loss (whether or not covered by insurance)
to its property;
(n) any
capital investment in, or any loan to, any other
Person;
-9-
(o) acceleration,
termination, material modification to or cancellation of any
material Contract (including, but not limited to, any Material
Contract) to which the Company is a party or by which it is
bound;
(p) any
material capital expenditures;
(q) imposition
of any Encumbrance upon any of the Company properties, capital
stock or assets, tangible or intangible;
(r) (i)
grant of any bonuses, whether monetary or otherwise, or increase in
any wages, salary, severance, pension or other compensation or
benefits in respect of its current or former employees, officers,
directors, independent contractors or consultants, other than as
provided for in any written agreements or required by applicable
Law, (ii) change in the terms of employment for any employee or any
termination of any employees for which the aggregate costs and
expenses exceed $5,000, or (iii) action to accelerate the vesting
or payment of any compensation or benefit for any current or former
employee, officer, director, independent contractor or
consultant;
(s) hiring
or promoting any person as or to (as the case may be) an officer or
hiring or promoting any employee below officer except to fill a
vacancy in the ordinary course of business;
(t) adoption,
modification or termination of any: (i) employment, severance,
retention or other agreement with any current or former employee,
officer, director, independent contractor or consultant, (ii)
Benefit Plan or (iii) collective bargaining or other agreement with
a Union, in each case whether written or oral;
(u) any
loan to (or forgiveness of any loan to), or entry into any other
transaction with, any of its stockholders or current or former
directors, officers and employees;
(v) entry
into a new line of business or abandonment or discontinuance of
existing lines of business;
(w) adoption
of any plan of merger, consolidation, reorganization, liquidation
or dissolution or filing of a petition in bankruptcy under any
provisions of federal or state bankruptcy Law or consent to the
filing of any bankruptcy petition against it under any similar
Law;
(x) purchase,
lease or other acquisition of the right to own, use or lease any
property or assets for an amount in excess of $5,000, individually
(in the case of a lease, per annum) or $12,000 in the aggregate (in
the case of a lease, for the entire term of the lease, not
including any option term), except for purchases of inventory or
supplies in the ordinary course of business consistent with past
practice;
(y) acquisition
by merger or consolidation with, or by purchase of a substantial
portion of the assets or stock of, or by any other manner, any
business or any Person or any division thereof;
(z) action
by the Company to make, change or rescind any Tax election, amend
any Tax Return or take any position on any Tax Return, take any
action, omit to take any action or enter into any other transaction
that would have the effect of increasing the Tax liability or
reducing any Tax asset of Buyer in respect of any Post-Closing Tax
Period; or
(aa) any
Contract to do any of the foregoing, or any action or omission that
would result in any of the foregoing.
-10-
Section 3.09 Material Contracts.
(a) Section
3.09(a) of the Disclosure Schedules lists each of the following
Contracts of the Company (such Contracts, together with all
Contracts concerning the occupancy, management or operation of any
Real Property (including without limitation, brokerage contracts)
listed or otherwise disclosed in Section 3.10(b) of the Disclosure
Schedules and all Company IP Agreements, being
“Material
Contracts”):
(i) each
Contract of the Company involving aggregate consideration in excess
of $15,000, monthly aggregate consideration in excess of $5,000
and/or a Contract term of more than three (3) months, all to the
extent, in each case, such Contract cannot be cancelled by the
Company without penalty or without more than 60 days’
notice;
(ii) all
Contracts that require the Company to purchase its total
requirements of any product or service from a third party or that
contain “take or pay” provisions;
(iii) all
Contracts that provide for the indemnification by the Company of
any Person or the assumption of any Tax, environmental or other
Liability of any Person;
(iv) all
Contracts that relate to the acquisition or disposition of any
business, a material amount of stock or assets of any other Person
or any real property (whether by merger, sale of stock, sale of
assets or otherwise);
(v) all
broker, distributor, dealer, manufacturer’s representative,
franchise, agency, sales promotion, market research, marketing
consulting and advertising Contracts to which the Company is a
party;
(vi) all
employment agreements and Contracts with independent contractors or
consultants (or similar arrangements) to which the Company is a
party and which are not cancellable without material penalty or
without more than 90 days’ notice;
(vii) except
for Contracts relating to trade receivables, all Contracts relating
to indebtedness (including, without limitation, guarantees) of the
Company;
(viii) all
Contracts with any Governmental Authority to which the Company is a
party;
(ix) all
Contracts that limit or purport to limit the ability of the Company
to compete in any line of business or with any Person or in any
geographic area or during any period of time;
(x) any
Contracts to which the Company is a party that provide for any
joint venture, partnership or similar arrangement by the
Company;
(xi) all
Contracts between or among the Company on the one hand and Seller
or any Affiliate of Seller (other than the Company) on the other
hand;
(xii) all
collective bargaining agreements or Contracts with any Union to
which the Company is a party; and
(xiii) any
other Contract that is material to the Company and not previously
disclosed pursuant to this Section 3.09.
(b) Each
Material Contract is valid and binding on the Company in accordance
with its terms and is in full force and effect. None of the Company
or, to Seller’s Knowledge, any other party thereto is in
breach of or default under (or is alleged to be in breach of or
default under), or has provided or received any notice of any
intention to terminate, any Material Contract. No event or
circumstance has occurred that, with notice or lapse of time or
both, would constitute an event of default under any Material
Contract or result in a termination thereof or would cause or
permit the acceleration or other changes of any right or obligation
or the loss of any benefit thereunder. Complete and correct copies
of each Material Contract (including all modifications, amendments
and supplements thereto and waivers thereunder) have been made
available to Buyer.
-11-
Section 3.10 Title to Assets; Real
Property.
(a) The
Company has good and valid (and, in the case of owned Real
Property, good and marketable fee simple) title to, or a valid
leasehold interest in, all Real Property, Additional Assets and
personal property and other assets reflected in the Financial
Statements or acquired after the Balance Sheet Date, other than
properties and assets sold or otherwise disposed of in the ordinary
course of business consistent with past practice since the Balance
Sheet Date. All such properties and assets (including leasehold
interests) are free and clear of Encumbrances.
(b) Section
3.10(b) of the Disclosure Schedules lists (i) the street address of
each parcel of Real Property; (ii) if such property is leased or
subleased by the Company, the landlord under the lease, the rental
amount currently being paid, and the expiration of the term of such
lease or sublease for each leased or subleased property; and (iii)
the current use of such property. With respect to owned Real
Property, Seller has delivered or made available to Buyer true,
complete and correct copies of the deeds and other instruments (as
recorded) by which the Company acquired such Real Property, and
copies of all title insurance policies, opinions, abstracts and
surveys in the possession of Seller or the Company and relating to
the Real Property. With respect to leased Real Property, Seller has
delivered or made available to Buyer true, complete and correct
copies of any leases affecting the Real Property. The Company is
not a sublessor or grantor under any sublease or other instrument
granting to any other Person any right to the possession, lease,
occupancy or enjoyment of any leased Real Property. The use and
operation of the Real Property in the conduct of the
Company’s business do not violate in any material respect any
Law, covenant, condition, restriction, easement, license, permit or
agreement. No material improvements constituting a part of the Real
Property encroach on real property owned or leased by a Person
other than the Company. There are no Actions pending nor, to the
Seller’s Knowledge, threatened against or affecting the Real
Property or any portion thereof or interest therein in the nature
or in lieu of condemnation or eminent domain
proceedings.
(c) Section
3.10(c) of the Disclosure Schedules lists (i) each item of tangible
personal property owned by the Company with a value in excess of
$100 and (ii) the current use of such property.
Section 3.11 Condition and Sufficiency of
Assets. The buildings, plants,
structures, furniture, fixtures, machinery, equipment, vehicles and
other items of tangible personal property of the Company are
structurally sound, are in good operating condition and repair, and
are adequate for the uses to which they are being put, and none of
such buildings, plants, structures, furniture, fixtures, machinery,
equipment, vehicles and other items of tangible personal property
is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost.
The buildings, plants, structures, furniture, fixtures, machinery,
equipment, vehicles and other items of tangible personal property
currently owned or leased by the Company, together with all other
properties and assets of the Company, are sufficient for the
continued conduct of the Company’s business after the Closing
in substantially the same manner as conducted prior to the Closing
and constitute all of the rights, property and assets necessary to
conduct the business of the Company as currently
conducted.
Section 3.12 Intellectual
Property.
(a) Section
3.12(a) of the Disclosure Schedules contains a correct, current,
and complete list of all (i) Company IP Registrations, specifying
as to each, as applicable: the title, xxxx, or design; the record
owner and inventor(s), if any; the jurisdiction by or in which it
has been issued, registered, or filed; the patent, registration, or
application serial number; the issue, registration, or filing date;
and the current status, (ii) all unregistered Trademarks included
in the Company Intellectual Property, (iii) all proprietary
Software of the Company; and (iv) all other Company Intellectual
Property material to or used or held for use in the business as
currently conducted and as proposed to be conducted. All required
filings and fees related to the Company IP Registrations have been
timely filed with and paid to the relevant Governmental Authorities
and authorized registrars, and all Company IP Registrations are
otherwise in good standing. Seller has provided Buyer with true and
complete copies of file histories, documents, certificates, office
actions, correspondence and other materials related to all Company
IP Registrations.
-12-
(b) Section
3.12(b) of the Disclosure Schedules contains a correct, current,
and complete list of all Company IP Agreements, specifying for each
the date, title, and parties thereto. Seller has provided Buyer
with true and complete copies (or in the case of any oral
agreements, a complete and correct written description) of all such
Company IP Agreements, including all modifications, amendments and
supplements thereto and waivers thereunder. Each Company IP
Agreement is valid and binding on the Company in accordance with
its terms and is in full force and effect. Neither the Company nor
any other party thereto is, or is alleged to be, in breach of or
default under, or has provided or received any notice of breach of,
default under, or intention to terminate (including by
non-renewal), any Company IP Agreement..
(c) The
Company is the sole and exclusive legal and beneficial, and with
respect to the Company IP Registrations, record, owner of all
right, title, and interest in and to the Company Intellectual
Property, and has the valid and enforceable right to use all other
Intellectual Property used or held for use in or necessary for the
conduct of the Company’s business as currently conducted or
as proposed to be conducted, in each case, free and clear of
Encumbrances. The Company has entered into binding, valid and
enforceable, written Contracts with each current and former
employee and independent contractor who is or was involved in or
has contributed to the invention, creation, or development of any
Intellectual Property during the course of employment or engagement
with the Company whereby such employee or independent contractor
(i) acknowledges the Company’s exclusive ownership of all
Intellectual Property invented, created, or developed by such
employee or independent contractor within the scope of his or her
employment or engagement with the Company; (ii) grants to the
Company a present, irrevocable assignment of any ownership interest
such employee or independent contractor may have in or to such
Intellectual Property; and (iii) irrevocably waives any right or
interest, including any moral rights, regarding such Intellectual
Property, to the extent permitted by applicable Law. Seller has
provided Buyer with true and complete copies of all such
Contracts.
(d) Neither
the execution, delivery or performance of this Agreement, nor the
consummation of the transactions contemplated hereunder, will
result in the loss or impairment of or payment of any additional
amounts with respect to, nor require the consent of any other
Person in respect of, the Company’s right to own or use any
Company Intellectual Property or any Intellectual Property subject
to any Company IP Agreement.
(e) All
of the Company Intellectual Property is valid and enforceable, and
all Company IP Registrations are subsisting and in full force and
effect. The Company has taken all reasonable and necessary steps to
maintain and enforce the Company Intellectual Property and to
preserve the confidentiality of all Trade Secrets included in the
Company Intellectual Property, including by requiring all Persons
having access thereto to execute binding, written non-disclosure
agreements.
(f) The
conduct of the Company’s business as currently and formerly
conducted and as proposed to be conducted, and the products,
processes and services of the Company, have not infringed,
misappropriated or otherwise violated, and will not infringe,
misappropriate or otherwise violate, the Intellectual Property or
other rights of any Person. No Person has infringed,
misappropriated or otherwise violated any Company Intellectual
Property or Licensed Intellectual Property.
(g) There
are no Actions (including any opposition, cancellation, revocation,
review, or other proceeding) settled, pending or threatened
(including in the form of offers to obtain a license): (i) alleging
any infringement, misappropriation, or other violation by the
Company of the Intellectual Property of any Person; (ii)
challenging the validity, enforceability, registrability,
patentability, or ownership of any Company Intellectual Property;
or (iii) by the Company or any other Person alleging any
infringement, misappropriation, or violation by any Person of the
Company Intellectual Property. Neither Seller nor the Company is
aware of any facts or circumstances that could reasonably be
expected to give rise to any such Action. The Company is not
subject to any outstanding or prospective Governmental Order
(including any motion or petition therefor) that does or could
reasonably be expected to restrict or impair the use of any Company
Intellectual Property.
