EXHIBIT 2.1
_________________________________
STOCK PURCHASE AGREEMENT
among
Xxxxx Xxx Xxxxx
and
Xxxxxxx Xxxxx,
on the one hand,
and
Logical Design Solutions, Inc.,
on the other hand.
___________________________________________________
Dated as of November 10, 1999
___________________________________________________
Table of Contents
Page
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1. Purchase and Sale of the Shares...................................... 1
2. Closing.............................................................. 1
(a) Closing....................................................... 1
(b) Consideration................................................. 1
(c) Escrow........................................................ 1
3. Representations and Warranties of the Sellers........................ 1
(a) Organization and Standing; Books and Records.................. 2
(b) Authority..................................................... 2
(c) Ownership of Capital Stock of the Company; the Shares......... 2
(d) No Conflicts; Consents........................................ 3
(e) Capital Stock of the Company.................................. 3
(f) Equity Interests.............................................. 4
(g) Financial Statements; Undisclosed Liabilities................. 4
(h) Absence of Changes or Events.................................. 4
(i) Taxes......................................................... 5
(j) Assets Other than Real Property Interests..................... 6
(k) Title to Real Property........................................ 7
(l) Contracts..................................................... 7
(m) Litigation.................................................... 7
(n) Insurance..................................................... 8
(o) Benefit Plans................................................. 8
(p) Compliance with Applicable Laws............................... 9
(q) Employee and Labor Matters.................................... 9
(r) Transactions with Affiliates.................................. 10
(s) Corporate Name................................................ 10
(t) Customers..................................................... 10
(u) Private Offering.............................................. 10
(v) Intellectual Property......................................... 11
(w) Technology.................................................... 11
(x) Brokers....................................................... 12
4. Representations and Warranties of the Buyer.......................... 12
(a) Authority..................................................... 12
(b) No Conflicts; Consents........................................ 12
(c) LDS Shares.................................................... 12
(d) Brokers....................................................... 12
5. Covenants of the Sellers............................................. 13
(a) Confidentiality............................................... 13
(b) Supplemental Disclosure....................................... 13
(c) Corporate Name................................................ 13
(d) Records....................................................... 13
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6. Covenants of the Buyer............................................... 14
(a) Confidentiality............................................... 14
(b) Supplemental Disclosure....................................... 14
(c) Employees and Employee Benefit Plans.......................... 14
(d) Establishment of Retention Bonus Pool......................... 14
7. Mutual Covenants..................................................... 15
(a) Further Assurances............................................ 15
(b) Publicity..................................................... 15
8. Conditions to Closing................................................ 15
(a) Each Party's Obligation....................................... 15
(b) The Sellers' Obligation....................................... 16
(c) The Buyer's Obligation........................................ 16
9. Indemnification...................................................... 17
(a) Tax Indemnification........................................... 17
(b) General Indemnification by the Sellers........................ 18
(c) General Indemnification by the Buyer.......................... 18
(d) Losses Net of Insurance, etc.................................. 18
(e) Termination of Indemnification under Sections
9(b) and 9(c)................................................. 19
(f) Procedures Relating to Indemnification
(Other than under Section 9(a))............................... 19
(g) Other Claims.................................................. 21
(h) Procedures Relating to Indemnification of Tax Claims.......... 21
(i) Satisfaction of Claims........................................ 22
10. Tax Matters.......................................................... 22
11. Assignment........................................................... 24
12. No Third-Party Beneficiaries......................................... 25
13. Survival............................................................. 25
14. Expenses............................................................. 25
15. Amendments........................................................... 25
16. Notices.............................................................. 25
17. Interpretation; Exhibits and Schedules............................... 26
18. Counterparts......................................................... 26
19. Entire Agreement..................................................... 26
20. Severability......................................................... 27
ii
21. Consent to Jurisdiction.............................................. 27
22. Governing Law........................................................ 27
Exhibit A Form of Escrow Agreement
Exhibit B Form of Employment Agreement
Exhibit C Confidentiality Agreement, as Amended
Exhibit D Form of Stockholders Agreement
Schedule 2(b) Selling Stockholders/Consideration
Schedule 3(e) Capital Stock of the Company
Schedule 3(g) Financial Statements; Undisclosed Liabilities
Schedule 3(h) Absence of Changes or Events
Schedule 3(i) Taxes
Schedule 3(k) Title to Real Property
Schedule 3(l) Contracts
Schedule 3(n) Insurance
Schedule 3(o) Benefit Plans
Schedule 3(p) Compliance with Applicable Laws
Schedule 3(r) Transactions with Affiliates
Schedule 3(t) Customers
Schedule 3(v) Intellectual Property
iii
Table of Definitions
Applicable Laws ......................................................3(p)
Auditor ..........................................................2(d)(iv)
Xxxxxxxxx Purchase ...............................................3(c)(iv)
Benefit Plans .....................................................3(o)(i)
Buyer ...........................................................Preamble
Closing ..............................................................2(a)
Closing Date .........................................................2(a)
Code ...........................................................3(i)(i)(D)
Confidentiality Agreement ............................................5(c)
Consideration ....................................................Preamble
Contracts ............................................................3(l)
ERISA .............................................................3(o)(i)
Employment Agreements .............................................8(c)(v)
Escrow Agent .........................................................2(c)
Escrow Agreement .....................................................2(c)
Escrow Amount ........................................................2(c)
Financial Statements .................................................3(g)
Governmental Entity ..................................................3(d)
Intellectual Property ................................................3(v)
Interest Rate .....................................................2(d)(v)
IRS ............................................................3(i)(i)(C)
LDS Shares ...........................................................2(b)
Leased Property ......................................................3(k)
Loss .................................................................9(d)
Material Adverse Effect...............................................3(a)
New Jersey Act .......................................................3(d)
Non-Voting Stock .................................................3(c)(iv)
October Balance Sheet ................................................3(g)
Pension Plans ...................................................3(o)(iii)
Permitted Liens....................................................3(j)(i)
Plan .............................................................3(e)(ii)
Pre-Closing Tax Period .........................................3(i)(i)(E)
Property Taxes ....................................................9(a)(i)
Records ..............................................................5(f)
RIA ..............................................................3(l)(ii)
Xxxxxx Buy-Back ..................................................3(c)(iv)
Securities Act .......................................................3(u)
Sellers .........................................................Preamble
Service Agreement ....................................................5(b)
Shareholders Agreement ..........................................8(c)(iii)
Shares ..........................................................Preamble
Straddle Period ......................................................9(a)
Subsidiary ...........................................................3(a)
System Software ......................................................3(w)
iv
Tax Claim ............................................................9(h)
Tax or Taxes ...................................................3(i)(i)(A)
Tax Return .....................................................3(i)(i)(B)
Third Party Claim ....................................................9(f)
Virginia Act .........................................................3(d)
Voting Stock .........................................................3(e)
Year 2000 Compliant ..................................................3(w)
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of November 10, 1999, by and among Xxxxx
Xxx Xxxxx and Xxxxxxx Xxxxx (the "Sellers"), on the one hand, and Logical Design
Solutions, Inc., a corporation organized under the laws of the State of New
Jersey (the "Buyer"), on the other hand.
The Sellers desire to sell to the Buyer, and the Buyer desires to purchase
from the Sellers, all of the issued and outstanding shares of the Class A,
Voting Common Stock, no par value per share (the "Shares"), of Jump! Information
Technologies, Inc., a corporation organized under the laws of the Commonwealth
of Virginia that is wholly-owned of record by the Sellers (the "Company"), in
exchange for the consideration set forth in Section 2 (the "Consideration").
Accordingly, the Sellers and the Buyer hereby agree as follows:
1. Purchase and Sale of the Shares. On the terms and subject to the
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conditions of this Agreement, the Sellers shall sell, transfer and deliver or
cause to be sold, transferred and delivered to the Buyer, and the Buyer shall
purchase from the Sellers, in each case free and clear of all liens, charges and
encumbrances of any kind, the Shares for the Consideration, payable as set forth
below in Section 2.
2. Closing. (a) Closing. The closing (the "Closing") of the purchase and
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sale of the Shares shall be held at the offices of Xxxxx & Xxxx llp, Xxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. New York City time on
November 10, 1999 (the "Closing Date").
(b) Consideration. At the Closing, (i) subject to Section 2(c) below, the
Buyer shall deliver to each Seller, (x) the cash component of the Consideration
as set forth on Schedule 2(b) hereto payable by the Buyer to each Seller in
immediately available funds by wire transfer to a bank account designated in
writing by such Seller and (y) the number of shares of common stock of the
Buyer, no par value per share (the "LDS Shares"), as set forth on Schedule 2(b)
hereto issuable by the Buyer to each such Seller and (ii) each Seller shall
deliver or cause to be delivered to the Buyer certificates representing all
Shares owned of record by such Seller, duly endorsed in blank or accompanied by
stock powers duly endorsed in blank in proper form for transfer, with
appropriate transfer stamps, if any, affixed.
(c) Escrow. In connection with Section 9 hereof, the number of LDS Shares
set forth under the column heading "Escrow Amounts LDS Shares" on Schedule 2(b)
hereto (the "Escrow Amount") of the Consideration shall be delivered by the
Buyer on the Closing Date to First Union National Bank, as escrow agent (the
"Escrow Agent"), under an escrow agreement to be entered into on or immediately
prior to the Closing Date by the Sellers, the Buyer and the Escrow Agent
substantially in the form of Exhibit A hereto (the "Escrow Agreement").
