1
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXX.XXX, INC.,
PACIFIC ACQUISITION, INC.
AND
SAGE ENTERPRISES, INC.
DATED AS OF AUGUST 3, 1998
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CONTENTS
ARTICLE I - THE MERGER ............................................................ 1
1.1 The Merger ......................................................... 1
1.2 The Closing ........................................................ 2
1.3 Effective Date and Time ............................................ 2
1.4 Articles of Organization of the Surviving Corporation .............. 2
1.5 Bylaws of the Surviving Corporation ................................ 2
1.6 Directors and Officers ............................................. 3
1.7 Conversion of Shares ............................................... 3
1.7.1 Exchange Ratio ............................................ 3
1.7.2 Exchange of Certificates ................................. 6
1.7.3 No Fractional Shares ..................................... 7
1.7.4 No Further Transfers ..................................... 7
1.8 Tax Free Reorganization ............................................ 7
1.9 Stockholder Representatives ....................................... 7
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................ 8
2.1 Organization ....................................................... 8
2.2 Enforceability ..................................................... 9
2.3 Capitalization ..................................................... 9
2.4 Subsidiaries and Affiliates ........................................ 10
2.5 No Approvals; No Conflicts ......................................... 10
2.6 Financial Statements ............................................... 11
2.7 Absence of Certain Changes or Events ............................... 12
2.8 Taxes .............................................................. 14
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2.9 Property ........................................................... 16
2.10 Contracts .......................................................... 17
2.11 Claims and Legal Proceedings ....................................... 19
2.12 Labor and Employment Matters ....................................... 19
2.13 Employee Benefit Plans ............................................. 20
2.13.1 Employee Benefit Plan Listing ............................ 20
2.13.2 Documents Provided ....................................... 21
2.13.3 Compliance ............................................... 21
2.13.4 Contributions and Premium Payments ....................... 22
2.13.5 Related Employers ........................................ 22
2.13.6 Multiemployer and Title IV Plans ......................... 22
2.13.7 Post-Termination Welfare Benefits ........................ 23
2.13.8 Suits, Claims and Investigations ......................... 23
2.13.9 Payments Resulting From Transactions ..................... 23
2.14 Intellectual Property .............................................. 24
2.14.1 Technology ............................................... 24
2.14.2 Third Party Technology .................................... 24
2.14.3 Trademarks ................................................ 25
2.14.4 Intellectual Property Rights .............................. 25
2.14.5 Maintenance of Rights ..................................... 25
2.14.6 Third Party Infringement .................................. 26
2.14.7 Infringement by the Company ............................... 26
2.14.8 Confidentiality ........................................... 27
2.14.9 Warranty Against Defects .................................. 27
2.14.10 Domain Names .............................................. 27
2.14.11 Year 2000 ................................................. 27
2.15 Corporate Books and Records ........................................ 28
2.16 Licenses, Permits, Authorizations, etc. ............................ 28
2.17 Compliance With Laws ............................................... 28
2.18 Insurance .......................................................... 29
2.19 Brokers or Finders ................................................. 29
2.20 Absence of Questionable Payments ................................... 29
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2.21 Bank Accounts ...................................................... 30
2.22 Customers and Suppliers ............................................ 30
2.23 Accounts Receivable ................................................ 30
2.24 Creditors' List .................................................... 31
2.25 Insider Interests .................................................. 31
2.26 Compliance With Environmental Laws ................................. 31
2.27 Pooling Matters .................................................... 32
2.28 Buyer Stock Ownership .............................................. 32
2.29 Xxxx-Xxxxx-Xxxxxx .................................................. 32
2.30 Information Supplied by the Company ................................ 32
2.31 Full Disclosure .................................................... 33
2.32 Sole Representations and Warranties ................................ 33
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF XXXXXX.XXX AND THE PURCHASER ..... 33
3.1 Organization ....................................................... 33
3.2 Enforceability ..................................................... 34
3.3 Securities ......................................................... 34
3.4 No Approvals or Notices Required; No Conflicts With Instruments .... 35
3.5 Capitalization ..................................................... 35
3.6 SEC Documents ...................................................... 35
3.7 Absence of Certain Changes ......................................... 35
3.8 Information Supplied by Xxxxxx.xxx ................................. 36
3.9 Pooling Matters .................................................... 36
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3.10 Seller Stock Ownership ............................................. 36
3.11 Brokers or Finders ................................................. 36
ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX.XXX AND THE
PURCHASER ................................................................. 36
4.1 Accuracy of Representations and Warranties ......................... 37
4.2 Performance of Agreements .......................................... 37
4.3 Opinion of Counsel for the Company ................................. 37
4.4 Consents to Merger ................................................. 37
4.5 Compliance Certificate ............................................. 37
4.6 Material Adverse Change ............................................ 37
4.7 Approvals and Consents ............................................. 38
4.8 Proceedings and Documents; Clerk's Certificate ..................... 38
4.9 Nonforeign Affidavit ............................................... 38
4.10 Compliance With Laws ............................................... 38
4.11 Stockholder Approvals .............................................. 38
4.12 Dissenting Shares .................................................. 39
4.13 Legal Proceedings .................................................. 39
4.14 Escrow Agreement ................................................... 39
4.15 Employment and Noncompetition Arrangements ......................... 39
4.16 Employee Benefit Plans ............................................. 39
4.17 Investor Rights Agreement .......................................... 39
4.18 Affiliate Letters .................................................. 39
4.19 Termination of Certain Agreements .................................. 40
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4.20 Pooling ............................................................ 40
ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ................... 40
5.1 Accuracy of Representations and Warranties ......................... 40
5.2 Performance of Agreements .......................................... 40
5.3 Opinion of Counsel ................................................. 40
5.4 Compliance Certificate ............................................. 41
5.5 Legal Proceedings .................................................. 41
5.6 Material Adverse Change ............................................ 41
5.7 Approvals and Consents ............................................. 41
5.8 Compliance With Laws ............................................... 41
5.9 Stockholder Approvals .............................................. 42
5.10 Escrow Agreement ................................................... 42
5.11 Investor Rights Agreement .......................................... 42
5.12 Option Agreements .................................................. 42
ARTICLE VI - COVENANTS ............................................................ 42
6.1 Conduct of Business by the Company Pending the Merger .............. 42
6.2 Access to Information; Confidentiality ............................. 44
6.3 No Alternative Transactions ........................................ 45
6.4 Notification of Certain Matters .................................... 45
6.5 Further Action; Reasonable Best Efforts ............................ 46
6.6 Stockholders Approval .............................................. 46
6.7 Proxy Statement .................................................... 46
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6.8 Listing Application ................................................ 47
6.9 Pooling; Reorganization ............................................ 47
6.10 Dissenting Shares .................................................. 47
6.11 Publicity .......................................................... 47
6.12 Indemnification and Insurance ...................................... 48
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER ................................... 48
7.1 Termination ........................................................ 48
7.2 Effect of Termination .............................................. 49
7.3 Amendment .......................................................... 49
7.4 Waiver ............................................................. 49
ARTICLE VIII - SURVIVAL AND INDEMNIFICATION ....................................... 49
8.1 Survival ........................................................... 49
8.2 Indemnification by the Company and Holders of Company Capital
Stock or Options ................................................... 50
8.3 Indemnification by Xxxxxx.xxx ...................................... 50
8.4 Threshold and Limitations .......................................... 51
8.5 Procedure for Indemnification ...................................... 52
8.6 Remedies ........................................................... 53
ARTICLE IX - GENERAL .............................................................. 54
9.1 Tax Matters ........................................................ 54
9.2 Expenses ........................................................... 54
9.3 Notices ............................................................ 54
9.4 Severability ....................................................... 56
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9.5 Entire Agreement ................................................... 56
9.6 Assignment ......................................................... 56
9.7 Parties in Interest ................................................ 56
9.8 Governing Law ...................................................... 57
9.9 Headings ........................................................... 57
9.10 Counterparts ....................................................... 57
EXHIBITS
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1.3 - Articles of Merger
1.7.1 - Form of Escrow Agreement
2 - Disclosure Memorandum
2(A) - Form of Investor Rights Agreement
4.3 - Form of Opinion of Counsel for the Company
4.9 - Foreign Investment in Real Property Tax Act Affidavit
4.15 - Form of Confidentiality Agreement
4.18 - Affiliate Letter
5.3 - Form of Opinion of Counsel for Xxxxxx.xxx
5.12 - Forms of Option Agreement
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of August 3, 1998, by and among Xxxxxx.xxx, Inc., a Delaware corporation
("Xxxxxx.xxx"), Pacific Acquisition, Inc., a Massachusetts corporation and
wholly owned subsidiary of Xxxxxx.xxx (the "Purchaser"), and Sage Enterprises,
Inc., a Massachusetts corporation (the "Company").
RECITALS
A. The Company, Xxxxxx.xxx and the Purchaser believe it advisable and in
their respective best interests to effect a merger of the Company and the
Purchaser pursuant to this Agreement (the "Merger").
B. The Board of Directors of the Company has approved the Merger as
required by applicable law.
C. The Boards of Directors of Xxxxxx.xxx and the Purchaser have approved
the Merger as required by applicable law.
D. It is intended that the Merger will qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and as a "pooling of interests" for accounting purposes.
AGREEMENT
In consideration of the terms hereof, the parties hereto agree as
follows:
ARTICLE I - THE MERGER
1.1 THE MERGER
Upon the terms and subject to the conditions hereof, (a) at the
Effective Time (as defined in Section 1.3 hereof), the separate existence of the
Purchaser shall cease and the Purchaser shall be merged with and into the
Company (the Company is sometimes referred to herein as the "Surviving
Corporation"), and (b) from and after the Effective Time, the Merger shall have
all the effects of a merger under the laws of the Commonwealth of Massachusetts
and other applicable law.
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1.2 THE CLOSING
The closing of the Merger pursuant to this Agreement (the "Closing")
shall take place on the earliest practicable business day after the conditions
to the Closing set forth in Articles IV and V hereof are satisfied or waived
(the "Closing Date") at 10:00 a.m. local time at the offices of Xxxxxxx Coie
LLP, 1201 Third Avenue, 46th Floor, Seattle, Washington, or such other time or
location as Xxxxxx.xxx and the Company shall agree. At the Closing, each of the
parties hereto shall deliver all such documents, instruments, certificates and
other items as may be required under this Agreement or the other Operative
Documents (as defined in Article II hereof) or otherwise.
1.3 EFFECTIVE DATE AND TIME
On the Closing Date and subject to the terms and conditions hereof,
articles of merger (the "Articles of Merger") complying with the applicable
provisions of the Massachusetts Business Corporation Law (the "Massachusetts
Law"), substantially in the form or forms attached hereto as Exhibit 1.3, and in
such form and executed in such manner as required by Massachusetts Law, shall be
delivered for filing to the Secretary of State of the Commonwealth of
Massachusetts (the "Massachusetts Secretary of State"). The Merger shall become
effective on the date (the "Effective Date") and at the time (the "Effective
Time") of filing of the Articles of Merger or at such other time as may be
specified in the Articles of Merger as filed. If the Massachusetts Secretary of
State requires any changes in the Articles of Merger as a condition to filing or
to issuing its certificate to the effect that the Merger is effective,
Xxxxxx.xxx, the Purchaser and the Company will execute any necessary revisions
incorporating such changes, provided such changes are not inconsistent with and
do not result in any substantial change in the terms of this Agreement.
1.4 ARTICLES OF ORGANIZATION OF THE SURVIVING CORPORATION
At the Effective Time, the Articles of Organization of the Purchaser, as
in effect immediately prior to the Effective Time, shall be the Articles of
Organization of the Surviving Corporation. Thereafter, the Articles of
Organization of the Surviving Corporation may be amended in accordance with
their terms and as provided by law; provided, however, that Article 1 thereof
shall be amended to read as follows: "The name of this corporation is Pacific
Corporation."
1.5 BYLAWS OF THE SURVIVING CORPORATION
At the Effective Time, the Bylaws of the Purchaser as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation.
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Thereafter, the Bylaws may be amended or repealed in accordance with their terms
and the Articles of Organization of the Surviving Corporation and as provided by
law.
1.6 DIRECTORS AND OFFICERS
At the Effective Time, the directors of the Purchaser shall continue in
office as the directors of the Surviving Corporation, and the officers of
Purchaser shall continue in office as the officers of the Surviving Corporation,
and such directors and officers shall hold office in accordance with and subject
to the Articles of Organization and Bylaws of the Surviving Corporation.
1.7 CONVERSION OF SHARES
1.7.1 EXCHANGE RATIO
As of the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof:
(a) All shares of any class of capital stock of the Company held by the
Company as treasury shares shall be canceled.
(b) Each issued and outstanding share of common stock of the Company,
par value $.01 per share (the "Company Common Stock"), and each issued and
outstanding share of the Company's Series A Preferred Stock, par value $.01 per
share (the "Company Series A Stock"), and the Company's Series B Preferred
Stock, $.01 par value per share (the "Company Series B Stock", and, together
with the Company Common Stock, the Company Series A Stock and the Company Series
B Stock (the "Company Capital Stock")), other than shares of Company Capital
Stock, if any, for which dissenters' rights have been or will be perfected in
compliance with applicable law, shall be converted into the right to receive
from Xxxxxx.xxx a number of shares of Xxxxxx.xxx common stock, par value $.01
per share ("Xxxxxx.xxx Common Stock"), determined by dividing 900,000 by the
total number of shares of Company Capital Stock outstanding immediately prior to
the Effective Time on a fully diluted basis, assuming for this purpose that all
outstanding options ("Options") and all outstanding warrants ("Warrants") to
purchase shares of Company Common Stock have been validly exercised prior to the
Effective Time, regardless of any vesting limitations, other restrictions on
exercisability or repurchase rights, and that the shares of Company Common Stock
issuable upon such exercise have been validly issued (such shares of Xxxxxx.xxx
Common Stock being referred to herein as the "Merger Consideration" or the
"Securities" and the quotient so derived being referred to herein as the
"Exchange Ratio"). The number of Securities to be issued to each stockholder of
the Company under this Section 1.7.1(c) shall be calculated by aggregating all
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shares of Company Capital Stock held by each such stockholder, so that such
number of Securities to be issued shall be equal to the number of shares of
Company Capital Stock held by such stockholder multiplied by the Exchange Ratio,
with cash paid in lieu of any fractional share of Xxxxxx.xxx Common Stock
pursuant to Section 1.7.3 hereof.