-13-
(h) The
computer hardware, servers, networks, platforms, peripherals, data
communication lines, and other information technology equipment and
related systems, including any outsourced systems and processes,
that are owned or used by the Company (“Company
Systems”) are reasonably
sufficient for the immediate and anticipated needs of the
Company’s business. In the past eighteen (18) months, there
has been no unauthorized access, use, intrusion, or breach of
security, or failure, breakdown, performance reduction, or other
adverse event affecting any Company Systems, that has caused or
could reasonably be expected to cause any: (i) substantial
disruption of or interruption in or to the use of such Company
Systems or the conduct of the Company’s business; (ii) loss,
destruction, damage, or harm of or to the Company or its
operations, personnel, property, or other assets; or (iii)
liability of any kind to the Company. The Company has taken all
reasonable actions, consistent with applicable industry best
practices, to protect the integrity and security of the Company
Systems and the data and other information stored or processed
thereon. The Company (i) maintains commercially reasonable backup
and data recovery, disaster recovery, and business continuity
plans, procedures, and facilities; (ii) acts in compliance
therewith; and (iii) tests such plans and procedures on a regular
basis, and such plans and procedures have been proven effective
upon such testing.
Section 3.13 Inventory. All inventory of the Company, whether or not
reflected in the Balance Sheet, consists of a quality and quantity
usable and salable in the ordinary course of business consistent
with past practice, except for obsolete, damaged, defective or
slow-moving items that have been written off or written down to
fair market value or for which adequate reserves have been
established. All such inventory is owned by the Company free and
clear of all Encumbrances, and no inventory is held on a
consignment basis. The quantities of each item of inventory
(whether raw materials, work-in-process or finished goods) are not
excessive, but are reasonable in the present circumstances of the
Company.
Section 3.14 Accounts Receivable.
The accounts receivable reflected on
the Balance Sheet and the accounts receivable arising after the
date thereof (a) have arisen from bona fide transactions entered
into by the Company involving the sale of goods or the rendering of
services in the ordinary course of business consistent with past
practice; (b) constitute only valid, undisputed claims of the
Company not subject to claims of set-off or other defenses or
counterclaims other than normal cash discounts accrued in the
ordinary course of business consistent with past practice; and (c)
subject to a reserve for bad debts shown on the Balance Sheet or,
with respect to accounts receivable arising after the Balance Sheet
Date, on the accounting records of the Company, are collectible in
full within 90 days after billing. The reserve for bad debts shown
on the Balance Sheet or, with respect to accounts receivable
arising after the Balance Sheet Date, on the accounting records of
the Company have been determined in accordance with GAAP,
consistently applied, subject to normal year-end adjustments and
the absence of disclosures normally made in
footnotes.
Section 3.15 Reserved.
Section 3.16 Insurance. Section 3.16 of the Disclosure Schedules sets
forth a true and complete list of all current policies or binders
of fire, liability, product liability, umbrella liability, real and
personal property, workers’ compensation, vehicular,
directors’ and officers’ liability, fiduciary liability
and other casualty and property insurance maintained by Seller or
its Affiliates (including the Company) and relating to the assets,
business, operations, employees, officers and directors of the
Company (collectively, the “Insurance
Policies”) and true and
complete copies of such Insurance Policies have been made available
to Buyer. Such Insurance Policies are in full force and effect and
shall remain in full force and effect following the consummation of
the transactions contemplated by this Agreement. Neither the Seller
nor any of its Affiliates (including the Company) has received any
written notice of cancellation of, premium increase with respect
to, or alteration of coverage under, any of such Insurance
Policies. All premiums due on such Insurance Policies have either
been paid or, if due and payable prior to Closing, will be paid
prior to Closing in accordance with the payment terms of each
Insurance Policy. The Insurance Policies do not provide for any
retrospective premium adjustment or other experience-based
liability on the part of the Company. All such Insurance Policies
(a) are valid and binding in accordance with their terms; (b) are
provided by carriers who are financially solvent; and (c) have not
been subject to any lapse in coverage. There are no claims related
to the business of the Company pending under any such Insurance
Policies as to which coverage has been questioned, denied or
disputed or in respect of which there is an outstanding reservation
of rights. None of Seller or any of its Affiliates (including the
Company) is in default under, or has otherwise failed to comply
with, in any material respect, any provision contained in any such
Insurance Policy. The Insurance Policies are of the type and in the
amounts customarily carried by Persons conducting a business
similar to the Company and are sufficient for compliance with all
applicable Laws and Contracts to which the Company is a party or by
which it is bound.
-14-
Section 3.17 Legal Proceedings; Governmental
Orders.
(a) There
are no Actions pending or, to Seller’s Knowledge, threatened
(a) against or by the Company affecting any of its properties or
assets (or by or against Seller or any Affiliate thereof and
relating to the Company); or (b) against or by the Company, Seller
or any Affiliate of Seller that challenges or seeks to prevent,
enjoin or otherwise delay the transactions contemplated by this
Agreement. To Seller’s knowledge, no event has occurred or
circumstances exist that may give rise to, or serve as a basis for,
any such Action.
(b) There
are no outstanding Governmental Orders and no unsatisfied
judgments, penalties or awards against or affecting the Company or
any of its properties or assets. The Company is in compliance with
the terms of each Governmental Order set forth in Section 3.17(b)
of the Disclosure Schedules. To Seller’s knowledge, no event
has occurred or circumstances exist that may constitute or result
in (with or without notice or lapse of time) a violation of any
such Governmental Order.
Section 3.18 Compliance With Laws;
Permits.
(a) The
Company has complied, and is now complying, with all Laws
applicable to it or its business, properties or
assets.
(b) All
Permits required for the Company to conduct its business have been
obtained by it and are valid and in full force and effect. All fees
and charges with respect to such Permits as of the date hereof have
been paid in full. Section 3.18(b) of the Disclosure Schedules
lists all current Permits issued to the Company, including the
names of the Permits and their respective dates of issuance and
expiration. No event has occurred that, with or without notice or
lapse of time or both, would reasonably be expected to result in
the revocation, suspension, lapse or limitation of any Permit set
forth in Section 3.18(b) of the Disclosure Schedules.
Section 3.19 Environmental
Matters.
(a) The
Company is currently and has been in compliance with all
Environmental Laws and has not, and the Seller has not, received
from any Person any: (i) Environmental Notice or Environmental
Claim; or (ii) written request for information pursuant to
Environmental Law, which, in each case, either remains pending or
unresolved, or is the source of ongoing obligations or requirements
as of the Closing Date.
(b) The
Company has obtained and is in material compliance with all
Environmental Permits (each of which is disclosed in Section
3.19(b) of the Disclosure Schedules) necessary for the ownership,
lease, operation or use of the business or assets of the Company
and all such Environmental Permits are in full force and effect and
shall be maintained in full force and effect by Seller through the
Closing Date in accordance with Environmental Law, and neither
Seller nor the Company is aware of any condition, event or
circumstance that might prevent or impede, after the Closing Date,
the ownership, lease, operation or use of the business or assets of
the Company as currently carried out. With respect to any such
Environmental Permits, Seller has undertaken, or will undertake
prior to the Closing Date, all measures necessary to facilitate
transferability of the same, and neither the Company nor the Seller
is aware of any condition, event or circumstance that might prevent
or impede the transferability of the same, nor have they received
any Environmental Notice or written communication regarding any
material adverse change in the status or terms and conditions of
the same.
(c) No
real property currently or formerly owned, operated or leased by
the Company is listed on, or has been proposed for listing on, the
National Priorities List (or CERCLIS) under CERCLA, or any similar
state list.
-15-
(d) There
has been no Release of Hazardous Materials in contravention of
Environmental Law with respect to the business or assets of the
Company or any real property currently or formerly owned, operated
or leased by the Company, and neither the Company nor Seller has
received an Environmental Notice that any real property currently
or formerly owned, operated or leased in connection with the
business of the Company (including soils, groundwater, surface
water, buildings and other structure located on any such real
property) has been contaminated with any Hazardous Material which
could reasonably be expected to result in an Environmental Claim
against, or a violation of Environmental Law or term of any
Environmental Permit by, Seller or the Company.
(e) There
are no active or abandoned aboveground or underground storage tanks
owned or operated by the Company.
(f) There
are no off-site Hazardous Materials treatment, storage, or disposal
facilities or locations used by the Company or Seller or any
predecessors as to which the Company or Seller may retain
liability, and neither Seller nor the Company has received any
Environmental Notice regarding potential liabilities with respect
to an off-site Hazardous Materials treatment, storage, or disposal
facilities or locations used by the Company or Seller.
(g) Neither
Seller nor the Company has retained or assumed, by contract or
operation of Law, any liabilities or obligations of third parties
under Environmental Law.
(h) Seller
has provided or otherwise made available to Buyer: (i) any and all
environmental reports, studies, audits, records, sampling data,
site assessments, risk assessments, economic models and other
similar documents with respect to the business or assets of the
Company or any currently or formerly owned, operated or leased real
property which are in the possession or control of the Seller or
Company related to compliance with Environmental Laws,
Environmental Claims or an Environmental Notice or the Release of
Hazardous Materials; and (ii) any and all material documents
concerning planned or anticipated capital expenditures required to
reduce, offset, limit or otherwise control pollution and/or
emissions, manage waste or otherwise ensure compliance with current
or future Environmental Laws (including, without limitation, costs
of remediation, pollution control equipment and operational
changes).
(i) Neither
the Seller nor the Company is aware of or reasonably anticipates,
as of the Closing Date, any condition, event or circumstance
concerning the Release or regulation of Hazardous Materials that
might, after the Closing Date, prevent, impede or materially
increase the costs associated with the ownership, lease, operation,
performance or use of the business or assets of the Company as
currently carried out.
Section 3.20 Employee Benefit
Matters.
(a) Section
3.20(a) of the Disclosure Schedules contains a true and complete
list of each pension, benefit, retirement, compensation,
employment, consulting, profit-sharing, deferred compensation,
incentive, bonus, performance award, phantom equity, stock or
stock-based, change in control, retention, severance, vacation,
paid time off (PTO), medical, vision, dental, disability, welfare,
Code Section 125 cafeteria, fringe benefit and other similar
agreement, plan, policy, program or arrangement (and any amendments
thereto), in each case whether or not reduced to writing and
whether funded or unfunded, including each “employee benefit
plan” within the meaning of Section 3(3) of ERISA, whether or
not tax-qualified and whether or not subject to ERISA, which is or
has been maintained, sponsored, contributed to, or required to be
contributed to by the Company for the benefit of any current or
former employee, officer, director, retiree, independent contractor
or consultant of the Company or any spouse or dependent of such
individual, or under which the Company or any of its ERISA
Affiliates has or may have any Liability, or with respect to which
Buyer or any of its Affiliates would reasonably be expected to have
any Liability, contingent or otherwise (as listed on Section
3.20(a) of the Disclosure Schedules, each, a
“Benefit Plan”). The Company has separately identified in
Section 3.20(a) of the Disclosure Schedules (i) each Benefit Plan
that contains a change in control provision and (ii) each Benefit
Plan that is maintained, sponsored, contributed to, or required to
be contributed to by the Company primarily for the benefit of
employees outside of the United States (a
“Non-U.S.
Benefit Plan”).
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(b) With
respect to each Benefit Plan, Seller has made available to Buyer
accurate, current and complete copies of each of the following: (i)
where the Benefit Plan has been reduced to writing, the plan
document together with all amendments; (ii) where the Benefit Plan
has not been reduced to writing, a written summary of all material
plan terms; (iii) where applicable, copies of any trust agreements
or other funding arrangements, custodial agreements, insurance
policies and contracts, administration agreements and similar
agreements, and investment management or investment advisory
agreements, now in effect or required in the future as a result of
the transactions contemplated by this Agreement or otherwise; (iv)
copies of any summary plan descriptions, summaries of material
modifications, summaries of benefits and coverage, COBRA
communications, employee handbooks and any other written
communications (or a description of any oral communications)
relating to any Benefit Plan; (v) in the case of any Benefit Plan
that is intended to be qualified under Section 401(a) of the Code,
a copy of the most recent determination, opinion or advisory letter
from the Internal Revenue Service and any legal opinions issued
thereafter with respect to such Benefit Plan’s continued
qualification; (vi) in the case of any Benefit Plan for which a
Form 5500 must be filed, a copy of the two most recently filed
Forms 5500, with all corresponding schedules and financial
statements attached; (vii) actuarial valuations and reports related
to any Benefit Plans with respect to the two most recently
completed plan years; (viii) the most recent nondiscrimination
tests performed under the Code; and (ix) copies of material
notices, letters or other correspondence from the Internal Revenue
Service, Department of Labor, Department of Health and Human
Services, Pension Benefit Guaranty Corporation or other
Governmental Authority relating to the Benefit Plan.