3. Representations and Warranties of the Sellers. The Sellers hereby
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jointly and severally represent and warrant to the Buyer as follows:
(a) Organization and Standing; Books and Records. (i) The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Virginia. The Company has no Subsidiaries (as defined
below). The Company has all requisite corporate power and authority necessary to
carry on its business as presently conducted and to enable it to own, lease or
otherwise hold its properties and assets. The Company is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the conduct or nature of its business or the ownership, leasing or holding
of its properties or assets makes such qualification necessary, except such
jurisdictions where the failure to be so qualified or in good standing,
individually or in the aggregate, would not have a material adverse effect on
the business, condition (financial or otherwise), results of operations or
prospects of the Company (a "Material Adverse Effect"). The term "Subsidiary"
means each person of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by the Company.
(ii) The Sellers have delivered to the Buyer true and complete
copies of the Articles of Incorporation and By-laws, each as amended to date, of
the Company. The stock certificates and transfer books and the minute books of
the Company (which have been made available for inspection by the Buyer prior to
the execution and delivery of this Agreement) are true and complete.
(b) Authority. Each Seller has all requisite power and authority to
enter into this Agreement and the Escrow Agreement, to perform his obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. All acts and other proceedings required to be taken by each Seller
to authorize the execution, delivery and performance of this Agreement and the
Escrow Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and properly taken. This Agreement and the Escrow
Agreement have been duly executed and delivered by each Seller and constitute
legal, valid and binding obligations of each Seller, enforceable against each
Seller in accordance with their terms. Any action required to be taken by the
shareholders of the Company or Board of Directors of the Company in connection
with approving this Agreement and authorizing the consummation of the
transactions contemplated herein has been taken.
(c) Ownership of Capital Stock of the Company; the Shares. (i) The
Sellers are the record owners of the Shares listed beside their respective names
on Schedule 2(b) hereto. Each Seller has good and valid title to such Shares
held of record, in each case free and clear of any liens, charges or
encumbrances of any kind.
(ii) Upon delivery to the Buyer at the Closing of certificates
representing the Shares, duly endorsed by the Sellers for transfer to the Buyer,
and upon the Sellers' receipt of the Consideration (net of the Escrow Amount),
good and valid title to the Shares will pass to the Buyer, free and clear of any
liens, charges or encumbrances of any kind, other than those arising from acts
of the Buyer or its affiliates. Other than this Agreement, the Shares are not
subject to any agreement, contract, commitment, understanding or arrangement,
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including any such agreement, contract, commitment, understanding or arrangement
restricting or otherwise relating to the voting, dividend rights or disposition
of the Shares.
(iii) Each of the shareholders agreement, dated October 30, 1998,
among the Sellers, Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxx and the Company and the voting
agreement, dated October 30, 1998, among the Sellers and Xxxx Xxxxxxxxx has been
validly terminated.
(iv) Immediately prior to the Closing, the Company purchased all
of the shares of Series A, Class B, Non-Voting Common Stock, no par value per
share, of the Company (the "Non-Voting Stock") owned by Xxx Xxxxxx (the "Xxxxxx
Buy-Back"). Immediately prior to the Closing, each of the Sellers purchased
350,000 Voting Shares from Xxxxxxx Xxxxxxxxx (the "Xxxxxxxxx Purchase"). The
consummation of the Xxxxxx Buy-Back and the Xxxxxxxxx Purchase were each in
compliance with all applicable Federal and state laws and regulations relating
to the offer, sale and purchase of securities.
(d) No Conflicts; Consents. The execution and delivery of this
Agreement by each Seller and the Escrow Agreement by each Seller do not, and the
consummation of the transactions contemplated hereby and thereby and compliance
with the terms hereof and thereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any lien, charge or encumbrance of any kind upon any of the properties or
assets of the Company under, any provision of (i) the Articles of Incorporation
or By-laws of the Company, (ii) any note, bond, mortgage, indenture, deed of
trust, license, lease, contract, commitment, agreement or arrangement to which
the Company is a party or by which it or its properties or assets are bound or
(iii) any judgment, order or decree, or statute, law, ordinance, rule or
regulation, applicable to the Company or its properties or assets. No consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Federal, state, local or foreign government or
any court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, or any
national securities or commodities exchange or other regulatory or self-
regulatory body or association (a "Governmental Entity") is required to be
obtained or made by or with respect to any Seller or the Company or any of their
respective affiliates in connection with (A) the execution, delivery and
performance of this Agreement or the Escrow Agreement or the consummation of the
transactions contemplated hereby or thereby or (B) the conduct by the Company of
its business following the Closing as conducted on the date hereof, except for
filings (if any) to be made pursuant to the Virginia Stock Corporation Act (the
"Virginia Act") or the New Jersey Business Corporation Act (the "New Jersey
Act").
(e) Capital Stock of the Company. (i) The authorized capital stock of
the Company consists of 2,100,000 shares of Class A Voting Common Stock, no par
value per share (the "Voting Stock"), and 500,000 shares of Non-Voting Stock, of
which no shares of Non-Voting Stock are issued and outstanding and 2,100,000
shares of Voting Stock, constituting the Shares, are duly authorized and validly
issued and outstanding, fully paid and nonassessable, and
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all the certificates representing the Shares are in the physical possession of
the Sellers. Except for the Shares, there are no shares of capital stock of the
Company outstanding. None of the Shares have been issued in violation of, or are
subject to, any purchase option, call, right of first refusal, preemptive,
subscription or similar right under any provision of applicable law, the
Articles of Incorporation or By-laws of the Company or any agreement, contract
or instrument to which any Seller or the Company is a party or by which any of
them or any of their respective properties or assets is bound. There are no
outstanding warrants, options, rights, "phantom" stock rights, agreements,
convertible or exchangeable securities or other commitments. There are no equity
securities of the Company reserved for issuance for any purpose. There are no
outstanding bonds, debentures, notes or other indebtedness having the right to
vote on any matters on which stockholders of the Company may vote.
(ii) The Company's Non-Qualified Stock Option Plan (the "Plan") has
been validly terminated and is no longer in force or effect and all options
previously issued under the Plan have been validly terminated and are no longer
in force or effect. Attached hereto as Schedule 3(e), are the written agreements
entered into by each holder of previously issued options regarding termination
of his or her options.
(f) Equity Interests. The Company does not directly or indirectly own
any capital stock of or other equity interests in any corporation, partnership
or other person, and the Company is not a member of or participant in any
partnership, joint venture or similar person.
(g) Financial Statements; Undisclosed Liabilities. (i) Schedule 3(g)
sets forth (A) the unaudited balance sheet, dated as of October 31, 1999, of the
Company (the "October Balance Sheet"), (B) the unaudited balance sheet of the
Company as of December 31, 1998, and the unaudited statements of operations of
the Company for the period from inception (March 1, 1998) to December 31, 1998
(the financial statements described in clauses (A) and (B) above, are
collectively referred to herein as the "Financial Statements") and (C) other
known liabilities of the Company. The Financial Statements are complete and
correct, are in accordance with the books and records of the Company and fairly
present the financial condition and results of operations of the Company as of
the respective dates thereof and for the respective periods indicated.
(ii) The Company does not have any liabilities or obligations of
any nature (whether accrued, absolute, contingent, threatened or otherwise),
except (A) as disclosed, reflected or reserved against in the October Balance
Sheet, (B) for liabilities and obligations incurred in the ordinary course of
business since the date of the October Balance Sheet, incurred not in violation
of this Agreement and that would not, individually or in the aggregate, result
in a Material Adverse Effect, (C) for Taxes (as defined in Section 3(i)) and (D)
as disclosed on Schedule 3(g).
(h) Absence of Changes or Events. Except as set forth in Schedule
3(h), since the date of the October Balance Sheet, there has not been any
material adverse change (or any development that is reasonably likely to result
in any material adverse change) in the business, assets, condition (financial or
otherwise), results of operations or prospects of the Company.
4
Except as set forth in Schedule 3(h), since the date of the October Balance
Sheet, the business of the Company has been conducted in the ordinary course and
in substantially the same manner as previously conducted, and the Company has
not (i) declared or paid any dividend or made any other distribution to its
stockholders whether or not upon or in respect of any shares of its capital
stock, (ii) redeemed or otherwise acquired any shares of its capital stock or
issued any capital stock or any option, warrant or right relating thereto or any
securities convertible into or exchangeable for any shares of capital stock,
(iii) adopted or amended any Benefit Plan (as defined in Section 3(o)), except
as required by law, or entered into or amended any employment, severance or
consulting agreement, contract or similar arrangement, (iv) granted to any
director, officer or employee any increase in compensation or benefits, except
for increases for any such director, officer or employee in the ordinary course
of business consistent with past practice or as may be required under existing
agreements, (v) incurred or assumed any liability, obligation or indebtedness
for borrowed money or guaranteed any such liability, obligation or indebtedness,
(vi) extended any credit to any person, except in the ordinary course of
business, (vii) permitted, allowed or suffered any of its assets to become
subject to any mortgage, security interest, lien, charge, encumbrance, easement,
covenant, right-of-way or other similar restriction of any nature whatsoever,
(viii) cancelled any indebtedness or waived any claims or rights of substantial
value, except for customer trade adjustments in the ordinary course of business
that do not exceed $1,000 individually or $5,000 in the aggregate, (ix) entered
into any agreement, contract or other arrangement with any Seller or any of
their affiliates, (x) made any change in any method of accounting or accounting
practice or policy, (xi) made, changed or revoked any election relating to the
Company or the Shares under any Tax law, except as required by law or (xii)
entered into, or modified, amended, terminated, or permitted the lapse of, any
lease of real property or other material agreement relating to real property.