(c) Notwithstanding the foregoing, certificates representing ten percent
(10%) of the Securities issuable to each holder of Company Capital Stock under
Section 1.7.1(b) (the "Escrow Shares") shall be deposited in escrow with
ChaseMellon Shareholder Services L.L.C. ("ChaseMellon"), to be held and
administered in accordance with an Escrow Agreement in substantially the form
attached hereto as Exhibit 1.7.1 (the "Escrow Agreement"). Notwithstanding the
escrow of the Escrow Shares, dividends or other distributions declared and paid
on such shares shall continue to be paid by Xxxxxx.xxx to the Company
stockholders and all voting rights with respect to such shares shall inure to
the benefit of and be enjoyed by such stockholders. Any securities received by
the escrow agent in respect of any Escrow Shares held in escrow as a result of
any stock split or combination of shares of Xxxxxx.xxx Common Stock, payment of
a stock dividend or other stock distribution in or on shares of Xxxxxx.xxx
Common Stock, or change of shares of Xxxxxx.xxx Common Stock into any other
securities pursuant to or as part of a merger, consolidation, acquisition of
property or stock, or separation, reorganization or liquidation of Xxxxxx.xxx,
or otherwise, shall be held by the escrow agent as, and shall be included within
the definition of, Escrow Shares, as the case may be.
(d) Each issued and outstanding share of capital stock of the Purchaser
shall be converted into one share of common stock of the Surviving Corporation.
(e)Each outstanding Option to purchase shares of Company Capital Stock
issued pursuant to the Company's 1997 Amended Stock Option Plan and the
Company's MVP Stock Option Plan (the "Company Option Plans"), whether or not
vested or exercisable, shall be assumed by Xxxxxx.xxx and shall constitute an
option to acquire, on the same terms and conditions as were applicable under
such assumed Option, a number of shares of Xxxxxx.xxx Common Stock equal to the
product of the Exchange Ratio and the number of shares of Company Capital Stock
subject to such Option (the "Option Shares"), at a price per share (rounded up
to the nearest $.001) equal to the aggregate exercise price for the shares of
Company Capital Stock subject to such Option divided by the number of full
shares of Xxxxxx.xxx Common Stock deemed to be purchasable pursuant to such
Option; provided, however, that (i) subject to the provisions of clause (ii)
below, the number of shares of Xxxxxx.xxx Common Stock that may be purchased
upon exercise of such Option shall not include any fractional shares and, upon
the last such exercise of such Option, Xxxxxx.xxx
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shall pay to the holder thereof an amount of cash equal to such fraction
multiplied by the closing price of Xxxxxx.xxx Common Stock as reported on the
Nasdaq National Market on the date of such exercise, and (ii) in the case of any
Option to which Section 421 of the Code applies by reason of its qualification
under Section 422 of the Code, the option price, the number of shares
purchasable pursuant to such Option and the terms and conditions of exercise of
such Option shall be determined in order to comply with Section 424 of the Code.
Xxxxxx.xxx shall assume the obligations of the Company under the Company Option
Plans and each Option and shall comply with the terms of the Company Option
Plans and each Option as they apply to the Options assumed as set forth above.
Xxxxxx.xxx shall use its best efforts to cause the shares of Xxxxxx.xxx Common
Stock that are issuable upon exercise of the Options assumed in accordance with
this Section 1.7.1 to be registered under the Securities Act of 1933, as amended
(the "Securities Act"), on Form S-8 ("Form S-8") within 30 days following the
Closing Date. The Company will cooperate with Xxxxxx.xxx in the preparation of
the Form S-8.
(f) Each outstanding Warrant to purchase shares of Company Common Stock
shall be assumed by Xxxxxx.xxx and shall constitute a warrant to acquire, on the
same terms and conditions as were applicable under such assumed Warrant, that a
number of shares of Xxxxxx.xxx Common Stock equal to the product of the Exchange
Ratio and the number of shares of Company Common Stock subject to such Warrant,
at a price per share equal to the aggregate exercise price for the shares of
Company Common Stock subject to such Warrant divided by the number of full
shares of Xxxxxx.xxx Common Stock deemed to be purchasable pursuant to such
Warrant; provided, however, that the number of shares of Xxxxxx.xxx Common Stock
that may be purchased upon exercise of such Warrant shall not include any
fractional shares and, upon the last such exercise of such Warrant, Xxxxxx.xxx
shall pay to the holder thereof an amount of cash equal to such fraction
multiplied by the closing price of Xxxxxx.xxx Common Stock as reported in the
Nasdaq National Market on the date of such exercise. Promptly after the
Effective Date, Xxxxxx.xxx shall deliver to holders of Warrants appropriate
warrant agreements representing the right to acquire shares of Xxxxxx.xxx Common
Stock on the same terms and conditions as contained in the outstanding Warrants
(subject to any adjustments required by the preceding sentence), upon surrender
of the outstanding Warrants.
(g) Holders of shares of Company Capital Stock who have complied with
all the requirements for perfecting dissenters' rights, as set forth in the
Massachusetts Law, shall be entitled to their rights under the Massachusetts Law
with respect to such shares (the "Dissenting Shares").
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(h) If, prior to the Effective Time, Xxxxxx.xxx recapitalizes through a
split-up of its outstanding shares of capital stock into a greater number, or a
combination of its outstanding shares of capital stock into a lesser number,
reorganizes, reclassifies or otherwise changes its outstanding shares of capital
stock into the same or a different number of shares of other classes of capital
stock, or declares a dividend on its outstanding shares of capital stock payable
in shares or securities convertible into shares, the number of shares of
Xxxxxx.xxx Common Stock into which the shares of Company Capital Stock are to be
converted, and the number of shares of Xxxxxx.xxx Common Stock issuable upon the
exercise of each Assumed Option and each Warrant, will be adjusted appropriately
so as to maintain the proportionate interests of the holders of the Company
Capital Stock, Warrants and Options and the holders of shares of capital stock
of Xxxxxx.xxx.
1.7.2 EXCHANGE OF CERTIFICATES
As soon as practicable after the Effective Date but in any event within
15 business days after the Effective Date, ChaseMellon, as exchange agent, shall
make available, and each stockholder of the Company will be entitled to receive,
upon surrender to ChaseMellon of one or more certificates representing shares of
Company Capital Stock for cancellation and a letter of transmittal containing
appropriate representations, certificates representing the number of shares of
Xxxxxx.xxx Common Stock that such stockholder is entitled to receive pursuant to
Section 1.7.1 hereof; provided, however, that the certificates representing the
Escrow Shares shall be retained by ChaseMellon in accordance with the Escrow
Agreement. The shares of Xxxxxx.xxx Common Stock that each stockholder of the
Company shall be entitled to receive pursuant to the Merger shall be deemed to
have been issued at the Effective Time. No interest shall accrue on the Merger
Consideration. If the Merger Consideration (or any portion thereof) is to be
delivered to any person other than the person in whose name the certificate or
certificates representing shares of Company Capital Stock surrendered in
exchange therefor is registered, it shall be a condition to such exchange that
the person requesting such exchange shall pay to Xxxxxx.xxx any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the certificate or certificates so
surrendered, or shall establish to the satisfaction of Xxxxxx.xxx that such tax
has been paid or is not applicable. Notwithstanding the foregoing, neither
Xxxxxx.xxx nor any other party hereto shall be liable to a holder of shares of
Company Capital Stock for any Merger Consideration delivered to a public
official pursuant to applicable abandoned property, escheat and similar laws.
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1.7.3 NO FRACTIONAL SHARES
No certificates or scrip representing fractional shares of Xxxxxx.xxx
Common Stock shall be issued upon the surrender for exchange of certificates
representing Company Capital Stock pursuant to the Merger, and no dividend,
stock split or other distribution with respect to Xxxxxx.xxx Common Stock shall
relate to any such fractional interest, and any such fractional interests shall
not entitle the owner thereof to vote or to any rights of a security holder. In
lieu of each such fractional share, Xxxxxx.xxx shall pay to the holder thereof,
as soon as practicable after the Effective Date, an amount in cash equal to such
fraction multiplied by the closing price of Xxxxxx.xxx Common Stock as reported
on the Nasdaq National Market on the trading day prior to the Closing Date.
1.7.4 NO FURTHER TRANSFERS
After the Effective Time, there shall be no transfers of any shares of
Company Capital Stock on the stock transfer books of the Surviving Corporation.
If, after the Effective Time, certificates formerly representing shares of
Company Capital Stock are presented to the Surviving Corporation, they shall be
forwarded to Xxxxxx.xxx and be canceled and exchanged in accordance with this
Section 1.7, subject to applicable law in the case of the Dissenting Shares.
1.8 TAX FREE REORGANIZATION
(a) Except as otherwise required by the Internal Revenue Service
pursuant to a determination (as defined in Section 1313 of the Code) or
otherwise, or by applicable law, the parties shall not take a position on any
tax returns inconsistent with the treatment of the Merger for tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code by reason
of Section 368(a)(2)(E) of the Code.
(b) In addition, Xxxxxx.xxx represents, solely for tax purposes, now,
and as of the Closing Date, that it presently intends to continue the Company's
historic business or use a significant portion of the Company's business assets
in business in a manner that satisfies the continuity of business enterprise
requirement set forth in Treasury Regulation Section 1.368-1(d).
1.9 STOCKHOLDER REPRESENTATIVES
By approving the Merger at a special meeting of stockholders or by
written consent of the stockholders, each stockholder of the Company shall have
irrevocably authorized and appointed Xxxxxx Xxxxx, Xxx Xxxxxxx and Xxxxxx Xxxxx
(the "Stockholder Representatives"), with full power of substitution and
resubstitution, as
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his, her or its representative and true and lawful attorney-in-fact and agent to
act with the powers set forth in the Investor Rights Agreement in his, her or
its name place and stead and to execute in the name and on behalf of such
stockholder the Escrow Agreement and any other agreement, certificate,
instrument or document to be delivered by the stockholders in connection with
the Escrow Agreement or Article VIII of this Agreement.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as is otherwise set forth in the Disclosure Memorandum attached
hereto as Exhibit 2 (the "Disclosure Memorandum"), each of which exceptions
shall specifically identify or cross-reference the provision of this Article II
to which such exception relates, and which shall constitute in its entirety a
representation and warranty under this Article II, and in order to induce
Xxxxxx.xxx and the Purchaser to enter into and perform this Agreement, the
Escrow Agreement and the Investor Rights Agreement in substantially the form
attached hereto as Exhibit 2(A) (the "Investor Rights Agreement") to be entered
into as of the Closing among Xxxxxx.xxx and each of the stockholders of the
Company, and the other agreements and certificates that are required to be
executed pursuant to this Agreement (collectively, the "Operative Documents"),
the Company represents and warrants to Xxxxxx.xxx and the Purchaser as of the
date of this Agreement and as of the Closing as follows in this Article II. For
the purposes of this Article II, unless the context otherwise requires,
references to the Company will be deemed to include all predecessors of the
Company.
2.1 ORGANIZATION
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts. The Company
has all requisite corporate power and authority to own, operate and lease its
properties and assets, to carry on its business as now conducted and as proposed
to be conducted, and to enter into and perform its obligations under this
Agreement and the other Operative Documents to which the Company is a party, and
to consummate the transactions contemplated hereby and thereby. The Company is
duly qualified and licensed as a foreign corporation to do business and is in
good standing in each jurisdiction in which the character of the Company's
properties occupied, owned or held under lease or the nature of the business
conducted by the Company makes such qualification necessary, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company's business, properties or prospects (a "Company Material
Adverse Effect").
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2.2 ENFORCEABILITY
The Company has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement and each of the other Operative
Documents to which it is a party and each of the certificates, instruments and
documents executed or delivered by it pursuant to the terms of this Agreement.
All corporate action on the part of the Company and its officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the other Operative Documents to which the
Company is a party, the consummation of the Merger, and the performance of all
the Company's obligations under this Agreement and the other Operative Documents
to which the Company is a party has been taken or will be taken as of or prior
to the Effective Time. This Agreement has been, and each of the other Operative
Documents to which the Company is a party at the Closing will have been, duly
executed and delivered by the Company, and this Agreement is, and each of the
other Operative Documents to which the Company is a party will be at the
Closing, a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
2.3 CAPITALIZATION
(a) The authorized capital stock of the Company consists of 20,000,000
shares of Company Common Stock and 10,400,000 shares of preferred stock, of
which 5,000,000 shares are designated as Company Series A Stock and, 5,400,000
shares are designated as Company Series B Stock.
(b) The issued and outstanding capital stock of the Company consists
solely of 3,816,458 shares of Company Common Stock, 4,941,616 shares of Company
Series A Stock and 5,363,985 shares of Company Series B Stock (the "Outstanding
Shares"), which are and as of the Closing will be held of record and
beneficially by the stockholders of the Company as set forth on Schedule 2.3(b)
to the Disclosure Memorandum. The Outstanding Shares are, and immediately prior
to the Closing will be, duly authorized and validly issued, fully paid and
nonassessable, and issued in compliance with all applicable federal, state and
foreign securities laws. No Person (as defined in Section 2.5 hereof) other than
the stockholders of the Company holds any interest in any of the Outstanding
Shares. True and correct copies of the stock records of the Company, showing all
issuances and transfers of shares of capital stock of the Company since
inception, have been provided to Xxxxxx.xxx.
(c) Other than outstanding Options to purchase up to 1,762,296 shares of
Company Common Stock that have been granted under the Company Option Plans, and
Warrants to purchase up to 253,146 shares of Company Common Stock, there are
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no outstanding rights of first refusal or offer, preemptive rights, options,
warrants, conversion rights or other agreements, either directly or indirectly,
for the purchase or acquisition from the Company or any stockholder of any
shares of Company Capital Stock or any securities convertible into or
exchangeable for shares of Company's Capital Stock. Set forth on Schedule 2.3(c)
to the Disclosure Memorandum is a spreadsheet accurately reflecting the number
of such Options and Warrants outstanding, the grant dates, vesting schedules and
exercise prices thereof, the identities of the holders thereof and an indication
of their relationships to the Company. The Company has delivered to Xxxxxx.xxx
true and correct copies of the Company Option Plans, the form of stock option
letter agreement relating to Options granted thereunder and all material
deviations therefrom as well as the true and correct copies of all outstanding
Warrants.
(d) Other than as set forth on Schedule 2.3(d), the Company is not a
party or subject to any agreement or understanding, and, to the knowledge of the
Company, there is no agreement or understanding between any Persons, that
affects or relates to the voting or giving of written consents with respect to
any securities of the Company or the voting by any director of the Company. No
stockholder of the Company or any affiliate thereof is indebted to the Company,
and the Company is not indebted to any stockholder of the Company or any
affiliate thereof. Other than as set forth on Schedule 2.3(d), the Company is
not under any contractual or other obligation to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.
