EXHIBIT 2.1
MEMBERSHIP INTEREST ACQUISITION AGREEMENT
AGREEMENT, dated as of December 10, 1998, among Xxxx Xxxxxxxxx
("Xxxxxxxxx"), Xxxxx Xxxx and Xxxxxxx Xxxx (each a "Seller," and, together, the
"Sellers") and Halo Network Management, LLC ("Halonet") and (ii) IBS
Interactive, Inc., a Delaware Corporation ("IBS" or the "Buyer").
WHEREAS, Halonet was organized pursuant to the New Jersey Limited Liability
Company Act pursuant to a certificate of formation filed on February 24, 1995,
as amended by a certificate of formation filed April 19, 1995 (the "Certificate
of Formation"), and an operating agreement among the Sellers dated April 19,
1995 (the "Operating Agreement");
WHEREAS, Sellers are all of the Members (as such term is defined in the
Operating Agreement) of Halonet, owning, in the aggregate, all of the issued and
membership interests in Halonet (as such term is defined in the Operating
Agreement) (each a "Membership Interest," or, collectively, the "Membership
Interests");
WHEREAS, the Sellers and Buyer desire to combine the business of Halonet
with the business IBS;
WHEREAS, to accomplish such combination, the Sellers desire to sell, assign
and transfer their respective Membership Interests to Buyer, and Buyer desires
to purchase such Membership Interests from Sellers;
WHEREAS, the admission of Buyer, as the sole member of Halonet, is subject
to the unanimous consent of the Members;
WHEREAS, the Members have unanimously decided that it is in the best
interests of Halonet to combine its business with the businesses of Buyer
through the sale of their Membership Interests from Sellers to the Buyer;
NOW, THEREFOR, the parties hereto, intending to be legally bound, hereby
and in consideration of the mutual covenants contained herein, agree as follows:
1. ACQUISITION OF SELLERS' MEMBERSHIP INTERESTS; PURCHASE PRICE.
A. Subject to the terms and conditions of this Agreement, on the Closing
Date (as defined in Section 6), Sellers shall sell, assign and
transfer to Buyer all of the Membership Interest owned, respectively,
by each Seller, and all of each such respective Seller's right, title
and interest in and to the Membership Interest and in and to Halonet,
and Buyer shall purchase, acquire and accept from the Sellers all of
the issued and outstanding Membership Interests.
B. The aggregate purchase price for all of the issued and outstanding
Membership Interests shall be $1,425,000 (the "Purchase Price"),
subject to adjustments as set forth in Sections 3.A and 3.B below.
2. FORM OF CONSIDERATION. The Purchase Price paid by Buyer shall consist of
219,231 shares of IBS common stock (the "Consideration") (One Million Four
Hundred Twenty Five Thousand Dollars ($1,425,000) divided by $6.50 (the
"Share Price")).
3. ADJUSTMENTS.
A. At the Closing (as defined in Section 6), $106,875 of the Purchase
Price (the "First Reserved Amount"), payable in the form of up to
16,442 shares of IBS common stock (the "First Reserved Shares"), will
be held in reserve by Continental Stock Transfer & Trust Company (the
"Escrow Agent"). On the sixth (6th) month anniversary of the Closing
(as defined in Section 6 below) (the "First Reconciliation Date"), IBS
and the Sellers' Attorney-in-Fact (as defined in Section 20.L below)
shall reconcile the set-offs to be deducted from the First Reserved
Amount and shall jointly instruct the Escrow Agent in writing, to
deliver to Sellers the number of First Reserved Shares, if any, equal
to (i) the First Reserved Amount less the amount of any and all
set-offs taken by IBS for uncollectible receivables which exceed the
reserve for uncollectible receivables set forth on the Balance Sheet
(as defined in Section 7) (ii) divided by the Share Price. Any and all
accounts receivable for which a set-off has been deducted from the
First Reserved Amount pursuant to this Section 3.A will be assigned by
Buyer to Sellers.
B.
i. At the Closing (as defined in Section 6), an additional $142,500
of the Purchase Price (the "Second Reserved Amount") payable in
the form of up to 21,923 shares of IBS common stock (the "Second
Reserved Shares") will be held in reserve by the Escrow Agent. No
later than the one (1) year anniversary of the Closing (as
defined in Section 6 below) (the "Second Reconciliation Date"),
IBS and the Sellers' Attorney-in-Fact (as defined in Section 20.L
below) shall calculate the final dollar value of "Additional
Liabilities," if any, to be deducted from the Second Reserved
Amount and shall jointly instruct the Escrow Agent to deliver to
Sellers the number of Second Reserved Shares, if any, equal to
(i) the Second Reserved Amount less the amount of any and all
set-offs taken by IBS for Additional Liabilities (ii) divided by
the Share Price. For purposes of this Agreement, "Additional
Liability" and, collectively, "Additional Liabilities," shall
include any and all claims, losses, damages, expenses or
liabilities, including, without limitation, reasonable
attorneys', accountants' and other professional fees and costs,
(collectively, the "Additional Liabilities"), which have been
asserted against, sustained, suffered or incurred by the Buyer,
or Buyer's respective officers, directors, shareholders and/or
legal and accounting representatives, arising from or by reason
of or in connection with:
a. Any breach of the respective representations, warranties and
covenants made by the Sellers herein.
b. The operation of Halonet before the Closing.
c. Any taxes owed or payable by Halonet with respect to any
taxable year or portion thereof ending on or before the
Closing to the extent such taxes are not reflected in the
reserve for taxes (if any) shown on the Balance Sheet (as
defined in Section 7.H.(ii)).
d. Any disclosed or undisclosed threatened or pending legal
actions, provided, however, that with respect to disclosed
legal actions, Buyer shall only have the right to set-off
fifty percent (50%) of the Additional Liabilities against
the Second Reserved Amount.
e. Any other Additional Liabilities asserted against, sustained
or incurred by Buyer or Halonet related to, associated with,
or arising from any and all liabilities and obligations of
Halonet.
f. Additional Liabilities shall not include: (a) obligations
and liabilities reserved against on the Balance Sheet or
provided for in Section 3.A, (b) liabilities incurred in
connection with the operation of the business of Halonet
after the Closing, (c) any third party claim made on or
after the first anniversary of the Closing, or (d) such
Additional Liabilities for which Halonet is insured and for
which Buyer has been made whole pursuant to such insurance
coverage.
ii. Within three (3) business days of Buyer knowledge of an
Additional Liablility, Buyer shall provide Sellers'
Attorney-in-Fact with written notice of the Additional
Liability to be set-off against the Second Reserved Amount.
Within five (5) business days of its receipt of such notice,
Sellers' Attorney-in-Fact shall inform Buyer, in writing,
whether it accepts such Additional Liability, will attempt
to cure such Additional Liability or, in good faith,
disputes such Additional Liability.
iii. In the event that Sellers elect to cure such Additional
Liability, Sellers shall have a period of thirty (30) days
of its receipt of such notice to cure such Additional
Liability; provided, however, that if notice of an
Additional Liability is received by Sellers in the thirty
(30) day period prior to the one (1) year anniversary of the
Closing (as defined in Section 6), the Sellers shall only
have that number of days from the date of receipt of notice
until the day prior to the one (1) year anniversary of the
Closing Date (as defined in Section 6) to cure such
Additional Liability.
iv. In the event Sellers have disputed that a set-off should be
taken with respect to a particular Additional Liability, and
Buyer and Sellers' Attorney-in-Fact cannot reach agreement
thereto, the parties agree to first submit such dispute to
mediation before a duly qualified and trained mediator, as
mutually selected by the parties, located in the State of
New Jersey. In the event such dispute is not settled by
mediation, then such dispute shall be submitted to binding
arbitration in the State of New Jersey under the rules of
the American Arbitration Association. The costs of any such
mediation/arbitration shall be borne equally by the parties,
with Sellers' costs and expenses to be set-off against the
Second Reserved Amount.