(i) Taxes. (i) For purposes of this Agreement, (A) "Tax" or "Taxes"
shall mean all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross receipts, excise, property, sales,
withholding, social security, occupation, use, service, license, payroll,
franchise, transfer and recording taxes, fees and charges, including estimated
taxes, imposed by the United States or any taxing authority (domestic or
foreign), whether computed on a separate, consolidated, unitary, combined or any
other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to, or imposed upon, or with respect to any such
taxes, charges, fees, levies or other assessments; (B) "Tax Return" shall mean
any return, report or other document or information required to be supplied to a
taxing authority in connection with Taxes; (C) "IRS" shall mean the Internal
Revenue Service; (D) "Code" shall mean the Internal Revenue Code of 1986, as
amended; and (E) "Pre-Closing Tax Period" shall mean all taxable periods ending
on or beforeDecember 31, 1998.
(ii) The Company is a "C" corporation as defined in the Code and has
been a "C" corporation since inception.
(iii) Since inception, the only jurisdictions where the Company has
filed any income tax returns are with the Federal government of the United
States of America
5
and with the Commonwealth of Virginia. The Sellers have delivered to the Buyer
true and correct copies of all Tax Returns.
(iv) Except as set forth in Schedule 3(i), (A) the Company has (x)
duly filed with the appropriate Governmental Entities all Tax Returns required
to be filed by it on or prior to the date hereof, and such Tax Returns are true,
correct and complete in all material respects and (y) duly paid in full all
Taxes for the Pre-Closing Tax Period, (B) there are no liens for Taxes upon the
Shares or the assets of the Company except for statutory liens for current Taxes
not yet due, (C) the Company has complied in all respects with all applicable
laws, rules and regulations relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections 1441,
1442, 3121 and 3402 of the Code or similar provisions under any foreign laws)
and has, within the time and the manner prescribed by law, withheld from and
paid over to the proper Governmental Entities all amounts required to be so
withheld and paid over under applicable laws, (D) no Federal, state, local or
foreign audits or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of the Company, and
the Company has not received notice of any pending audits or proceedings, (E)
there are no outstanding written requests, agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment of any
Taxes or deficiencies against the Company, (F) the Company is not a party to any
agreement providing for the allocation or sharing of Taxes, (G) the Company is
not a party to any agreement, contract or other arrangement that could result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code and (H) no power of
attorney has been executed by the Company with respect to any matter relating to
Taxes which is currently in force.
(j) Assets Other than Real Property Interests. (i) The Company has good
and valid title to all assets (other than real property interests) reflected on
the October Balance Sheet or acquired after the date thereof, except those sold
or otherwise disposed of for fair value since the date of the October Balance
Sheet in the ordinary course of business consistent with past practice and not
in violation of this Agreement, in each case free and clear of all liens,
charges or encumbrances of any kind except (A) mechanics', carriers', workmen's,
repairmen's or other like liens arising or incurred in the ordinary course of
business, liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business and liens for Taxes that are not due and payable or that may
thereafter be paid without penalty and (B) other imperfections of title or
encumbrances, if any, that do not, individually or in the aggregate, materially
impair the continued use and operation of the assets to which they relate in the
business of the Company as presently conducted (the liens and imperfections of
title described in clauses (A) and (B) above are hereinafter referred to
collectively as "Permitted Liens").
(ii) All leased personal property of the Company is in all material
respects in the condition required of such property by the terms of the lease
applicable thereto during the term of the lease and upon the expiration thereof,
and the Company has made all payments required by all such leases.
6
(k) Title to Real Property. The Company does not own in fee any real
property. Schedule 3(k) sets forth a complete list of all real property and
interests in real property leased by the Company (individually, a "Leased
Property"). The Company has good and valid title to the leasehold estates in all
Leased Property free and clear of all liens, charges and encumbrances
(including, without limitation, leases, subleases, assignments, easements,
covenants, rights-of-way and other similar restrictions of any nature
whatsoever), except (A) such as are set forth in Schedule 3(k), (B) Permitted
Liens, (C) easements, covenants, rights-of-way and other similar restrictions of
record, (D) any conditions that may be shown by a current, accurate survey or
physical inspection of any Leased Property made prior to Closing and (E) (I)
zoning, building and other similar restrictions, (II) mortgages, security
interests, liens, charges, encumbrances, easements, covenants, rights-of-way and
other similar restrictions that have been placed by any developer, landlord or
other third party on property over which the Company has easement rights or on
any Leased Property, and subordination or similar agreements relating thereto,
and (III) unrecorded easements, covenants, rights-of-way and other similar
restrictions, none of which items set forth in clauses (I), (II) and (III),
individually or in the aggregate, materially impair the continued use and
operation of the property to which they relate in the business of the Company as
presently conducted. The current use by the Company of the offices located on
Leased Property does not violate any local zoning or similar land use or
government regulations in any material respect.
(l) Contracts. (i) Schedule 3(l) sets forth a true and complete list of
all agreements, contracts, leases, subleases, licenses, options, instruments or
arrangements (oral or written) (collectively, the "Contracts") which the Company
is a party to. Except as set forth in Schedule 3(l), all Contracts are valid,
binding and in full force and effect and are enforceable by the Company in
accordance with its terms. Except as set forth in Schedule 3(l), the Company has
performed all material obligations required to be performed by it to date under
the Contracts and it is not (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder and, to
the knowledge of the Sellers, no other party to any of the Contracts is (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any material respect thereunder. All Contracts have been made available for
inspection by the Buyer prior to the execution and delivery of this Agreement.
All third party consents necessary to consummate the transactions set forth
herein (if any) have been received by the Company.
(ii) The special agreement, dated April 1, 1998, by and between the
Company and Research Institute of America Group ("RIA") relating to a $250,000
"conditional investment" has been validly amended such that paragraphs 4, 5 and
6 of such agreement are no longer in force or effect. Such amendment is attached
hereto on Schedule 3(l).
(m) Litigation. There is no claim, action, suit, proceeding,
arbitration, investigation or inquiry before any Governmental Entity or any
private arbitration tribunal now pending, or, to the best knowledge of the
Sellers, threatened, against, relating to or affecting the Company or the
properties, assets or business of the Company or the transactions contemplated
by this Agreement and the Escrow Agreement. To the knowledge of the Sellers,
there is no basis
7
for any such claim, action, suit, proceeding, arbitration, investigation or
inquiry which, individually or in the aggregate, may have a Material Adverse
Effect. Neither the Company nor any of the directors, officers or employees of
the Company has been permanently or temporarily enjoined or prohibited by
judgment, order or decree of any Governmental Entity from engaging in or
continuing any conduct or practice in connection with the businesses engaged in
by the Company. There is not in existence any judgment, order or decree of any
Governmental Entity enjoining or prohibiting the Company from taking, or
requiring the Company to take, any action of any kind or to which the Company or
any of its properties or assets is subject or bound. The Company is not in
violation in any material respect of any judgment, order or decree of any
Governmental Entity.
(n) Insurance. The Company maintains policies of fire and casualty,
liability and other forms of insurance in such amounts, with such deductibles
and against such risks and losses as are reasonable for the business and assets
of the Company. The insurance policies maintained with respect to the Company
and its assets and properties are listed in Schedule 3(n). All such policies are
in full force and effect, all premiums due and payable thereon have been paid
(other than retroactive or retrospective premium adjustments that are not yet,
but may be, required to be paid with respect to any period ending prior to the
Closing Date), and no notice of cancellation or termination has been received
with respect to any such policy which has not been replaced on substantially
similar terms prior to the date of such cancellation. The activities and
operations of the Company have been conducted in a manner so as to conform in
all material respects to all applicable provisions of such insurance policies.
(o) Benefit Plans. (i) Schedule 3(o) sets forth a list and brief
description of all "employee benefit plans" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all
other retirement, deferred compensation, health, fringe benefit, severance or
similar employee benefit or compensation arrangements (all the foregoing being
herein called "Benefit Plans") maintained by the Company for the benefit of any
director, officer or employee of the Company. The Sellers have delivered or made
available to the Buyer true, complete and correct copies of (A) each Benefit
Plan (or, in the case of any unwritten Benefit Plans, descriptions thereof), (B)
the most recent annual report on Form 5500 (together with all schedules and
exhibits filed therewith) filed with the IRS with respect to each Benefit Plan
(if any such report was required) and the most recent summary annual report
distributed to participants with respect to each Benefit Plan for which a
summary annual report is required and (C) the most recent summary plan
description for each Benefit Plan for which such a summary plan description is
required. None of the Benefit Plans is (A) a "multiple employer plan" (within
the meaning of Section 413(c) of the Code), (B) a "multiemployer plan" (within
the meaning of Section 3(37) of ERISA), or (C) a "welfare benefit fund" (within
the meaning of Section 419(e) of the Code). None of the Benefit Plans is subject
to Section 412 of the Code or Title IV of ERISA, and the Company has not
previously maintained or contributed to (or been required to maintain or
contribute to) any plan which was subject to Section 412 of the Code or Title IV
of ERISA with respect to which the Company could have any liability therefor.