2.4 SUBSIDIARIES AND AFFILIATES
The Company does not own or control, and has not in the past owned or
controlled, directly or indirectly, any corporation, partnership, limited
liability company or other business entity. The Company does not own, directly
or indirectly, any ownership, equity, profits or voting interest in, or
otherwise control, any corporation, partnership, joint venture or other entity,
and has no agreement or commitment to purchase any such interest.
2.5 NO APPROVALS; NO CONFLICTS
The execution, delivery and performance by the Company of this Agreement
and the other Operative Documents to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby will not (a)
constitute a violation (with or without the giving of notice or lapse of time,
or both) of any provision of law or any judgment, decree, order, regulation or
rule of any court or other governmental authority applicable to the Company, (b)
require any consent, approval or authorization of, or declaration, filing or
registration with, any
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person, corporation, partnership, joint venture, association, organization,
other entity or governmental or regulatory authority (a "Person"), except (i)
compliance with applicable securities laws, (ii) the filing of all documents
necessary to consummate the Merger with the Massachusetts Secretary of State,
and (iii) the approval by the stockholders of the Company of the transactions
contemplated hereby, as provided under applicable law and the Articles of
Organization and Bylaws of the Company (all such consents, approvals and
authorizations to be duly obtained by the Company at or prior to the Closing),
(c) result in a default (with or without the giving of notice or lapse of time,
or both) under, or acceleration or termination of, or the creation in any party
of the right to accelerate, terminate, modify or cancel, any agreement, lease,
note or other restriction, encumbrance, obligation or liability to which the
Company is a party or by which it is bound or to which any assets of the Company
are subject, (d) result in the creation of any Encumbrance (as defined in
Section 2.9(d) hereof) upon the assets of the Company or upon any Outstanding
Shares or other securities of the Company, (e) conflict with or result in a
breach of or constitute a default under any provision of the Articles of
Organization or Bylaws of the Company, or (f) invalidate or adversely affect any
material permit, license, authorization or status used in the conduct of the
Company's business.
2.6 FINANCIAL STATEMENTS
The Company has delivered to Xxxxxx.xxx (a) audited balance sheets,
statements of operations, statements of cash flow, and statements of
stockholders' equity of the Company as of or for the fiscal year ended December
31, 1997 and the period from inception (September 5, 1996) to December 31, 1996
and (b) an unaudited balance sheet, statement of operations, statement of cash
flow and statement of stockholders' equity of the Company as of and for the
six-month period ended June 30, 1998. All the foregoing financial statements are
herein referred to as the "Financial Statements." The balance sheet of the
Company as of June 30, 1998 is herein referred to as the "Company Balance
Sheet." The Financial Statements have been prepared in conformity with generally
accepted accounting principles in the United States ("GAAP") on a basis
consistent with prior accounting periods and fairly present the financial
position, results of operations and changes in financial position of the Company
as of the dates and for the periods indicated (except, solely with respect to
the unaudited Financial Statements, as to footnotes and normal period-end
adjustments). The Company has no liabilities or obligations of any nature
(absolute, contingent or otherwise) that are not fully reflected or reserved
against in the Company Balance Sheet and that would be required under GAAP to be
reflected or reserved, except liabilities or obligations incurred since the date
of the Company Balance Sheet in the ordinary course of business and consistent
with past practice and except for liabilities or obligations that are not
material to the Company's financial
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condition. The Company maintains standard systems of accounting that are
adequate for its business. The Company is not a guarantor, indemnitor, surety or
other obligor of any indebtedness of any other Person. The Company's practices
with respect to capitalizing software development costs, as reflected in the
Financial Statements, are reasonable, in accordance with industry standards.
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except for transactions specifically contemplated in this Agreement,
since the date of the Company Balance Sheet, neither the Company nor any of its
officers or directors in their representative capacities on behalf of the
Company have:
(a) taken any action or entered into or agreed to enter into any
transaction, agreement or commitment other than in the ordinary course of
business;
(b) forgiven or canceled any indebtedness or waived any claims or rights
of material value (including, without limitation, any indebtedness owing by any
stockholder, officer, director, employee or affiliate of the Company);
(c) granted, other than in the ordinary course of business and
consistent with past practice or as required with the terms of any Employee
Benefit Plan listed in Schedule 2.13.1 of the Disclosure Memorandum, any
increase in the compensation of directors, officers, employees or consultants
(including any such increase pursuant to any employment agreement or bonus,
pension, profit-sharing, lease payment or other plan or commitment) or any
increase in the compensation payable or to become payable to any director,
officer, employee or consultant;
(d) suffered any change having a Company Material Adverse Effect;
(e) borrowed or agreed to borrow any funds or incurred or become subject
to, whether directly or by way of assumption or guarantee or otherwise, any
liabilities or obligations (absolute, accrued, contingent or otherwise) in
excess of $25,000, except liabilities and obligations incurred in the ordinary
course of business and consistent with past practice, or increased, or
experienced any change in any assumptions underlying or methods of calculating,
any bad debt, contingency or other reserves;
(f) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of claims, liabilities and obligations reflected or reserved against in
the Company Balance Sheet or incurred in the ordinary course of business and
consistent with past
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practice since the date of the Company Balance Sheet, or prepaid any obligation
having a fixed maturity of more than 90 days from the date such obligation was
issued or incurred;
(g) permitted or allowed any of its property or assets (real, personal
or mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge, except in the ordinary
course of business and consistent with past practice;
(h) purchased or sold, transferred or otherwise disposed of any of its
material properties or assets (real, personal or mixed, tangible or intangible);
(i) disposed of or permitted to lapse any rights to the use of any
trademark, trade name, patent or copyright, or disposed of or disclosed to any
Person without obtaining an appropriate confidentiality agreement from any such
Person any trade secret, formula, process or know-how not theretofore a matter
of public knowledge;
(j) made any single capital expenditure or commitment in excess of
$25,000 for additions to property, plant, equipment or intangible capital assets
or made aggregate capital expenditures in excess of $25,000 for additions to
property, plant, equipment or intangible capital assets;
(k) made any change in any method of accounting or accounting practice
or internal control procedure;
(l) issued any capital stock or other securities (other than the grant
of 548,435 options under the Company Option Plan), or declared, paid or set
aside for payment any dividend or other distribution in respect of its capital
stock, or redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of capital stock or other securities of the Company, or otherwise
permitted the withdrawal by any of the holders of capital stock of the Company
of any cash or other assets (real, personal or mixed, tangible or intangible),
in compensation, indebtedness or otherwise, other than payments of compensation
in the ordinary course of business and consistent with past practice;
(m) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of the
Company's stockholders, officers, directors or employees or any affiliate of any
of the Company's stockholders, officers, directors or employees, except
compensation paid to officers and employees at rates not exceeding the rates of
compensation paid during the fiscal year last ended or the compensation referred
to in Schedule 2.12 of the Disclosure Memorandum; or
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(n) agreed, whether in writing or otherwise, to take any action
described in this Section 2.7.
2.8 TAXES
(a) (i) All Tax Returns (as defined below) required to be filed by or on
behalf of the Company have been filed on a timely basis with the appropriate
governmental authority in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns were true, correct and complete
in all material respects; (ii) all Taxes (as defined below) of the Company
(whether or not reflected on any Tax Return) have been fully and timely paid;
(iii) no waivers of statutes of limitation have been given or requested with
respect to the Company in connection with any Tax Returns covering the Company
with respect to any Taxes payable by it; and (iv) the Company has duly and
timely withheld from employee salaries, wages and other compensation and paid
over to the appropriate governmental authority all amounts required to be so
withheld and paid over for all periods under all applicable laws. There are no
liens with respect to Taxes on any of the Company's property or assets other
than liens for current Taxes not yet payable.
(b) Neither the Company nor any other Person on behalf of the Company
(i) has filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company;
(ii) has executed or entered into a closing agreement pursuant to Section 7121
of the Code or any predecessor provision thereof or any similar provision of
state, local or foreign law; or (iii) has agreed to or is required, except as
may be required as a result of the transactions contemplated hereby, to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company or has notice that a governmental authority has proposed any such
adjustment or change in accounting method.
(c) There is no dispute or claim concerning any Tax liability of the
Company either (i) claimed or raised by any authority in writing or (ii) as to
which any of the directors and officers (and employees responsible for Tax
matters) of the Company have knowledge based on personal contact with any agent
of such authority. Schedule 2.8 to the Disclosure Memorandum lists all Tax
Returns filed with respect to the Company for taxable periods ended on or after
the Company's inception that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Company has delivered to Xxxxxx.xxx
correct and complete copies of all Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company since
the Company's inception.
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(d) The Company has not made any payments, is not obligated to make any
payments and is not a party to any agreement that will obligate it to make any
payments that will not be deductible under Section 280G of the Code (or any
similar provision of state, local or foreign law) as a result of the Merger or
the other transactions contemplated hereby.
(e) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(2)(i) of the Code.
(f) The Company is not a party to any Tax allocation or sharing
agreement. The Company (i) has not been a member of a Tax Group (as defined
below) filing a consolidated income Tax Return under Section 1501 of the Code
(or any similar provision of state, local or foreign law) and (ii) does not have
any liability for Taxes of any Person under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor by contract or otherwise.
(g) The unpaid Taxes of the Company (i) did not, as of June 30, 1998,
exceed the reserve for Tax liability set forth on the face (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) of the Company Balance Sheet and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing Tax
Returns.
(h) The Disclosure Memorandum sets forth the amount of any net operating
loss, net capital loss, net-unrealized built-in loss (as defined under Section
382 of the Code), unused investment or other credit, unused foreign tax or
excess charitable contribution allocable to the Company.
As used in this Agreement, the following terms shall have the following
meanings:
"Taxes" means all foreign, federal, state, county or local taxes,
charges, fees, levies, imposts, duties and other assessments, including, but not
limited to, any income, alternative minimum or add-on tax, estimated, gross
income, gross receipts, sales, use, transfer, transactions, intangibles, ad
valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, real property, recording, personal property, federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Section 59(a) of the Code) or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to tax.
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"Tax Group" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Company is now
or was formerly a member.
"Tax Returns" means any return, declaration, report, claim or refund,
information return, statement, or other similar document relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
2.9 PROPERTY
(a) The Company owns no real property other than the leasehold interests
described on Schedule 2.9(a) to the Disclosure Memorandum, which contains a
complete and accurate list of all real property of the Company that is leased,
rented or used by the Company (the "Real Property"). The Company has delivered
to Xxxxxx.xxx true and complete copies of all written leases, subleases, rental
agreements, contracts of sale, tenancies or licenses relating to the Real
Property and written summaries of the terms of any oral leases, subleases,
rental agreements, contracts of sale, tenancies or licenses relating to the Real
Property.
(b) Schedule 2.9(b) to the Disclosure Memorandum contains a complete and
accurate list of each item of personal property having a value in excess of
$5,000 that is owned, leased, rented or used by the Company (the "Personal
Property"); however, such list need not describe the Technology and the IP
Rights (as defined in Section 2.14) listed on Schedule 2.14 to the Disclosure
Memorandum. The Company has delivered to Xxxxxx.xxx true and complete copies of
all leases, subleases, rental agreements, contracts of sale, tenancies or
licenses relating to the Personal Property.
(c) The Real Property and the Personal Property include all properties
and assets (whether real, personal or mixed, tangible or intangible) (other
than, in the case of the Personal Property, property rights with an individual
value of less than $5,000 and the Technology and the IP Rights listed on
Schedule 2.14 to the Disclosure Memorandum) reflected in the Company Balance
Sheet and all the properties and assets purchased by the Company since the date
of the Company Balance Sheet (except for such properties or assets sold since
the date of the Company Balance Sheet in the ordinary course of business and
consistent with past practice). The Real Property and the Personal Property
include all material property used in the business of the Company, other than
the Technology and the IP Rights listed on Schedule 2.14 to the Disclosure
Memorandum. The Company's offices and other structures and the Personal Property
are of a quality consistent with industry standards, are in good operating
condition and repair, normal wear and tear excepted, are adequate for the uses
to which they are being put and comply in all material respects with applicable
safety and other laws and regulations.
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(d) The Company's leasehold interest in each parcel of the Real Property
is free and clear of all liens, mortgages, pledges, deeds of trust, security
interests, charges, encumbrances and other adverse claims or interests of any
kind (each, an "Encumbrance"). Each lease of any portion of the Real Property is
valid, binding and enforceable in accordance with its terms against the parties
thereto and any other Person with an interest in such Real Property, the Company
has performed in all material respects all obligations imposed on it thereunder,
and neither the Company nor any other party thereto is in default thereunder,
nor is there any event that with notice or lapse of time, or both, would
constitute a default thereunder. The Company has not granted any lease,
sublease, tenancy or license of, or entered into any rental agreement or
contract of sale with respect to, any portion of the Real Property.
(e) The Personal Property is free and clear of all Encumbrances, and,
other than leased Personal Property that is so noted on the list supplied
pursuant to Section 2.9(b), the Company owns such Personal Property. Each lease,
license, rental agreement, contract of sale or other agreement to which the
Personal Property is subject is valid, binding and enforceable in accordance
with its terms against the parties thereto, the Company has performed in all
material respects all obligations imposed on it thereunder, and neither the
Company nor, to the best of the Company's knowledge, any other party thereto is
in default thereunder, nor is there any event that with notice or lapse of time,
or both, would constitute a default by the Company or, to the best of the
Company's knowledge, any other party thereunder. The Company has not granted any
lease, sublease, tenancy or license of any portion of the Personal Property,
except in the ordinary course of business.