4. EXCHANGE AT CLOSING. At the Closing (as defined in Section 6) Buyer shall
deliver to Sellers 180,866 shares of IBS Common Stock (the "Closing
Shares") in exchange for all of the Membership Interests.
5. TRANSFER OF SHARES. Each Seller agrees that each and every sale, transfer,
assignment and/or encumbrance of any of the Closing Shares, the First
Reserved Shares or the Second Reserved Shares (the Closing Shares, the
First Reserved Shares and the Second Reserved Shares are collectively
referred to herein as the "Shares"), respectively, will comply in all
respects with the provisions of Rule 144 of the Securities Act of 1933, as
amended. Buyer will, in a timely manner, instruct its counsel to provide an
opinion of its Counsel which will permit the Rule 144 legend to be removed
from a Seller's stock certificate, provided that the Seller has provided
IBS, its counsel and/or its transfer agent with satisfactory proof that
Seller has and will comply with the requirements of Rule 144.
6. CLOSING. The closing of the purchase and sale of Sellers' Membership
Interests and the other matters contemplated by this Agreement shall take
place at 10 a.m. on December __, 1998, at the offices of Greenbaum, Rowe,
Xxxxx, Xxxxx, Xxxxx & Xxxxxx, LLP, or at such other time and place as
mutually agreed upon by the parties, time being of the essence (the
"Closing ").
7. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each Seller, severally and
jointly (but with respect to Xxxxxxxxxx 0.X, 0.X, 0.X, 0.X, 0.X, 7.Z and
7.AA, each of the Sellers but with respect to himself only and not with
respect to any other Seller), hereby represents and warrants to Buyer as
follows, and acknowledges that the Buyer is relying upon such
representations and warranties, respectively, in connection with the
purchase by Buyer of Sellers' Membership Interests:
A. SELLERS' LEGAL CAPACITY; NO RESTRICTIONS. Each Seller has full legal
capacity, power and authority to execute and deliver this Agreement
and to perform his respective obligations hereunder. All acts required
to be taken by Sellers to enter into this Agreement and to carry out
the transactions contemplated hereby have been properly taken; and
this Agreement constitutes a legal, valid and binding obligation of
Sellers, enforceable in accordance with its terms. The execution,
delivery and performance of this Agreement by Sellers in accordance
with its terms will not, with or without the giving of notice or the
passage of time, or both, conflict with, result in a default, right to
accelerate or loss of rights under, or result in the creation of any
Encumbrance (as defined in Section 7.B) pursuant to, or require the
consent of any third party or governmental authority pursuant to (a)
any provision of the Certificate of Organization of Halonet and all
amendments thereto or its Operating Agreement, as currently amended
and in effect, or (b) any franchise, mortgage, indenture or deed of
trust or any material lease, license or other agreement or any law,
regulation, order, judgment or decree to which any of the Sellers or
Halonet is a party or by which any of them (or any of their assets,
properties, operations or businesses) may be bound, subject to or
affected.
B. OWNERSHIP. The Sellers own all of the issued and outstanding
Membership Interests of Halonet. Set forth on in the disclosure letter
dated even date herewith (the "Disclosure Letter") is the name,
address, number and percentage interest of Membership Interest owned
by each of the Sellers. Sellers are the sole registered holders and
beneficial owners of the Membership Interests, free and clear of any
and all Encumbrances (the term "Encumbrances" as used herein shall
mean a mortgage, lien, encumbrance, security interest, restriction,
pledge, options, calls, assessments, adverse claims or rights with
respect to the property involved). Except as provided in the Operating
Agreement, Sellers have all legal right, title and authority to
transfer the Membership Interests to Buyer as contemplated hereby. The
assignment, transfer and sale of the Membership Interests to Buyer in
accordance with Section 1 hereof will vest in Buyer full right, title
and interest in and to such Membership Interests, free and clear of
any and all Encumbrances.
X. XXXXXXX' INTEREST IN SIMILAR BUSINESSES. Except as set forth in the
Disclosure Letter, no Seller has any financial interest in any person,
firm or entity (other than Halonet) which is, or since February 24,
1995, was, directly or indirectly, engaged in any business engaged in
by Halonet, or which is a party to any material agreement to which
Halonet is also a party. Notwithstanding the foregoing, a Seller shall
not be in violation of this Section 7.C solely by owning or investing
in less than 5% of the securities of any publicly traded company.
D. MEMBERSHIP INTERESTS. All of the Membership Interests and the holders
thereof are as set forth in the Disclosure Letter. All issued
Membership Interests of Halonet are duly authorized, validly issued
and fully paid and non-assessable. No options, warrants or other
rights for the purchase of any of the Membership Interests of Halonet
or any security convertible into such Membership Interests are
authorized and outstanding. Except for the Operating Agreement, there
are no voting trusts or other contractual commitments or
understandings with respect to the ownership, transfer and voting of
the Membership Interests. There are no contracts, commitments or
understandings to issue any additional Membership Interests and there
are no securities or rights of any kind outstanding which are
convertible into or exchangeable for any Membership Interests or other
interests in Halonet.
E. SUBSIDIARY; INVESTMENTS IN OTHERS. Halonet has no subsidiaries and
does not: (i) own, directly or indirectly, any Membership Interests or
membership interests of another corporation or entity; or (ii) have
any interest, directly or indirectly, in any unincorporated
association, partnership, joint venture or other entity, nor has
Halonet made any commitment to purchase any Membership Interests of,
or otherwise made any investment in, any other corporation,
unincorporated association, partnership, joint venture or other
entity.
F. COMPANY EXISTENCE AND POWER. Halonet is a limited liability company
duly organized and validly existing and in good standing under the
laws of the State of New Jersey, the only state in which it transacts
business. Halonet has the power to own, lease or operate its
properties and to carry on its business as now being conducted.
Sellers have furnished to Buyer true and complete copies as the same
are currently in effect of (i) the Operating Agreement of Halonet and
all amendments thereto, certified as true and correct by each of the
Sellers, and (ii) the certificate of formation of Halonet certified by
the Secretary of State or other appropriate governmental official of
its jurisdiction of organization.
G. RECORDS. The books of account, minute books and membership list,
including any transfers of membership interest, of Halonet, previously
delivered by Sellers to Buyer or their representatives, are complete
and correct in all material respects, and there have been no material
transactions involving Halonet which properly should have been set
forth therein and which have not been so set forth.