The Company is not a member of a controlled group, under common control, or
required to be treated
8
as a single employer with any other entity (within the meaning of Section
414(b), (c) or (m) of the Code or Section 4001(a)(14) or (b)(1) of ERISA).
(ii) Each Benefit Plan has been administered in all material
respects in accordance with its terms. The Company and all the Benefit Plans are
in compliance in all material respects with the applicable provisions of ERISA
and the Code and all other applicable law. There are no lawsuits, actions,
termination proceedings or other proceedings pending or, to the knowledge of the
Sellers, threatened against or involving any Benefit Plan and, to the knowledge
of the Sellers, there are no investigations by any Governmental Entity or other
claims (except claims for benefits payable in the normal operation of the
Benefit Plans) pending or threatened against or involving any Benefit Plan or
asserting any rights to benefits under any Benefit Plan.
(iii) All Benefit Plans which are "employee pension benefits plans"
(as defined in Section 3(2) of ERISA) (the "Pension Plans") have been the
subject of determination letters from the IRS to the effect that such Pension
Plans are qualified and exempt from Federal income taxes under Sections 401(a)
and 501(a), respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of the Sellers, has revocation been threatened,
nor has any such Pension Plan been amended or administered since the date of its
most recent determination letter or application therefor in any respect that
would adversely affect its qualification.
(iv) None of the Benefit Plans which is a "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) provides for post-retirement
medical, dental or life insurance benefits, the cost of which is not entirely
borne by the retirees eligible therefor.
(v) Except as set forth in Schedule 3(o), no director, officer or
employee or former director, officer or employee of the Company will become
entitled to payment or accelerated vesting of any stock option bonus,
retirement, severance, job security or similar benefit or any enhanced benefit
solely as a result of the transactions contemplated hereby.
(p) Compliance with Applicable Laws. The Company is in compliance in all
material respects with all applicable statutes, laws, ordinances, rules, orders
and regulations of any Governmental Entity ("Applicable Laws"), including,
without limitation, (i) the Foreign Corrupt Practices Act, (ii) the Federal
Election Campaign Act, (iii) any provision of any Applicable Law relating to
campaign financing and/or contributions to political candidates, political
parties, political action committees and the like and (iv) any provision of any
Applicable Law relating to government procurement practices and procedures.
Except as set forth in Schedule 3(p), none of the Sellers or the Company has
received any written communication since inception of the Company from a
Governmental Entity that alleges that the Company is not in compliance in any
material respect with any Applicable Laws.
(q) Employee and Labor Matters. (i) No action, suit, complaint, charge,
arbitration, inquiry, proceeding or investigation by or before any Governmental
Entity (including without limitation the Equal Employment Opportunity
Commission), brought by or on behalf of
9
any employee, prospective employee, former employee, retiree, labor organization
or other representative of the Company's employees is pending or, to the best
knowledge of the Sellers, threatened against the Company or any employee of the
Company (including, without limitation, with respect to alleged sexual
harassment); (ii) no grievance is pending or, to the best knowledge of the
Sellers, threatened against the Company; (iii) the Company is not a party to, or
otherwise bound by, any consent decree with, or citation by, any Governmental
Entity relating to employees or employment practices; and (iv) the Company is in
compliance with all applicable laws, agreements, contracts, and policies
relating to employment, employment practices, wages, hours, and terms and
conditions of employment (including, without limitation, with respect to
workmen's compensation laws and disability insurance coverage laws). The Company
is not a party to any collective bargaining agreements.
(r) Transactions with Affiliates. (i) Except as set forth in Schedule 3(r),
none of the Contracts between the Company, on the one hand, and any Seller or
any of his affiliates (other than the Company), on the other hand, will continue
in effect subsequent to the Closing. Except as set forth in Schedule 3(r), after
the Closing neither any Seller nor any of his affiliates will have any interest
in any property (real or personal, tangible or intangible) or contract used in
or pertaining to the business of the Company. Neither any Seller nor any of his
affiliates has any direct or indirect ownership interest in any person in which
the Company has any direct or indirect ownership interest or with which the
Company competes or has a business relationship.
(ii) The Sellers and the employees of the Company have repaid all
outstanding amounts due to the Company.
(s) Corporate Name. The Company (i) has the exclusive right to use the name
"Jump! Information Technologies, Inc." as the name of a corporation in the
Commonwealth of Virginia and (ii) has not received any notice of conflict since
inception with respect to the rights of others regarding such name.
(t) Customers. Except as set forth in Schedule 3(t), the Company does not
have any customer from which it received more than 1% of its revenues during its
most recent full fiscal year. Except as set forth in Schedule 3(t), since the
date of the October Balance Sheet, there has not been any material adverse
change in the business relationship of the Company with any customer set forth
in Schedule 3(t).
(u) Private Offering. Each of the Sellers (i) is acquiring all of the LDS
Shares to be acquired by him hereunder with no view or intention to offer for
sale any of the LDS Shares in a manner which would violate the Securities Act of
1933, as amended (the "Securities Act") or state securities laws; (ii) has
carefully reviewed and understands the risks of, and other considerations
relating to, acquiring the LDS Shares and an investment in the Buyer, and fully
understands the limitations on transfer of the LDS Shares under the Securities
Act and state securities laws and acknowledges and agrees that the certificates
representing the LDS Shares shall contain a legend regarding restrictions on
transfer under the Securities Act and the Shareholders Agreement (as defined
herein); (iii) has consulted his own financial, legal and tax advisors with
respect to the economic, legal and tax consequences of an investment in the LDS
10
Shares and has not relied on the Buyer, its officers, directors, affiliates or
professional advisors for advice as to such consequences; (iv) is knowledgeable
and experienced with regard to the business of the Buyer; (v) has received all
information he has requested in connection with his entry into this Agreement
and his acquisition of the LDS Shares, and has been given the opportunity and
right to meet the representatives of the Buyer and to investigate and inquire
into all aspects of the Buyer and the terms and conditions of the acquisition of
the LDS Shares.
(v) Intellectual Property. Schedule 3(v) sets forth a true and complete
list of all copyrights, patents, trademarks (registered or unregistered), trade
names and service marks and applications therefor and other material
intellectual property and proprietary rights, whether or not subject to
statutory registration or protection (collectively, "Intellectual Property"),
owned, used, filed by or licensed to the Company. With respect to registered
trademarks, Schedule 3(v) sets forth a list of all jurisdictions in which such
trademarks are registered or applied for and all registration and application
numbers. Except as set forth in Schedule 3(v), the Company owns, and the Company
has the right to use, execute, reproduce, display, perform, modify, enhance,
distribute, prepare derivative works of and sublicense, without payment to any
other person, all Intellectual Property listed in Schedule 3(v) and the
consummation of the transactions contemplated hereby will not conflict with,
alter or impair any such rights.
The Company has not granted any options, licenses or agreements of any kind
relating to Intellectual Property listed in Schedule 3(v) or the marketing or
distribution thereof. The Company is not bound by or a party to any options,
licenses or agreements of any kind relating to the Intellectual Property of any
other person, except as set forth in Schedule 3(v) and except for agreements
relating to computer software licensed to the Company in the ordinary course of
business. Subject to the rights of third parties set forth in Schedule 3(v),
all Intellectual Property listed in Schedule 3(v) is free and clear of the
claims of others and of all liens, security interests and encumbrances
whatsoever. The conduct of the business of the Company as presently conducted
does not violate, conflict with or infringe the Intellectual Property of any
other person. Except as set forth in Schedule 3(v), (i) no claims are pending,
or to the knowledge of the Sellers, threatened, against the Company by any
person with respect to the ownership, validity, enforceability, effectiveness or
use of any Intellectual Property and (ii) since inception, the Sellers and the
Company have not received any communications alleging that the Company has
violated any rights relating to Intellectual Property of any person or entity.
(w) Technology. The Sellers have taken all commercially reasonable measures
in order to insure that the computer software, computer firmware, computer
hardware (whether general or special purpose), and other similar or related
items of automated, computerized, and/or software system(s) that are material to
the Company's financial and informational systems (collectively, the "System
Software") are Year 2000 Compliant (as defined below). "Year 2000 Compliant"
means, with respect to any System Software, that such System Software will (i)
operate prior to, during and after the calendar year 2000 without error relating
to the date related data, and (ii) properly recognize and indicate dates in the
calendar year 2000 and beyond as both input and output.
11
(x) Brokers. No Seller nor the Company is subject to any valid claim of any
broker, investment banker, finder or other intermediary in connection with the
transactions contemplated by this Agreement.