2.10 CONTRACTS
Schedule 2.10 to the Disclosure Memorandum contains a complete and
accurate list (other than the IP Rights listed on Schedule 2.14 to the
Disclosure Memorandum) of all contracts, agreements and understandings, oral or
written, to which the Company is currently a party or by which the Company is
currently bound providing for potential payments by or to the Company in excess
of $25,000, including, without limitation, security agreements, license
agreements, software development agreements, distribution agreements, joint
venture agreements, reseller agreements, credit agreements and instruments
relating to the borrowing of money. All contracts set forth on Schedule 2.10 are
valid, binding and enforceable in accordance with their terms against each party
thereto, and are in full force and effect, the Company has performed in all
material respects all obligations imposed on it thereunder, and neither the
Company nor, to the best of
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the Company's knowledge, any other party thereto is in default thereunder, nor
is there any event that with notice or lapse of time, or both, would constitute
a default by the Company or, to the best of the Company's knowledge, any other
party thereunder. True and complete copies of each such written contract (or
written summaries of the terms of any such oral contract) have been heretofore
delivered to Xxxxxx.xxx. Except as specifically set forth on Schedule 2.10, the
Company has no
(a) contracts with directors, officers, stockholders, employees, agents,
consultants, advisors, salespersons, sales representatives, distributors or
dealers that are not, except as provided by law to the contrary without regard
to the express terms of such contract, cancelable by it within 30 days' notice
without liability, penalty or premium, any agreement or arrangement providing
for the payment of any bonus or commission based on sales or earnings, or any
compensation agreement or arrangement affecting or relating to former employees
of the Company;
(b) employment agreement, whether express or implied, or any other
agreement for services that contains any severance or termination pay
liabilities or obligations;
(c) noncompetition agreement or other restriction from carrying on its
business anywhere in the world;
(d) notice that any party to a contract listed on Schedule 2.10 intends
to cancel, terminate or refuse to renew such contract or to exercise or decline
to exercise any option or right thereunder;
(e) material disagreement with any of its suppliers, customers,
distributors, OEM resellers, licensors or licensees;
(f) product distribution agreement, development agreement, or license
agreement as licensor or licensee (except for standard nonexclusive software
licenses granted to end-user customers in the ordinary course of business the
form of which has been provided to Xxxxxx.xxx or standard licenses purchased by
the Company for off-the-shelf software), and except as otherwise set forth on
Schedule 2.14.2 to the Disclosure Memorandum);
(g) joint venture contract or arrangement or any other agreement that
involves a sharing of profits with other persons; and
(h) instrument evidencing or related in any way to indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise, except for trade
indebtedness incurred in the ordinary course of business, and except as
disclosed in the Financial Statements.
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2.11 CLAIMS AND LEGAL PROCEEDINGS
Except as set forth on Schedules 2.11 and 2.14 to the Disclosure
Memorandum, there are no claims, actions, suits, arbitrations, investigations or
proceedings pending against the Company or, to the best of the Company's
knowledge, threatened against the Company before or by any court or governmental
or nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other Person. There are no outstanding or unsatisfied
judgments, orders, decrees or stipulations to which the Company is a party.
Schedule 2.11 sets forth a description of any material disputes that have been
settled or resolved by litigation or arbitration since the Company's inception.
2.12 LABOR AND EMPLOYMENT MATTERS
There are no material labor disputes, employee grievances or
disciplinary actions pending or, to the best of the Company's knowledge,
threatened against or involving the Company or any of its present or former
employees. The Company has complied with all provisions of law relating to
employment and employment practices, terms and conditions of employment, wages
and hours. The Company is not engaged in any unfair labor practice and has no
liability for any arrears of wages or Taxes or penalties for failure to comply
with any such provisions of law. There is no labor strike, dispute, slowdown or
stoppage pending or, to the best of the Company's knowledge, threatened against
or affecting the Company, and the Company has not experienced any work stoppage
or other labor difficulty since its incorporation. No collective bargaining
agreement is binding on the Company. The Company has no knowledge of any
organizational efforts presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company. Each employee, officer and
consultant of the Company has executed a nondisclosure agreement in the form
provided to Xxxxxx.xxx. To the best of the Company's knowledge, no employee (or
person performing similar functions) of the Company is in violation of any such
agreement or any employment agreement, noncompetition agreement, patent
disclosure agreement, invention assignment agreement, proprietary information
agreement or other contract or agreement relating to the relationship of such
employee with the Company or any other party, and the Company will use its best
efforts to prevent any such violation. Schedule 2.12 to the Disclosure
Memorandum sets forth a true and complete list of (a) the names and current
compensation amounts of all directors and officers of the Company; (b) the wage
rates for nonsalaried and nonofficer salaried employees of the Company by
classification, and all labor union contracts (if any); (c) all group insurance
programs in effect for employees of the Company (other than any Employee Benefit
Plan listed on Schedule 2.13.1 to the Disclosure Memorandum); and (d) the names
and current
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compensation packages of all independent contractors and consultants of the
Company. The Company is not in default with respect to any of its obligations
referred to in clause (b) above and has no obligation or liability for severance
or back pay owed through or by virtue of the Closing. Except as disclosed on
Schedule 2.12, all employees of the Company are employed on an "at will" basis.
2.13 EMPLOYEE BENEFIT PLANS
2.13.1 EMPLOYEE BENEFIT PLAN LISTING
Schedule 2.13.1 to the Disclosure Memorandum sets forth a true, accurate
and complete list of all retirement, pension, profit sharing, deferred
compensation, savings, bonus, incentive, cafeteria, flexible benefits, medical,
dental, vision, hospitalization, life insurance, group insurance, medical
expense reimbursement, dependent care assistance, tuition reimbursement,
disability, accident, sick pay, holiday, vacation, severance, stock purchase,
stock option, stock appreciation rights, fringe benefit and other employee
benefit plans, funds, policies, programs, contracts, arrangements and payroll
practices (including, but not limited to, all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all employment, consulting and personal service
contracts and agreements, whether formal or informal, whether written or
unwritten and whether legally binding or not, (a) sponsored, maintained or
contributed to by the Company, (b) covering or benefiting any current or former
officer, employee, agent, director or independent contractor of the Company (or
any dependent or beneficiary of any such individual), or (c) with respect to
which the Company has (or could have) any actual or potential obligation or
liability (such plans, funds, policies, programs, contracts, arrangements and
payroll practices are hereinafter referred to collectively as "Employee Benefit
Plans" and each individually as an "Employee Benefit Plan"). The Company does
not have any agreement, arrangement, commitment or obligation, whether formal or
informal, whether written or unwritten and whether legally binding or not, to
create (or contribute to) any additional employee benefit plan, fund, policy,
program, contract, arrangement or payroll practice or to modify or amend any
existing Employee Benefit Plan. There has been no amendment, written
interpretation or announcement (whether or not written) by the Company relating
to, or change in participation or coverage under, any Employee Benefit Plan
that, either alone or together with other such items or events, could materially
increase the expense of maintaining the Employee Benefit Plans above the level
of expense incurred with respect thereto for the most recent fiscal year
included in the Financial Statements.
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2.13.2 DOCUMENTS PROVIDED
The Company has delivered to Xxxxxx.xxx true, correct and complete
copies (or, in the case of unwritten Employee Benefit Plans, descriptions) of
all Employee Benefit Plans (and all amendments thereto), along with, to the
extent applicable to the particular Employee Benefit Plan, the following
information: (a) copies of the last three annual reports (Form 5500 series)
filed with respect to such Employee Benefit Plan; (b) copies of the summary plan
descriptions, summary annual reports, summaries of material modifications and
all material employee manuals or communications filed or distributed with
respect to such Employee Benefit Plan during the last three years; and (c)
copies of all contracts (and any amendments thereto) relating to such Employee
Benefit Plan, including, but not limited to, service provider agreements,
administrative service agreements, insurance contracts, annuity contracts,
investment management agreements and record-keeping agreements.
2.13.3 COMPLIANCE
Except as set forth on Schedule 2.13.3 to the Disclosure Memorandum,
with respect to each Employee Benefit Plan: (a) such Employee Benefit Plan is,
and at all times since its inception has been, maintained, administered and
operated in accordance with its terms and in compliance in all material respects
with all applicable laws, statutes, orders, rules and regulations, and all
requirements prescribed thereby, including, but not limited to, ERISA and the
Code; (b) all amendments and actions required to bring such Employee Benefit
Plan into conformity with the applicable provisions of ERISA, the Code and other
applicable laws and regulations have been made or taken within the time
prescribed by law, except to the extent that such amendments or actions are not
required by law to be made or taken until after the Closing Date and are
disclosed on Schedule 2.13.3 to the Disclosure Memorandum; (c) the Company and,
to the knowledge of the Company, each fiduciary of such Employee Benefit Plan
have, at all times, properly performed all obligations, whether arising by
operation of law or by contract, required to be performed by each of them in
connection with such Employee Benefit Plan, and there have been no defaults or
violations of law by the Company, any fiduciary or any other Person with respect
to such Employee Benefit Plan; (d) all returns, reports and other disclosures
relating to such Employee Benefit Plan required to be filed with any
governmental entity or agency or furnished to any participant or beneficiary
have been properly completed or prepared and timely filed or furnished in
accordance with applicable law; (e) neither the Company nor any other fiduciary
of such Employee Benefit Plan has engaged in any transaction or acted or failed
to act in a manner that violates the fiduciary requirements of ERISA or any
other applicable law; (f) no event has occurred or is threatened or about to
occur that would constitute a nonexempt prohibited transaction
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under Section 406 or 407 of ERISA or under Section 4975 of the Code; and (g) no
event or omission has occurred, or is about to occur, that could subject,
directly or indirectly, the Company or any other Person to a tax under Chapter
43 of Subtitle D of the Code or a penalty under Part 5 of Subtitle B of Title I
of ERISA. Each Employee Benefit Plan that constitutes a "group health plan," as
defined in Section 607(1) or Section 733(a)(1) of ERISA or Section 4980B(g)(2)
of the Code, has been maintained, administered and operated at all times since
its inception in compliance in all material respects with the requirements of
Parts 6 and 7 of Subtitle B of Title I of ERISA, Section 4980B(f) of the Code,
any regulations under such ERISA and Code sections and any other applicable
federal, state, local or foreign law regarding the provision or continuation of
health insurance coverage or other welfare benefits (within the meaning of
Section 3(1) of ERISA).
2.13.4 CONTRIBUTIONS AND PREMIUM PAYMENTS
All contributions, premiums and other payments due or required to be
made to each Employee Benefit Plan under the terms of such Employee Benefit
Plan, ERISA, the Code or other applicable law have been timely paid, or, if not
yet due, have been properly recorded on the books of the Company.
2.13.5 RELATED EMPLOYERS
The Company is not, and has never been, a member of (a) a controlled
group of corporations, within the meaning of Section 414(b) of the Code, (b) a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, (c) an affiliated service group, within the meaning
of Section 414(m) of the Code, or (d) any other group of Persons treated as a
single employer under Section 414(o) of the Code.
2.13.6 MULTIEMPLOYER AND TITLE IV PLANS
The Company does not maintain or contribute to, and has never maintained
or contributed to (or been obligated to contribute to), any multiemployer plan
as defined in Section 3(37) or 4001(a)(3) of ERISA or 414(f) of the Code, any
multiple employer plan within the meaning of Section 4063 or 4064 of ERISA or
Section 413(c) of the Code, or any employee benefit plan, fund, program,
contract or arrangement that is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA.
2.13.7 POST-TERMINATION WELFARE BENEFITS
Except as set forth on Schedule 2.13.7 to the Disclosure Memorandum,
neither the Company nor any Employee Benefit Plan provides or has any obligation
to
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provide (or contribute toward the cost of) health, severance or any other
welfare benefits (within the meaning of Section 3(1) of ERISA) with respect to
any current or former officer, employee, agent, director or independent
contractor of the Company or any other entity beyond such individual's
retirement or other termination of service, other than continuation coverage
mandated by Sections 601 through 608 of ERISA or Section 4980B(f) of the Code or
other applicable law.
2.13.8 SUITS, CLAIMS AND INVESTIGATIONS
There are no actions, suits or claims (other than routine claims for
benefits) pending or, to the best of the Company's knowledge, threatened with
respect to (or against the assets of) any Employee Benefit Plan, nor, to the
best of the Company's knowledge, is there a basis for any such action, suit or
claim. No Employee Benefit Plan is currently under investigation, audit or
review, directly or indirectly, by the Internal Revenue Service (the "IRS"), the
Department of Labor (the "DOL") or any other governmental entity or agency, and,
to the best of the Company's knowledge, no such action is contemplated or under
consideration by the IRS, the DOL or any other governmental entity or agency.
2.13.9 PAYMENTS RESULTING FROM TRANSACTIONS
Except as set forth on Schedule 2.13.9 to the Disclosure Memorandum,
neither the execution and delivery of this Agreement or any of the other
Operative Documents nor the consummation of the transactions contemplated in (or
by) this Agreement or any of the other Operative Documents will (a) entitle any
current or former officer, employee, agent, director or independent contractor
of the Company to severance pay, unemployment compensation or any other payment
from the Company or any other Person, or otherwise increase the amount of
compensation due to any such individual, or (b) result in any benefit or right
becoming established or increased, or accelerate the time of payment or vesting
of any benefit, under any Employee Benefit Plan, whether or not some other
subsequent action or event would be required to trigger any of the items
specified in clause (a) or (b) of this Section 2.13.9.
2.14 INTELLECTUAL PROPERTY
2.14.1 TECHNOLOGY
Except for the Third Party Technologies (as defined in Section 2.14.2),
the Company owns all right, title and interest in and to the following
(collectively, the "Technology"), free and clear of all Encumbrances: (a) all
products, computer programs, specifications, source code, object code, graphics,
devices, techniques, algorithms, methods, technology, processes, procedures,
packaging, trade dress,
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formulae, drawings, designs, concepts, user interfaces, "look and feel,"
software or development tools and content that are now or during the two (2)
years prior to the date of this Agreement have been, or are currently proposed
to be, developed, produced, used, marketed and/or sold in the Company's
business, including, without limitation, the items listed in Schedule 2.14.1 to
the Disclosure Memorandum; (b) any and all updates, enhancements, corrections,
modifications, improvements and new releases related to the items set forth in
(a), above; (c) any and all technology and work in progress related to the items
set forth in (a) and (b), above; and (d) all inventions, discoveries, processes,
designs, trade secrets, know-how and other confidential or proprietary
information related to the items set forth in (a), (b) and (c), above. The
Technology, excluding the Third Party Technologies, is sometimes referred to
herein as the "Company Technology."