H. FINANCIAL STATEMENTS. Sellers have delivered to Buyer the following
financial statements, including any notes, comments, schedules (except
for prepaid insurance and fixed assets), and supplemental data therein
(collectively called the "Financial Statements"), all of which have
been prepared from the books and records of Halonet in accordance with
generally accepted accounting principles consistently applied and
maintained throughout the periods indicated, and fairly present the
financial condition of Halonet as and at their respective dates and
the results of the operations of Halonet for the periods covered
thereby (except its Interim Financial Statements are subject to normal
year-end adjustments and lack footnotes and normal presentation
items):
i. Compiled, internally prepared, balance sheets of Halonet at
December 31, 1996 and December 31, 1997, and statements of
income, cash flow and changes in members' equity for the years
then ended.
ii. Compiled, internally prepared, balance sheet of Halonet ("Balance
Sheet") as at November 30, 1998 (the "Balance Sheet Date"), and
compiled, internally prepared, statements of income, cash flow
and changes in members' equity for the eleven months then ended
("Interim Financial Statements").
iii. The Interim Financial Statements reflect all loan agreements,
indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, equipment obligations,
guaranties and lease purchase agreements to which Halonet is a
party or by which any of its properties is bound.
iv. Except as set forth in the Disclosure Letter, and without
limiting the generality of the foregoing provisions of this
Section 7.H, the Financial Statements have been prepared on the
following bases:
a. All fixed assets and equipment have been valued at actual
cost less accumulated depreciation, and no asset has,
directly or indirectly, been written up.
b. The statements of income do not contain any items of special
or nonrecurring income or any other income not earned in the
ordinary course of business, except as expressly specified
therein.
c. Pension, benefit and welfare plan payments and severance pay
for each employee of Halonet have been paid on a current
basis as of the Balance Sheet Date, on the basis of benefits
customarily granted. Vacation and sick pay have not been
accrued as of the Balance Sheet Date. Halonet's aggregate
liability for vacation and sick pay as of the Balance Sheet
Date does not exceed $10,000. All bonuses have been accrued
for each employee of Halonet as of the Balance Sheet Date.
All bonuses are discretionary and no employee of Halonet has
any contractual rights to a bonus for any period during the
fiscal year ending December 31, 1998.
d. Transactions between Halonet and any affiliate thereof are
fully disclosed therein or in the Disclosure Letter.
e. Except as set forth in the Disclosure Letter, the accounts
receivable of Halonet included in the Balance Sheet are
collectible in full over the period of usual trade terms (by
use of Halonet's normal collection methods), and there do
not exist any defenses, counterclaims and set-offs which
would materially adversely affect such net receivables, and
all such receivables are actual and bona fide receivables
representing the total dollar amount thereof shown on the
books of Halonet.
f. Halonet has no liabilities, whether absolute, accrued,
contingent or otherwise, except (A) as and to the extent
reflected or reserved against on the Balance Sheet, and (B)
those incurred in the ordinary course of business and
consistent with prior practices, not in the aggregate
materially adverse, since the Balance Sheet Date or
otherwise disclosed in the Disclosure Letter. There are no
facts or circumstances existing on the date hereof, which
could be reasonably likely to result in the occurrence of
any such liability.
I. TAXES, TAX RETURNS. All federal, state, local and foreign income,
excise, property, sales and other taxes, assessments, governmental
charges, penalties, interest and fines due and payable by Halonet and
by any other person, firm or corporation which will or may be
liabilities of Halonet, for all periods ending on or before the
Balance Sheet Date, have been paid in full, or have been fully
reserved against on the Balance Sheet. Halonet has filed all federal,
state, local and foreign income, excise, property, sales, withholding,
social security, information returns and other tax returns, reports
and related information ("Returns") required to have been filed by it
prior to the date hereof, and no extensions of the time for filing a
Return is presently in effect. The Returns that have been filed have
been accurately prepared and have been duly and timely filed. Halonet
is not and has never been a member of any affiliated group filing a
consolidated tax return. None of Halonet's Returns have been examined
by any governmental or other authority exercising any taxing or tax
regulatory authority for any fiscal years or periods since it came
into business. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any
Return, or payment of any tax, governmental charge, assessment,
deficiency, penalties, fines or interest by Halonet. There is no
action, suit, proceeding, investigation or claim now threatened or
pending against Halonet in respect of taxes, governmental charges or
assessments, or any matter under discussion with any governmental or
other taxing authority relating to taxes, governmental charges or
assessments asserted by any such authority.
J. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet Date,
Halonet has not:
i. Issued, delivered or agreed to issue or deliver any Halonet
membership interest or other Company securities, or granted or
agreed to grant any options (including employee options),
warrants or other rights for the issue thereto except as
contemplated herein;
ii. Borrowed or agreed to borrow any funds in excess of the amount
thereof shown on the Balance Sheet;
iii. Incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except
current liabilities for trade obligations due to third parties
incurred in the ordinary course of business and consistent with
prior practice;
iv. Discharged or satisfied any Encumbrance other than those then
required to be discharged or satisfied, or paid any obligation or
liability, absolute, accrued, contingent or otherwise, whether
due or to become due, other than current liabilities shown on the
Balance Sheet and current liabilities not in excess of $1,500
incurred since the Balance Sheet Date in the ordinary course of
business and consistent with prior practice;
v. Sold, transferred, leased to others or otherwise disposed of any
assets, except for inventories sold for fair consideration in the
ordinary course of business and assets no longer used or useful
in the conduct of its business, or canceled or compromised any
debt or claim, or waived or released any right of substantial
value;
vi. Received any notice of termination of any contract, lease or
other agreement, or suffered any damage, destruction or loss
(whether or not covered by insurance) which, in any case or in
the aggregate, has had or might reasonably be expected to have, a
material adverse effect on its condition (financial or
otherwise), properties, assets, liabilities, operations or
prospects;
vii. Reduced its inventories or supplies below normal and adequate
levels for the continuation of business in the usual course;
viii.Encountered any labor union organizing activity, had any actual
or threatened employee strikes, work stoppages, slowdowns or
lockouts, or any other labor trouble other than routine grievance
matters none of which is material, or had any material change in
its relations with its employees, agents, customers or suppliers;
ix. Transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, trade name, invention or similar
rights, or modified any existing rights with respect thereto;
x. Except as set forth in the Disclosure Letter, made any accrual or
arrangement for any payment or any bonus, or any severance or
termination pay to (a) any present or former officer or employee
who is or was receiving compensation at an annual rate in excess
of $10,000; or (b) any person, firm or corporation which is or
was furnishing professional or consulting services to Halonet;
xi. Increased the rate of compensation payable or to become payable
by it to any of its directors, officers or employees who is or
was receiving compensation at an annual rate in excess of
$10,000; entered into an employment agreement or amended any
employment agreement for any such person; or made any material
increase in any insurance, pension or other employee benefit
plan, payment or arrangement made to, for or with any such
director, officer or employees;
xii. Except as set forth in the Disclosure Letter, declared or made,
or agreed to declare or make, any payment of distributions of any
assets of any kind whatsoever to any Seller or any affiliate of
any Seller, or purchased or redeemed, or agreed to purchase or
redeem, any of its membership interests, or made or agreed to
make any payment to any Seller or any affiliate of any Seller,
whether on account or with respect to long-term debt, management
fees or otherwise;
xiii.Suffered any other change, event or condition which, in any case
or in the aggregate, has had or is reasonably expected to have a
material adverse effect on its condition (financial or
otherwise), properties, assets, liabilities, operations, business
or prospects; or,
xiv. Entered into any agreement or made any commitment to take any of
the types of action described in any of the foregoing clauses.