(c) Each
Benefit Plan and any related trust (other than any multiemployer
plan within the meaning of Section 3(37) of ERISA (each a
“Multiemployer
Plan”)) has been
established, administered and maintained in accordance with its
terms and in compliance with all applicable Laws (including ERISA,
the Code and any applicable local Laws). Each Benefit Plan that is
intended to be qualified within the meaning of Section 401(a) of
the Code (a “Qualified Benefit
Plan”) is so qualified
and received a favorable and current determination letter from the
Internal Revenue Service with respect to the most recent five year
filing cycle, or with respect to a prototype or volume submitter
plan, can rely on an opinion letter from the Internal Revenue
Service to the prototype plan or volume submitter plan sponsor, to
the effect that such Qualified Benefit Plan is so qualified and
that the plan and the trust related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and nothing has occurred that could reasonably be expected to
adversely affect the qualified status of any Qualified Benefit
Plan. Nothing has occurred with respect to any Benefit Plan that
has subjected or could reasonably be expected to subject the
Company or any of its ERISA Affiliates or, with respect to any
period on or after the Closing Date, Buyer or any of its
Affiliates, to a penalty under Section 502 of ERISA or to tax or
penalty under Sections 4975 or 4980H of the
Code.
No pension plan (other than a Multiemployer Plan)
which is subject to minimum funding requirements, including any
multiple employer plan, (each, a “Single Employer
Plan”) in which employees
of the Company or any ERISA Affiliate participate or have
participated has an “accumulated funding deficiency”,
whether or not waived, or is subject to a lien for unpaid
contributions under Section 303(k) of ERISA or Section 430(k) of
the Code. No Single Employer Plan covering employees of the Company
which is a defined benefit plan has an “adjusted funding
target attainment percentage,” as defined in Section 436 of
the Code, less than 80%. All benefits, contributions and premiums
relating to each Benefit Plan have been timely paid in accordance
with the terms of such Benefit Plan and all applicable Laws and
accounting principles, and all benefits accrued under any unfunded
Benefit Plan have been paid, accrued or otherwise adequately
reserved to the extent required by, and in accordance with, GAAP.
All Non-U.S. Benefit Plans that are intended to be funded and/or
book-reserved are funded and/or book-reserved, as appropriate,
based upon reasonable actuarial assumptions.
(d) Neither
the Company nor any of its ERISA Affiliates has (i) incurred or
reasonably expects to incur, either directly or indirectly, any
material Liability under Title I or Title IV of ERISA or related
provisions of the Code or applicable local Law relating to employee
benefit plans; (ii) failed to timely pay premiums to the Pension
Benefit Guaranty Corporation; (iii) withdrawn from any Benefit
Plan; (iv) engaged in any transaction which would give rise to
liability under Section 4069 or Section 4212(c) of ERISA; (v)
incurred taxes under Section 4971 of the Code with respect to any
Single Employer Plan; or (v) participated in a multiple employer
welfare arrangements (MEWAs).
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(e) With
respect to each Benefit Plan (i) no such plan is a Multiemployer
Plan and (A) all contributions required to be paid by the Company
or its ERISA Affiliates have been timely paid to the applicable
Multiemployer Plan; (B) neither the Company nor any ERISA Affiliate
has incurred any withdrawal liability under Title IV of ERISA which
remains unsatisfied, and (C) a complete withdrawal from all such
Multiemployer Plans at the Effective Time would not result in any
material liability to the Company and no Multiemployer Plan is in
critical, endangered or seriously endangered status or has suffered
a mass withdrawal; (ii) no such plan is a “multiple employer
plan” within the meaning of Section 413(c) of the Code or a
“multiple employer welfare arrangement” (as defined in
Section 3(40) of ERISA); (iii) no Action has been initiated by the
Pension Benefit Guaranty Corporation to terminate any such plan or
to appoint a trustee for any such plan; (iv) no such plan or the
plan of any ERISA Affiliate maintained or contributed to within the
last six (6) years is a Single Employer Plan subject to Title IV of
ERISA; and (v) no “reportable event,” as defined in
Section 4043 of ERISA, with respect to which the reporting
requirement has not been waiver has occurred with respect to any
such plan.
(f) Each
Benefit Plan can be amended, terminated or otherwise discontinued
after the Closing in accordance with its terms, without material
liabilities to Buyer, the Company or any of their Affiliates other
than ordinary administrative expenses typically incurred in a
termination event. The Company has no commitment or obligation and
has not made any representations to any employee, officer,
director, independent contractor or consultant, whether or not
legally binding, to adopt, amend, modify or terminate any Benefit
Plan or any collective bargaining agreement, in connection with the
consummation of the transactions contemplated by this Agreement or
otherwise.
(g) Other
than as required under Sections 601 to 608 of ERISA or other
applicable Law, no Benefit Plan provides post-termination or
retiree health benefits to any individual for any reason, and
neither the Company nor any of its ERISA Affiliates has any
Liability to provide post-termination or retiree health benefits to
any individual or ever represented, promised or contracted to any
individual that such individual would be provided with
post-termination or retiree health benefits.
(h) There
is no pending or, to Seller’s Knowledge, threatened Action
relating to a Benefit Plan (other than routine claims for
benefits), and no Benefit Plan has within the three years prior to
the date hereof been the subject of an examination or audit by a
Governmental Authority or the subject of an application or filing
under or is a participant in, an amnesty, voluntary compliance,
self-correction or similar program sponsored by any Governmental
Authority.
(i) There
has been no amendment to, announcement by Seller, the Company or
any of their Affiliates relating to, or change in employee
participation or coverage under, any Benefit Plan or collective
bargaining agreement that would increase the annual expense of
maintaining such plan above the level of the expense incurred for
the most recently completed fiscal year (other than on a de minimis
basis) with respect to any director, officer, employee, independent
contractor or consultant, as applicable. None of Seller, the
Company, nor any of their Affiliates has any commitment or
obligation or has made any representations to any director,
officer, employee, independent contractor or consultant, whether or
not legally binding, to adopt, amend, modify or terminate any
Benefit Plan or any collective bargaining agreement.
(j) Each
Benefit Plan that is subject to Section 409A of the Code has been
administered in compliance with its terms and the operational and
documentary requirements of Section 409A of the Code and all
applicable regulatory guidance (including notices, rulings and
proposed and final regulations) thereunder. The Company does not
have any obligation to gross up, indemnify or otherwise reimburse
any individual for any excise taxes, interest or penalties incurred
pursuant to Section 409A of the Code.
(k) Each
individual who is classified by the Company as an independent
contractor has been properly classified for purposes of
participation and benefit accrual under each Benefit
Plan.
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(l) Neither
the execution of this Agreement nor any of the transactions
contemplated by this Agreement will (either alone or upon the
occurrence of any additional or subsequent events): (i) entitle any
current or former director, officer, employee, independent
contractor or consultant of the Company to severance pay or any
other payment; (ii) accelerate the time of payment, funding or
vesting, or increase the amount of compensation (including
stock-based compensation) due to any such individual; (iii) limit
or restrict the right of the Company to merge, amend, or terminate
any Benefit Plan; (iv) increase the amount payable under or result
in any other material obligation pursuant to any Benefit Plan; (v)
result in “excess parachute payments” within the
meaning of Section 280G(b) of the Code; or (vi) require a
“gross-up” or other payment to any “disqualified
individual” within the meaning of Section 280G(c) of the
Code. Seller has made available to Buyer true and complete copies
of any Section 280G calculations prepared (whether or not final)
with respect to any disqualified individual in connection with the
transactions.
Section 3.21 Employment
Matters.
(a) Section
3.21(a) of the Disclosure Schedules contains a list of all persons
who are employees, independent contractors or consultants of the
Company as of the date hereof, including any employee who is on a
leave of absence of any nature, paid or unpaid, authorized or
unauthorized, and sets forth for each such individual the
following: (i) name; (ii) title or position (including whether
full-time or part-time); (iii) hire or retention date; (iv) current
annual base compensation rate or contract fee; (v) commission,
bonus or other incentive-based compensation; and (vi) a description
of the fringe benefits provided to each such individual as of the
date hereof. As of the date hereof, all compensation, including
wages, commissions, bonuses, fees and other compensation, payable
to all employees, independent contractors or consultants of the
Company for services performed on or prior to the date hereof have
been paid in full and there are no outstanding agreements,
understandings or commitments of the Company with respect to any
compensation, commissions, bonuses or fees.
(b) The
Company is not, and has not been for the past five (5) years, a
party to, bound by, or negotiating any collective bargaining
agreement or other Contract with a union, works council or labor
organization (collectively, “Union”), and there is not, and has not been for
the past five (5) years, any Union representing or purporting to
represent any employee of the Company, and no Union or group of
employees is seeking or has sought to organize employees for the
purpose of collective bargaining. There has never been, nor has
there been any threat of, any strike, slowdown, work stoppage,
lockout, concerted refusal to work overtime or other similar labor
disruption or dispute affecting the Company or any of its
employees. The Company has no duty to bargain with any
Union.
(c) The
Company is and has been in material compliance with all applicable
Laws pertaining to employment and employment practices, including
all Laws relating to labor relations, equal employment
opportunities, fair employment practices, employment
discrimination, harassment, retaliation, reasonable accommodation,
disability rights or benefits, immigration, wages, hours, overtime
compensation, child labor, hiring, promotion and termination of
employees, working conditions, meal and break periods, privacy,
health and safety, workers’ compensation, leaves of absence,
paid sick leave and unemployment insurance. All individuals
characterized and treated by the Company as independent contractors
or consultants are properly treated as independent contractors
under all applicable Laws. All employees of the Company classified
as exempt under the Fair Labor Standards Act and state and local
wage and hour laws are properly classified. The Company is in
compliance with and has complied with all immigration laws,
including Form I-9 requirements and any applicable mandatory
E-Verify obligations. There are no Actions against the Company
pending, or to the Seller’s Knowledge, threatened to be
brought or filed, by or with any Governmental Authority or
arbitrator in connection with the employment of any current or
former applicant, employee, consultant, volunteer, intern or
independent contractor of the Company, including, without
limitation, any charge, investigation or claim relating to unfair
labor practices, equal employment opportunities, fair employment
practices, employment discrimination, harassment, retaliation,
reasonable accommodation, disability rights or benefits,
immigration, wages, hours, overtime compensation, employee
classification, child labor, hiring, promotion and termination of
employees, working conditions, meal and break periods, privacy,
health and safety, workers’ compensation, leaves of absence,
paid sick leave, unemployment insurance or any other employment
related matter arising under applicable Laws.
(d) The
Company has complied with the WARN Act, and it has no plans to
undertake any action in the future that would trigger the WARN
Act.
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Section 3.22 Taxes.
(a) All
Tax Returns required to be filed on or before the Closing Date by
the Company have been, or will be, timely filed. Such Tax Returns
are, or will be, true, complete and correct in all respects. All
Taxes due and owing by the Company (whether or not shown on any Tax
Return) have been, or will be, timely paid. The Company has withheld and paid each Tax
required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
customer, shareholder or other party, and complied with all
information reporting and backup withholding provisions of
applicable Law. No claim has
been made by any taxing authority in any jurisdiction where the
Company does not file Tax Returns that it is, or may be, subject to
Tax by that jurisdiction. No
extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of the
Company.
(b) The
amount of the Company’s Liability for unpaid Taxes for all
periods ending on or before the Balance Sheet Date does not, in the
aggregate, exceed the amount of accruals for Taxes (excluding
reserves for deferred Taxes) reflected on the Financial Statements.
The amount of the Company’s Liability for unpaid Taxes for
all periods following the end of the recent period covered by the
Financial Statements shall not, in the aggregate, exceed the amount
of accruals for Taxes (excluding reserves for deferred Taxes) as
adjusted for the passage of time in accordance with the past custom
and practice of the Company (and which accruals shall not exceed
comparable amounts incurred in similar periods in prior
years).
(c) All
deficiencies asserted, or assessments made, against the Company as
a result of any examinations by any taxing authority have been
fully paid. The Company is not
a party to any Action by any taxing authority. There are no pending
or threatened Actions by any taxing authority. Seller has delivered to Buyer copies of all
federal, state, local and foreign income, franchise and similar Tax
Returns, examination reports, and statements of deficiencies
assessed against, or agreed to by, the Company for all Tax periods
ending after December 31, 2010. There are no Encumbrances for Taxes (other than
for current Taxes not yet due and payable) upon the assets of the
Company.