2.14.2 THIRD PARTY TECHNOLOGY
Schedule 2.15.2 to the Disclosure Memorandum sets forth a list of all
Technology used in the Company's business for which the Company does not own all
right, title and interest (collectively, the "Third Party Technologies"), and
all license agreements or other contracts pursuant to which the Company has the
right to use (in the manner used by the Company, or intended or necessary for
use with the Company Technology) the Third Party Technologies (the "Third Party
Licenses"), indicating, with respect to each of the Third Party Technologies
listed therein, the owner thereof and the Third Party License applicable
thereto. The Company has the lawful right to use (free of any material
restriction) (a) all Third Party Technology that is incorporated in or used in
the development or production of the Company Technology, and (b) all other Third
Party Technology necessary for the conduct of the Company's business as now
conducted and as proposed to be conducted. All Third Party Licenses are valid,
binding and in full force and effect, the Company and, to the best of the
Company's knowledge, each other party thereto have performed in all material
respects their obligations thereunder, and neither the Company nor, to the best
of the Company's knowledge, any other party thereto is in default thereunder,
nor to the best of the Company's knowledge has there occurred any event or
circumstance which with notice or lapse of time or both would constitute a
default or event of default, on the part of the Company or, to the best of the
Company's knowledge, any other party thereto or give to any other party thereto
the right to terminate or modify any Third Party License. The Company has not
received notice that any party to any Third Party License intends to cancel,
terminate or refuse to renew (if renewable) such Third Party License or to
exercise or decline to exercise any option or right thereunder.
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2.14.3 TRADEMARKS
Schedule 2.14.3 to the Disclosure Memorandum sets forth a list of all
trademarks, trade names, brand names, service marks, logos or other identifiers
used by the Company in its business (the "Marks"). The Company has full legal
and beneficial ownership, free and clear of any Encumbrances, of all rights
conferred by use of the Marks in the Company's business and, as to those Marks
that have been registered in the United States Patent and Trademark Office, by
federal registration of the Marks.
2.14.4 INTELLECTUAL PROPERTY RIGHTS
Schedule 2.14.4 to the Disclosure Memorandum sets forth all patents,
patent applications, copyright registrations (and applications therefor) and
trademark registrations (and applications therefor) (collectively, the "IP
Registrations") associated with the Company Technology and the Marks. The
Company owns all right, title and interest, free and clear of any Encumbrances,
in and to the IP Registrations, together with any other rights in or to any
copyrights (registered or unregistered), rights in the Marks (registered or
unregistered), trade secret rights and other intellectual property rights
(including, without limitation, rights of enforcement) associated with the
Company Technology and the Marks (collectively, the "IP Rights").
2.14.5 MAINTENANCE OF RIGHTS
Except as set forth in Schedule 2.14.5 to the Disclosure Memorandum, the
Company has not conducted its business, and has not used or enforced (or failed
to use or enforce) the IP Rights, in a manner that would result in the
abandonment, cancellation or unenforceability of any item of the IP Rights or
the IP Registrations, and the Company has not taken (or failed to take) any
action that would result in the forfeiture or relinquishment of any IP Rights or
IP Registrations, in each case where such abandonment, cancellation,
unenforceability, forfeiture or relinquishment would have a Company Material
Adverse Effect. Except as set forth in Schedule 2.14.5, the Company has not
granted to any third party any rights or permissions to use any of the
Technology or the IP Rights. To the best of the Company's knowledge, except
pursuant to reasonably prudent safeguards, (a) no third party has received any
confidential information relating to the Technology or the IP Rights, and (b)
the Company is not under any contractual or other obligation to disclose to any
third party any Company Technology.
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2.14.6 THIRD PARTY INFRINGEMENT
Except as set forth in Schedule 2.14.6 to the Disclosure Memorandum, (a)
the Company has not received any notice or claim (whether written, oral or
otherwise) challenging the Company's ownership or rights in the Company
Technology or the IP Rights or claiming that any other person or entity has any
legal or beneficial ownership with respect thereto; (b) all IP Rights are
legally valid and enforceable without any material qualification, limitation or
restriction on their use, and the Company has not received any notice or claim
(whether written, oral or otherwise) challenging the validity or enforceability
of any IP Rights; and (c) to the best of the Company's knowledge, no other
person or entity is infringing or misappropriating any part of the IP Rights or
otherwise making any unauthorized use of the Company Technology.
2.14.7 INFRINGEMENT BY THE COMPANY
Except as set forth in Schedule 2.14.7 to the Disclosure Memorandum, (a)
the use of any of the Technology in the Company's business does not and will, to
the knowledge of the Company, not conflict with, infringe, violate or interfere
with or constitute an appropriation of any right, title or interest (including,
without limitation, any patent, copyright or trade secret right) held by any
other person or entity, and there have been no claims made with respect thereto,
(b) the use of any of the Marks and other IP Rights in the Company's business
will not conflict with, infringe, violate or interfere with or constitute an
appropriation of any right, title or interest (including, without limitation,
any patent, copyright, trademark or trade secret right) held by any other person
or entity, and there have been no claims made with respect thereto, and (c) the
Company has not received any notice or claim (whether written, oral or
otherwise) regarding any infringement, misappropriation, misuse, abuse or other
interference with any third party intellectual property or proprietary rights
(including, without limitation, infringement of any patent, copyright, trademark
or trade secret right of any third party) by the Company, the Technology or the
Marks or other IP Rights or claiming that any other entity has any claim of
infringement with respect thereto.
2.14.8 CONFIDENTIALITY
Except as set forth in Schedule 2.14.8 to the Disclosure Memorandum, (a)
the Company has not disclosed any source code regarding the Technology to any
person or entity other than an employee of the Company and under a written
nondisclosure agreement; (b) the Company has at all times maintained and
diligently enforced commercially reasonable procedures to protect all
confidential information relating to the Technology; (c) neither the Company nor
any escrow agent is under any
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contractual or other obligation to disclose the source code or any other
proprietary information included in or relating to the Technology; and (d) the
Company has not deposited any source code relating to the Technology into any
source code escrows or similar arrangements. If, as disclosed on Schedule
2.14.8, the Company has deposited any source code to the Technology into source
code escrows or similar arrangements, no event has occurred that has or could
reasonably form the basis for a release of such source code from such escrows or
arrangements.
2.14.9 WARRANTY AGAINST DEFECTS
Except as set forth in Schedule 2.14.9 to the Disclosure Memorandum, the
Technology is free from known material defects and substantially conforms to the
applicable specifications, documentation and samples of such Technology.
2.14.10 DOMAIN NAMES
Schedule 2.14.10 sets forth a list of all Internet domain names used by
the Company in its business (collectively, the "Domain Names"). The Company has,
and after the Closing the Surviving Corporation will have, a valid registration
and all material rights (free of any material restriction) in and to the Domain
Names, including without limitation all rights necessary to continue to conduct
the Company's business as it is currently conducted.
2.14.11 YEAR 2000
Each hardware, software and firmware product used by the Company in its
business (collectively, the "Software") will accurately process date data
(including, but not limited to, calculating, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries, including, without
limitation, leap year calculations, without a decrease in the functionality of
the Software. The Software is designed to be used prior to, during and after the
calendar year 2000 A.D. and will operate during each such time period without
error relating to date data, specifically including any error relating to, or
the product of, date data which represents or references different centuries or
more than one century. Without limiting the generality of the foregoing, the
Software (a) will not abnormally end or provide invalid or incorrect results as
a result of date data, specifically including date data which represents or
references different centuries or more than one century, (b) has been designed
to ensure year 2000 compatibility, including, but not limited to, date data
century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values that
reflect the century, and (c) includes "Year 2000 Capabilities," meaning that the
Software (i) will manage and manipulate data involving dates, including single
century formulas and
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multi-century formulas, and will not cause an abnormally ending scenario within
the application or generate incorrect values or invalid results involving such
dates, (ii) provides that all date-related user interface functionalities and
data fields include the indication of century, and (iii) provides that all
date-related data interface functionalities include the indication of century.
2.15 CORPORATE BOOKS AND RECORDS
The Company has furnished to Xxxxxx.xxx or its representatives for their
examination true and complete copies of (a) the Articles of Organization and
Bylaws of the Company as currently in effect, including all amendments thereto,
(b) the minute books of the Company, and (c) the stock transfer books of the
Company. Such minutes reflect all meetings of the Company's stockholders, Board
of Directors and any committees thereof since the Company's inception, and such
minutes accurately reflect in all material respects the events of and actions
taken at such meetings. Such stock transfer books accurately reflect all
issuances and transfers of shares of capital stock of the Company since its
inception.
2.16 LICENSES, PERMITS, AUTHORIZATIONS, ETC.
Except as identified on Schedules 2.1 and 2.5 to the Disclosure
Memorandum, the Company has received all currently required governmental
approvals, authorizations, consents, licenses, orders, registrations and permits
of all agencies, whether federal, state, local or foreign, the failure to obtain
of which would have a Company Material Adverse Effect. The Company has not
received any notifications of any asserted present failure by it to have
obtained any such governmental approval, authorization, consent, license, order,
registration or permit, or past and unremedied failure to obtain such items.
2.17 COMPLIANCE WITH LAWS
Except as described on Schedule 2.17 to the Disclosure Memorandum, the
Company has at all times complied, and is in compliance, with all federal,
state, local and foreign laws, rules, regulations, ordinances, decrees and
orders applicable to it, to its employees, or to the Real Property and the
Personal Property, including, without limitation, all such laws, rules,
ordinances, decrees and orders relating to intellectual property protection,
antitrust matters, consumer protection, currency exchange, environmental
protection, equal employment opportunity, health and occupational safety,
pension and employee benefit matters, securities and investor protection
matters, labor and employment matters and trading-with-the-enemy matters except
where its noncompliance would not have a Company Material Adverse Effect. The
Company has not received any notification of any asserted present or past
unremedied
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failure by the Company to comply with any of such laws, rules, regulations,
ordinances, decrees or orders.
2.18 INSURANCE
The Company maintains (a) insurance on all of its property (including
leased premises) that insures against loss or damage by fire or other casualty
(including extended coverage) and (b) insurance against liabilities, claims and
risks of a nature and in such amounts listed on Schedule 2.18. All insurance
policies of the Company are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date this representation is
made have been paid, and no notice of cancellation or termination has been
received with respect to any such policy or binder. Such policies or binders are
sufficient for compliance with all agreements to which the Company is a party,
will remain in full force and effect through the respective expiration dates of
such policies or binders without the payment of additional premiums and will not
in any way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. The Company has not been refused any insurance
with respect to its assets or operations, nor has its coverage been limited, by
any insurance carrier to which it has applied for any such insurance or with
which it has carried insurance.
2.19 BROKERS OR FINDERS
Except as set forth on Schedule 2.19 to the Disclosure Memorandum, the
Company has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by or on behalf of the Company, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Merger, this Agreement or any transaction contemplated
hereby.
2.20 ABSENCE OF QUESTIONABLE PAYMENTS
Neither the Company nor, to the Company's knowledge, any director,
officer, agent, employee or other Person acting on behalf of the Company has
used any Company funds for improper or unlawful contributions, payments, gifts
or entertainment, or made any improper or unlawful expenditures relating to
political activity to domestic or foreign government officials or others. The
Company has adequate financial controls to present such improper or unlawful
contributions, payments, gifts, entertainment or expenditures. Neither the
Company nor, to the Company's knowledge, any current director, officer, agent,
employee or other Person acting on behalf of the Company has accepted or
received any improper or unlawful contributions, payments, gifts or
expenditures. The Company has at all times complied, and is in compliance, in
all respects with the Foreign Corrupt Practices Act
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and all foreign laws and regulations relating to prevention of corrupt practices
and similar matters.
2.21 BANK ACCOUNTS
Schedule 2.21 to the Disclosure Memorandum sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains safe deposit boxes or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.
2.22 CUSTOMERS AND SUPPLIERS
Schedule 2.22 to the Disclosure Memorandum sets forth (a) a complete and
accurate list of the customers of the Company accounting for 5% or more of the
Company's sales during the fiscal year last ended showing the approximate total
sales by the Company to each such customer during the fiscal year last ended and
(b) a complete and accurate list of the suppliers of the Company from whom the
Company has purchased 5% or more of the goods or services purchased by the
Company in the fiscal year last ended. The Company has no reasonable basis to
expect any material modification to its relationship with any customer or
supplier named on Schedule 2.22 to the Disclosure Memorandum.
2.23 ACCOUNTS RECEIVABLE
All accounts receivable of the Company reflected in the Company Balance
Sheet, or existing at the Effective Time, represent sales actually made in the
ordinary course of business and were recorded in the Company's books consistent
with the presentation applied in the Financial Statements for the year ended
December 31, 1997. Except as described on Schedule 2.23 to the Disclosure
Memorandum, the bad debt reserves and sales return allowances reflected in the
Company Balance Sheet are adequate in all material respects. Set forth on
Schedule 2.23 to the Disclosure Memorandum are a full and complete list and
aging study of all consolidated accounts receivable of the Company existing as
of June 30, 1998.
2.24 CREDITORS' LIST
The Disclosure Memorandum sets forth a full, complete and accurate list
of all creditors of Company, with the amount payable to each such creditor as of
the date hereof and the Closing Date.
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2.25 INSIDER INTERESTS
Except as set forth on Schedule 2.25 to the Disclosure Memorandum, no
stockholder or officer or director or other representative of the Company has
any interest (other than as a stockholder of the Company) (a) in any Real
Property, Personal Property, Technology or IP Rights used in or directly
pertaining to the business of the Company, including, without limitation,
inventions, patents, trademarks or trade names, or (b) in any agreement,
contract, arrangement or obligation relating to the Company, its present or
prospective business or its operations. Except as set forth on Schedule 2.25,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, holders, affiliates or any affiliate
thereof. The Company and its officers and directors have no interest, either
directly or indirectly, in any entity, including, without limitation, any
corporation, partnership, joint venture, proprietorship, firm, licensee,
business or association (whether as an employee, officer, director, stockholder,
agent, independent contractor, security holder, creditor, consultant or
otherwise) that presently (a) provides any services, produces and/or sells any
products or product lines or engages in any activity that is the same, similar
to or competitive with any activity or business in which the Company is now
engaged or proposes to engage; (b) is a supplier, customer or creditor, or has
an existing contractual relationship with any of the Company's employees (or
persons performing similar functions); or (c) has any direct or indirect
interest in any asset or property (real, personal or mixed, tangible or
intangible) of the Company or any property (real, personal or mixed, tangible or
intangible) that is necessary or desirable for the present or anticipated future
conduct of the Company's business.
2.26 COMPLIANCE WITH ENVIRONMENTAL LAWS
Neither the Company nor, to the best of the Company's knowledge, any
other Person (including, without limitation, any previous owner, lessee or
sublessee) has treated, stored or disposed of any material amounts of petroleum,
petroleum products, hazardous waste, hazardous substances, pollutants or
contaminants on the Real Property, or any real property previously owned,
leased, subleased or used by the Company in the operation of its business, in
violation of any applicable foreign, federal, state or local statutes,
regulations or ordinances, or common law, in each case as in existence at or
prior to the Closing. There have been no releases of any material amounts of
petroleum, petroleum products, hazardous waste, hazardous substances, pollutants
or contaminants on, at or from any assets or properties, including, without
limitation, the Real Property, owned, leased, subleased or used by the Company
in the operation of its business during the time such assets or properties were
owned, leased, subleased or used by the Company (or, to the best of the
Company's knowledge, prior
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to such time), including, without limitation, any releases of any material
amounts of petroleum, petroleum products, hazardous waste, hazardous substances,
pollutants or contaminants in violation of any law.