K. TITLE TO PROPERTIES. Set forth in the Disclosure Letter is a
description of all real property owned by Halonet or in which Halonet
has a leasehold or other interest or which is used by Halonet in
connection with the operation of its business, together with a
description of each lease, sublease, license or any other instrument
under which Halonet claims or holds such leasehold or other interest
or right to the use thereof or pursuant to which Halonet has assigned,
sublet or granted any rights therein, identifying the parties thereto,
the rental or other payment terms, expiration date and cancellation
and renewal terms thereof. Halonet has good and marketable title to
all its properties and assets, including, without limitation, those
reflected in its books and records and in the Balance Sheet except (a)
inventory sold for fair consideration or consumed after the Balance
Sheet Date in the ordinary course of business, and (b) assets no
longer used or useful in the conduct of its business which in the
aggregate do not have a fair market value in excess of $3,000, the
sale of which does not conflict with or constitute a breach of the
representations, warranties or provisions of this Agreement. None of
the properties and assets of Halonet are subject to any Encumbrance or
adverse claim of any nature whatsoever, direct or indirect, whether
accrued, absolute, contingent or otherwise, except for (i) those which
are set forth in the Balance Sheet as securing specific liabilities,
or (ii) as set forth in the Disclosure Letter. All the properties and
assets owned, leased or used by Halonet are in good operating
condition and repair, are suitable for the purposes used, and are
adequate and sufficient for all current operations, and meet all
applicable laws, rules and regulations relating to such property. All
leases are in full force and effect and true and complete copies of
all leases have been delivered to the Buyer or their representatives.
L. PERMITS AND LICENSES; COMPLIANCE WITH LAW. All licenses, permits,
authorizations, variances, exemptions, orders and approvals from
federal, state, local and foreign governmental and regulatory bodies
held or, to the best of Sellers' knowledge, required to be held by
Halonet in connection with its ownership and lease of real and
personal property and the operation of its business have been
obtained. Halonet is in compliance in all material respects with the
terms of such licenses, permits, authorizations, variances,
exemptions, orders and approvals held by it or applicable to it and
with all material requirements, standards and procedures of the
federal, state, local and foreign governmental or regulatory bodies
which issued them. Except as set forth in the Disclosure Letter,
Halonet is in compliance in all material respects with all federal,
state, local and foreign laws, ordinances, codes, regulations, orders,
requirements and standards of procedures which are applicable in any
material respect to its business. The Disclosure Letter includes, to
the extent that any of the following exists: (i) a list of each
adjudged violation; and (ii) a list of each asserted violation, notice
of inspection, inspection report or any other written report
(excluding Returns) delivered by any governmental or regulatory agency
to Halonet or delivered by Halonet to any governmental or regulatory
agency relating to enforcement of or compliance with any of such laws,
ordinances, codes, regulations, orders, requirements, standards and
procedures material to Halonet. Except as set forth in the Disclosure
Letter: (i) Halonet has complied with all existing federal, state and
local laws, rules, regulations, ordinances, orders, judgments and
decrees applicable to its business, properties or operations as
presently conducted, and neither the ownership nor use of Halonet's
properties nor the conduct of its business conflicts with the rights
of any other person, firm or corporation or violates, or with or
without the giving of notice or the passage of time, or both, will
violate, conflict with or result in a default, right to accelerate or
loss of rights under, any term or provision of (a) the certificate of
organization or Operating Agreement of Halonet, as presently in
effect, or (b) any mortgage, indenture, deed of trust or material
Encumbrances, lease, license or agreement or any law, ordinance, rule,
regulation, order, judgment or decree to which Halonet is a party or
by which it or any of its properties, assets or operations may be
bound or affected or which might materially adversely affect any such
properties, assets or operations; and (ii) Sellers do not know of any
proposed laws, rules, regulations, ordinances, orders, judgments,
decrees, governmental takings, condemnations or other proceedings
which would be applicable to the business, operations or properties of
Halonet and which might materially adversely affect its properties,
assets, operations or prospects, either before or after the Closing.
Without limiting the generality of the foregoing, to the best
knowledge and belief of Sellers, neither Sellers, Halonet nor any
manager, employee or agent of Halonet has, directly or indirectly,
made, promised to make, or authorized the making of, an offer, payment
or gift of money or anything of value to any government official,
political party or employee, agent or fiduciary of a customer, to
obtain a contract for or to influence a decision in favor of Halonet
where such offer, payment or gift was or would be, if made, in
violation of any applicable law, nor have they maintained cash or
anything of value, in an account or otherwise, not properly and
accurately accounted for on the books and records of Halonet for this
purpose.
M. CONTRACTS WITH CUSTOMERS AND OTHERS. None of the customers or other
persons which are parties to any agreements to which Halonet is a
party has notified Halonet of any intention to terminate its contract
or arrangement for service, as a result of the transactions
consummated hereby or otherwise.
N. PRODUCT WARRANTIES AND GUARANTEES. Except with respect to product
warranties or guarantees of any nature described in the Disclosure
Letter and provided by Halonet in the ordinary course of business,
Halonet is not a party to or bound by any agreement of guarantee,
indemnification, assumption or endorsement or any other like
commitment of the obligations, liabilities (contingent or otherwise)
or indebtedness of any other person, firm or corporation.
O. MATERIAL AGREEMENTS; VALIDITY; NO DEFAULT. Set forth in the Disclosure
Letter are descriptions of: (i) all acquisition agreements pursuant to
which Halonet has any continuing obligation, and any claims by parties
other than Halonet with respect thereto; (ii) all contracts,
agreements, commitments, purchase orders or other understandings or
arrangements to which Halonet is a party relating to the sale or
furnishing by it of goods or services where the consideration for such
sale is $5,000 or more, in any single case, any claims by parties
other than Halonet with respect thereto, and any express product
guarantees or warranties made by Halonet relating to its goods or
services; (iii) all contracts, agreements, commitments, purchase
orders or other understandings or arrangements to which Halonet is a
party relating to the purchase by it of goods or services where the
consideration for such purchase is $5,000 or more, in any single case,
and any claims by Halonet with respect thereto; and (iv) all
contracts, agreements and commitments not yet fully performed,
pursuant to which Halonet will acquire the business or any substantial
portion of the assets of any other person, firm or corporation. All
the contracts, agreements, leases, licenses and commitments required
to be listed in the Disclosure Letter are valid and binding,
enforceable in accordance with their respective terms, and are in full
force and effect. Except as set forth in the Disclosure Letter, there
is not under any such contract, agreement, lease, license or
commitment (a) any existing material default by Halonet or any event
which, after notice or lapse of time, or both, would constitute a
material default by Halonet or result in a right to accelerate by any
other person or a loss of any rights of Halonet and (b) any default by
any other person, or any event which, after notice or lapse of time,
or both, would constitute a default by any such person or result in a
right to accelerate by Halonet or a loss of any rights of any such
person. Halonet is not a party to or bound by any contract, agreement,
lease, license or commitment which, upon performance, is reasonably
expected to result in any loss or liability to Halonet. True and
complete copies of all contracts, agreements, leases, licenses,
commitments and other documents set forth in the Disclosure Letter
(together with any and all amendments thereto) have been delivered to
Buyer or its representatives.