4. Representations and Warranties of the Buyer. The Buyer hereby
-------------------------------------------
represents and warrants to the Sellers as follows:
(a) Authority. The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey. The Buyer has
all requisite corporate power and authority to enter into this Agreement and the
Escrow Agreement, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. All corporate acts
and other proceedings required to be taken by the Buyer to authorize the
execution, delivery and performance of this Agreement and the Escrow Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly and properly taken. This Agreement and the Escrow Agreement have been
duly executed and delivered by the Buyer and constitute legal, valid and binding
obligations of the Buyer, enforceable against the Buyer in accordance with their
respective terms.
(b) No Conflicts; Consents. The execution and delivery of this Agreement
and the Escrow Agreement by the Buyer do not, and the consummation of the
transactions contemplated hereby and thereby and compliance with the terms
hereof and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any lien, charge
or encumbrance of any kind upon any of the properties or assets of the Buyer
under, any provision of (i) the Certificate of Incorporation or By-laws of the
Buyer, (ii) any material note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment, agreement or arrangement to which the
Buyer is a party or by which any of its properties or assets is bound or (iii)
any judgment, order or decree, or statute, law, ordinance, rule or regulation,
applicable to the Buyer or any of its properties or assets. No consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to the Buyer or any of its affiliates in connection
with the execution, delivery and performance of this Agreement or the Escrow
Agreement or the consummation of the transactions contemplated hereby and
thereby.
(c) LDS Shares. Assuming that the representations set forth in Sections
3(b) and 3(u) are true and further assuming that the Sellers have the requisite
power and authority to be the lawful owners of the LDS Shares, upon delivery to
each of the Sellers at the Closing of certificates representing the LDS Shares
and upon the Buyer's receipt of the Shares, good and valid title to the LDS
Shares will pass to the Sellers, free and clear of any liens, charges or
encumbrances of any kind, other than those arising from acts of the Sellers.
(d) Brokers. The Buyer is not subject to any valid claim of any broker,
investment banker, finder or other intermediary in connection with the
transactions contemplated by this Agreement.
12
5. Covenants of the Sellers. The Sellers jointly and severally covenant and
------------------------
agree as follows:
(a) Confidentiality. The Sellers acknowledge that in connection with the
purchase and sale of the Shares and the consummation of the other transactions
contemplated hereby, they and the Company are subject to the terms of a
confidentiality agreement, dated August 4, 1999, as amended by a letter
agreement dated August 12, 1999, both attached hereto as Exhibit C, between the
Buyer and the Company (the "Confidentiality Agreement"), the terms of which are
incorporated herein by reference. Each Seller hereby affirms that all terms and
conditions set forth in the Confidentiality Agreement remain in full force and
effect and apply to, among other things, this Agreement and the transactions
contemplated hereunder.
(b) Supplemental Disclosure. The Sellers shall give prompt notice to the
Buyer of (i) any representation or warranty made by any Seller contained in this
Agreement that is qualified as to materiality becoming untrue or inaccurate or
any such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by any Seller to comply
with or satisfy in any material respect any covenant or agreement to be complied
with or satisfied by it under this Agreement; provided, however, that no such
-------- -------
notification shall affect the representations, warranties, covenants or
agreements of the parties.
(c) Corporate Name. The Sellers shall not use, or permit any other person
(other than the Company or the Buyer and any person authorized by the Company or
the Buyer) to use, the name "Jump! Information Technologies, Inc." or any
variation thereof using the words "Jump! Information Technologies, Inc." for any
purpose whatsoever.
(d) Records. On the Closing Date, the Sellers shall deliver or cause to be
delivered to the Buyer all agreements, documents, books, records and files,
including records and files stored on computer disks or tapes or any other
storage medium (collectively, "Records"), if any, in the possession of the
Sellers relating to the business and operations of the Company, subject to the
following exceptions:
(i) The Buyer recognizes that certain Records may contain
incidental information relating to the Sellers, and that the Sellers may retain
such Records and shall provide copies of the relevant portions thereof to the
Buyer;
(ii) The Sellers may retain copies of all Records prepared in
connection with the sale of the Shares, including bids received from other
parties, if any, and analyses relating to the Company; and
(iii) The Sellers may retain any Tax Returns and supporting work
papers, and the Buyer shall be provided with copies of such Tax Returns only to
the extent that they relate to the Company's separate returns or separate Tax
liability. The Sellers may have reasonable access to the records of the Company
for tax purposes.
13
6. Covenants of the Buyer. The Buyer covenants and agrees as follows:
----------------------
(a) Confidentiality. The Buyer acknowledges that the information being
provided to it in connection with the purchase and sale of the Shares and the
consummation of the other transactions contemplated hereby is subject to the
terms of the Confidentiality Agreement, the terms of which are incorporated
herein by reference. The Buyer hereby affirms that all terms and conditions set
forth in the Confidentiality Agreement remain in full force and effect and apply
to, among other things, this Agreement and the transactions contemplated
hereunder.
(b) Supplemental Disclosure. The Buyer shall give prompt notice to the
Sellers of (i) any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becoming untrue or inaccurate or
any such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that no such
-------- -------
notification shall affect the representations, warranties, covenants or
agreements of the parties.
(c) Employees and Employee Benefit Plans. (i) The Buyer shall, or shall
cause the Company to, offer employment, on an at will basis and at substantially
the same rates of compensation as in effect immediately prior to the Closing, to
all employees of the Company employed at the Closing Date. Notwithstanding
anything to the contrary, no contracts of employment shall be deemed to have
been created pursuant to this Section.
(ii) The Buyer shall cause service by employees of the Company to
be recognized under each benefit plan or arrangement established, maintained or
contributed to by the Buyer after the Closing for the benefit of any such
employees for purposes of (A) eligibility to participate and (B) vesting, but in
no event shall such service be taken into account in determining the accrual of
benefits under any such benefit plan or arrangement, including, but not limited
to, a defined benefit plan.
(iii) At and after the Closing Date, the Buyer shall make adequate
provisions to carry out the agreements set forth in this Section 6(c).
(d) Establishment of Retention Bonus Pool. The Buyer shall establish, or
cause the Company to establish, a retention bonus pool in the aggregate amount
of $50,000 that shall be funded as of the Closing Date for the benefit of
certain employees of the Company (not including the Sellers or Xxxxxxx
Xxxxxxxxx), which bonus pool shall have such terms and conditions as are
determined by the Sellers (in their sole discretion) after consulting with the
Buyer, including provisions with respect to who shall receive a bonus,
allocation of individual amounts, timing of payments, vesting schedules and
performance criteria.
14
7. Mutual Covenants.
----------------
(a) Further Assurances. The Sellers shall cooperate with the Buyer, and
the Buyer shall cooperate with the Sellers, in filing any necessary
applications, reports or other documents with, giving any notices to, and
seeking any consents from, all Governmental Entities and all third parties as
may be required in connection with the consummation of the transactions
contemplated by this Agreement and the Escrow Agreement and the performance by
the Company of its business after such consummation, and in seeking necessary
consultation with and prompt favorable action by any such Governmental Entity or
third party. From time to time, as and when requested by another party hereto, a
party hereto shall execute and deliver, or cause to be executed and delivered,
all such documents and instruments and shall take, or cause to be taken, all
such further or other actions as such other party may reasonably deem necessary
or desirable to consummate the transactions and the agreements set forth herein.
(b) Publicity. The Sellers and the Buyer agree that no public release or
announcement concerning the transactions contemplated hereby shall be issued by
any party hereto or the Company without the prior consent of (i) the Buyer in
the case of a release or an announcement by a Seller or the Company or (ii) the
Sellers in the case of a release or an announcement by the Buyer (in each case
which consent shall not be unreasonably withheld), except as such release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange, in which case the party required to make
the release or announcement shall, if practicable, allow the Buyer or the
Sellers, as the case may be, reasonable time to comment on such release or
announcement in advance of such issuance. The Sellers shall not make any
comments or statements with respect to the transactions contemplated hereby to
any third party (including without limitation members of the news media,
securities analysts and employees of the Company) without the prior consent of
the Buyer.
8. Conditions to Closing.
---------------------
(a) Each Party's Obligation. The respective obligation of each party
hereto to effect the transactions contemplated hereby is subject to the
satisfaction or waiver as of the Closing of the following conditions:
(i) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other order
shall have been enacted, entered, promulgated, enforced or issued by any
Governmental Entity and no other legal restraint or prohibition preventing the
purchase and sale of the Shares or any of the other transactions contemplated by
this Agreement or the Escrow Agreement shall be in effect.
(ii) All third party consents (including those set forth on
Schedule 3(l)) and all consents of or filings with Governmental Entities
necessary (including pursuant to the New Jersey Act or the Virginia Act, if any)
for the consummation of the transactions contemplated hereby shall have been
received or made and proof thereof shall be delivered at the Closing.
15
(b) The Sellers' Obligation. The obligation of the Sellers to sell and
deliver the Shares to the Buyer is subject to the satisfaction or waiver as of
the Closing of the following conditions:
(i) The representations and warranties of the Buyer made in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, as of the
Closing, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date). The Buyer shall have duly performed, complied with and satisfied
in all material respects all covenants, agreements and conditions required by
this Agreement to be performed, complied with or satisfied by the Buyer by the
time of the Closing. The Buyer shall have delivered to the Sellers a certificate
dated the Closing Date and signed by an officer of the Buyer confirming the
foregoing.