2.27 POOLING MATTERS
To the best knowledge of Company, the Company has not taken or failed to
take any action that would prevent the accounting for the Merger as a pooling of
interests in accordance with Accounting Principles Board Opinion No. 16, the
interpretive releases issued pursuant thereto and the pronouncements of the
Securities and Exchange Commission (the "SEC").
2.28 BUYER STOCK OWNERSHIP
The Company does not own any shares of Xxxxxx.xxx Common Stock or other
securities convertible into Xxxxxx.xxx Common Stock.
2.29 XXXX-XXXXX-XXXXXX
The Company and Xxxxxx Xxxxx, respectively, are each their own ultimate
parent entity as defined under the rules and regulations promulgated under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"Xxxx-Xxxxx-Xxxxxx Act"). Neither the Company nor Xxxxxx Xxxxx is a $10 million
person as defined thereunder. Lycos and CMG @Ventures II LLC ("@Ventures") are
the only stockholders of the Company whose acquisition of Xxxxxx.xxx Common
Stock would trigger the jurisdictional tests of the Xxxx-Xxxxx-Xxxxxx Act. Both
Lycos and @Ventures have advised the Company that they are acquiring the
Xxxxxx.xxx Common Stock solely for purposes of investment within the meaning of
16 C.F.R. 802.9.
2.30 INFORMATION SUPPLIED BY THE COMPANY
None of the information supplied or to be supplied by the Company for
inclusion in the information statement to be delivered to its stockholders in
connection with any written consent by or meeting of such stockholders
(collectively, "Stockholder Materials"), at the date such information was
supplied prior to the time the Company's stockholders were requested to approve
the Merger, contained or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not materially misleading; provided, however, that
the Company makes no representations or warranties regarding information
furnished by or related to Xxxxxx.xxx or Xxxxxxxxx.
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0.00 XXXX XXXXXXXXXX
Xxxx of this Agreement, the Financial Statements, the Disclosure
Memorandum, and the Exhibits hereto or the other Operative Documents, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements so made, in light of the circumstances
under which they are made, not misleading.
2.32 SOLE REPRESENTATIONS AND WARRANTIES
The representations and warranties contained in this Article II are the
only representations and warranties made by the Company in connection with the
transactions contemplated by this Agreement and supersede any and all previous
written or oral statements made by the Company to Xxxxxx.xxx.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF XXXXXX.XXX AND THE PURCHASER
In order to induce the Company to enter into and perform this Agreement
and the other Operative Documents, Xxxxxx.xxx and the Purchaser jointly and
severally represent and warrant to the Company as follows in this Article III:
3.1 ORGANIZATION
Xxxxxx.xxx is a corporation validity existing and in good standing under
the laws of the state of Delaware. The Purchaser is a corporation validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts. Each of Xxxxxx.xxx and the Purchaser has all requisite corporate
power and authority to own, operate and lease its respective properties and
assets, to carry on its respective business as now conducted, and as proposed to
be conducted and to enter into and perform its obligations under this Agreement
and the other applicable Operative Documents to which Xxxxxx.xxx or the
Purchaser is a party, and to consummate the transactions contemplated hereby and
thereby. Each of Xxxxxx.xxx and the Purchaser is duly qualified and licensed as
a foreign corporation to do business and is in good standing in each
jurisdiction in which the character of properties occupied, owned or held under
lease by Xxxxxx.xxx or the Purchaser, as applicable, or the nature of the
business conducted by Xxxxxx.xxx or the Purchaser, as applicable, makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the business, operations,
assets, liabilities (absolute, accrued, contingent or otherwise), condition
(financial or other) or prospects of Xxxxxx.xxx (an "Xxxxxx.xxx Material Adverse
Effect") or the Purchaser, as applicable. Each of Xxxxxx.xxx and the Purchaser
has full
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corporate power and authority to execute, deliver and perform this Agreement and
the other Operative Documents to which it is a party, and to carry out the
transactions contemplated hereby and thereby.
3.2 ENFORCEABILITY
All corporate action on the part of Xxxxxx.xxx and the Purchaser and
their respective officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
other applicable Operative Documents to which Xxxxxx.xxx or the Purchaser is a
party, the consummation of the Merger, and the performance of all of their
respective obligations under this Agreement and the other applicable Operative
Documents to which Xxxxxx.xxx or the Purchaser is a party has been taken or will
be taken prior to the Effective Time. This Agreement has been, and each of the
other Operative Documents to which Xxxxxx.xxx is a party will have been at the
Closing, duly executed and delivered by Xxxxxx.xxx, and this Agreement is, and
each of the other Operative Documents to which Xxxxxx.xxx is a party will be at
the Closing, a legal, valid and binding obligation of Xxxxxx.xxx, enforceable
against Xxxxxx.xxx in accordance with its terms. This Agreement has been, and
each of the other Operative Documents to which the Purchaser is a party will
have been at the Closing, duly executed and delivered by the Purchaser, and this
Agreement is, and each of the other Operative Documents to which the Purchaser
is a party will be at the Closing, a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms.
3.3 SECURITIES
The Securities (including the Option Shares) to be issued pursuant to
this Agreement have been duly authorized for issuance, and such Securities
(including the Option Shares), when issued and delivered to the Company's
stockholders pursuant to this Agreement, shall be validly issued, fully paid and
nonassessable.
3.4 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS
The execution, delivery and performance of this Agreement and the other
Operative Documents by the Purchaser and Xxxxxx.xxx, as applicable, and the
consummation by them of the transactions contemplated hereby and thereby will
not (a) constitute a violation (with or without the giving of notice or lapse of
time, or both) of any provision of law applicable to Xxxxxx.xxx or the
Purchaser, (b) require any consent, approval or authorization of any Person,
except compliance with applicable securities laws and the filing of all
documents necessary to consummate the
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Merger with the Massachusetts Secretary of State (all such consents, approvals
or authorizations to be duly obtained at or prior to the Closing), or (c)
conflict with or result in a breach of or constitute a default under any charter
provision of the Articles of Organization or Bylaws of Xxxxxx.xxx or the
Purchaser.
3.5 CAPITALIZATION
The authorized capital stock of Xxxxxx.xxx consists of 300,000,000
shares of Xxxxxx.xxx Common Stock of which 49,756,203 shares were issued and
outstanding as of July 24, 1998 and 10,000,000 shares of preferred stock, par
value $0.01 per share, none of which are issued and outstanding. Such issued and
outstanding shares of Xxxxxx.xxx Common Stock are validly issued, fully paid and
nonassessable.
3.6 SEC DOCUMENTS
Xxxxxx.xxx has furnished the stockholders of the Company with true and
complete copies of its Annual Report on Form 10-K for the fiscal year ending
December 31, 1997 (the "Form 10-K"), its Quarterly Reports on Form 10-Q filed
after the date of the Form 10-K, all Form 8-Ks filed after the date of the Form
10-K and its Proxy Statement relating to its 1998 Annual Meeting of Stockholders
on May 28, 1998 (collectively, the "SEC Documents"). As of their respective
filing dates, each of the SEC Documents complied in all material respects with
the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the SEC promulgated
thereunder.
3.7 ABSENCE OF CERTAIN CHANGES
Since the March 31, 1998 financial statements included in the SEC
Documents, there has not been any change that by itself or in conjunction with
all other such changes has had an Xxxxxx.xxx Material Adverse Effect, except as
disclosed in the SEC Documents to the date of this Agreement.
3.8 INFORMATION SUPPLIED BY XXXXXX.XXX
None of the information supplied or to be supplied by Xxxxxx.xxx for
inclusion in the Stockholder Materials, including the SEC Documents, at the date
such information was supplied prior to the time the stockholders of the Company
were requested to approve the Merger at either a special meeting of stockholders
or by executing a written consent, contained or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not materially
misleading; provided,
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however, that Xxxxxx.xxx makes no representations or warranties regarding
information furnished by or related to the Company.
3.9 POOLING MATTERS
To the best of Xxxxxx.xxx's knowledge, Xxxxxx.xxx has not taken or
failed to take any action that would prevent the accounting for the Merger as a
pooling of interests in accordance with Accounting Principles Board Opinion No.
16, the interpretive releases issued pursuant thereto and the pronouncements of
the SEC.
3.10 SELLER STOCK OWNERSHIP
Neither Xxxxxx.xxx nor any of its subsidiaries own any shares of Company
Capital Stock or other securities convertible into shares of Company Capital
Stock.
3.11 BROKERS OR FINDERS
Except as set forth on Schedule 3.11 to the Disclosure Memorandum,
Xxxxxx.xxx has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by or on behalf of Xxxxxx.xxx, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Merger, this Agreement or any transaction contemplated
hereby.
ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS
OF XXXXXX.XXX AND THE PURCHASER
The obligations of Xxxxxx.xxx and the Purchaser to perform and observe
the covenants, agreements and conditions hereof to be performed and observed by
them at or before the Closing shall be subject to the satisfaction of the
following conditions, which may be expressly waived only in writing signed by
Xxxxxx.xxx:
4.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained herein
(including applicable Exhibits or Schedules to the Disclosure Memorandum) and in
the other Operative Documents shall have been true and correct when made and
shall be true and correct as of the Closing Date as though made on that date.
4.2 PERFORMANCE OF AGREEMENTS
The Company shall have performed all obligations and agreements and
complied with all covenants and conditions contained in this Agreement or any
other
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Operative Document to be performed and complied with by it at or prior to the
Closing.
4.3 OPINION OF COUNSEL FOR THE COMPANY
Xxxxxx.xxx shall have received the opinion letter of Xxxxxxxx, Xxxxxxx &
Xxxxxxx, counsel for the Company, dated the Closing Date, substantially in the
form attached hereto as Exhibit 4.3.
4.4 CONSENTS TO MERGER
The Company shall have received and shall have delivered to Xxxxxx.xxx
written consents to the Merger from each of the parties (other than the Company)
to those agreements, leases, notes or other documents identified on Schedules
2.5, 2.10 and 2.14 to the Disclosure Memorandum that treat the Merger as an
assignment or otherwise by their terms require consent. In addition, the Company
shall have received and shall have delivered to Xxxxxx.xxx consents from Lycos,
Inc., Puma Technologies, Inc., NaviSite Internet Services, GeoCities, EMC2, and
FAR VII, Inc., which consents shall be reasonably satisfactory in all respects
to Xxxxxx.xxx.
4.5 COMPLIANCE CERTIFICATE
Xxxxxx.xxx shall have received a certificate of the President and the
Chief Financial Officer of the Company, dated the Closing Date, in form and
substance satisfactory to Xxxxxx.xxx, certifying that the conditions to the
obligations of Xxxxxx.xxx and the Purchaser have been fulfilled.
4.6 MATERIAL ADVERSE CHANGE
Since the date of this Agreement and through the Closing, there shall
not have occurred any change that would have a Company Material Adverse Effect,
except for such changes occurring as a direct result of the execution or
announcement of this Agreement.
4.7 APPROVALS AND CONSENTS
All transfers of material permits or licenses and all approvals of or
notices to public agencies, federal, state, local or foreign, the granting or
delivery of which is necessary for the consummation of the transactions
contemplated hereby, or for the continued operation of the Company, shall have
been obtained, and all waiting periods specified by law shall have passed. All
other consents, approvals and notices referred to in this Agreement shall have
been obtained or delivered.
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4.8 PROCEEDINGS AND DOCUMENTS; CLERK'S CERTIFICATE
All corporate and other proceedings in connection with the transactions
contemplated hereby and by the other Operative Documents, and all documents and
instruments incident to such transactions, shall have been approved by
Xxxxxx.xxx's counsel, and Xxxxxx.xxx shall have received a certificate of the
Clerk of the Company, in form and substance satisfactory to Xxxxxx.xxx, as to
the authenticity and effectiveness of the actions of the Board of Directors and
stockholders of the Company authorizing the Merger and the transactions
contemplated by this Agreement and the other Operative Documents, and such other
documents as are specified by Xxxxxx.xxx's counsel.
4.9 NONFOREIGN AFFIDAVIT
Xxxxxx.xxx shall have received from the Company, pursuant to Section
1445 of the Code, a Foreign Investment in Real Property Tax Act Affidavit in
substantially the form attached hereto as Exhibit 4.9.
4.10 COMPLIANCE WITH LAWS
The consummation of the transactions contemplated by this Agreement and
the other Operative Documents shall be legally permitted by all laws and
regulations to which Xxxxxx.xxx or the Company is subject.
4.11 STOCKHOLDER APPROVALS
The principal terms of this Agreement shall have been approved by the
holders of not less than 90% of each class of Company Capital Stock.
4.12 DISSENTING SHARES
The Dissenting Shares shall not constitute more than 10% of the Company
Capital Stock.
4.13 LEGAL PROCEEDINGS
No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened that would enjoin, restrain, condition
or prohibit consummation of this Agreement or any other Operative Document.
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4.14 ESCROW AGREEMENT
ChaseMellon and a representative of the Company's stockholders on behalf
of the Company's stockholders shall have executed and delivered the Escrow
Agreement.
4.15 EMPLOYMENT AND NONCOMPETITION ARRANGEMENTS
Each of the Company's employees set forth on Schedule 4.15 shall have
accepted an oral offer of employment with Xxxxxx.xxx and executed the Xxxxxx.xxx
standard form of Confidentiality, Noncompetition and Invention Agreement
substantially in the form attached hereto as Exhibit 4.15.
4.16 EMPLOYEE BENEFIT PLANS
The Company shall convert any "standardized" prototype Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code to a
"non-standardized" prototype plan, in a form satisfactory to Xxxxxx.xxx and
Purchaser and with terms that are substantially similar to those of the
predecessor "standardized" Employee Benefit Plan, effective as of a date prior
to Closing.
4.17 INVESTOR RIGHTS AGREEMENT
Each of the Company's stockholders shall have executed the Investor
Rights Agreement.