(d) The
Company is not a party to, or bound by, any Tax indemnity, Tax
sharing or Tax allocation agreement. No private letter rulings, technical advice
memoranda or similar agreement or rulings have been requested,
entered into or issued by any taxing authority with respect to the
Company. The Company has not
been a member of an affiliated, combined, consolidated or unitary
Tax group for Tax purposes. The Company has no Liability for Taxes
of any Person (other than the Company) under Treasury Regulations
Section 1.1502-6 (or any corresponding provision of state, local or
foreign Law), as transferee or successor, by contract or
otherwise.
(e) The
Company will not be required to include any item of income in, or
exclude any item or deduction from, taxable income for any taxable
period or portion thereof ending after the Closing Date as a result
of:
(i) any
change in a method of accounting under Section 481 of the Code (or
any comparable provision of state, local or foreign Tax Laws), or
use of an improper method of accounting, for a taxable period
ending on or prior to the Closing Date;
(ii) an
installment sale or open transaction occurring on or prior to the
Closing Date;
(iii) a
prepaid amount received on or before the Closing Date;
(iv) any
closing agreement under Section 7121 of the Code, or similar
provision of state, local or foreign Law; or
(v) any
election under Section 108(i) of the Code.
-20-
(f) Seller
is not a “foreign person” as that term is used in
Treasury Regulations Section 1.1445-2. The Company is not, nor has
it been, a United States real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(a) of the Code.
The Company has not been a
“distributing corporation” or a “controlled
corporation” in connection with a distribution described in
Section 355 of the Code. The
Company is not, and has not been, a party to, or a promoter of, a
“reportable transaction” within the meaning of Section
6707A(c)(1) of the Code and Treasury Regulations Section 1.6011
4(b). There is currently no
limitation on the utilization of net operating losses, capital
losses, built-in losses, tax credits or similar items of the
Company under Sections 269, 382, 383, 384 or 1502 of the Code and
the Treasury Regulations thereunder (and comparable provisions of
state, local or foreign Law).
(g) Section
3.22(g) of the Disclosure Schedules sets forth all foreign
jurisdictions in which the Company is subject to Tax, is engaged in
business or has a permanent establishment. The Company has not
entered into a gain recognition agreement pursuant to Treasury
Regulations Section 1.367(a)-8. The Company has not transferred an
intangible the transfer of which would be subject to the rules of
Section 367(d) of the Code.
(h) No
property owned by the Company is (i) required to be treated as
being owned by another person pursuant to the so-called “safe
harbor lease” provisions of former Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, (ii) subject to Section
168(g)(1)(A) of the Code, or (iii) subject to a disqualified
leaseback or long-term agreement as defined in Section 467 of the
Code.
Section 3.23 Books and Records.
The minute books and stock record
books of the Company, all of which have been made available to
Buyer, are complete and correct and have been maintained in
accordance with sound business practices. The minute books of the
Company contain accurate and complete records of all meetings, and
actions taken by written consent of, the stockholders, the board of
directors and any committees of the board of directors of the
Company, and no meeting, or action taken by written consent, of any
such stockholders, board of directors or committee has been held
for which minutes have not been prepared and are not contained in
such minute books. At the Closing, all of those books and records
will be in the possession of the Company.
Section 3.24 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement or
any other Ancillary Document based upon arrangements made by or on
behalf of Seller.
Section 3.25 Full Disclosure.
No representation or warranty by
Seller in this Agreement and no statement contained in the
Disclosure Schedules to this Agreement or any certificate or other
document furnished or to be furnished to Buyer pursuant to this
Agreement contains any untrue statement of a material fact, or
omits to state a material fact necessary to make the statements
contained therein, in light of the circumstances in which they are
made, not misleading.
ARTICLE
IV
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer
represents and warrants to Seller that the statements contained in
this ARTICLE IV are true and correct as of the date
hereof.
Section 4.01 Organization and Authority of
Buyer. Buyer is a limited
liability company duly organized, validly existing and in good
standing under the Laws of the state of Delaware. Buyer has full
power and authority to enter into this Agreement and the Ancillary
Documents to which Buyer is a party, to carry out its obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by
Buyer of this Agreement and any Ancillary Document to which Buyer
is a party, the performance by Buyer of its obligations hereunder
and thereunder and the consummation by Buyer of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer, and (assuming due authorization,
execution and delivery by Seller) this Agreement constitutes a
legal, valid and binding obligation of Buyer enforceable against
Buyer in accordance with its terms. When each Ancillary Document to
which Buyer is or will be a party has been duly executed and
delivered by Buyer (assuming due authorization, execution and
delivery by each other party thereto), such Ancillary Document will
constitute a legal and binding obligation of Buyer enforceable
against it in accordance with its terms.
-21-
Section 4.02 No Conflicts; Consents.
The execution, delivery and
performance by Buyer of this Agreement and the Ancillary Documents
to which it is a party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not: (a) conflict
with or result in a violation or breach of, or default under, any
provision of the certificate of formation, limited liability
company agreement or other organizational documents of Buyer; (b)
conflict with or result in a violation or breach of any provision
of any Law or Governmental Order applicable to Buyer; or (c)
require the consent, notice or other action by any Person under any
Contract to which Buyer is a party. No consent, approval, Permit,
Governmental Order, declaration or filing with, or notice to, any
Governmental Authority is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement and
the Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby.
Section 4.03 Investment Purpose.
Buyer is acquiring the Shares solely
for its own account for investment purposes and not with a view to,
or for offer or sale in connection with, any distribution thereof.
Buyer acknowledges that the Shares are not registered under the
Securities Act of 1933, as amended, or any state securities laws,
and that the Shares may not be transferred or sold except pursuant
to the registration provisions of the Securities Act of 1933, as
amended or pursuant to an applicable exemption therefrom and
subject to state securities laws and regulations, as
applicable.
ARTICLE
V
COVENANTS
Section 5.01 Conduct of Business Prior to
the Closing. From the date
hereof until the Closing, except as otherwise provided in this
Agreement or consented to in writing by Buyer (which consent shall
not be unreasonably withheld or delayed), Seller shall, and shall
cause the Company to, (x) conduct the business of the Company in
the ordinary course of business consistent with past practice; and
(y) use reasonable best efforts to maintain and preserve intact the
current organization, business and franchise of the Company and to
preserve the rights, franchises, goodwill and relationships of its
employees, customers, lenders, suppliers, regulators and others
having business relationships with the Company. Without limiting
the foregoing, from the date hereof until the Closing Date, Seller
shall:
(a) cause
the Company to preserve and maintain all of its
Permits;
(b) cause
the Company to pay its debts, Taxes and other obligations when
due;
(c) cause
the Company to maintain the properties and assets owned, operated
or used by the Company in the same condition as they were on the
date of this Agreement, subject to reasonable wear and
tear;
(d) cause
the Company to continue in full force and effect without
modification all Insurance Policies, except as required by
applicable Law;
(e) cause
the Company to defend and protect its properties and assets from
infringement or usurpation;
(f) cause
the Company to perform all of its obligations under all Contracts
relating to or affecting its properties, assets or
business;
(g) cause
the Company to maintain its books and records in accordance with
past practice;
(h) cause
the Company to comply in all material respects with all applicable
Laws; and
(i) cause
the Company not to take or permit any action that would cause any
of the changes, events or conditions described in Section 3.08 to
occur.
-22-
Section 5.02 Access to Information.
From the date hereof until the
Closing, Seller shall, and shall cause the Company to, (a) afford
Buyer and its Representatives full and free access to and the right
to inspect all of the Real Property, properties, assets, premises,
books and records, Contracts and other documents and data related
to the Company; (b) furnish Buyer and its Representatives with such
financial, operating and other data and information related to the
Company as Buyer or any of its Representatives may reasonably
request; and (c) instruct the Representatives of Seller and the
Company to cooperate with Buyer in its investigation of the
Company. Without limiting the foregoing, Seller shall permit Buyer
and its Representatives to conduct environmental due diligence of
the Company and the Real Property, including the collecting and
analysis of samples of indoor or outdoor air, surface water,
groundwater or surface or subsurface land on, at, in, under or from
the Company and the Real Property. Any investigation pursuant to
this Section 5.02 shall be conducted in such manner as not to
interfere unreasonably with the conduct of the business of Seller
or the Company. No investigation by Buyer or other information
received by Buyer shall operate as a waiver or otherwise affect any
representation, warranty or agreement given or made by Seller in
this Agreement.
Section 5.03 No Solicitation of Other
Bids.
(a) Seller
shall not, and shall not authorize or permit any of its Affiliates
(including the Company) or any of its or their Representatives to,
directly or indirectly, (i) encourage, solicit, initiate,
facilitate or continue inquiries regarding an Acquisition Proposal;
(ii) enter into discussions or negotiations with, or provide any
information to, any Person concerning a possible Acquisition
Proposal; or (iii) enter into any agreements or other instruments
(whether or not binding) regarding an Acquisition Proposal. Seller
shall immediately cease and cause to be terminated, and shall cause
its Affiliates (including the Company) and all of its and their
Representatives to immediately cease and cause to be terminated,
all existing discussions or negotiations with any Persons conducted
heretofore with respect to, or that could lead to, an Acquisition
Proposal. For purposes hereof, “Acquisition
Proposal” shall mean any
inquiry, proposal or offer from any Person (other than Buyer or any
of its Affiliates) concerning (i) a merger, consolidation,
liquidation, recapitalization, share exchange or other business
combination transaction involving the Company; (ii) the issuance or
acquisition of shares of capital stock or other equity securities
of the Company; or (iii) the sale, lease, exchange or other
disposition of any significant portion of the Company’s
properties or assets.
(b) In
addition to the other obligations under this Section 5.03, Seller
shall promptly (and in any event within three business days after
receipt thereof by Seller or its Representatives) advise Buyer
orally and in writing of any Acquisition Proposal, any request for
information with respect to any Acquisition Proposal, or any
inquiry with respect to or which could reasonably be expected to
result in an Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and
the identity of the Person making the same.
(c) Seller
agrees that the rights and remedies for noncompliance with this
Section 5.03 shall include having such provision specifically
enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach
shall cause irreparable injury to Buyer and that money damages
would not provide an adequate remedy to Buyer.
Section 5.04 Notice of Certain
Events.
(a) From
the date hereof until the Closing, Seller shall promptly notify
Buyer in writing of:
(i) any
fact, circumstance, event or action the existence, occurrence or
taking of which (A) has had, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect,
(B) has resulted in, or could reasonably be expected to result in,
any representation or warranty made by Seller hereunder not being
true and correct or (C) has resulted in, or could reasonably be
expected to result in, the failure of any of the conditions set
forth in Section 7.02 to be satisfied;
(ii) any
notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
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(iii) any
notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement;
and
(iv) any
Actions commenced or, to Seller’s Knowledge, threatened
against, relating to or involving or otherwise affecting Seller or
the Company that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 3.17
or that relates to the consummation of the transactions
contemplated by this Agreement.
(b) Buyer’s
receipt of information pursuant to this Section 5.04 shall not
operate as a waiver or otherwise affect any representation,
warranty or agreement given or made by Seller in this Agreement
(including Section 8.02 and Section 9.01(b)) and shall not be
deemed to amend or supplement the Disclosure
Schedules.
Section 5.05 Resignations.
Seller shall deliver to Buyer written
resignations, effective as of the Closing Date, of the officers and
directors of the Company requested by Buyer at least five business
days prior to the Closing.
Section 5.06 Confidentiality.
From and after the Closing, Seller
shall, and shall cause its Affiliates to, hold, and shall use its
reasonable best efforts to cause its or their respective
Representatives to hold, in confidence any and all information,
whether written or oral, concerning the Company, except to the
extent that Seller can show that such information (a) is generally
available to and known by the public through no fault of Seller,
any of its Affiliates or their respective Representatives; or (b)
is lawfully acquired by Seller, any of its Affiliates or their
respective Representatives from and after the Closing from sources
which are not prohibited from disclosing such information by a
legal, contractual or fiduciary obligation. If Seller or any of its
Affiliates or their respective Representatives are compelled to
disclose any information by judicial or administrative process or
by other requirements of Law, Seller shall promptly notify Buyer in
writing and shall disclose only that portion of such information
which Seller is advised by its counsel in writing is legally
required to be disclosed, provided that
Seller shall use reasonable best
efforts to obtain an appropriate protective order or other
reasonable assurance that confidential treatment will be accorded
such information.
Section 5.07 Non-Competition;
Non-Solicitation; Non-Disparagement.