(ii) There shall not be pending or threatened against the Company
or any Seller any suit, action or proceeding by any Governmental Entity (or any
suit, action or proceeding by any other person that has a reasonable likelihood
of success), challenging or seeking to restrain or prohibit the purchase and
sale of the Shares or any of the other transactions contemplated by this
Agreement or the Escrow Agreement.
(c) The Buyer's Obligation. The obligation of the Buyer to purchase the
Shares from the Sellers is subject to the satisfaction (or waiver by the Buyer)
as of the Closing of the following conditions:
(i) The representations and warranties of the Sellers made in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, as of the
Closing, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date). The Sellers shall have duly performed, complied with and
satisfied in all material respects all covenants, agreements and conditions
required by this Agreement to be performed, complied with or satisfied by the
Sellers by the time of the Closing. Each Seller shall have delivered to the
Buyer a certificate dated the Closing Date and signed by such Seller confirming
the foregoing.
(ii) There shall not be pending or threatened against the Buyer,
the Company or any of their directors or officers any suit, action or proceeding
by any Governmental Entity (or any suit, action or proceeding by any other
person that has a reasonable likelihood of success), (A) challenging or seeking
to restrain or prohibit the purchase and sale of the Shares or any of the other
transactions contemplated by this Agreement or the Escrow Agreement or seeking
to obtain from the Buyer or any of its subsidiaries in connection with the
purchase and sale of the Shares any damages in excess of $1,000,000, (B) seeking
to prohibit or limit the ownership or operation by the Buyer or the Company of
any material portion of the business or
16
assets of the Buyer, its subsidiaries or the Company, or to compel the Buyer,
its subsidiaries or the Company to dispose of or hold separate any material
portion of the business or assets of the Buyer, its subsidiaries or the Company,
in each case as a result of the purchase and sale of the Shares or any of the
other transactions contemplated by this Agreement or the Escrow Agreement, (C)
seeking to impose limitations on the ability of the Buyer to acquire or hold, or
exercise full rights of ownership of, the Shares, including the right to vote
the Shares on all matters properly presented to the stockholders of the Company
or (D) seeking to prohibit the Buyer or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the Company.
(iii) The Buyer and each of the Sellers shall have executed and
delivered at Closing a shareholder agreement, substantially in the form of
Exhibit D hereto (the "Shareholders Agreement").
(iv) Each Seller, the Buyer and the Escrow Agent shall have
executed and delivered at Closing the Escrow Agreement.
(v) The Company and each of the Sellers shall have executed and
delivered at Closing employment agreements substantially in the form of Exhibit
B hereto (the "Employment Agreements").
9. Indemnification.
---------------
(a) Tax Indemnification. The Sellers, jointly and severally, shall
indemnify the Buyer and its affiliates (including the Company) and each of their
respective directors, officers, employees, stockholders, agents and other
representatives against and hold them harmless from (x) any liability for Taxes
of the Company for any Pre-Closing Tax Period, (y) any liability for Taxes of
the Sellers or any other person (other than the Company) which is or has ever
been affiliated with the Company and (z) any liability for reasonable legal,
accounting, appraisal, consulting or similar fees and expenses for any item
attributable to any item in clause (x) or (y) above. The Buyer shall, and after
the Closing shall also cause the Company to, indemnify each Seller and its
affiliates and each of their respective employees, agents and representatives
against and hold them harmless from any liability for Taxes of the Company or
any affiliate for any taxable period ending after December 31, 1998 (except to
the extent such taxable period began before December 31, 1998, in which case the
Buyer's indemnity will cover only that portion of any such Taxes that are not
for the Pre- Closing Tax Period). In the case of any taxable period that
includes (but does not end on) December 31, 1998 (a "Straddle Period"):
(i) real, personal and intangible property Taxes ("property Taxes")
of the Company for any Pre-Closing Tax Period (other than Taxes imposed in
connection with the sale of the Shares or otherwise in connection with this
Agreement or the transactions contemplated hereby) shall be equal to the amount
of such property Taxes for the entire Straddle Period multiplied by a fraction,
the numerator of which is the number of days during the Straddle Period that are
in the Pre-Closing Tax Period and the denominator of which is the number of days
in the Straddle Period; and
17
(ii) the Taxes of the Company (other than property Taxes) for the
Pre-Closing Tax Period (other than Taxes imposed in connection with the sale of
the Shares or otherwise in connection with this Agreement or the transactions
contemplated hereby) shall be computed as if such taxable period ended as of the
close of business on December 31, 1998. The indemnity obligations of the Sellers
in respect of Taxes for a Straddle Period shall equal the excess of (x) such
Taxes for the Pre-Closing Tax Period over (y) the sum of (i) the amount of such
Taxes for the Pre-Closing Tax Period paid by the Sellers or any of its
affiliates (other than the Company) at any time and (ii) the amount of such
Taxes paid by the Company on or prior to December 31, 1998. The Sellers, jointly
and severally, shall initially pay such excess to the Buyer five days prior to
the date on which the Tax Return (including any Tax Return with respect to
estimated Taxes) with respect to the liability for such Taxes is required to be
filed (and if no such Tax Return is required to be filed, five days prior to the
date satisfaction of the Tax liability is required by the relevant taxing
authority). The payments to be made pursuant to this paragraph by the Sellers
with respect to a Straddle Period shall be appropriately adjusted to reflect any
final determination (which shall include the execution of Form 870-AD or any
successor form) with respect to Taxes for the Straddle Period.
(b) General Indemnification by the Sellers. The Sellers, jointly and
severally, shall indemnify the Buyer and its affiliates (including the Company)
and each of their respective directors, officers, employees, stockholders,
agents and representatives against and hold them harmless from any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) suffered or incurred by any such indemnified party (other than any
relating to Taxes, for which indemnification provisions are set forth in Section
9(a) hereof) arising from, relating to or otherwise in respect of (i) any
failure of any representation or warranty of any of the Sellers contained in
this Agreement which survives the Closing or in any certificate delivered
pursuant hereto to be true and correct and (ii) any breach of any agreement or
covenant of any Seller contained in this Agreement.
(c) General Indemnification by the Buyer. The Buyer shall, and shall
cause the Company to, indemnify each Seller, its affiliates and each of their
respective employees, agents and representatives against and hold them harmless
from any loss, liability, claim, damage or expense (including reasonable legal
fees and expenses) suffered or incurred by any such indemnified party (other
than any relating to Taxes, for which indemnification provisions are set forth
in Section 9(a)) arising from, relating to or otherwise in respect of (i) any
failure of any representation or warranty of the Buyer contained in this
Agreement which survives the Closing or in any certificate delivered pursuant
hereto to be true and correct and (ii) any breach of any agreement or covenant
of the Buyer contained in this Agreement.
(d) Losses Net of Insurance, etc. The amount of any loss, liability,
claim, damage, expense or Tax for which indemnification is provided under this
Section 9 shall be net of any amounts actually recovered by the indemnified
party under insurance policies with respect to such loss, liability, claim,
damage, expense or Tax (collectively, a "Loss") and shall be (i) increased to
take account of any net Tax cost incurred by the indemnified party arising from
the receipt of indemnity payments hereunder (grossed up for such increase) and
(ii) reduced to take
18
account of any net Tax benefit realized by the indemnified party arising from
the incurrence or payment of any such Loss. In computing the amount of any such
Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all
other items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt of any indemnity payment hereunder or the
incurrence or payment of any indemnified Loss. Any indemnity payment under this
Agreement shall be treated as an adjustment to the Consideration for Tax
purposes, unless a final determination (which shall include the execution of a
Form 870-AD or successor form) with respect to the indemnified party or any of
its affiliates causes any such payment not to be treated as an adjustment to the
Consideration for United States Federal income Tax purposes.
(e) Termination of Indemnification under Sections 9(b) and 9(c). The
obligations to indemnify and hold harmless a party hereto pursuant to Sections
9(b) and 9(c), shall terminate at the close of business on the date which is one
(1) year after the Closing Date, except as follows:
(i) in the case of Sections 3(i) and 3(o), such representations and
warranties shall terminate when the applicable statute of limitations has
expired; and
(ii) in the case of Sections 3(b), 3(c)(i), 3(c)(ii), 3(e)(i), 3(u)
and Sections 4(a) and 4(c), such representations and warranties shall not
expire;
provided, however, that such obligations to indemnify and hold harmless shall
-------- -------
not terminate with respect to any item as to which the person to be indemnified
or the related party thereto shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice of such claim (stating in
reasonable detail the basis of such claim) to the indemnifying party.