4.18 AFFILIATE LETTERS
The Company shall have delivered or caused to be delivered to Xxxxxx.xxx
an Affiliate Letter in the form attached hereto as Exhibit 4.18. from each of
those Persons who were, at the record date for the Company's stockholders
meeting (or the date on which the requisite number of consents has been
obtained) to approve the Merger, "affiliates" of the Company within the meaning
of Rule 145 of the rules and regulations promulgated under the Securities Act.
4.19 TERMINATION OF CERTAIN AGREEMENTS
Any and all rights of refusal, co-sale rights and registration rights
(other than pursuant hereto) for the benefit of the holders of the Company
Common Stock, the Company Series A Stock or the Company Series B Stock shall
have been terminated.
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4.20 POOLING
Ernst & Young LLP and KPMG Peat Marwick LLP each shall have delivered to
Xxxxxx.xxx and the Purchaser an opinion in form and substance reasonably
satisfactory to Xxxxxx.xxx that the Merger will qualify for "pooling of
interests" treatment under applicable accounting standards.
ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY
The obligations of the Company to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by them at or
before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by the Company.
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Xxxxxx.xxx and the Purchaser
contained herein and in the other Operative Documents shall have been true and
correct when made and shall be true and correct as of the Closing Date as though
made on that date.
5.2 PERFORMANCE OF AGREEMENTS
Xxxxxx.xxx and the Purchaser shall have performed all obligations and
agreements and complied with all covenants and conditions contained in this
Agreement or any other Operative Document to be performed and complied with by
them at or prior to the Closing.
5.3 OPINION OF COUNSEL
The Company shall have received the opinion letter of Xxxxxxx Coie LLP,
counsel for Xxxxxx.xxx, dated the Closing Date, substantially in the form
attached hereto as Exhibit 5.3.
5.4 COMPLIANCE CERTIFICATE
The Company shall have received a certificate of an officer of
Xxxxxx.xxx, dated the Closing Date, substantially in form and substance
satisfactory to the Company, certifying that the conditions to the obligations
of the Company have been fulfilled.
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5.5 LEGAL PROCEEDINGS
No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any other Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened that would enjoin, restrain, condition
or prohibit consummation of this Agreement or any other Operative Document.
5.6 MATERIAL ADVERSE CHANGE
Since the date of this Agreement and through the Closing, there shall
not have occurred any change in the business, operations, assets, liabilities
(absolute, accrued, contingent or otherwise), sales, margins, profitability,
condition (financial or other) or prospects of Xxxxxx.xxx that would have an
Xxxxxx.xxx Material Adverse Effect, except for such changes occurring as a
direct result of the execution or announcement of this Agreement. Changes in the
trading prices of Xxxxxx.xxx Common Stock shall not be deemed to have an
Xxxxxx.xxx Material Adverse Effect under this Agreement.
5.7 APPROVALS AND CONSENTS
All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby
or for the continued operation of the Company, shall have been obtained, and all
waiting periods specified by law shall have passed. All other consents,
approvals and notices referred to in this Agreement shall have been obtained or
delivered.
5.8 COMPLIANCE WITH LAWS
The consummation of the transactions contemplated by this Agreement and
the other Operative Documents shall be legally permitted by all laws and
regulations to which Xxxxxx.xxx or the Company is subject.
5.9 STOCKHOLDER APPROVALS
The principal terms of this Agreement shall have been approved by the
holders of not less than 90% of each class of Company Capital Stock (measured on
a fully diluted basis).
5.10 ESCROW AGREEMENT
Xxxxxx.xxx shall have executed the Escrow Agreement.
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5.11 INVESTOR RIGHTS AGREEMENT
Xxxxxx.xxx shall have executed the Investor Rights Agreement.
5.12 OPTION AGREEMENTS
Xxxxxx.xxx shall have executed an option agreement substantially in the
forms of Exhibit 5.12 with each of the individuals set forth on Schedule 5.12 in
which each individual will be granted options to purchase the number of shares
of Xxxxxx.xxx Common Stock set forth opposite his name on such Schedule.
ARTICLE VI - COVENANTS
Between the date of this Agreement and the Effective Time, the parties
covenant and agree as set forth in this Article VI.
6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER
Unless Xxxxxx.xxx shall otherwise agree in writing, the business of the
Company shall be conducted in and only in, and the Company shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice and in accordance with applicable law; and the Company shall
use its best efforts to preserve intact the business organization of the
Company, to keep available the services of the current officers, employees and
consultants of the Company and to preserve the current relationships of the
Company with, and the goodwill of, customers, suppliers and other Persons with
which the Company has significant business relations. By way of amplification
and not limitation, except as otherwise contemplated by this Agreement, the
Company shall not, between the date of this Agreement and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Xxxxxx.xxx:
(a) amend or otherwise change its Articles of Organization or Bylaws or
equivalent organizational documents;
(b) except for the issuance to a purchaser of no more than 10,000 shares
of Company Series B Stock upon a sale that closes prior to the Closing Date and
except for the issuance of shares of capital stock of the Company upon the
exercise or conversion of currently outstanding Options, Warrants, Company
Series A Stock or Company Series B Stock, issue, sell, contract to issue or
sell, pledge, dispose of, grant, encumber or authorize the issuance, sale,
pledge, disposition, grant or Encumbrance of (i) any shares of capital stock of
any class of the Company, or any options, warrants, convertible securities or
other rights of any kind to acquire any
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shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or (ii) any assets of
the Company, except for sales in the ordinary course of business and in a manner
consistent with past practice;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock or other securities, property or otherwise, with respect
to any of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock or other securities;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary course of business and consistent with past
practice; (iii) enter into any contract or agreement other than in the ordinary
course of business, consistent with past practice; (iv) authorize any single
capital expenditure that is in excess of $25,000 or capital expenditures that
are, in the aggregate, in excess of $100,000 for the Company taken as a whole;
(v) enter into any agreement in which the obligation of the Company exceeds
$25,000 or that shall not terminate or be subject to termination for convenience
within 180 days following execution; (vi) license any Technology or IP Rights
other than in the ordinary course of business, consistent with past practice; or
(vii) enter into or amend any contract, agreement, commitment or arrangement
with respect to any matter set forth in this Section 6.1(e);
(f) enter into or amend any employment, consulting or agency agreement,
or, except as required by any Employee Benefit Plan listed on Schedule 2.13.1 to
the Disclosure Memorandum, increase the compensation payable or to become
payable to its officers, employees, agents or consultants, or grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance, benefit
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting
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methods, policies or procedures (including, without limitation, procedures with
respect to the payment of accounts payable and collection of accounts
receivable);
(h) make any tax election or settle or compromise any federal, state,
local or foreign income tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the Company Balance Sheet or subsequently incurred in the ordinary course of
business and consistent with past practice;
(j) take any action that would or is reasonably likely to result in any
of the representations and warranties of the Company set forth in this Agreement
being untrue, or in any covenant of the Company set forth in this Agreement
being breached, or in any of the conditions to the Merger specified in Article
IV hereof not being satisfied; or
(k) take or agree to take any action specified in Section 2.7 hereof, or
enter into any other material transaction other than those specified above, or
agree to do any of the foregoing.
6.2 ACCESS TO INFORMATION; CONFIDENTIALITY
From the date hereof to the Effective Time, the Company shall, and shall
cause the officers, directors, employees, auditors and agents of the Company to,
afford the officers, employees and agents of Xxxxxx.xxx complete access at all
reasonable times to the officers, employees, agents, properties, offices, plants
and other facilities, books and records of the Company and shall furnish
Xxxxxx.xxx with all financial, operating and other data and information as
Xxxxxx.xxx, through its officers, employees or agents, may reasonably request.
From the date hereof until the Effective Time, the Company shall provide
Xxxxxx.xxx with monthly and other financial statements of the Company as they
become available internally at the Company, all of which financial statements
shall fairly present the financial position and results of operations of the
Company as of the dates and for the periods therein specified. No investigation
pursuant to this Section 6.2 shall affect any representation or warranty in this
Agreement of any party hereto or any condition to the obligations of the parties
hereto. The parties shall continue to comply with and to perform their
respective obligations under the Mutual Nondisclosure Agreement between
Xxxxxx.xxx and the Company entered into as of July 16, 1998 other than with
respect to Section 9 thereof.
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6.3 NO ALTERNATIVE TRANSACTIONS
Unless this Agreement shall have been terminated in accordance with its
terms, the Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any Person relating to any acquisition or purchase of
all or (other than in the ordinary course of business) any portion of the assets
of, or, subject to Section 6.1(b) hereof, any equity interest in, the Company or
any business combination with the Company or participate in any negotiations
regarding, or furnish to any other Person any information with respect to, or
otherwise cooperate or negotiate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or seek
any of the foregoing. The Company shall notify Xxxxxx.xxx promptly if any such
proposal or offer, or any inquiry or contact with any Person with respect
thereto, is made and shall, in any such notice to Xxxxxx.xxx, indicate in
reasonable detail the identity of the Person making such proposal, offer,
inquiry or contact and the terms and conditions of such proposal, offer, inquiry
or contact. The Company agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which the Company
is a party.
6.4 NOTIFICATION OF CERTAIN MATTERS
The Company shall give prompt notice to Xxxxxx.xxx of (a) the occurrence
or nonoccurrence of any event that would be likely to cause any representation
or warranty of the Company contained in this Agreement to be untrue or
inaccurate and (b) any failure of the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, and Xxxxxx.xxx shall give prompt notice to the Company of any of the
foregoing of which an officer of Xxxxxx.xxx obtains actual knowledge prior to
the Closing; provided, however, that the delivery of any notice pursuant to this
Section 6.4 shall not limit or otherwise affect the remedies available to
Xxxxxx.xxx hereunder.
6.5 FURTHER ACTION; REASONABLE BEST EFFORTS
Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, including, without limitation,
using its reasonable best efforts to obtain all waivers, licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company as are necessary for the
consummation of the transactions contemplated hereby and to fulfill the
conditions to the Merger. In case at any time after the
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Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, each party to this Agreement shall use its
reasonable best efforts to take all such action. No Significant Stockholder will
undertake any course of action inconsistent with this Agreement or which would
make any representations, warranties or agreements made by such party in this
Agreement or any other Operative Documents untrue or any conditions precedent to
this Agreement unable to be satisfied at or prior to the Closing. After the
Closing Date, each party hereto, at the request of and without any further cost
or expense to the other parties, will take any further actions necessary or
desirable to carry out the purposes of this Agreement or any other Operative
Document, to vest in the Surviving Corporation full title to all properties,
assets and rights of the Company and to effect the issuance of the Xxxxxx.xxx
Common Stock to the stockholders of the Company pursuant to the terms and
conditions hereof.
6.6 STOCKHOLDERS APPROVAL
The Company will obtain either the approval at a special meeting of
stockholders or the written consent of the stockholders of the Company at the
earliest practicable date approving this Agreement, the other Operative
Documents, the Merger and related matters, which approval will be unanimously
recommended by the Company's Board of Directors and management.
6.7 PROXY STATEMENT
The Company will send the Stockholder Materials to the stockholders of
the Company, in a timely manner, for the purposes of considering approval of the
Merger, either at a special meeting of stockholders or by executing a written
consent. The Company will promptly provide all information relating to its
business or operations necessary for inclusion in the Stockholder Materials to
satisfy all requirements of applicable state and federal securities laws. The
Company and Xxxxxx.xxx each shall be solely responsible for any statement,
information or omission in the Stockholder Materials relating to it or its
affiliates based on written information furnished by it. The Company and
Xxxxxx.xxx will not provide to or publish for the stockholders of the Company
any material concerning it or its affiliates that violates the Securities Act or
the Exchange Act with respect to the transactions contemplated hereby.
6.8 LISTING APPLICATION
Xxxxxx.xxx shall promptly prepare and submit to the Nasdaq National
Market a listing application covering the shares of Xxxxxx.xxx Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to the
Effective Time,
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approval for the listing of such shares of Xxxxxx.xxx Common Stock, subject to
official notice of issuance.
6.9 POOLING; REORGANIZATION
From and after the date hereof and until the Effective Time, neither
Xxxxxx.xxx nor the Company will take any action or fail to take any action or
enter into any contract, agreement, commitment or arrangement that would
jeopardize the treatment of the Merger as a "pooling of interests" for
accounting purposes, including, without limitation, any action by the Company or
Xxxxxx.xxx with respect to their representations and warranties in Sections 2.27
and 3.9 hereof, respectively, that would cause such representations not to be
true in all material respects from and after the date hereof until the Effective
Time.
6.10 DISSENTING SHARES
As promptly as practicable after the date of the special meeting of
stockholders or the written consent of the Company's stockholders and prior to
the Closing Date, the Company shall furnish Xxxxxx.xxx with the name and address
of each stockholder of the Company who requests appraisal rights pursuant to the
Massachusetts Law (the "Dissenting Stockholder") and the number of Dissenting
Shares owned by such Dissenting Stockholder.
6.11 PUBLICITY
No party hereto shall issue any press release or otherwise make any
statements to any third party with respect to this Agreement or the transactions
contemplated hereby until the issuance by Xxxxxx.xxx and the Company of a joint
press release announcing the transactions contemplated hereby that shall be
prepared by them in cooperation.
6.12 INDEMNIFICATION AND INSURANCE
Xxxxxx.xxx agrees that all rights to indemnification or exculpation now
existing in favor of the employees, agents, directors or officers of the Company
(the "Company Indemnified Parties") as provided in its Articles of organization
or By-Laws, or otherwise in effect on the date hereof shall continue in full
force and effect for a period of not less than one year from the Closing Date;
provided, however, that, in the event any claim or claims are asserted or made
within such one-year period, all rights to indemnification in respect of any
such claim or claims shall continue until disposition of any and all such
claims. Any determination required to be made with respect to whether a Company
Indemnified Party's conduct complies with the
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standards set forth in the Articles of Organization or By-Laws of the Company or
otherwise shall be made by independent counsel selected by the Company
Indemnified Party reasonably satisfactory to Xxxxxx.xxx (whose fees and expenses
shall be paid by Xxxxxx.xxx).
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any approval of this Agreement
by the stockholders of the Company):
(a) by mutual written consent;
(b) by either the Company or Xxxxxx.xxx, if the Merger has not been
consummated by August 31, 1998; provided, however, that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by either the Company or Xxxxxx.xxx, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise prohibited
or if any judgment, injunction, order or decree enjoining Xxxxxx.xxx, the
Purchaser or the Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and nonappealable;
provided, however, that the party seeking to terminate this Agreement pursuant
to this Section 7.1(c) shall have used all reasonable efforts to remove such
judgment, injunction, order or decree;
(d) by the Company, in the event of a material breach by Xxxxxx.xxx of
any representation, warranty or agreement contained herein which has not been
cured or is not curable by August 31, 1998; or
(e) by Xxxxxx.xxx, in the event of a material breach by the Company of
any representation, warranty or agreement contained herein which has not been
cured or is not curable by August 31, 1998.