P. INTELLECTUAL PROPERTY. Set forth in the Disclosure Letter is a
description of all software licenses, patents, patent applications,
patent licenses, trademarks, trademark registrations, and applications
therefor, service marks, service names, trade names, domain names,
copyrights and copyright registrations, and applications therefor of
Halonet (the "Intellectual Property"). Except as set forth in the
Disclosure Letter, Halonet owns or possesses the royalty-free license
or other right to use all Intellectual Property which are listed in
the Disclosure Letter or which are necessary to conduct its business
as presently operated without conflict with or infringement upon any
valid rights of others. No person, firm, corporation or other entity
is entitled to restrain Halonet from using any such copyright,
trademark, service xxxx, service name, trade name, domain names or
patent. Halonet has not received any notice claiming that it is
infringing upon or otherwise acting adversely to any copyrights,
trademarks, trademark rights, service marks, service names, trade
names, domain name, patents, patent rights, licenses or trade secrets
owned by any person, firm, corporation or other entity. Except as set
forth in the Disclosure Letter, there are no outstanding options,
licenses or agreements of any kind with respect to the Intellectual
Property. None of the Sellers or Halonet's employees or any affiliate
thereof have any interest in any Intellectual Property.
Q. CONSENTS. No consent, approval, exemption or authorization is required
to be obtained from, no notice is required to be given to and no
filing is required to be made with any third party (including, without
limitation, governmental and quasi-governmental agencies, authorities
and instrumentalities of competent jurisdiction) by Halonet or
Sellers, (i) in order for this Agreement to constitute legal, valid
and binding obligations of Sellers or to authorize or permit the
consummation by Sellers of the transactions contemplated hereby and
thereby or (ii) under or pursuant to any governmental or
quasi-governmental permits, licenses, consents authorizations or
approvals held by or issued to Halonet (including, without limitation,
environmental, health, safety and operating permits and licenses) by
reason of this Agreement or the consummation of the transactions
contemplated hereby.
R. RECEIVABLES. All receivables of Halonet (including loans receivable
and advances) other than accounts receivable which are reflected in
the Balance Sheet, and all such receivables which have arisen since
the Balance Sheet Date, constituted and will constitute only valid
claims against third parties not affiliated with the Company, arising
only from bona fide transactions in the ordinary course of business
and shall be (or have been) fully collected or collectible when due in
accordance with the usual terms customarily utilized by Halonet
without resort to litigation and without defense, offset or
counterclaim, in the aggregate face amounts thereof except to the
extent of the normal allowance for doubtful accounts with respect to
accounts receivable computed in a manner consistent with prior
practice as reflected on the Balance Sheet. Sellers have delivered to
Buyer an aging schedule for the accounts receivable of Halonet at the
Balance Sheet Date.
S. LITIGATION. Except as set forth in the Disclosure Letter, there is no
claim, legal action, arbitration, governmental investigation or other
legal or administrative proceeding, or any order, decree or judgment
in progress, pending or in effect, or threatened against or relating
to Halonet, its properties, assets, business or membership interests
or other securities, or the transactions contemplated by this
Agreement, and Sellers do not know of any basis of the same. Except as
set forth in the Disclosure Letter, there is no continuing order,
injunction or decree of any court, arbitrator or governmental
authority to which Halonet is a party or by which Halonet or its
assets, properties, business or its membership interests is bound.
T. EMPLOYEE PLANS. Set forth in the Disclosure Letter are descriptions of
all Employee Plans (as defined below), the financial and actuarial
condition of such plans, the extent to which they are funded, and the
actuarial assumptions utilized in calculating the financial condition
thereof. "Employee Plans" means all pension, retirement, disability,
medical, dental or other health insurance plans, life insurance or
other death benefit plans, profit sharing, deferred compensation,
stock options, bonus or other incentive plans, severance plans, or
other employee benefit plans or arrangements, whether or not funded,
covering any of Halonet's current or former officers, employees,
directors or consultants or to which Halonet is a party or bound or
otherwise may have any liability to any person (including any such
plan formerly maintained or in connection with which Halonet may have
any liability to any person after the Closing, and any such plan which
is a multi-employer plan. No Employee Plan fails to comply in full
with applicable provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA") and regulations issued under ERISA, in such a
manner as to constitute, in the aggregate, a material adverse event.
Complete and correct copies of all determination letters issued by the
Internal Revenue Service relating to any qualified plans under Section
401(a) of the Internal Revenue Code have previously been delivered to
Buyer. No facts or circumstance, including, without limitation, any
"reportable events" as defined in ERISA and the regulations
promulgated under ERISA, exist in connection with such plans which
constitute, in the aggregate, a material adverse event, or which might
constitute grounds for the termination of any such plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer any such plan,
nor does any such plan have any funding deficiency.
Halonet has complied with and performed in all material respects all
contractual obligations required by it to be performed with respect to
any Employee Plan or any related trust agreement or insurance
contract. All contributions and other payments required to be made by
Halonet to any Employee Plan prior to the date hereof has been made.
Halonet has not communicated generally to its employees regarding any
material increases of benefit levels (or creation of material new
benefits) with respect to any Employee Plan beyond those reflected in
the current Employee Plans.
Halonet has not participated in or incurred an obligation to
contribute to any Multiemployer Plan (as defined in Section 3(37) of
ERISA) or incurred or been notified of any withdrawal liability in
respect of any such plan.
U. INSURANCE. Set forth in the Disclosure Letter is a description of all
fire, theft, casualty, liability and other insurance policies insuring
Halonet, all performance bonds, customs bonds and the like maintained
by, or for the benefit of, Halonet, and all life insurance policies
maintained for any of its employees, specifying with respect to each
such policy or bond the name of the insurer or issuer, the risk
insured against or covered thereby, the limits of coverage, the
deductible amount (if any), the premium rate or cost and the date
through which coverage will continue by virtue of premiums already
paid. Halonet maintains adequate insurance coverage for all normal
risks incident to Halonet's assets, properties and business
operations. Such insurance will continue to be in force as of the
Closing.
V. DISCLOSURE. No representation or warranty by Sellers or Halonet
contained in this Agreement, and no information contained in any other
instrument furnished or to be furnished to Buyer pursuant to this
Agreement or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make
the statements contained therein not misleading.
W. BANK ACCOUNTS. Set forth in the Disclosure Letter is the name of each
bank or other financial institution in which Halonet has an account or
safe deposit box or vault arrangement and the names of all persons
authorized to draw thereon or to have access thereto; and the names of
all persons, if any, holding tax or other powers of attorney from
Halonet and a summary of the terms thereof.
X. EMPLOYEE MATTERS. The Disclosure Letter sets forth (i) the name of
each employee of Halonet; the amount paid to him for services rendered
during the calendar years 1996 and 1997; the current annual rate of
his compensation; a list of all written contracts of employment of
Halonet and all consulting agreements with Halonet and the terms
thereof; (ii) all collective bargaining or other labor agreements, if
any, to which Halonet is a party; all affirmative action plans or
other such plans in effect since February 24, 1995; (iii) all union
organizing efforts conducted or being conducted or threatened with
respect to employees of Halonet; all labor-related work stoppages
experienced by Halonet since February 24, 1995; and (iv) all reports
filed since February 24, 1995 with governmental agencies relating to
equal employment opportunities and employment of protected minorities
(including women and persons over age 40); all decisions rendered by
governmental agencies (including Courts and the Equal Employment
Opportunity Commission) with respect to claims or complaints filed
alleging unlawful, discriminating employment practices; and all such
claims or complaints now pending; and, (v) the managers of Halonet now
in office. Other than as set forth in the Disclosure Letter, Halonet
has no employment agreements with any of its employees other than
At-Will employment agreements that give Halonet the right to terminate
at any time any such employee without notice or cause.