(f) Procedures Relating to Indemnification (Other than under Section
9(a)). In order for a party (the "indemnified party") to be entitled to any
indemnification provided for under this Agreement (other than under Section
9(a)) in respect of, arising out of or involving a claim or demand made by any
person against the indemnified party (a "Third Party Claim"), such indemnified
party must notify the indemnifying party in writing, and in reasonable detail,
of the Third Party Claim within 10 business days after receipt by such
indemnified party of written notice of the Third Party Claim; provided, however,
-------- -------
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure (except that the indemnifying
party shall not be liable for any expenses incurred during the period in which
the indemnified party failed to give such notice). Thereafter, the indemnified
party shall deliver to the indemnifying party, within five business days after
the indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the Third
Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges its obligation to indemnify the indemnified
party therefor, to assume the defense thereof with counsel selected by the
indemnifying party; provided that such counsel is not reasonably
--------
19
objected to by the indemnified party. Should the indemnifying party so elect to
assume the defense of a Third Party Claim, the indemnifying party shall not be
liable to the indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
failed to assume the defense thereof (other than during the period prior to the
time the indemnified party shall have given notice of the Third Party Claim as
provided above).
If the indemnifying party so elects to assume the defense of any Third
Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such cooperation
shall include the retention and (upon the indemnifying party's request) the
provision to the indemnifying party of records and information which are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Whether or not the indemnifying party shall
have assumed the defense of a Third Party Claim, the indemnified party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written consent (which
consent shall not be unreasonably withheld). If the indemnifying party shall
have assumed the defense of a Third Party Claim, the indemnified party shall
agree to any settlement, compromise or discharge of a Third Party Claim which
the indemnifying party may recommend and which by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim, which releases the indemnifying party completely in
connection with such Third Party Claim and which would not otherwise adversely
affect the indemnified party.
Notwithstanding the foregoing, the indemnifying party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the
reasonable fees and expenses of counsel incurred by the indemnified party in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the indemnified party which the indemnified party reasonably determines,
after conferring with its outside counsel, cannot be separated from any related
claim for money damages. If such equitable relief or other relief portion of
the Third Party Claim can be so separated from that for money damages, the
indemnifying party shall be entitled to assume the defense of the portion
relating to money damages. The indemnification required by Section 9(b) and
9(c) shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred. All claims under Section 9(b)
or 9(c) other than Third Party Claims shall be governed by Section 9(g). All
Tax Claims (as defined in Section 9(h)) shall be governed by Section 9(h).
20
(g) Other Claims. In the event any indemnified party should have a claim
against any indemnifying party under Section 9(b) or 9(c) that does not involve
a Third Party Claim being asserted against or sought to be collected from such
indemnified party, the indemnified party shall deliver notice of such claim with
reasonable promptness to the indemnifying party. The failure by any indemnified
party so to notify the indemnifying party shall not relieve the indemnifying
party from any liability which it may have to such indemnified party under
Section 9(b) or 9(c), except to the extent that the indemnifying party
demonstrates that it has been materially prejudiced by such failure. If the
indemnifying party does not notify the indemnified party within 45 calendar days
following its receipt of such notice that the indemnifying party disputes its
liability to the indemnified party under Section 9(b) or 9(c), such claim
specified by the indemnified party in such notice shall be conclusively deemed a
liability of the indemnifying party under Section 9(b) or 9(c) and the
indemnifying party shall pay the amount of such liability to the indemnified
party on demand or, in the case of any notice in which the amount of the claim
(or any portion thereof) is estimated, on such later date when the amount of
such claim (or such portion thereof) becomes finally determined. If the
indemnifying party has timely disputed its liability with respect to such claim,
as provided above, the indemnifying party and the indemnified party shall
proceed in good faith to negotiate a resolution of such dispute and, if not
resolved through negotiations, such dispute shall be resolved by litigation in
an appropriate court of competent jurisdiction.
(h) Procedures Relating to Indemnification of Tax Claims. If a claim
shall be made by any taxing authority, which, if successful, might result in an
indemnity payment to the Buyer, one of its affiliates or any of their respective
directors, officers, employees, stockholders, agents or representatives pursuant
to Section 9(a), then the Buyer shall give notice to the Sellers in writing of
such claim and of any counterclaim the Buyer proposes to assert (a "Tax Claim");
provided, however, that the failure to give such notice shall not affect the
-------- -------
indemnification provided hereunder except to the extent the Sellers have been
actually and materially prejudiced as a result of such failure. If a Tax Claim
shall be made by any taxing authority, which, if successful, might result in an
indemnity payment to either of the Sellers or one of their affiliates pursuant
to Section 9(a), then the Sellers shall give notice to the Buyer in writing of
such Tax Claim; provide, however, that the failure to give such notice shall not
------- -------
affect the indemnification provided hereunder except to the extent the Buyer has
been actually and materially prejudiced as a result of such failure.
With respect to any Tax Claim relating to a taxable period ending on or
prior to December 31, 1998, the Sellers shall control all proceedings and may
make all decisions taken in connection with such Tax Claim (including selection
of counsel) and, without limiting the foregoing, may in their sole discretion
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with any taxing authority with respect thereto, and may, in their
sole discretion, either pay the Tax claimed and xxx for a refund where
applicable law permits such refund suits or contest the Tax Claim in any
permissible manner; provided, however, that the Sellers must first consult in
-------- -------
good faith with the Buyer before taking any action with respect to the conduct
of a Tax Claim. Notwithstanding the foregoing, (i) the Sellers shall not settle
any Tax Claim without the prior written consent of the Buyer, which consent
shall not
21
be unreasonably withheld, (ii) the Buyer, and counsel of its own choosing, shall
have the right to participate fully in all aspects of the defense of such Tax
Claim, (iii) the Sellers shall inform the Buyer, reasonably promptly in advance,
of the date, time and place of all administrative and judicial meetings,
conferences, hearings and other proceedings relating to such Tax Claim, (iv) the
Buyer shall be entitled to have its representatives (including counsel,
accountants and consultants) attend and participate in any such administrative
and judicial meetings, conferences, hearings and other proceedings relating to
such Tax Claim and (v) the Sellers shall provide to the Buyer all information,
document requests and responses, proposed notices of deficiency, notices of
deficiency, revenue agent's reports, protests, petitions and any other documents
relating to such Tax Claim promptly upon receipt from, or in advance of
submission to (as the case may be), the relevant taxing authority.
The Sellers and the Buyer shall jointly control and participate in all
proceedings taken in connection with any Tax Claim relating to Taxes of the
Company for a Straddle Period. Neither the Sellers nor the Buyer shall settle
any such Tax Claim without the prior written consent of the other.
The Buyer shall control all proceedings with respect to any Tax Claim
relating to a taxable period beginning after December 31, 1998. None of the
Sellers shall have any right to participate in the conduct of any such
proceeding.
The Buyer shall, and shall cause the Company and each of its affiliates, on
the one hand, to, and each Seller and its affiliates, on the other hand, shall,
reasonably cooperate in contesting any Tax Claim, which cooperation shall
include the retention and, upon request, the provision to the requesting person
of records and information which are reasonably relevant to such Tax Claim, and
making employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.
(i) Satisfaction of Claims. In the event the Buyer shall be entitled to
recover any amount pursuant to the indemnification provisions set forth in this
Section 9, the Buyer shall look to the Escrow Amount only, and shall not seek to
recover any amount directly from any Seller, except for indemnification claims
that survive pursuant to Sections 9(e)(i) and 9(e)(ii), in which case the Buyer
shall first look to the Escrow Amount and shall not seek to recover any amount
directly from any Seller until the Escrow Amount shall be exhausted and/or the
Escrow Agreement has terminated. Except for claims made pursuant to Sections
9(e)(i) and 9(e)(ii) hereof, no claim for indemnification under this Section 9
may be made, and the Sellers shall not have any liability for any and all claims
which, when aggregated with all previous claims for which payment has been made
under this Section 9, exceeds $150,000.
10. Tax Matters.
-----------
(a) For any taxable period of the Company that includes (but does not
end on) the Closing Date, the Buyer shall timely prepare and file with the
appropriate taxing authorities all Tax Returns required to be filed and shall
pay all Taxes due with respect to such Returns;
22
provided that the Sellers shall reimburse the Buyer (in accordance with the
--------
procedures set forth in Section 9(a)) for any amount owed by the Sellers
pursuant to Section 9(a) with respect to the taxable periods covered by such Tax
Returns. For any taxable period of the Company that ends on or before December
31, 1998, the Sellers shall timely prepare and file with the appropriate taxing
authorities all Tax Returns required to be filed, and shall pay all Taxes due
with respect to such Tax Returns (or, if the Buyer or the Company pays such
Taxes after the Closing Date, shall reimburse the Buyer in accordance with the
procedures set forth in Section 9(a) hereof); provided, however, that no such
-------- -------
Tax Return shall be filed without the prior written consent of the Buyer. The
Buyer and the Sellers agree to cause the Company to file all Tax Returns for the
taxable period including the Closing Date on the basis that the relevant taxable
period ended as of the close of business on the Closing Date, unless the
relevant taxing authority will not accept a Tax Return filed on that basis.
(b) The Sellers shall, and shall cause the Company to, and the Buyer
shall, reasonably cooperate, and shall cause their respective affiliates,
officers, employees, agents, auditors and other representatives reasonably to
cooperate, in preparing and filing all Tax Returns and in resolving all disputes
and audits with respect to all taxable periods relating to Taxes, including by
maintaining and making available to each other all records necessary in
connection with Taxes, provided, however, in no event shall the Buyer be
-------- -------
required to provide any Tax Return to the Sellers. The Buyer and the Sellers
recognize that the Sellers and their affiliates will need access, from time to
time, after the Closing Date, to certain accounting and Tax records and
information held by the Company to the extent such records and information
pertain to events occurring prior to the Closing Date; therefore, the Buyer
agrees, and agrees after the Closing to cause the Company, to allow the Sellers
and their agents and other representatives, at times and dates mutually
acceptable to the parties, reasonable access to such records from time to time,
during normal business hours and at the Sellers' expense.