(a) For
a period of five years commencing on the Closing Date (the
“Restricted
Period”), Seller shall
not, and shall not permit any of its Affiliates to, directly or
indirectly, (i) engage in or assist others in engaging in the
Restricted Business in the Territory; (ii) have an interest in any
Person that engages directly or indirectly in the Restricted
Business in the Territory in any capacity, including as a partner,
shareholder, member, employee, principal, agent, trustee or
consultant; or (iii) intentionally interfere in any material
respect with the business relationships (whether formed prior to or
after the date of this Agreement) between the Company and customers
or suppliers of the Company. Notwithstanding the foregoing, Seller
may own, directly or indirectly, solely as an investment,
securities of any Person traded on any national securities exchange
if Seller is not a controlling Person of, or a member of a group
which controls, such Person and does not, directly or indirectly,
own 5% or more of any class of securities of such
Person.
(b) During
the Restricted Period, Seller shall not, and shall not permit any
of its Affiliates to, directly or indirectly, hire or solicit any
employee of the Company or encourage any such employee to leave
such employment or hire any such employee who has left such
employment, except pursuant to a general solicitation which is not
directed specifically to any such employees.
(c) During
the Restricted Period, Seller shall not, and shall not permit any
of its Affiliates to, directly or indirectly, solicit or entice, or
attempt to solicit or entice, any clients or customers of the
Company or potential clients or customers of the Company for
purposes of diverting their business or services from the
Company.
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(d) Seller
agrees that it shall not, and shall cause its Affiliates and
Representatives to not, except as done in good faith in any claim,
suit, action or proceeding against Buyer (i) make any negative
statement or communication regarding Buyer, the Company or any of
their respective Affiliates or Representatives or employees, or
(ii) make any derogatory or disparaging statement or communication
regarding Buyer, the Company or any of their respective Affiliates
or Representatives or employees. Nothing in this Section shall
limit a Person’s ability to make true and accurate statements
of communications in connection with any disclosure such Person is
required to make and makes in good faith, in each case, pursuant to
applicable law.
(e) Seller
acknowledges that a breach or threatened breach of this Section
5.07 would give rise to irreparable harm to Buyer, for which
monetary damages would not be an adequate remedy, and hereby agrees
that in the event of a breach or a threatened breach by Seller of
any such obligations, Buyer shall, in addition to any and all other
rights and remedies that may be available to it in respect of such
breach, be entitled to equitable relief, including a temporary
restraining order, an injunction, specific performance and any
other relief that may be available from a court of competent
jurisdiction (without any requirement to post bond).
(f) Seller
acknowledges that the restrictions contained in this Section 5.07
are reasonable and necessary to protect the legitimate interests of
Buyer and constitute a material inducement to Buyer to enter into
this Agreement and consummate the transactions contemplated by this
Agreement. In the event that any covenant contained in this Section
5.07 should ever be adjudicated to exceed the time, geographic,
product or service, or other limitations permitted by applicable
Law in any jurisdiction, then any court is expressly empowered to
reform such covenant, and such covenant shall be deemed reformed,
in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable Law. The
covenants contained in this Section 5.07 and each provision hereof
are severable and distinct covenants and provisions. The invalidity
or unenforceability of any such covenant or provision as written
shall not invalidate or render unenforceable the remaining
covenants or provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such covenant or provision in any other
jurisdiction.
Section 5.08 Release. Seller, knowingly, voluntarily and
unconditionally releases, forever discharges and covenants not to
xxx the Company and its respective predecessors, successors,
parents, subsidiaries and other Affiliates and all of their current
and former managers, members, officers, directors, partners,
employees, agents and representatives from and for any and all
claims, causes of action, demands, suits, debts, obligations,
liabilities, damages, losses, costs, and expenses (including
attorney fees) of every kind or nature whatsoever, known or
unknown, actual or potential, suspected or unsuspected, fixed or
contingent, that Seller has or may have, now or in the future,
arising out of, relating to, or resulting from any act or omission,
errors, negligence, strict liability, breach of contract, tort,
violations of law, matter or cause whatsoever from the beginning of
time to the Closing Date; provided, however, that such release
shall not cover any claims, causes of action, demands, suits,
debts, obligations, liabilities, damages, losses, costs and
expenses (including attorney fees) of any kind or nature whatsoever
arising under this Agreement or any other documents contemplated by
this Agreement (collectively, the “Released Claims”).
The foregoing release shall be binding on Seller’s respective
heirs, successors, assigns, creditors, representatives, guardians,
trustees and any other Person claiming by, through or in right of
Seller. Seller represents and covenants that there has been, and
will be, no assignment or other transfer by Seller of any interest
in any Released Claim which Seller may be releasing as of Closing
or have had against the Company or any other Person released
hereunder. Seller covenants and agrees that it shall not commence,
join in, or in any manner seek relief through any suit arising out
of, based upon or relating to any Released Claim or in any manner
assert or cause or assist another to assert against the applicable
released parties any such Released Claim.
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Section 5.09 Governmental Approvals and
Consents.
(a) Each
party hereto shall, as promptly as possible, (i) make, or cause or
be made, all filings and submissions required under any Law
applicable to such party or any of its Affiliates; and (ii) use
reasonable best efforts to obtain, or cause to be obtained, all
consents, authorizations, orders and approvals from all
Governmental Authorities that may be or become necessary for its
execution and delivery of this Agreement and the performance of its
obligations pursuant to this Agreement and the Ancillary Documents.
Each party shall cooperate fully with the other party and its
Affiliates in promptly seeking to obtain all such consents,
authorizations, orders and approvals. The parties hereto shall not
willfully take any action that will have the effect of delaying,
impairing or impeding the receipt of any required consents,
authorizations, orders and approvals.
(b) Seller
and Buyer shall use reasonable best efforts to give all notices to,
and obtain all consents from, all third parties that are required
or otherwise requested by Buyer in connection with the transactions
contemplated by this Agreement.
(c) Without
limiting the generality of the parties’ undertakings pursuant
to subsections (a) and (b) above, each of the parties hereto shall
use all reasonable best efforts to:
(i) respond
to any inquiries by any Governmental Authority regarding antitrust
or other matters with respect to the transactions contemplated by
this Agreement or any Ancillary Document;
(ii) avoid
the imposition of any order or the taking of any action that would
restrain, alter or enjoin the transactions contemplated by this
Agreement or any Ancillary Document; and
(iii) in
the event any Governmental Order adversely affecting the ability of
the parties to consummate the transactions contemplated by this
Agreement or any Ancillary Document has been issued, to have such
Governmental Order vacated or lifted.
(d) If
any consent, approval or authorization necessary to preserve any
right or benefit under any Contract to which the Company is a party
is not obtained prior to the Closing, Seller shall, subsequent to
the Closing, cooperate with Buyer and the Company in attempting to
obtain such consent, approval or authorization as promptly
thereafter as practicable. If such consent, approval or
authorization cannot be obtained, Seller shall use its reasonable
best efforts to provide the Company with the rights and benefits of
the affected Contract for the term thereof, and, if Seller provides
such rights and benefits, the Company shall assume all obligations
and burdens thereunder.
(e) All
analyses, appearances, meetings, discussions, presentations,
memoranda, briefs, filings, arguments, and proposals made by or on
behalf of either party before any Governmental Authority or the
staff or regulators of any Governmental Authority, in connection
with the transactions contemplated hereunder (but, for the
avoidance of doubt, not including any interactions between Seller
or the Company with Governmental Authorities in the ordinary course
of business, any disclosure which is not permitted by Law or any
disclosure containing confidential information) shall be disclosed
to the other party hereunder in advance of any filing, submission
or attendance, it being the intent that the parties will consult
and cooperate with one another, and consider in good faith the
views of one another, in connection with any such analyses,
appearances, meetings, discussions, presentations, memoranda,
briefs, filings, arguments, and proposals. Each party shall give
notice to the other party with respect to any meeting, discussion,
appearance or contact with any Governmental Authority or the staff
or regulators of any Governmental Authority, with such notice being
sufficient to provide the other party with the opportunity to
attend and participate in such meeting, discussion, appearance or
contact.
(f) Notwithstanding
the foregoing, nothing in this Section 5.09 shall require, or be
construed to require, Buyer or any of its Affiliates to agree to
(i) sell, hold, divest, discontinue or limit, before or after the
Closing Date, any assets, businesses or interests of Buyer, the
Company or any of their respective Affiliates; (ii) any conditions
relating to, or changes or restrictions in, the operations of any
such assets, businesses or interests which, in either case, could
reasonably be expected to result in a Material Adverse Effect or
materially and adversely impact the economic or business benefits
to Buyer of the transactions contemplated by this Agreement; or
(iii) any material modification or waiver of the terms and
conditions of this Agreement.
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Section 5.10 Books and Records.
(a) In
order to facilitate the resolution of any claims made against or
incurred by Seller prior to the Closing, or for any other
reasonable purpose, for a period of three years after the Closing,
Buyer shall:
(i) retain
the books and records (including personnel files) of the Company
relating to periods prior to the Closing in a manner reasonably
consistent with the prior practices of the Company;
and
(ii) upon
reasonable notice, afford the Representatives of Seller reasonable
access (including the right to make, at Seller’s expense,
photocopies), during normal business hours, to such books and
records;
provided,
however, that any books and
records related to Tax matters shall be retained pursuant to the
periods set forth in ARTICLE VI.
(b) In
order to facilitate the resolution of any claims made by or against
or incurred by Buyer or the Company after the Closing, or for any
other reasonable purpose, for a period of three (3) years following
the Closing, Seller shall:
(i) retain
the books and records (including personnel files) of Seller which
relate to the Company and its operations for periods prior to the
Closing; and
(ii) upon
reasonable notice, afford the Representatives of Buyer or the
Company reasonable access (including the right to make, at
Buyer’s expense, photocopies), during normal business hours,
to such books and records;
provided,
however, that any books and
records related to Tax matters shall be retained pursuant to the
periods set forth in ARTICLE VI.
(c) Neither
Buyer nor Seller shall be obligated to provide the other party with
access to any books or records (including personnel files) pursuant
to this Section 5.10 where such access would violate any
Law.
Section 5.11 Closing Conditions
From the date hereof until the
Closing, each party hereto shall, and Seller shall cause the
Company to, use reasonable best efforts to take such actions as are
necessary to expeditiously satisfy the closing conditions set forth
in ARTICLE VII hereof.
Section 5.12 Public Announcements.
Unless otherwise required by
applicable Law or stock exchange requirements (based upon the
reasonable advice of counsel), no party to this Agreement shall
make any public announcements in respect of this Agreement or the
transactions contemplated hereby or otherwise communicate with any
news media without the prior written consent of the other party
(which consent shall not be unreasonably withheld or delayed), and
the parties shall cooperate as to the timing and contents of any
such announcement.
Section 5.13 Further Assurances.
Following the Closing, each of the
parties hereto shall, and shall cause their respective Affiliates
to, execute and deliver such additional documents, instruments,
conveyances and assurances and take such further actions as may be
reasonably required to carry out the provisions hereof and give
effect to the transactions contemplated by this Agreement. In
addition, immediately following the Closing, the Seller shall
change its corporate name and amend its corporate documents
accordingly to discontinue use of the name “SpendSmart
Networks” and other similar names or any variations thereof,
except where legally required to identify the Seller until its name
has been changed to another name.
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ARTICLE
VI
TAX
MATTERS
Section 6.01 Tax
Covenants.
(a) Without
the prior written consent of Buyer, Seller (and, prior to the
Closing, the Company, its Affiliates and their respective
Representatives) shall not, to the extent it may affect, or relate
to, the Company, make, change or rescind any Tax election, amend
any Tax Return or take any position on any Tax Return, take any
action, omit to take any action or enter into any other transaction
that would have the effect of increasing the Tax liability or
reducing any Tax asset of Buyer or the Company in respect of any
Post-Closing Tax Period. Seller agrees that Buyer is to have no
liability for any Tax resulting from any action of Seller, the
Company, its Affiliates or any of their respective Representatives,
and agrees to indemnify and hold harmless Buyer (and, after the
Closing Date, the Company) against any such Tax or reduction of any
Tax asset.
(b) All
transfer, documentary, sales, use, stamp, registration, value added
and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the
Ancillary Documents (including any real property transfer Tax and
any other similar Tax) shall be borne and paid by Seller when due.
Seller shall, at its own expense, timely file any Tax Return or
other document with respect to such Taxes or fees (and Buyer shall
cooperate with respect thereto as necessary).