7.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement pursuant to Section
7.1 hereof, there shall be no further obligation on the part of any party
hereto, except that nothing herein shall relieve any party from liability for
any willful breach hereof.
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7.3 AMENDMENT
This Agreement may be amended by the parties hereto at any time before
or after approval of the Company's stockholders; but after such approval, no
amendment will be made that by applicable law requires the further approval of
the Company's stockholders without obtaining such further approval.
7.4 WAIVER
At any time prior to the Effective Time, any party hereto may (a) extend
the time for the performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
or parties to be bound thereby.
ARTICLE VIII - SURVIVAL AND INDEMNIFICATION
8.1 SURVIVAL
All representations and warranties contained in this Agreement or in the
other Operative Documents or in any certificate delivered pursuant hereto or
thereto shall survive the Closing for a period of one year, except that those
representations set forth in Sections 2.6, 2.7, 2.22, 2.23 and 2.24 shall
survive until the date of the completion of the independent audit of financial
statements of Xxxxxx.xxx for the fiscal year ending December 31, 1998 (the
"Expiration Date"), and shall not be deemed waived or otherwise affected by any
investigation made or any knowledge acquired with respect thereto, or by any
notice delivered pursuant to Section 6.4 hereof; provided, however, that any
claim based on fraud shall survive the Closing indefinitely. The covenants and
agreements contained in this Agreement or in the other Operative Documents shall
survive the Closing and shall continue until all obligations with respect
thereto shall have been performed or satisfied or shall have been terminated in
accordance with their terms.
8.2 INDEMNIFICATION BY THE COMPANY AND HOLDERS OF COMPANY CAPITAL
STOCK OR OPTIONS
(a) Up to and until the Closing, the Company shall indemnify and hold
Xxxxxx.xxx and its officers, directors and affiliates (the "Xxxxxx.xxx
Indemnified Parties") harmless from and against, and shall reimburse the
Xxxxxx.xxx Indemnified Parties for, any and all losses, damages, debts,
liabilities, obligations, judgments, orders, awards, writs, injunctions,
decrees, fines, penalties, taxes, costs or
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expenses (including, but not limited to, any legal or accounting fees or
expenses) ("Losses") arising out of or in connection with (i) any inaccuracy in,
or misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or in any other Operative Document or in any
certificate delivered pursuant hereto or thereto and (ii) any failure by the
Company to perform or comply, in whole or in part, with any covenant or
agreement in this Agreement or in any other Operative Document.
(b) From and after the Closing, the holders of Company Capital Stock,
shall severally and pro rata to the extent of their pro rata portion of the
Escrow Shares indemnify and hold the Xxxxxx.xxx Indemnified Parties harmless
from and against, and shall reimburse the Xxxxxx.xxx Indemnified Parties for,
any and all Losses arising out of or in connection with (i) any inaccuracy in,
or misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or in any certificate delivered pursuant hereto and
(ii) any failure by the Company to perform or comply, in whole or in part, with
any covenant or agreement in this Agreement to be performed on or prior to the
Closing Date.
8.3 INDEMNIFICATION BY XXXXXX.XXX
Xxxxxx.xxx shall indemnify and hold the Company and its officers,
directors and affiliates and the holders of Company Capital Stock and Options
(the "Company Indemnified Parties" and, together with the Xxxxxx.xxx Indemnified
Parties, the "Indemnified Parties") harmless from and against, and shall
reimburse the Company Indemnified Parties for, any and all Losses arising out of
or in connection with (i) any inaccuracy, misrepresentation or breach in any
representation or warranty made by Xxxxxx.xxx or the Purchaser in this Agreement
or in any other Operative Document or in any certificate delivered pursuant
hereto or thereto and (ii) any failure by Xxxxxx.xxx or the Purchaser to perform
or comply, in whole or in part, with any covenant or agreement in this Agreement
or in any other Operative Document.
8.4 THRESHOLD AND LIMITATIONS
(a) No Indemnified Party shall be entitled to receive any
indemnification payment with respect to any claims for indemnification under
this Article VIII ("Claims") until the aggregate Losses for which such
Indemnified Parties would be otherwise entitled to receive indemnification
exceed $250,000, (the "Threshold"); provided, however, that once such aggregate
Losses exceed the Threshold, such Indemnified Parties shall be entitled to
indemnification for the aggregate amount of all Losses without regard to the
Threshold.
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(b) Except for liability based on fraud, the aggregate liability of an
indemnifying party hereunder for Losses incurred by any and all Indemnified
Parties shall, in the case of the indemnification obligations of the holders of
Company Capital Stock be limited to a dollar amount equal to the product
obtained by multiplying the pro rata portion of the Escrow Shares held by the
indemnifying party by the average of the closing prices of Xxxxxx.xxx Common
Stock as reported on the Nasdaq National Market for the three consecutive
trading days immediately preceding the Closing Date. Except for liability based
on fraud, the indemnification obligations of the holders of Company Common Stock
and Options pursuant to this Article VIII shall be limited to the Escrow Shares.
Except for liability based on fraud, Xxxxxx.xxx shall not be entitled to pursue
any claims for indemnification under this Article VIII against the holders of
Company Common Stock directly or personally and the sole recourse of Xxxxxx.xxx
shall be to make claims against the Escrow in accordance with the terms of the
Escrow Agreement.
(c) Except for liability based on fraud, (i) no holder of Company
Capital Stock or Options shall have any liability to an Xxxxxx.xxx Indemnified
Party under this Agreement, except to the extent of such holder's Escrow Shares
deposited under the Escrow Agreement, and (ii) the remedies set forth in this
Article VIII shall be the exclusive remedies of Xxxxxx.xxx and the other
Xxxxxx.xxx Indemnified Parties hereunder against any such holder.
(d) The Escrow Shares shall be held for a period ending on the
Expiration Date, except that, to the extent permitted under the Escrow
Agreement, Escrow Shares may be withheld after the Expiration Date to satisfy
claims for indemnification which are the subject of an indemnity claim by an
Xxxxxx.xxx Indemnified Party pursuant to a notice of such claim delivered to the
Representative prior to the Expiration Date.
8.5 PROCEDURE FOR INDEMNIFICATION
(a) An Indemnified Party shall notify the indemnifying party in writing
reasonably promptly after the assertion against the Indemnified Party of any
claim by a third party (a "Third Party Claim") in respect of which the
Indemnified Party intends to base a Claim for indemnification hereunder, but the
failure or delay so to notify the indemnifying party shall not relieve it of any
obligation or liability that it may have to the Indemnified Party except to the
extent that the indemnifying party demonstrates that its ability to defend or
resolve such Third Party Claim is adversely affected thereby.
(b) (i) Subject to the rights of or duties to any insurer or other third
party having potential liability therefor, the indemnifying party shall have the
right, upon written notice given to the Indemnified Party within 30 days after
receipt of the
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notice from the Indemnified Party of any Third Party Claim, to assume the
defense or handling of such Third Party Claim, at the indemnifying party's sole
expense, in which case the provisions of Section 8.5(b)(ii) hereof shall govern.
(ii) The indemnifying party shall select counsel reasonably
acceptable to the Indemnified Party in connection with conducting the defense or
handling of such Third Party Claim, and the indemnifying party shall defend or
handle the same in consultation with the Indemnified Party and shall keep the
Indemnified Party timely apprised of the status of such Third Party Claim. The
indemnifying party shall not, without the prior written consent of the
Indemnified Party, agree to a settlement of any Third Party Claim, unless (A)
the settlement provides an unconditional release and discharge of the
Indemnified Party and the Indemnified Party is reasonably satisfied with such
discharge and release and (B) the Indemnified Party shall not have reasonably
objected to any such settlement on the ground that the circumstances surrounding
the settlement could result in an adverse impact on the business properties or
prospects of Xxxxxx.xxx. The Indemnified Party shall cooperate with the
indemnifying party and shall be entitled to participate in the defense or
handling of such Third Party Claim with its own counsel and at its own expense.
(c) (i) If the indemnifying party does not give written notice to the
Indemnified Party within 30 days after receipt of the notice from the
Indemnified Party of any Third Party Claim of the indemnifying party's election
to assume the defense or handling of such Third Party Claim, the provisions of
Section 8.5(c)(ii) hereof shall govern.
(ii) The Indemnified Party may, at the indemnifying party's
expense (which shall be paid from time to time by the indemnifying party as such
expenses are incurred by the Indemnified Party), select counsel in connection
with conducting the defense or handling of such Third Party Claim and defend or
handle such Third Party Claim in such manner as it may deem appropriate;
provided, however, that the Indemnified Party shall keep the indemnifying party
timely apprised of the status of such Third Party Claim and shall not settle
such Third Party Claim without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld. If the Indemnified
Party defends or handles such Third Party Claim, the indemnifying party shall
cooperate with the Indemnified Party and shall be entitled to participate in the
defense or handling of such Third Party Claim with its own counsel and at its
own expense.
(d) If the Indemnified Party intends to seek indemnification hereunder,
other than for a Third Party Claim, then it shall notify the indemnifying party
in writing 90 days after its discovery of facts upon which it intends to base
its Claim for
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indemnification hereunder, but the failure or delay so to notify the
indemnifying party shall not relieve the indemnifying party of any obligation or
liability that the indemnifying party may have to the Indemnified Party except
to the extent that the indemnifying party demonstrates that the indemnifying
party's ability to defend or resolve such Claim is adversely affected thereby.
(e) The Indemnified Party may notify the indemnifying party of a Claim
even though the amount thereof plus the amount of other Claims previously
notified by the Indemnified Party aggregate less than the Threshold.
(f) At the Closing, the Escrow Shares shall be deposited in the Escrow
Account to satisfy potential claims by the Xxxxxx.xxx Indemnified Parties under
this Article VIII.
8.6 REMEDIES
Except as otherwise provided, the indemnification provisions of this
Article VIII are the sole and exclusive remedy of any party to this Agreement
for a breach of any representation, warranty or covenant contained herein.
Notwithstanding the preceding sentence, each of the parties acknowledges and
agrees that the other parties hereto would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the parties
hereto agrees that the other parties hereto shall be entitled to an injunction
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof (including the
indemnification provisions hereof) in any competent court having jurisdiction
over the parties, in addition to any other remedy to which they may be entitled
at law or in equity.
ARTICLE IX - GENERAL
9.1 TAX MATTERS
(a) Xxxxxx.xxx, the Purchaser and the Company shall cooperate, as and to
the extent reasonably requested, in connection with the preparation and filing
of Tax Returns pursuant to this Section 9.1 and any audit, investigation,
litigation or other action with respect to Taxes that may be instituted after
the Closing. Xxxxxx.xxx, the Purchaser and the Company shall use commercially
reasonable efforts to retain all books and records with respect to Tax matters
pertinent to the Company relating to any Tax period beginning before the Closing
Date until the expiration of the applicable statute of limitations (and, to the
extent notified by Xxxxxx.xxx, the
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Purchaser or the Company, any extensions thereof) and shall provide any such
records to the other party as may be reasonably requested.
(b) Except as set forth in Section 1.8(b), neither Xxxxxx.xxx nor the
Purchaser makes any representation or warranty with respect to, and expressly
disclaims any responsibility for, any Tax consequences to the Company or its
stockholders arising out of the structure or terms of this Agreement (including,
without limitation, the qualification or failure of the purchase and sale of the
shares to qualify as a reorganization under Section 368 of the Code), or the
negotiation or consummation hereof. The Company and its stockholders have
consulted with its, his or her own tax advisor in such matters and are solely
responsible for any such Tax consequences.
9.2 EXPENSES
Regardless of whether the transactions contemplated by this Agreement
are consummated, each party shall pay its own fees and expenses incident to the
negotiation, preparation and execution of this Agreement and the other Operative
Documents (including legal and accounting fees and expenses); provided, however,
that, should any action be brought hereunder, the attorneys' fees and expenses
of the prevailing party shall be paid by the other party to such action; and
provided, further, that the professional fees and expenses incurred by the
Company in excess of $200,000 of legal, accounting and other professional fees
shall be paid by the stockholders of the Company.
9.3 NOTICES
Any notice or demand desired or required to be given hereunder shall be
in writing given by personal delivery, certified or registered mail, confirmed
facsimile transmission, or overnight courier service, in each case addressed as
respectively set forth below or to such other address as any party shall have
previously designated by such a notice. The effective date of any notice or
request shall be the date of personal delivery, four days after the date of
mailing by certified or registered mail, the date on which successful facsimile
transmission is confirmed or the date undertaken for delivery by a reputable
overnight courier service, as the case may be, in each case properly addressed
as provided herein and with all charges prepaid.
TO XXXXXX.XXX OR THE PURCHASER:
Xxxxxx.xxx, Inc.
0000 Xxxxxx Xxxxxx
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00
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Treasurer
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
TO THE SIGNIFICANT STOCKHOLDERS:
At their respective addresses set forth on Schedule 2.32 to the
Disclosure Memorandum.
TO THE COMPANY:
Sage Enterprises, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxx Xxxxxx, Chief Executive Officer
with a copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
9.4 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order
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that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
9.5 ENTIRE AGREEMENT
This Agreement, the Mutual Nondisclosure Agreement and the other
Operative Documents constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and thereof.
9.6 ASSIGNMENT
This Agreement shall not be assigned by operation of law or otherwise,
except that Xxxxxx.xxx may assign all or any of its rights and obligations
hereunder to any of its affiliates, provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations, and further provided that any such assignment
shall not change the consideration due to the stockholders of the Company
hereunder.
9.7 PARTIES IN INTEREST
This Agreement shall be binding on and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
9.8 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the state of Delaware applicable to contracts executed in and to be
performed in that state. All actions and proceedings arising out of or relating
to this Agreement shall be heard and determined in any Delaware state or federal
court thereof.
9.9 HEADINGS
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
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9.10 COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
XXXXXX.XXX, INC.
By Xxxxxxx X. Xxxxx
____________________________________
Its Chief Exeutive Officer
________________________________
PACIFIC ACQUISITION, INC.
By Xxxxx Xxxxxxx
____________________________________
Its Treasurer
________________________________
SAGE ENTERPRISES, INC.
By Xxxxx X. Xxxxxx
____________________________________
Its Chief Executive Officer
________________________________
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