(c) The amount or economic benefit of any refunds, credits or offsets
of Taxes of the Company for any taxable period ending on or before the Closing
Date shall be for the account of the Sellers. Notwithstanding the foregoing,
(i) any such refunds, credits or offsets of Taxes shall be for the account of
the Buyer to the extent such refunds, credits or offsets of Taxes are
attributable (determined on a marginal basis) to the carryback from a taxable
period beginning after the Closing Date (or the portion of a Straddle Period
that begins on the day after the Closing Date) of items of loss, deduction or
credit, or other tax items, of the Company (or any of its affiliates, including
the Buyer) and (ii) to the extent the Buyer or the Company pays after the
Closing Date any amount with respect to Taxes for any such taxable period,
refunds of such Taxes (determined on a first-in, first-out basis) shall be for
the account of the Buyer. The amount or economic benefit of any refunds,
credits or offsets of Taxes of the Company for any taxable period beginning
after the Closing Date shall be for the account of the Buyer. The amount or
economic benefit of any refunds, credits or offsets of Taxes of the Company for
any Straddle Period shall be equitably apportioned between the Sellers, on the
one hand, and the Buyer, on the other hand. Each party shall forward, and shall
cause its affiliates to forward, to the party entitled pursuant to this Section
10(c) to receive the amount or economic benefit of a refund, credit or offset to
Tax the amount of such refund, or the economic benefit of such credit
23
or offset to Tax, within 30 days after such refund is received or after such
credit or offset is allowed or applied against other Tax liability, as the case
may be; provided, however, that any such amounts payable pursuant to this
-------- -------
Section 10(c) shall be net of any Tax cost or Tax benefit to the party making
payment pursuant to this Section 10(c) and its affiliates attributable to the
receipt of such refund, credit or offset to Tax and/or the payment of such
amounts pursuant to this Section 10(c). The Buyer and the Sellers shall treat
any amounts payable pursuant to this Section 10(c) as an adjustment to the
Consideration unless a final determination (which shall include the execution of
a Form 870-AD or successor form) causes any such payment not to be treated as an
adjustment to the Consideration for United States Federal income Tax purposes.
(d) The Sellers shall file any amended consolidated, combined or
unitary Tax Returns for taxable years ending on or prior to the Closing Date
which are required as a result of examination adjustments made by the IRS or by
the applicable state, municipal, provincial, local or foreign taxing authorities
for such taxable years as finally determined; provided, however, that no such
-------- -------
Return shall be filed without the prior written consent of the Buyer, which
consent shall not be unreasonably withheld.
For those jurisdictions in which separate Tax Returns are filed by the
Company, any required amended returns resulting from such examination
adjustments, as finally determined, shall be prepared by the Sellers and
furnished to the Company for approval, signature and filing at least 30 days
prior to the due date for filing such Tax Returns.
(e) All transfer, documentary, sales, use, registration and other such
Taxes (including all applicable real estate transfer or gains Taxes and stock
transfer Taxes) and related fees (including any penalties, interest and
additions to Tax) incurred in connection with the sale of the Shares or
otherwise in connection with this Agreement, the Escrow Agreement and the
transactions contemplated hereby and thereby shall be paid by the Sellers, and
the Sellers and the Buyer shall cooperate in timely preparing and filing all Tax
Returns as may be required to comply with the provisions of such Tax laws. The
Sellers shall bear and pay any stock transfer Taxes due as a result of the sale
of the Shares to the Buyer.
(f) The Sellers shall deliver to the Buyer at the Closing a duly
executed and acknowledged certificate, in form and substance acceptable to the
Buyer and in compliance with the Code and Treasury Regulations, certifying such
facts as to establish that the sale of the Shares and any other transactions
contemplated hereby are exempt from withholding under Section 1445 of the Code.
11. Assignment. This Agreement and the rights and obligations hereunder shall
----------
not be assignable or transferable by any Seller or the Buyer (including by
operation of law in connection with a merger, or sale of substantially all the
assets, or any dissolution, of the Buyer or any Seller) without the prior
written consent of the Buyer or the Sellers, as the case may be; provided,
--------
however, that the Buyer may assign its right to purchase the Shares hereunder to
-------
an affiliate of the Buyer with the prior written consent of the Sellers (which
consent will not be unreasonably withheld); provided further, that no assignment
-------- -------
shall limit or affect the assignor's obligations hereunder. Any attempted
assignment in violation of this Section 11 shall be void.
24
12. No Third-Party Beneficiaries. Except as provided in Sections 6(c), 6(d)
----------------------------
and Section 9 hereof, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns, and nothing herein expressed or implied
shall give or be construed to give to any person, other than the parties hereto
and such assigns, any legal or equitable rights hereunder.
13. Survival. The agreements and covenants set forth herein shall survive
--------
the Closing. The representations and warranties in this Agreement and in any
certificate delivered pursuant hereto shall survive the Closing solely for
purposes of Sections 9(b) and (c) and shall terminate at the close of business
on the date which is one (1) year after the Closing Date, except as follows:
(i) in the case of Sections 3(i) and 3(o), such representations and
warranties shall terminate when the applicable statute of limitations has
expired; and
(ii) in the case of Sections 3(b), 3(c)(i), 3(c)(ii), 3(e)(i), 3(u) and
Sections 4(a) and 4(c), such representations and warranties shall not expire.
14. Expenses. Whether or not the transactions contemplated hereby are
--------
consummated, and except as otherwise specifically provided in this Agreement or
the Escrow Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses.
15. Amendments. No amendment, modification or waiver in respect of this
----------
Agreement shall be effective unless it shall be in writing and signed by the
Buyer and the Sellers.
16. Notices. All notices or other communications required or permitted to
-------
be given hereunder shall be in writing and shall be delivered by hand or sent by
telecopy or sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service and shall be deemed given when so delivered
by hand, or telecopied, or if mailed, three days after mailing (one business day
in the case of express mail or overnight courier service), as follows:
(i) if to the Sellers,
Xxxxx Xxx Xxxxx
0000 Xxxxxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
and
Xxxxxxx Xxxxx
00000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
25
with a copy to:
Xxxxx & Xxxxx, P.C.
0000-X Xxxxxxxxxx Xxxxx
XxXxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx S. (Xxxx) Xxxxx, Esq.
and
(ii) if to the Buyer,
Logical Design Solutions, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: E. Xxxxx Xxxxxxxxx
with copies to:
Xxxxx & Xxxx LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: X. Xxxxxxxx, Esq.
or such other address as any party may from time to time specify by written
notice to the other parties hereto.
17. Interpretation; Exhibits and Schedules. The headings contained in this
--------------------------------------
Agreement, in any Exhibit or Schedule hereto and in the table of contents to
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any capitalized terms used in
any Schedule or Exhibit but not otherwise defined therein, shall have the
meaning as defined in this Agreement.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
19. Entire Agreement. This Agreement, the Employment Agreements, the
----------------
Shareholders Agreement, the Confidentiality Agreement and the Escrow Agreement
contain the
26
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter. The parties hereto shall not be liable or bound
to any other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein, in the
Confidentiality Agreement or in the Escrow Agreement.
20. Severability. If any provision of this Agreement (or any portion
------------
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances.
21. Consent to Jurisdiction. The Buyer and the Sellers irrevocably submit
-----------------------
to the exclusive jurisdiction of (a) the Superior Court of the State of New
Jersey, Chancery Division of Xxxxxx County and (b) the United States District
Court for the District of New Jersey, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Escrow Agreement or any
transaction contemplated hereby or thereby. The Buyer and the Sellers agree to
commence any action, suit or proceeding relating hereto or to the Escrow
Agreement either in the United States District Court for the District of New
Jersey or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Superior Court of the State of New
Jersey, Chancery Division of Xxxxxx County. The Buyer and the Sellers further
agree that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth in Section 16 above
shall be effective service of process for any action, suit or proceeding in New
Jersey with respect to any matters to which it has submitted to jurisdiction in
this Section 21. The Buyer and the Sellers irrevocably and unconditionally waive
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement, the Escrow Agreement or the transactions contemplated
hereby in (i) the Superior Court of the State of New Jersey, Chancery Division
of Xxxxxx County or (ii) the United States District Court for the District of
New Jersey, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
22. Governing Law. This Agreement and the rights and obligations of the
-------------
parties hereto shall be governed by and construed in accordance with the
internal laws of the State of New Jersey applicable to agreements made and to be
performed entirely within such State, without regard to the conflicts of law
principles of such State.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
Logical Design Solutions, Inc.
/s/ E. Xxxxx Xxxxxxxxx /s/ Xxxxx Xxx Xxxxx
_____________________________________ ______________________________
E. Xxxxx Xxxxxxxxx By: Xxxxx Xxx Xxxxx
Secretary and Chief Financial Officer
/s/ Xxxxxxx Xxxxx
_______________________________
By: Xxxxxxx Xxxxx
28