(c) Buyer
shall prepare, or cause to be prepared, all Tax Returns required to
be filed by the Company after the Closing Date with respect to a
Pre-Closing Tax Period. Any such Tax Return shall be prepared in a
manner consistent with past practice (unless otherwise required by
Law) and without a change of any election or any accounting method
and shall be submitted by Buyer to Seller (together with schedules,
statements and, to the extent requested by Seller, supporting
documentation) at least 45 days prior to the due date (including
extensions) of such Tax Return. If Seller objects to any item on
any such Tax Return, it shall, within ten days after delivery of
such Tax Return, notify Buyer in writing that it so objects,
specifying with particularity any such item and stating the
specific factual or legal basis for any such objection. If a notice
of objection shall be duly delivered, Buyer and Seller shall
negotiate in good faith and use their reasonable best efforts to
resolve such items. If Buyer and Seller are unable to reach such
agreement within ten days after receipt by Buyer of such notice,
the disputed items shall be resolved by the Accounting Firm and any
determination by the Accounting Firm shall be final. The Accounting
Firm shall resolve any disputed items within twenty days of having
the item referred to it pursuant to such procedures as it may
require. If the Accounting Firm is unable to resolve any disputed
items before the due date for such Tax Return, the Tax Return shall
be filed as prepared by Buyer and then amended to reflect the
Accounting Firm’s resolution. The costs, fees and expenses of
the Accounting Firm shall be borne equally by Buyer and Seller. The
preparation and filing of any Tax Return of the Company that does
not relate to a Pre-Closing Tax Period shall be exclusively within
the control of Buyer.
Section 6.02 Termination of Existing Tax
Sharing Agreements. Any and all
existing Tax sharing agreements (whether written or not) binding
upon the Company shall be terminated as of the Closing Date. After
such date none of the Company, Seller nor any of Seller’s
Affiliates and their respective Representatives shall have any
further rights or liabilities thereunder.
Section 6.03 Tax Indemnification.
Seller shall indemnify the Company,
Buyer, and each Buyer Indemnitee and hold them harmless from and
against (a) any Loss attributable to any breach of or inaccuracy in
any representation or warranty made in Section 3.22; (b) any Loss
attributable to any breach or violation of, or failure to fully
perform, any covenant, agreement, undertaking or obligation in
ARTICLE VI; (c) all Taxes of the Company or relating to the
business of the Company for all Pre-Closing Tax Periods; (d) all
Taxes of any member of an affiliated, consolidated, combined or
unitary group of which the Company (or any predecessor of the
Company) is or was a member on or prior to the Closing Date by
reason of a liability under Treasury Regulation Section 1.1502-6 or
any comparable provisions of foreign, state or local Law; and (e)
any and all Taxes of any person imposed on the Company arising
under the principles of transferee or successor liability or by
contract, relating to an event or transaction occurring before the
Closing Date. In each of the above cases, together with any
out-of-pocket fees and expenses (including attorneys’ and
accountants’ fees) incurred in connection therewith. Seller
shall reimburse Buyer for any Taxes of the Company that are the
responsibility of Seller pursuant to this Section 6.03 within ten
business days after payment of such Taxes by Buyer or the
Company.
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Section 6.04 Straddle Period.
In the case of Taxes that are payable
with respect to a taxable period that begins before and ends after
the Closing Date (each such period, a “Straddle
Period”), the portion of
any such Taxes that are treated as Pre-Closing Taxes for purposes
of this Agreement shall be:
(a) in
the case of Taxes (i) based upon, or related to, income, receipts,
profits, wages, capital or net worth, (ii) imposed in connection
with the sale, transfer or assignment of property, or (iii)
required to be withheld, deemed equal to the amount which would be
payable if the taxable year ended with the Closing Date;
and
(b) in
the case of other Taxes, deemed to be the amount of such Taxes for
the entire period multiplied by a fraction the numerator of which
is the number of days in the period ending on the Closing Date and
the denominator of which is the number of days in the entire
period.
Section 6.05 Section 338(h)(10) or 336(e)
Election. At Buyer’s
option, the Company and Seller shall join with Buyer in making a
timely election under Section 338(h)(10) or 336(e) of the Code (and
any corresponding election under state, local and foreign law) with
respect to the purchase and sale of the Shares of the Company
hereunder. Seller shall pay any Tax attributable to the making of
such Section 338(h)(10) or 336(e) election and Seller shall
indemnify Buyer and the Company against any adverse consequences
arising out of any failure to pay any such Taxes. If a Section
338(h)(10) or 336(e) election is made, Seller and Buyer agree that
the Purchase Price and Liabilities of the Company (plus other
relevant items) shall be allocated among the assets of the Company
for all purposes (including Tax and financial accounting) as shown
on the allocation schedule to be prepared by Buyer and delivered to
Seller on or before the Closing Date. Buyer, the Company and Seller
shall file all Tax Returns (including amended returns and claims
for refund) and information reports in a manner consistent with the
allocation schedule.
Section 6.06 Contests. Buyer agrees to give written notice to Seller of
the receipt of any written notice by the Company, Buyer or any of
Buyer’s Affiliates which involves the assertion of any claim,
or the commencement of any Action, in respect of which an indemnity
may be sought by Buyer pursuant to this ARTICLE VI (a
“Tax
Claim”);
provided,
that failure to comply with
this provision shall not affect Buyer’s right to
indemnification hereunder. Buyer shall control the contest or
resolution of any Tax Claim; provided,
however, that Buyer shall
obtain the prior written consent of Seller (which consent shall not
be unreasonably withheld or delayed) before entering into any
settlement of a claim or ceasing to defend such claim; and,
provided
further, that Seller shall be
entitled to participate in the defense of such claim and to employ
counsel of its choice for such purpose, the fees and expenses of
which separate counsel shall be borne solely by
Seller.
Section 6.07 Cooperation and Exchange of
Information. Seller and Buyer
shall provide each other with such cooperation and information as
either of them reasonably may request of the other in filing any
Tax Return pursuant to this ARTICLE VI or in connection with any
audit or other proceeding in respect of Taxes of the Company. Such
cooperation and information shall include providing copies of
relevant Tax Returns or portions thereof, together with
accompanying schedules, related work papers and documents relating
to rulings or other determinations by tax authorities. Each of
Seller and Buyer shall retain all Tax Returns, schedules and work
papers, records and other documents in its possession relating to
Tax matters of the Company for any taxable period beginning before
the Closing Date until the expiration of the statute of limitations
of the taxable periods to which such Tax Returns and other
documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the
respective Tax periods. Prior to transferring, destroying or
discarding any Tax Returns, schedules and work papers, records and
other documents in its possession relating to Tax matters of the
Company for any taxable period beginning before the Closing Date,
Seller or Buyer (as the case may be) shall provide the other party
with reasonable written notice and offer the other party the
opportunity to take custody of such materials.
Section 6.08 Tax Treatment of
Indemnification Payments. Any
indemnification payments pursuant to this ARTICLE VI shall be
treated as an adjustment to the Purchase Price by the parties for
Tax purposes, unless otherwise required by Law.
Section 6.09 Survival. Notwithstanding anything in this Agreement to the
contrary, the provisions of Section 3.22 and this ARTICLE VI shall
survive for the full period of all applicable statutes of
limitations (giving effect to any waiver, mitigation or extension
thereof) plus 60 days.
Section 6.10 Overlap. To the extent that any obligation or
responsibility pursuant to ARTICLE VIII may overlap with an
obligation or responsibility pursuant to this ARTICLE VI, the
provisions of this ARTICLE VI shall govern.
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ARTICLE
VII
CONDITIONS TO
CLOSING
Section 7.01 Conditions to Obligations of
All Parties. The obligations of
each party to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the
Closing, of each of the following conditions:
(a) No
Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Governmental Order which is in effect and
has the effect of making the transactions contemplated by this
Agreement illegal, otherwise restraining or prohibiting
consummation of such transactions or causing any of the
transactions contemplated hereunder to be rescinded following
completion thereof.
(b) Seller
shall have received all consents, authorizations, orders and
approvals from the Governmental Authorities referred to in Section
3.05 and Buyer shall have received all consents, authorizations,
orders and approvals from the Governmental Authorities referred to
in Section 4.02, in each case, in form and substance reasonably
satisfactory to Buyer and Seller, and no such consent,
authorization, order and approval shall have been
revoked.
Section 7.02 Conditions to Obligations of
Buyer. The obligations of Buyer
to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or Buyer’s waiver, at or prior
to the Closing, of each of the following
conditions:
(a) Other
than the representations and warranties of Seller contained in
Section 3.01, Section 3.02, Section 3.03, Section 3.06 and Section
3.24, the representations and warranties of Seller contained in
this Agreement, the Ancillary Documents and any certificate or
other writing delivered pursuant hereto shall be true and correct
in all respects (in the case of any representation or warranty
qualified by materiality or Material Adverse Effect) or in all
material respects (in the case of any representation or warranty
not qualified by materiality or Material Adverse Effect) on and as
of the date hereof and on and as of the Closing Date with the same
effect as though made at and as of such date (except those
representations and warranties that address matters only as of a
specified date, the accuracy of which shall be determined as of
that specified date in all respects). The representations and
warranties of Seller contained in Section 3.01, Section 3.02,
Section 3.03, Section 3.06 and Section 3.24 shall be true and
correct in all respects on and as of the date hereof and on and as
of the Closing Date with the same effect as though made at and as
of such date (except those representations and warranties that
address matters only as of a specified date, the accuracy of which
shall be determined as of that specified date in all
respects).
(b) The
Additional Assets shall have been assigned and transferred to the
Company in form and substance satisfactory to the Buyer in its sole
discretion.
(c) Seller
shall have duly performed and complied in all material respects
with all agreements, covenants and conditions required by this
Agreement and each of the Ancillary Documents to be performed or
complied with by it prior to or on the Closing Date.
(d) No
Action shall have been commenced against Buyer, Seller or the
Company, which would prevent the Closing. No injunction or
restraining order shall have been issued by any Governmental
Authority, and be in effect, which restrains or prohibits any
transaction contemplated hereby.
(e) To
the extent requested by the Buyer, the Buyer shall have received
payoff and release letters in form and substance satisfactory to
the Buyer with respect to the complete payment and satisfaction of
all of the Indebtedness of the Company other than the Final
Liabilities and the release of all Encumbrances on the assets of
the Company (if any).
(f) All
approvals, consents and waivers from third parties that are
required for the consummation of the transactions contemplated
hereby or otherwise reasonably requested by the Buyer shall have
been received, and executed counterparts thereof shall have been
delivered to Buyer at or prior to the Closing.
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(g) All
governmental and regulatory filings, authorizations and approvals
that are required for the consummation of the transactions
contemplated hereby will have been duly made and obtained, all on
terms satisfactory to the Buyer.
(h) From
the date of this Agreement, there shall not have occurred any
Material Adverse Effect, nor shall any event or events have
occurred that, individually or in the aggregate, with or without
the lapse of time, could reasonably be expected to result in a
Material Adverse Effect.
(i) There
shall have been no material adverse change from the date of this
Agreement in (i) the business, assets, financial or business
condition, operating results, earnings, the customer, or supplier,
employee and sales representative relations, or (ii) the ability of
the Seller to consummate the transactions contemplated
hereby.
(j) The
Ancillary Documents shall have been executed and delivered by the
parties thereto and true and complete copies thereof shall have
been delivered to Buyer.
(k) Buyer
shall have received resignations of the directors and officers of
the Company pursuant to Section 5.05.
(l) Seller
shall have delivered to Buyer a good standing certificate (or its
equivalent) for the Company from the secretary of state or similar
Governmental Authority of the jurisdiction under the Laws in which
the Company is organized.
(m) Seller
shall have delivered to Buyer a certificate pursuant to Treasury
Regulations Section 1.1445-2(b) that Seller is not a foreign person
within the meaning of Section 1445 of the Code.
(n) Seller
shall have delivered, or caused to be delivered, to Buyer stock
certificates evidencing the Shares, free and clear of Encumbrances,
duly endorsed in blank or accompanied by stock powers or other
instruments of transfer duly executed in blank and with all
required stock transfer tax stamps affixed.
(o) Buyer
shall have received a certificate, dated the Closing Date and
signed by a duly authorized officer of Seller, that each of the
conditions set forth in Section 7.02(a) and Section 7.02(b) have
been satisfied.
(p) Buyer
shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) of Seller certifying that
attached thereto are true and complete copies of all resolutions
adopted by the board of directors of Seller authorizing the
execution, delivery and performance of this Agreement and Ancillary
Documents and the consummation of the transactions contemplated
hereby and thereby, and that all such resolutions are in full force
and effect and are all the resolutions adopted in connection with
the transactions contemplated hereby and thereby.
(q) Seller
shall have delivered to Buyer an amendment to Exhibit A setting
forth the Assumed Liabilities as of the Closing Date with such
Liabilities to include only those additional Liabilities incurred
in the ordinary course of business since the date hereof (the
“Final
Liabilities”).
(r) Reserved.
(s) Xxxxx
Xxxxxxx shall have resigned as an employee of the Company, in form
and substance reasonably satisfactory to the Buyer, and Xxxxx
Xxxxxxx shall have been hired as an employee of
Seller.
(t) The
entire right, title and interest in and to United States Patent No.