Y. FINDERS' AND BROKERS' FEES. Neither Sellers nor Halonet, nor anyone on
behalf of any such persons, has retained any broker, finder or agent
or agreed to pay any brokerage fee, finder's fee or commission with
respect to the transactions contemplated by this Agreement.
Notwithstanding the foregoing, Sellers agree to pay any and all fees
due any broker retained by Seller whether or not any such broker
introduced Buyer to Sellers or participated in the transaction
contemplated hereby in any other manner.
Z. NON-COMPETITION. For a period of three (3) years commencing on the
date of the Closing, Sellers will not, directly or indirectly, in the
United States or in any foreign country in which Buyer is then
marketing its products or services, engage in or own, control or have
an interest in (except as a passive investor in publicly held
companies and except for investments held at the date hereof) or act
as an officer, director, or employee of, or consultant or adviser to,
any person, firm, corporation or institution that directly or
indirectly derives a substantial portion of its revenue from the
provision of: computer network integration, consultation, support or
management services; web design, development, programming or hosting
services; and/or Internet access services, to third parties
AA. INVESTMENT INTENT.
i. Each certificate representing the Shares shall be imprinted with
a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND
HAVE BEEN SOLD IN RELIANCE UPON EXEMPTIONS THEREFROM. THESE SECURITIES
MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION COVERING THESE SECURITIES UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
THEREUNDER. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE ACQUISITION
AGREEMENT, DATED AS OF DECEMBER 10, 1998 AND AS AMENDED AND MODIFIED
FROM TIME TO TIME BETWEEN THE ISSUER (THE "COMPANY") AND CERTAIN
INVESTORS, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER
OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH
RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED
BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST WITHOUT
CHARGE.
ii. Each Seller, respectively, is acquiring the Shares for his, her
or its own account, for investments purposes and not with a view
to or for sale in connection with, any distribution of such
Shares or any part thereof.
iii. Each Seller, respectively, is (a) an "accredited investor" as
that term is defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended, or (b) is an investor
experienced in the valuation of businesses similar to IBS, and
(c) is able to fend for him, her or its self in the transactions
contemplated by this Agreement, and (d) has such knowledge and
experience in financial, business and investment matters as to be
capable of evaluating the merits and risks of this investment,
and (e) has the ability to bear the economic risks of this
investment, (f) has had access to and has received such
information regarding Buyer as is specified in subparagraph
(b)(2) of Rule 502 promulgated under the Securities Act of 1933,
as amended, and (g) without in any way limiting the Buyer's right
or ability to rely on the representations and warranties made by
Sellers in or pursuant to this Agreement, have been afforded
prior to the Closing the opportunity to ask questions of, and to
receive answers from, IBS and to obtain any additional
information, to the extent IBS has such information or could have
acquired it without unreasonable expense, all as necessary for
each of Sellers, respectively, to make an informed investment
decision with respect to the purchase of the Shares.
iv. Each Seller, respectively, understands and acknowledges that (a)
the Shares to be sold and issued hereunder are unregistered and
may be required to be held indefinitely unless subsequently
registered under the Securities Act of 1933, as amended, or an
exemption from such registration is available; (b) IBS is under
no obligation to file a registration statement with the
Securities and Exchange Commission with respect to the Shares;
and (c) Rule 144 promulgated under the Securities Act of 1933, as
amended ("Rule 144"), which provides for certain limited sales of
unregistered securities, is not presently available with respect
to the Shares.
v. Each Seller, respectively, acknowledges that the representations
and warranties of Buyer in this Agreement or documents provided
for herein represent the sole and exclusive representations and
warranties of Buyer to the Sellers in connection with the
transactions contemplated hereby, and each of the respective
Sellers understands, acknowledges and agrees that all other
representations and warranties of any kind or nature expressed or
implied (including, but not limited to, any relating to the
future or historical financial condition, results of operations,
assets or liabilities of IBS) are specifically disclaimed by
Buyer.
BB. PERFORMANCE OF OBLIGATIONS. All covenants, agreements and obligations
required by this Agreement to be performed or complied with by Sellers
and/or Halonet have been performed or complied with in all material
respects.
CC. TRANSACTIONS IN IBS STOCK. Prior to the Closing, Sellers have not,
directly or indirectly, effectuated or caused to be effectuated,
purchases or sales of IBS' common stock.
DD. HALONET'S LEGAL CAPACITY; NO RESTRICTIONS. Halonet has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. All action required to authorize Halonet to
enter into this Agreement and to carry out the transactions
contemplated hereby has been properly taken; and this Agreement
constitutes the legal, valid and binding obligation of Halonet,
enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement\ by Halonet in accordance with its terms
will not, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate or
loss of rights under, or result in the creation of any Encumbrance
pursuant to, or require the consent of any third party or governmental
authority pursuant to (a) any provision of the Halonet's Certificate
of Formation or Operating Agreement, as currently amended and in
effect or (b) any franchise, mortgage, indenture or deed of trust or
any material lease, license or other agreement or any law, regulation,
order, judgment or decree to which Buyer is a party or by which it (or
any of its assets, properties, operations or business) may be bound,
subject to or affected.
EE. VALIDITY. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly
authorized by all necessary limited liability company and Member
actions. This Agreement has been duly executed and delivered by a duly
authorized manager of Halonet and, assuming the due execution and
delivery of this Agreement by Buyer, constitutes a valid and binding
obligation of Halonet and Sellers enforceable against Halonet and
Sellers in accordance with its terms.
8. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
each of Sellers, as follows:
A. ORGANIZATION AND STANDING. IBS is a corporation duly organized and
validly existing and in good standing under the law of the State of
Delaware.
B. LEGAL CAPACITY; NO RESTRICTIONS. Buyer has full corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. All action required to authorize Buyer to enter
into this Agreement and to carry out the transactions contemplated
hereby has been properly taken; and this Agreement constitutes the
legal, valid and binding obligation of the Buyer, enforceable in
accordance with its terms. The execution, delivery and performance of
this Agreement by Buyer in accordance with its terms will not, with or
without the giving of notice or the passage of time, or both, conflict
with, result in a default, right to accelerate or loss of rights
under, or result in the creation of any Encumbrance pursuant to, or
require the consent of any third party or governmental authority
pursuant to (a) any provision of the Buyer's certificate of
incorporation or by-laws, as currently amended and in effect or (b)
any franchise, mortgage, indenture or deed of trust or any material
lease, license or other agreement or any law, regulation, order,
judgment or decree to which Buyer is a party or by which it (or any of
its assets, properties, operations or business) may be bound, subject
to or affected.
C. COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Buyer has complied with
all existing material federal, state and local laws, rules,
regulations, ordinances, orders, judgments and decrees now or
hereafter applicable to its business, properties or operations as
presently conducted, and neither the ownership nor use of Buyer's
properties nor the conduct of its business conflicts with the rights
of any other person, firm or corporation or violates, or with or
without the giving of notice or the passage of time, or both, will
violate, conflict with or result in a default, right to accelerate or
loss of rights under, any term or provision of its (i) certificate of
incorporation or by-laws, as presently in effect, or (ii) any
mortgage, indenture, deed of trust or material Encumbrances, lease,
license or agreement or any law, ordinance, rule, regulation, order,
judgment or decree to which Buyer is a party or by which it or any of
its properties, assets or operations may be bound or affected or which
might material adversely affect any such properties, assets or
operations. Without limiting the generality of the foregoing, to the
best knowledge and belief of the Buyer, neither the Buyer nor any of
its officers, directors, employees or agents has, directly or
indirectly, made, promised to make, or authorized the making of, any
offer, payment or gift of money or anything of value to any
governmental official, political party or employee, agent or fiduciary
of a customer, to obtain a contract for or to influence a decision in
favor of Buyer where such offer, payment or gift was or would be, if
made, in violation of any applicable law, nor has it maintained cash
or anything of value, in an account or otherwise, not properly or
accurately accounted for on the respective books and records of Buyer
for this purpose.
D. DISCLOSURE. None of the respective representations or warranties by
the Buyer contained in this Agreement, and no information contained in
any other instrument furnished or to be furnished by Buyer pursuant to
this Agreement or in connection with the transaction contemplated
hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained therein not misleading.
E. INVESTMENT INTENT. Buyer is acquiring the Membership Interests for its
own account for investment, and not with a view to the resale or
distribution thereof.
F. FINDERS' AND BROKERS' FEES. Neither IBS nor anyone on behalf of IBS
has retained any broker, finder or agent or agreed to pay any
brokerage fee, finder's fee or commission with respect to the
transactions contemplated by this Agreement.
9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF SELLERS. All
statements contained in this Agreement and any document, certificate or
other instrument delivered by or on behalf of Sellers and/or Halonet
pursuant hereto or in connection with the transactions contemplated hereby
shall be deemed representations, warranties, covenants and agreements made
by Sellers. Each statement, representation, warranty, covenant and
agreement made or deemed made by Sellers and/or Halonet shall survive the
Closing for a period of 24 months. The statements, representations,
warranties, covenants and agreements made or deemed made by Sellers in this
Agreement shall not be affected or deemed waived by reason of the fact that
Buyer or their representatives should have known that any such
representation, warranty, covenant or agreement is or might be inaccurate
in any respect unless Sellers can demonstrate that Buyer or their
representatives had actual (and not merely constructive) knowledge that any
such representations, warranty, covenant or agreement is inaccurate in such
respect. Any furnishing of information to Buyer by Sellers pursuant to, or
otherwise in connection with, this Agreement, including, without
limitation, any information contained in any document, contract, book or
record of Sellers or Halonet to which Buyer shall have access or any
information obtained by, or made available to, Buyer as a result of any
investigation made by or on behalf of Buyer prior to or after the date of
this Agreement, shall not affect Buyer's right to rely on any statement,
representation, warranty, covenant or agreement made or deemed made by
Sellers in this Agreement and shall not be deemed a waiver thereof unless
Sellers can demonstrate that Buyer or its representatives had actual (and
not merely constructive) knowledge that any such statement, representation,
warranty, covenant or agreement is inaccurate in such respect.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The purchase by Buyer of the
Sellers' Membership Interests is subject to the conditions set forth in
this Section 10 for the exclusive benefit of Buyer to be fulfilled at or
prior to the Closing. Buyer may, however, waive the fulfillment of any of
these conditions, either before or after the Closing, but any waiver, to be
binding upon Buyer, must be by a writing duly executed by it. Sellers shall
use commercially reasonable efforts to cause each condition to be
fulfilled.
A. REPRESENTATIONS. All representations and warranties of Sellers and/or
Halonet contained in this Agreement, the Disclosure Letter or in any
other document, certificate or other instrument delivered by or on
behalf of Sellers and/or Halonet pursuant to this Agreement or in
connection with the transactions contemplated hereby are true and
correct in all material respects.
B. PERFORMANCE OF AGREEMENTS. All covenants, agreements and obligations
required by the terms of this Agreement to be performed by Sellers
and/or Halonet at or prior to the Closing have been duly and properly
performed or fulfilled in all material respects.
C. NO ADVERSE CHANGE. There have been no material adverse change in the
assets, liabilities, financial condition or business (financial or
otherwise) of Halonet from that shown or reflected in the Interim
Financial Statements. There shall not have occurred an event which, in
the reasonable opinion of Buyer, materially and adversely affects or
may materially or adversely affect the operations, business or
prospects of Halonet.
D. DOCUMENTS. All documents required to be delivered to Buyer at or prior
to the Closing have been duly delivered.
E. OPINION OF SELLERS' COUNSEL. Buyer's receipt of an opinion of Sellers'
counsel, dated the date of the Closing, substantially in the form
attached as Exhibit C.
F. NO LITIGATION. No action or proceeding is pending or threatened by any
person, firm, corporation, or governmental authority which questions,
or seeks to enjoin or prohibit: (a) the purchase and sale of the
Sellers' Membership Interests and the other transactions contemplated
by this Agreement or (b) the right of Halonet to conduct its
operations and carry on its business in the normal course and in
accordance with past practice.
G. NO LEGISLATION. No legislation (whether by statute, regulation or
otherwise) has been enacted or introduced subsequent to the date of
this Agreement which, in the reasonable opinion of Buyer, materially
and adversely affects or may materially and adversely affect the
operations, business or prospects of Halonet.
H. EMPLOYMENT AGREEMENTS. Receipt of executed employment agreements, in
form acceptable to Buyer, for Xxxxxxx Xxxxxxx, Xxx Xxxxx and Xxxxxxx
Xxxxx.
I. CONSULTING AGREEMENTS. Receipt of executed consulting agreements, in
form acceptable to Buyer, for Xxxxx Xxxx, Xxxxxxx Xxxx and Xxxx
Xxxxxxxxx.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS. The sale of Membership
Interests by Sellers is subject to the conditions set forth in this Section
11 for the exclusive benefit of Sellers to be fulfilled at or prior to the
Closing. Sellers may, however, waive the fulfillment of any of these
conditions, either before or after the Closing, but any waiver, to be
binding upon Sellers, must be by a writing executed by, or on behalf of,
them. Buyer shall use commercially reasonable efforts to cause each
condition to be fulfilled.
A. REPRESENTATIONS. All representations and warranties of Buyer in this
Agreement or in any other document, certificate or other instrument
delivered by or on behalf of Buyer pursuant to this Agreement or in
connection with the transactions contemplated hereby are true and
correct in all material respects.
B. PERFORMANCE OF AGREEMENTS. All covenants, agreements and obligations
required by the terms of this Agreement to be performed by Buyer at or
prior to the Closing have been duly and properly performed or
fulfilled in all material respects.
C. DOCUMENTS. All documents required to be delivered to Sellers at or
prior to the Closing have been duly delivered.
12. DELIVERY BY SELLERS AT THE CLOSING. At the Closing, and subject to the
terms and conditions set forth herein, Sellers shall deliver to Buyer:
A. Certificates or other indicia of ownership evidencing all of the
outstanding Membership Interests, together with such instruments as
Buyer may reasonably request to effect the sale, transfer and
assignment of the Membership Interests from Sellers to the Buyer.
B. Executed employment agreements for Xxxxxxx, Xxxxx and Oster.
C. Executed consulting agreements for Xxxxx Xxxx, Xxxxxxx Xxxx and Xxxx
Xxxxxxxxx.