9,473,593 shall have been assigned by the inventors thereof to the
Company, in form and substance reasonably satisfactory to the
Buyer.
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(u) Seller
shall have delivered to Buyer such other documents or instruments
as Buyer reasonably requests and are reasonably necessary to
consummate the transactions contemplated by this
Agreement.
Section 7.03 Conditions to Obligations of
Seller. The obligations of
Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or Seller’s
waiver, at or prior to the Closing, of each of the following
conditions:
(a) Other
than the representations and warranties of Buyer contained in
Section 4.01, the representations and warranties of Buyer contained
in this Agreement, the Ancillary Documents and any certificate or
other writing delivered pursuant hereto shall be true and correct
in all respects (in the case of any representation or warranty
qualified by materiality or Material Adverse Effect) or in all
material respects (in the case of any representation or warranty
not qualified by materiality or Material Adverse Effect) on and as
of the date hereof and on and as of the Closing Date with the same
effect as though made at and as of such date (except those
representations and warranties that address matters only as of a
specified date, the accuracy of which shall be determined as of
that specified date in all respects). The representations and
warranties of Buyer contained in Section 4.01 shall be true and
correct in all respects on and as of the date hereof and on and as
of the Closing Date with the same effect as though made at and as
of such date.
(b) Buyer
shall have duly performed and complied in all material respects
with all agreements, covenants and conditions required by this
Agreement and each of the Ancillary Documents to be performed or
complied with by it prior to or on the Closing Date.
(c) No
injunction or restraining order shall have been issued by any
Governmental Authority, and be in effect, which restrains or
prohibits any material transaction contemplated
hereby.
(d) The
Ancillary Documents shall have been executed and delivered by the
parties thereto and true and complete copies thereof shall have
been delivered to Seller.
(e) Seller
shall have received a certificate, dated the Closing Date and
signed by a duly authorized officer of Buyer, that each of the
conditions set forth in Section 7.03(a) and Section 7.03(b) have
been satisfied.
(f) Seller
shall have received a certificate of the Secretary or an Assistant
Secretary (or equivalent officer) of Buyer certifying that attached
thereto are true and complete copies of all resolutions adopted by
the board of directors of Buyer authorizing the execution, delivery
and performance of this Agreement and the Ancillary Documents and
the consummation of the transactions contemplated hereby and
thereby, and that all such resolutions are in full force and effect
and are all the resolutions adopted in connection with the
transactions contemplated hereby and thereby.
(g) Seller
shall have received an allocation schedule from Buyer in accordance
with Section 6.05 on or before the Closing Date.
(h) Buyer
shall have delivered to Seller such other documents or instruments
as Seller reasonably requests and are reasonably necessary to
consummate the transactions contemplated by this
Agreement.
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ARTICLE
VIII
INDEMNIFICATION
Section 8.01 Survival. Subject to the limitations and other provisions of
this Agreement, the representations and warranties contained herein
(other than any representations or warranties contained in Section
3.22 which are subject to Article VI) shall survive the Closing and
shall remain in full force and effect until the date that is two
(2) years from the Closing Date; provided, that the representations
and warranties in (a) Sections 3.01, 3.03, 3.24 and 4.01 shall
survive indefinitely, (b) Section 3.19 shall survive for a period
of six (6) years after the Closing; and (c) Section 3.20 shall
survive for the full period of all applicable statutes of
limitations (giving effect to any waiver, mitigation or extension
thereof) plus 60 days. All covenants and agreements of the parties
contained herein (other than any covenants or agreements contained
in Article VI which are subject to Article VI) shall survive the
Closing indefinitely or for the period explicitly specified
therein. Notwithstanding the foregoing, any claims asserted in good
faith with reasonable specificity (to the extent known at such
time) and in writing by notice from the non-breaching party to the
breaching party prior to the expiration date of the applicable
survival period shall not thereafter be barred by the expiration of
the relevant representation or warranty and such claims shall
survive until finally resolved.
Section 8.02 Indemnification By
Seller. Subject to the other
terms and conditions of this ARTICLE VIII, Seller shall indemnify
and defend each of Buyer and its Affiliates (including the Company)
and their respective Representatives (collectively, the
“Buyer
Indemnitees”) against,
and shall hold each of them harmless from and against, and shall
pay and reimburse each of them for, any and all Losses incurred or
sustained by, or imposed upon, the Buyer Indemnitees based upon,
arising out of, with respect to or by reason
of:
(a) any
inaccuracy in or breach of any of the representations or warranties
of Seller contained in this Agreement or in any certificate or
instrument delivered by or on behalf of Seller pursuant to this
Agreement (other than in respect of Section 3.22, it being
understood that the sole remedy for any such inaccuracy in or
breach thereof shall be pursuant to ARTICLE VI), as of the date
such representation or warranty was made or as if such
representation or warranty was made on and as of the Closing Date
(except for representations and warranties that expressly relate to
a specified date, the inaccuracy in or breach of which will be
determined with reference to such specified date);
(b) any
breach or non-fulfillment of any covenant, agreement or obligation
to be performed by Seller pursuant to this Agreement (other than
any breach or violation of, or failure to fully perform, any
covenant, agreement, undertaking or obligation in ARTICLE VI, it
being understood that the sole remedy for any such breach,
violation or failure shall be pursuant to ARTICLE VI);
(c) any
Transaction Expenses or Indebtedness (other than the Final
Liabilities) of the Company outstanding as of the Closing;
or
(d) any
Action (whenever instituted) of any third party (including any
Governmental Authority) that, if successful, would give rise to or
evidence the existence of or relate to a misrepresentation or
breach of any of the representations and warranties (construed in
accordance with Section 8.04 below) or covenants or agreements to
be performed by the Seller or any of its Affiliates, in each case,
which are contained in this Agreement or in any other agreement
contemplated herein or in any writing delivered in connection
herewith (including any attachment, exhibit, schedule or
certificate)
Section 8.03 Indemnification By
Buyer. Subject to the other
terms and conditions of this ARTICLE VIII, Buyer shall indemnify
and defend each of Seller and its Affiliates and their respective
Representatives (collectively, the “Seller
Indemnitees”) against,
and shall hold each of them harmless from and against, and shall
pay and reimburse each of them for, any and all Losses incurred or
sustained by, or imposed upon, the Seller Indemnitees based upon,
arising out of, with respect to or by reason
of:
(a) any
inaccuracy in or breach of any of the representations or warranties
of Buyer contained in this Agreement or in any certificate or
instrument delivered by or on behalf of Buyer pursuant to this
Agreement, as of the date such representation or warranty was made
or as if such representation or warranty was made on and as of the
Closing Date (except for representations and warranties that
expressly relate to a specified date, the inaccuracy in or breach
of which will be determined with reference to such specified
date);
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(b) any
breach or non-fulfillment of any covenant, agreement or obligation
to be performed by Buyer pursuant to this Agreement (other than
ARTICLE VI, it being understood that the sole remedy for any such
breach thereof shall be pursuant to ARTICLE VI); or
(c) any
Final Liability.
Section 8.04 Certain
Limitations. The
indemnification provided for in Section 8.02 and Section 8.03 shall
be subject to the following limitations:
(a) Seller
shall not be liable to the Buyer Indemnitees under Section 8.02(a)
until the aggregate amount of all Losses in respect of
indemnification under Section 8.02(a) exceeds $100,000 (the
“Basket”), in which event Seller shall be required
to pay or be liable for all such Losses in excess of the Basket.
The aggregate amount of all Losses for which Seller shall be liable
pursuant to Section 8.02(a) shall not exceed the Purchase Price
(the “Cap”).
(b) Buyer
shall not be liable to the Seller Indemnitees for indemnification
under Section 8.03(a) until the aggregate amount of all Losses in
respect of indemnification under Section 8.03(a) exceeds the
Basket, in which event Buyer shall be required to pay or be liable
for all such Losses from the first dollar. The aggregate amount of
all Losses for which Buyer shall be liable pursuant to Section
8.03(a) shall not exceed the Cap.
(c) Notwithstanding
the foregoing, the limitations set forth in Section 8.04(a) and
Section 8.04(b) shall not apply to Losses based upon, arising out
of, with respect to or by reason of any inaccuracy in or breach of
any representation or warranty in Section 3.01, Section 3.03,
Section 3.19, Section 3.20, Section 3.24 or Section 4.01 or any
Liability that is not included as a Final Liability.
(d) For
purposes of this ARTICLE VIII, any inaccuracy in or breach of any
representation or warranty shall be determined without regard to
any materiality, Material Adverse Effect or other similar
qualification contained in or otherwise applicable to such
representation or warranty.
(e) Any
indemnification obligation of the Seller pursuant to
Section 8.02 shall be effected by wire transfer of immediately
available funds from the Seller to an account designated in writing
by the applicable Buyer Indemnitee within fifteen (15) days after
the determination thereof.
Section 8.05 Indemnification
Procedures. The party making a
claim under this ARTICLE VIII is referred to as the
“Indemnified
Party”, and the party
against whom such claims are asserted under this ARTICLE VIII is
referred to as the “Indemnifying
Party”.
(a) Third
Party Claims. If any Indemnified Party receives notice of the
assertion or commencement of any Action made or brought by any
Person who is not a party to this Agreement or an Affiliate of a
party to this Agreement or a Representative of the foregoing (a
“Third
Party Claim”) against
such Indemnified Party with respect to which the Indemnifying Party
is obligated to provide indemnification under this Agreement, the
Indemnified Party shall give the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than 30
calendar days after receipt of such notice of such Third Party
Claim. The failure to give such prompt written notice shall not,
however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the Indemnifying
Party forfeits rights or defenses by reason of such failure. Such
notice by the Indemnified Party shall describe the Third Party
Claim in reasonable detail, shall include copies of all material
written evidence thereof and shall indicate the estimated amount,
if reasonably practicable, of the Loss that has been or may be
sustained by the Indemnified Party. The Indemnifying Party shall
have the right to participate in, or by giving written notice to
the Indemnified Party, to assume the defense of any Third Party
Claim at the Indemnifying Party’s expense and by the
Indemnifying Party’s own counsel, and the Indemnified Party
shall cooperate in good faith in such defense; provided, that
if the Indemnifying Party is Seller,
such Indemnifying Party shall not have the right to defend or
direct the defense of any such Third Party Claim that (x) is
asserted directly by or on behalf of a Person that is a supplier or
customer of the Company, or (y) seeks an injunction or other
equitable relief against the Indemnified Party. In the event that
the Indemnifying Party assumes the defense of any Third Party
Claim, subject to Section 8.05(b), it shall have the right to take
such action as it deems necessary to avoid, dispute, defend, appeal
or make counterclaims
pertaining to any
such Third Party Claim in the name and on behalf of the Indemnified
Party. The Indemnified Party shall have the right to participate in
the defense of any Third Party Claim with counsel selected by it
subject to the Indemnifying Party’s right to control the
defense thereof. The fees and disbursements of such counsel shall
be at the expense of the Indemnified Party, provided, that if in the reasonable
opinion of counsel to the Indemnified Party, (A) there are legal
defenses available to an Indemnified Party that are different from
or additional to those available to the Indemnifying Party; or (B)
there exists a conflict of interest between the Indemnifying Party
and the Indemnified Party that cannot be waived, the Indemnifying
Party shall be liable for the reasonable fees and expenses of
counsel to the Indemnified Party in each jurisdiction for which the
Indemnified Party determines counsel is required. If the
Indemnifying Party elects not to compromise or defend such Third
Party Claim, fails to promptly notify the Indemnified Party in
writing of its election to defend as provided in this Agreement, or
fails to diligently prosecute the defense of such Third Party
Claim, the Indemnified Party may, subject to Section 8.05(b), pay,
compromise, defend such Third Party Claim and seek indemnification
for any and all Losses based upon, arising from or relating to such
Third Party Claim. Seller and Buyer shall cooperate with each other
in all reasonable respects in connection with the defense of any
Third Party Claim, including making available (subject to the
provisions of Section 5.06) records relating to such Third Party
Claim and furnishing, without expense (other than reimbursement of
actual out-of-pocket expenses) to the defending party, management
employees of the non-defending party as may be reasonably necessary
for the preparation of the defense of such Third Party
Claim.