D. The Disclosure Letter.
E. The opinion of Buyer's counsel.
F. A letter in the form of an "Audit Letters," acceptable to Buyer, from
the respective law firms handling any threatened or pending legal
matter set forth in the Disclosure Letter.
G. Such additional items as Buyer may reasonably request.
13. DELIVERY BY BUYER AT THE CLOSING. At the Closing, and subject to the terms
and conditions set forth herein, Buyer shall deliver to Sellers:
A. The Closing Shares.
B. An opinion of Sellers' counsel, dated the date of the Closing,
concerning the due authorization of the Consideration and the issuance
of the Closing Shares.
C. The escrow agreement (the "Escrow Agreement").
D. Such additional items as Sellers may reasonably request.
14. EXPENSES. Buyer shall bear and pay the legal, accounting and other expenses
of Buyer associated with the consummation of the transactions contemplated
hereby. Halonet shall bear and pay the legal, accounting and other expenses
of Halonet associated with the consummation of the transactions
contemplated hereby. Each Seller shall bear and pay his legal, accounting
and other expenses associated with the consummation of the transactions
contemplated hereby.
15. BUYER INDEMNIFICATION. Buyer shall indemnify and hold harmless the Sellers
and their respective heirs, executors and legal representatives ("Seller
Indemnitees") from and against any losses, damages, expenses or
liabilities, including, without limitation, reasonable attorneys',
accountants and other professional fees, which may be sustained, suffered
or incurred by any of the Seller Indemnitees arising from or by reason of
or in connection with any breach of the representations, warranties or
covenants made by Buyer herein. This indemnity shall survive the Closing;
provided, however, that any claim for indemnity hereunder must be presented
to the Buyer within twelve (12) months of the Closing. The liability of
Buyer pursuant to this Section 14 shall be limited to the aggregate
purchase price of the purchased Membership Interests.
16. PUBLICITY. No party shall issue any press release or make any public
announcement relating to the subject matter of this Agreement or otherwise
publicize the execution and delivery of this Agreement, the provisions
hereof or the transactions contemplated hereby without the prior written
approval of the form and content of such press release or publicity by the
Buyer or Sellers, as applicable; provided, however, that any party may make
any public disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its publicly traded
securities (in which case the disclosing party will use its best efforts to
advise the other party prior to making such disclosure).
17. NOTICES.
A. Any and all notices, requests, demands, consents, approvals or other
communications required or permitted to be given under any provision
of this Agreement shall be in writing and shall be deemed given upon
personal delivery or the mailing thereof by first class certified
mail, return receipt requested, postage pre-paid; or by telecopier or
other electronic means, as follows:
If to Buyer:
IBS Interactive, Inc.
0 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx, Xx., President
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Sellers:
Xxxxx Xxxx
Attorney-in-Fact
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
with a copy to:
Greenbaum, Rowe, Xxxxx, Xxxxx, Xxxxx & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
B. Any party hereto may change its address for the purpose of this
Agreement by notice to the other parties given as aforesaid.
18. MISCELLANEOUS.
A. ENTIRE AGREEMENT; AMENDMENT. This Agreement together with the Exhibit
attached hereto and made a part hereof and the other documents
delivered in connection herewith constitute the entire agreement of
the parties with respect to the subject matter hereof and the
transactions contemplated hereby and supercede any prior oral or
written understanding or agreement of the Sellers and Buyer with
respect thereto. This Agreement may not be modified, amended or
terminated except by a written agreement specifically referring to
this Agreement signed by all of the parties hereto.
B. SEVERABILITY. In the event that any provision of this Agreement would
be held to be invalid, prohibited or unenforceable in any jurisdiction
for any reason, unless such provision is narrowed by judicial
construction, this Agreement shall, as to such jurisdiction, be
construed as if such invalid, prohibited or unenforceable provision
had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of
this Agreement would be held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, such provision, as
to such jurisdiction for any reason, shall be ineffective to the
extent of such invalidity, prohibition or unenforceability, without
invalidating the remaining portion of such provision or the other
provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
C. NO WAIVER. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature.
D. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of each party hereto, and its successors and assigns. Except
as hereafter provided, this Agreement shall not be assigned by either
Buyer or Sellers and any attempted assignment shall be void.
E. PERSONS HAVING RIGHTS UNDER THIS AGREEMENT. Nothing in this Agreement
expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to,
any person or corporation other than the parties hereto, any right,
remedy, or claim under or by reason of this Agreement or of any
covenant, condition, stipulation, promise or agreement contemplated
hereby. All covenants, conditions, stipulations, promises and
agreements contained in this Agreement shall be for the sole and
exclusive benefit of the parties hereto and their successors and
assigns.
F. HEADINGS. The section headings contained herein are for the purpose of
convenience only and are not intended to define or limit the contents
of said articles or sections.
G. GOVERNING LAW. THE PARTIES CONSENT TO PERSONAL JURISDICTION IN ANY
ACTION BROUGHT IN ANY COURT, FEDERAL OR STATE, WITHIN THE STATE OF NEW
JERSEY, HAVING SUBJECT MATTER JURISDICTION IN THE MATTER. THIS LETTER
AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
H. FURTHER ASSURANCES. Sellers and Buyer shall cooperate and take such
actions and execute and deliver such other documents, at or prior to
the Closing or subsequent thereto as may be reasonably requested by
any other party hereto in order to carry out this Agreement and the
transactions contemplated thereby.
I. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more
than one party but all of which taken together shall constitute one
and the same Agreement.
J. RIGHTS AND REMEDIES. All rights, powers and remedies afforded to a
party under this Agreement, by law or otherwise, shall be cumulative
(and not alternative) and shall not preclude assertion or seeking by a
party of any other rights or remedies.
K. CERTAIN DEFINITIONS. As used herein, the word "person" shall include
an individual and entity of any kind.
L. ATTORNEY-IN-FACT. Each Seller hereby appoints Xxxxx Xxxx as such
Seller's attorney-in-fact and representative, to do any and all things
and to execute any and all documents, in such Seller's name, place and
stead, in any way which such Seller could do if personally present, in
connection with this Agreement and the transactions contemplated
hereby, including, but not limited to, amending, canceling, extending
or waiving any term of this Agreement, to bring claims for and defend
claims against liabilities and Additional Liabilities pursuant to the
terms of this Agreement and to enter into settlement negotiations and
to settle claims thereunder, and to accept notices pursuant to Section
19 of this Agreement. Each of the other parties hereto shall be
entitled to rely, as being binding upon each Seller, upon any document
reasonably believed by it to be genuine and correct and to have been
signed by the attorney-in-fact, and no other party shall be liable to
any Seller for any action taken or omitted to be taken by it on such
reliance.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE
DULY EXECUTED THE DAY AND YEAR FIRST ABOVE WRITTEN.
/s/ Xxxxx Xxxx /s/ Xxxxxxx Xxxx /s/ Xxxx Xxxxxxxxx
----------------------- ----------------------- -----------------------
XXXXX XXXX XXXXXXX XXXX XXXX XXXXXXXXX
HALO NETWORK MANAGEMENT, LLC IBS INTERACTIVE, INC.
By:/s/ Xxxxx Xxxx By:/s/ Xxxxxxxx Xxxxxxxx, Xx.
------------------------------ ---------------------------
Name: Xxxxx Xxxx Xxxxxxxx Xxxxxxxx, Xx.
Manager President