(b) Settlement
of Third Party Claims. Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not enter into settlement
of any Third Party Claim without the prior written consent of the
Indemnified Party, except as provided in this Section 8.05(b). If a
firm offer is made to settle a Third Party Claim without leading to
liability or the creation of a financial or other obligation on the
part of the Indemnified Party and provides, in customary form, for
the unconditional release of each Indemnified Party from all
liabilities and obligations in connection with such Third Party
Claim and the Indemnifying Party desires to accept and agree to
such offer, the Indemnifying Party shall give written notice to
that effect to the Indemnified Party. If the Indemnified Party
fails to consent to such firm offer within ten days after its
receipt of such notice, the Indemnified Party may continue to
contest or defend such Third Party Claim and in such event, the
maximum liability of the Indemnifying Party as to such Third Party
Claim shall not exceed the amount of such settlement offer. If the
Indemnified Party fails to consent to such firm offer and also
fails to assume defense of such Third Party Claim, the Indemnifying
Party may settle the Third Party Claim upon the terms set forth in
such firm offer to settle such Third Party Claim. If the
Indemnified Party has assumed the defense pursuant to Section
8.05(a), it shall not agree to any settlement without the written
consent of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed).
(c) Direct
Claims. Any Action by an Indemnified Party on account of a Loss
which does not result from a Third Party Claim (a
“Direct Claim”) shall be asserted by the Indemnified
Party giving the Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than 30 days after the
Indemnified Party becomes aware of such Direct Claim. The failure
to give such prompt written notice shall not, however, relieve the
Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party forfeits rights or
defenses by reason of such failure. Such notice by the Indemnified
Party shall describe the Direct Claim in reasonable detail, shall
include copies of all material written evidence thereof and shall
indicate the estimated amount, if reasonably practicable, of the
Loss that has been or may be sustained by the Indemnified Party.
The Indemnifying Party shall have 30 days after its receipt of such
notice to respond in writing to such Direct Claim. The Indemnified
Party shall allow the Indemnifying Party and its professional
advisors to investigate the matter or circumstance alleged to give
rise to the Direct Claim, and whether and to what extent any amount
is payable in respect of the Direct Claim and the Indemnified Party
shall assist the Indemnifying Party’s investigation by giving
such information and assistance (including access to the
Company’s premises and personnel and the right to examine and
copy any accounts, documents or records) as the Indemnifying Party
or any of its professional advisors may reasonably request. If the
Indemnifying Party does not so respond within such 30 day period,
the Indemnifying Party shall be deemed to have rejected such claim,
in which case the Indemnified Party shall be free to pursue such
remedies as may be available to the Indemnified Party on the terms
and subject to the provisions of this
Agreement.
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(d) Tax
Claims. Notwithstanding any other provision of this Agreement, the
control of any claim, assertion, event or proceeding in respect of
Taxes of the Company (including, but not limited to, any such claim
in respect of a breach of the representations and warranties in
Section 3.22 hereof or any breach or violation of or failure to
fully perform any covenant, agreement, undertaking or obligation in
ARTICLE VI) shall be governed exclusively by ARTICLE VI
hereof.
Section 8.06 Reserved.
Section 8.07 Tax Treatment of
Indemnification Payments. All
indemnification payments made under this Agreement shall be treated
by the parties as an adjustment to the Purchase Price for Tax
purposes, unless otherwise required by Law.
Section 8.08 Effect of Investigation.
The representations, warranties and
covenants of the Indemnifying Party, and the Indemnified
Party’s right to indemnification with respect thereto, shall
not be affected or deemed waived by reason of any investigation
made by or on behalf of the Indemnified Party (including by any of
its Representatives) or by reason of the fact that the Indemnified
Party or any of its Representatives knew or should have known that
any such representation or warranty is, was or might be inaccurate
or by reason of the Indemnified Party’s waiver of any
condition set forth in Section 7.02 or Section 7.03, as the case
may be.
ARTICLE
IX
TERMINATION
Section 9.01 Termination.
This Agreement may be terminated at
any time prior to the Closing:
(a) by
the mutual written consent of Seller and Buyer;
(b) by
Buyer by written notice to Seller if:
(i) Buyer
is not then in material breach of any provision of this Agreement
and there has been a breach, inaccuracy in or failure to perform
any representation, warranty, covenant or agreement made by Seller
pursuant to this Agreement that would give rise to the failure of
any of the conditions specified in ARTICLE VII and such breach,
inaccuracy or failure has not been cured by Seller within ten days
of Seller’s receipt of written notice of such breach from
Buyer; or
(ii) any
of the conditions set forth in Section 7.01 or Section 7.02 shall
not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by November 15, 2017, unless such
failure shall be due to the failure of Buyer to perform or comply
with any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing;
(c) by
Seller by written notice to Buyer if:
(i) Seller
is not then in material breach of any provision of this Agreement
and there has been a breach, inaccuracy in or failure to perform
any representation, warranty, covenant or agreement made by Buyer
pursuant to this Agreement that would give rise to the failure of
any of the conditions specified in ARTICLE VII and such breach,
inaccuracy or failure has not been cured by Buyer within ten days
of Buyer’s receipt of written notice of such breach from
Seller; or
(ii) any
of the conditions set forth in Section 7.01 or Section 7.03 shall
not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by November 15, 2017, unless such
failure shall be due to the failure of Seller to perform or comply
with any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing;
or
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(d) by
Buyer or Seller in the event that (i) there shall be any Law that
makes consummation of the transactions contemplated by this
Agreement illegal or otherwise prohibited or (ii) any Governmental
Authority shall have issued a Governmental Order restraining or
enjoining the transactions contemplated by this Agreement, and such
Governmental Order shall have become final and
non-appealable.
Section 9.02 Effect of Termination.
In the event of the termination of
this Agreement in accordance with this Article, this Agreement
shall forthwith become void and there shall be no liability on the
part of any party hereto except:
(a) as
set forth in this ARTICLE IX and Section 5.06 and ARTICLE X hereof;
and
(b) that
nothing herein shall relieve any party hereto from liability for
any willful breach of any provision hereof.
ARTICLE
X
MISCELLANEOUS
Section 10.01 Expenses. Except as otherwise expressly provided herein, all
costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs
and expenses, whether or not the Closing shall have
occurred.
Section 10.02 Notices. All notices, requests, consents, claims, demands,
waivers and other communications hereunder shall be in writing and
shall be deemed to have been given (a) when delivered by hand (with
written confirmation of receipt); (b) when received by the
addressee if sent by a nationally recognized overnight courier
(receipt requested); (c) on the date sent by facsimile or e-mail of
a PDF document (with confirmation of transmission) if sent during
normal business hours of the recipient, and on the next business
day if sent after normal business hours of the recipient or (d) on
the third day after the date mailed, by certified or registered
mail, return receipt requested, postage prepaid. Such
communications must be sent to the respective parties at the
following addresses (or at such other address for a party as shall
be specified in a notice given in accordance with this Section
10.02):
|
If to Seller:
|
SpendSmart Networks, Xxx.000
Xxxxxxxxx, Xxxxx 000
Xxx Xxxx Xxxxxx, XX 00000
E-mail: xxxx@xxxxxxxxx-xxxxx.xxx
Attention: Xxxx
Xxxxxxx
|
|
with a copy to:
|
TroyGould
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxxxx.xxx
Attention: Xxxxx X. Xxxxxxxx
|
|
If to Buyer:
|
Eclipse Marketing LLC
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxxx.xxx
Attention: Xxxxxxx X. Xxxxx
|
|
with a copy to:
|
Xxxxxxxxx Xxxxxx PLLC
0000 X. Xxx Xxxxxx Xx., Xxxxx 000
Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile: 000 000 0000
E-mail: xxxxxxx@xxxxxxxxxxxxxxx.xxx
|
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Section
10.03 Interpretation.
For purposes of this Agreement, (a)
the words “include,” “includes” and
“including” shall be deemed to be followed by the words
“without limitation”; (b) the word “or” is
not exclusive; and (c) the words “herein,”
“hereof,” “hereby,” “hereto”
and “hereunder” refer to this Agreement as a whole.
Unless the context otherwise requires, references herein: (x) to
Articles, Sections, Disclosure Schedules and Exhibits mean the
Articles and Sections of, and Disclosure Schedules and Exhibits
attached to, this Agreement; (y) to an agreement, instrument or
other document means such agreement, instrument or other document
as amended, supplemented and modified from time to time to the
extent permitted by the provisions thereof and (z) to a statute
means such statute as amended from time to time and includes any
successor legislation thereto and any regulations promulgated
thereunder. This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation
against the party drafting an instrument or causing any instrument
to be drafted. The Disclosure Schedules and Exhibits referred to
herein shall be construed with, and as an integral part of, this
Agreement to the same extent as if they were set forth verbatim
herein.
Section 10.04 Headings. The headings in this Agreement are for reference
only and shall not affect the interpretation of this
Agreement.
Section 10.05 Severability.
If any term or provision of this
Agreement is invalid, illegal or unenforceable in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect
any other term or provision of this Agreement or invalidate or
render unenforceable such term or provision in any other
jurisdiction. Except as provided in Section 5.07(f), upon such
determination that any term or other provision is invalid, illegal
or unenforceable, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent
possible.
Section 10.06 Entire Agreement.
This Agreement and the Ancillary
Documents constitute the sole and entire agreement of the parties
to this Agreement with respect to the subject matter contained
herein and therein, and supersede all prior and contemporaneous
understandings and agreements, both written and oral, with respect
to such subject matter. In the event of any inconsistency between
the statements in the body of this Agreement and those in the
Ancillary Documents, the Exhibits and Disclosure Schedules (other
than an exception expressly set forth as such in the Disclosure
Schedules), the statements in the body of this Agreement will
control.
Section 10.07 Successors and Assigns.
This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither party may
assign its rights or obligations hereunder without the prior
written consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided,
however, that prior to the
Closing Date, Buyer may, without the prior written consent of
Seller, assign all or any portion of its rights under this
Agreement to one or more of its direct or indirect wholly-owned
subsidiaries. No assignment shall relieve the assigning party of
any of its obligations hereunder.
Section 10.08 No Third-party
Beneficiaries. Except as
provided in Section 6.03 and ARTICLE VIII, this Agreement is for
the sole benefit of the parties hereto and their respective
successors and permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person or
entity any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this
Agreement.
Section 10.09 Amendment and Modification;
Waiver. This Agreement may only
be amended, modified or supplemented by an agreement in writing
signed by each party hereto. No waiver by any party of any of the
provisions hereof shall be effective unless explicitly set forth in
writing and signed by the party so waiving. No waiver by any party
shall operate or be construed as a waiver in respect of any
failure, breach or default not expressly identified by such written
waiver, whether of a similar or different character, and whether
occurring before or after that waiver. No failure to exercise, or
delay in exercising, any right, remedy, power or privilege arising
from this Agreement shall operate or be construed as a waiver
thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power
or privilege.
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Section 10.10 Governing Law; Arbitration;
Waiver of Jury Trial.
(a) This
Agreement shall be governed by and construed in accordance with the
internal laws of the State of Michigan without giving effect to any
choice or conflict of law provision or rule (whether of the State
of Michigan or any other jurisdiction).
(b) Except
for claims seeking injunctive or other equitable relief, any
controversy or claim arising out of or relating to this Agreement
or a breach thereof, shall be settled by binding arbitration in
Detroit, Michigan (or such other location as may be agreed to by
the parties) to be administered by the American Arbitration
Association (“AAA”) in accordance with its then-prevailing
Commercial Rules of Arbitration. Buyer and Seller shall select an
arbitrator from a list provided by the AAA that is mutually
satisfactory to them. If Buyer and Seller are unable to agree on an
arbitrator, then each (i.e., Buyer on the one hand and Seller on
the other) shall choose an arbitrator from a list provided by the
AAA. The two arbitrators so selected shall then select a third
arbitrator mutually satisfactory to them from the list provided by
the AAA. The single arbitrator so selected by the aforesaid
procedure shall hear the dispute and decide it. The arbitrator
selected shall not be a present or former officer, employee,
consultant or representative of any of the parties or any of their
Affiliates. The arbitrator shall have a background and training in
the general areas of law covered by this Agreement. The arbitrator
shall have the right to award costs, fees and expenses including,
without limitation, the arbitrator’s fees and reasonable
attorneys’ fees, to the prevailing party. A party shall be
entitled to have a judgment entered on the determination or
decision of the arbitrator in any court of competent jurisdiction.
The award of the arbitrator shall be binding and final on all
parties.
(c) EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE ANCILLARY DOCUMENTS IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH
PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS
AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE
EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.10(c).
Section 10.11 Specific Performance.
The parties agree that irreparable
damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in
addition to any other remedy to which they are entitled at law or
in equity.
Section 10.12 Counterparts.
This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall be deemed to be one and the same agreement. A
signed copy of this Agreement delivered by facsimile, e-mail or
other means of electronic transmission shall be deemed to have the
same legal effect as delivery of an original signed copy of this
Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective
officers thereunto duly authorized.
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By_____________________
Name: Xxxx Xxxxxxx
Title: Chief Executive Officer
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Eclipse Marketing LLC
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By_____________________
Name: Xxxxxxx X. Xxxxx
Title: Authorized Person
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